IMF Policies and the Asian Crisis

The argument can be made that economic freedom is a necessary precondition to political freedom, yet the unilateral focus of these reforms begs the question whether during the writing of the Washington Consensus, economic liberalization was solely a means to international development, or an end in itself. The historical support is for the latter, as John Williamson later reflects that there was, “a widespread attempt to tighten fiscal policy, extensive financial and trade liberalization, virtually universal elimination of restrictions on inward foreign direct investment, a lot of privatization, and quite a bit of deregulation. [But] the things that got most widely neglected were reforming public expenditure priorities, maintaining a competitive exchange rate, and extending property rights to the informal sector”

The Great Depression, which occurred in 1929, devastated the economy of many counties worldwide, including Japan. Thus, many sought for imperialism as the answer, such as the Western power and Japan. Japan targeted China, planning on taking advantage of the turmoil that was taking place inside the country, greatly devastating the country by military power. Watching closely over the feud between the Chinese Nationalists and Communists, Japan waited for the perfect opportunity. (Beck et. alt. 481)

In the years immediately following the second Great War, Japan was struck by what some would call an “economic miracle”. This miracle allowed for the industrialized nation of Japan to regain its foothold in the economic sectors of Southeast Asia. Essentially, after the war, the U.S. called for “unconditional surrender and for Japan to be stripped of most of its empire, occupied by allied troops, and demilitarized. Japan would then be integrated into the world economy, and its economic viability would be guaranteed through free trade”

The growth rate of real gross domestic product (GDP) shot up above 4% per year, and the long-anemic productivity growth rate accelerated. Rapid growth continued through the end of the 1990s, and the unemployment rate fell below 5 percent in 1997 while inflation remained subdued. In 1999 the expansion surpassed that of the 1960s as the longest US expansion on record. The pundits proclaimed that the benefits of neoliberal restructuring had finally been demonstrated. They noted that, by contrast, the Asian growth miracles, except for China, had collapsed in the 1997 financial crisis, while Japan’s unreconstructed statist economy remained mired in a decade-long

Nonetheless, the 1990s was the start of a new American policy in Asia, specifically focused on Japan, and an unrelenting period of competition “between free-market capitalism and non-capitalist market”. However, the 1990s is dubbed as Japan’s lost decade, a time “the powerful and privileged lost while the ordinary people benefited”. The lost decade was a “period when the economy imploded, the asset bubble collapsed, banks teetered on the edge of insolvency, unemployment skyrocketed, suicides increased and the leaders of Japan, Inc. were tarnished by exposes of pervasive corruption”. The lost decade encompassed the loss of money, security, stable families, and the credibility of the nation’s leadership. Again, a part of the lost decade is corruption and “the vast majority of postwar prime ministers have been implicated in corruption scandals”. In addition, the corruption involved the Yakuza, a major gangster organization, they manipulated “bankers and bureaucrats to secure huge loans for speculative and illegal activities”. Therefore, this asset bubble “may have been a giant con game that enriched the mob at public expense”, a partial reason for why the bubble

Neoliberal globalization is an economic system that promotes free market policies of liberalization, deregulation, privatization, and the cutting of social support systems. The International Monetary Fund and the World Bank help promote these policies by making structural adjustment programs conditions for any aid or support. Unfortunately, once structural adjustment programs are put into place they tend to disrupt developing countries’ economies and end up making them even worse off than before. Before the 1980s, developing countries had a per capita growth rate of more than 3%, once these policies were put into place growth rates dropped to 1.7% (Hickel 2012: 7). This provides evidence that these programs are pushed at developing countries

The four decades prior to World War One (WWI) and the three decades after World War Two (WWII) can be characterized as periods of great globalization and economic integration. As different parts of the world grew more interconnected, and the prosperity of one nation became tethered to the prosperity of another, many world actors searched for the right recipe of economic and political policies to help them weather the turbulent global market. In the first era, we see a focus on three pillars as the foundation for the world economic order. This included the gold standard, free trade, and the growth of international finance. In the second era, which proceeded WWII, similar policies were enacted as the world tried to learn from the mistakes made

Firstly, the financial aid from the strong state is the main factor that arose the economic miracle in Japan. When the cold war began, the U.S. government feared that a bleak economic prospects and instability in Japan would encourage the expansion of Soviet influence in the Pacific, and with a triumph of communism in China’s civil war, the prospective of East Asia seemed to be at stake (Miyazaki 1967). As a consequence, the concern about the spread of communism, which aroused the American officials to stress the expansion of chances for

In this essay we look in-depth on how government strategies and economic policy play a crucial role in the success of High Performance Asian Economies (HPAEs) during 1960 to 1990 (World Bank 1993).There are eight countries within HPAEs: South Korea, Taiwan, Hong Kong, Singapore, Thailand, Malaysia, Indonesia and Japan. Its economic development has significantly rise that it was name ‘East Asia Miracle’ (World Bank, 1993).

East Asian Economies have experienced an outstanding record of high and sustained economic growth over the period of 1990s. In the period of 1965 to 1990, East Asia’s twenty three economies grew faster than other economies of all other regions. Most of this success is attributable to seemingly miraculous growth in just eight high performing Asian economies (HPAEs). Among these high performing Asian economies, China ranks as the world's 2nd largest economy after the United States since 2010. It has been the world's fastest-growing economy with consistent growth rates of around 10% over the past 30 years. A major contributor to China’s extraordinary growth has been its economic reforms coupled with the implementation of unorthodox policies.

Since the 1960s, Asia has become richer quicker than any other region across the world. China and the High Performing Asian Economies (HPAE) have been the fastest growing economies ever, demonstrating phenomenal economic growth in the years between 1965 and 1990. Compared to large parts of Asia Sub-Saharan Africa and Latin America, the HPAE’s have been highly successful at achieving high growth rates. Most of this success can be attributed to the staggering growth in Japan, the four tigers including Hong Kong, the Republic of Korea, Singapore and Taiwan as well as the NIE’s of Southeast Asia, Indonesia, Malaysia and Thailand. Controversial issues have been raised in relation to the affiliation between the government, the private sector and the market. As a consequence of the coexistence of public policies and rapid growth in some of the HPAEs particularly Japan, Korea, Taiwan and Singapore. Moreover government intervention within these economies has been a necessity to promote development.

The performance of East Asian nations, particularly Japan, South Korea, Taiwan and most recently, mainland China, is largely attributable to the East Asian Model, which accounts for the following notable observations: sustained economic growth at high levels for long periods, social, political and economic diversity, and economic activities that are industrialized, export-oriented and socially beneficial in nature. The East Asian Model is characterized by the following elements: investment and trade-driven growth, active governmental involvement, strong regional cooperation and economic development driven towards poverty reduction.

The three major international economic institutions are the International Monetary Fund (IMF), the World Bank and the World Trade Organization; this book mainly focuses on the IMF and the World Bank, due to the author’s first-hand experience with both institutions. The IMF, a public institution built as a guiding hand for economic stability around the world, has brought false

After the 1997 Financial Crisis, Washington Consensus was critiqued for being relied too heavily on market fundamentalism, the belief that markets by themselves lead to economic efficiency and that economic policies should focus on efficiency—distributional concerns could and should be taken care of elsewhere in the political process—more moderate advocates of Washington consensus policies deny the charge. To a large extent, that debate, like the debate over the nomenclature ‘the Washington consensus’ itself, is beside the point. The policies pursued by the international financial institutions which came to be called the Washington consensus policies or neo liberalism entailed a much more circumscribed role for the state than were embraced by most of the East Asian countries, a set of policies which (in another simplification) came to be called the development state.

In the chapter, the authors O’Brien Robert and Marc Williams starts by giving a brief example of the 1997 Asian financial crisis in order to demonstrate the interpretation of the same event through some of the key approaches such as the liberal, economic nationalist and critical approach. The event that took place with the investors’ withdrawal of their money and investments has led to the 1997 Asian financial crisis. As a outcome, several Asian countries experienced economic depression and were forced to seek loans from the (11). According to the authors, theories help us in order to make sense of the world we live in (12). Thus, in the case of Asian crisis, these theories helped us understand the cause of the event, its aspects and the lessons which might be drawn from the crisis in order to prevent similar events from