Impact Of The Asian Financial Crisis Of 1997 On The Region 's Development

Within the last 60 years, Third World development has been a global priority, at the top of virtually every Western agenda. And with the rise of the global population and poverty levels continuing to rise along with it, it is very easy to see why human development is becoming such a topic of focus and discussion among members of the academia. But one question that everyone wants the answer too is, how does Third World development fit into Globalization? Despite apparent compatibility, when closely examined it is clear to see that Globalization actually contradicts Third World development due to the conflict of agendas. Both Globalization and Development hold views concerning market reform, social structure and regulation, which are

And yet again, the current crisis too effected almost every part of the world because the world is made up of interconnected globalized independent economies.

The most recent financial crisis of 2007 was felt throughout the world, and brought about huge economic consequences that are still being felt to this day. Within the United States, the crisis undoubtedly resulted in a surge in poverty and unemployment, a significant drop in consumption, and the loss of trust in the capitalist economic system. Because of globalization, this crisis was felt through the intertwined global markets, affecting underdeveloped countries even more. Historical events from the past have taught us that financial crises such as the one we suffered during 2007 have occurred a vast number of times. From Mexico to Thailand, these financial crises have resulted in contagion worldwide, and have caused governments to

(Reinhart and Rogoff, 2009) together with (Kindleberger and Aliber, 2005) in hundreds of pages present an exhaustive analysis of the crises within the last hundred of years, along with the classification of these in types of

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.

Over the past decades, the East Asian countries have experiences massive economic growth for the policy change from protection centred to export promotion. Taiwan, Korea, and Hong Kong would be the good examples of this. According to Krueger (1997), during 1950s and 60s, it was the general consensus that “import substitution” was the basis for the development, however, Asian countries that applied free trade and promoted export has risen rapidly starting from Taiwan, which transformed from a “high-inflation, inner-oriented, aid-dependent economy” to “major exporting economy”(Krueger 1997). Korea, Hong Kong and Singapore followed similar transformation at the same time period as called “East Asian miracle”(WorldBank 1993). Moreover she points out that those who transformed from inner-oriented to export-driven countries has become more resilient to dept crisis than other countries who did not. After 1979’s oil price surge, the huge economic recession attacked global market. In this crisis, countries with higher dept-export ratios could recovered its growth rate faster than those with inner-oriented manufacturing. (Krueger 1997)

In spite of Third World countries’ similar pre-industrial history and early policies aimed at industrializing, Third World countries have not had the same growth as most European countries. Bates analyzes the process of development and concludes that this time period as an important variable in a countries’ development.

In the 1950’s when most of the countries were in a conflict of choosing between a capitalist or a socialist system, East Asia opted to go for the capitalist system and were hence able to witness growth in the coming years. In 1980’s most of the East Asia enjoyed great investment rates and a higher amount of savings as compared to the other countries (Moreno, 2015). After having witnessed continuous growth the mid 1990’s period came as shock to everyone, the currency had started to devaluate which further lead to reduction in export prices and hence slowing the economic growth. The crisis had first started from Thailand where the foreign exchange market had crashed and Thai baht had pegged down, starting from Thailand the crisis went on to hit other countries like Malaysia, Indonesia and Philippines with the stock market of each country collapsing (Moreno, 2015). It had become evident that the benefits of the capitalist system had faded and investors had started regretting their decision of investing large sums of money in the East Asian market. However within a short of span of time the crisis had ended and by the end of 1999, most of the Asian countries had come back on track and had started witness growth again. This was possible primarily by structural changes which are discussed below in detail.

The Asia pacific economic corporation was established in 1989 for growing linkage of Asia-pacific economies and consider the local economic blocs. This corporation for promoting economic growth, cooperation, trade, and investment in the Asia pacific region. Its work concentrates basically on taxes, non-duty measures, administrations, deregulation, debate intervention, Uruguay Round usage, speculation, traditions methodology, norms and conformance, versatility of representatives, licensed innovation rights, rivalry strategy, government acquisition and standards of starting point. Setting up members include Australia, Brunei, Canada, Indonesia, Japan, South Korea, Malaysia, New Zealand, Philippines, Singapore, Thailand, and the United States. APEC works forward higher standard of living and advanced education through feasible economic growth. APEC includes all major economies of the region and the most progressive rapidly growing economies in the world. APEC is the main bury legislative gathering on the planet working on the premise of non-tying duties, open dialog and equivalent appreciation for the perspectives of all members. Not at all like the WTO or other multilateral exchange bodies, has APEC had no settlement commitments required of its members. Choices made APEC are come to by accord and responsibilities are embraced on an intentional premise. APEC’s twenty one member economies had combined gross domestic product over us sixteen trillion in 1988 and 42

The four Asian Tigers turned out to be an imperative role model for many of the developing countries and these countries include the “Tiger Cub Economies” comprising of Malaysia, Indonesia, Philippines and Thailand. Subsequent to the 1997 Asian Financial Crisis and the western Financial Crisis of 2007-2008, at the time there was a continuing decline in GDP (Gross Domestic Product-market assessment of all absolute commodities and services, compared to the populace, in any given year). For all the Asian Tiger countries, however each one bounced back easily because of their stable banking policies, government incentive measures and diffident or no communal

In the period between 1997 to 1998, a great economic storm blew the some fast-developing countries, especially Thailand, Indonesia and Malaysia. They had great economic develop before the crisis, but left almost everything at the end of the storm. The most obvious impact by the crisis is the capital outflows and currency devaluation. So, people in those developing countries began to find who should be respond to the crisis. International speculators were good targets to be blamed due to their actives during the crisis. The President of Indonesia, Suharto, even claimed “There are [parties] trying to engineer the fall of the rupiah to the 20,000 level [against the dollar]. It does not make sense.

Over the past thirty years since its establishment in August 1967, the ASEAN has been one of the fastest growing economies in the world with Gross Domestic Product (GDP) grew at an average annual rate of 6.6 per cent. Growth enormously peaked in 1994-1995 with Malaysia, Singapore, and Thailand enjoying growth rates in the range of 8-10 per cent. The region benefited from macroeconomic stability with countries ran budgetary surpluses up to the middle of 1997. The engine growth was said to be the exports, which grew more than fifty-fold from US$6.3 billion in 1970 to US$340 billion in 1996 (Setboonsarng, 1998). Much of the growth in the region could be attributed to the ASEAN leaders’ decision to launch the region on the road to real

The Association of South East Asian Nations or ASEAN is one of the regional Organizations which cater economy as its leading specialties. The idea of regional organization is a foundation and catalyst to strengthen the relationship between regional countries and reinforce solidarity in facing the challenges in the political, security and international economy arena (Keling, Md.Som, Saludin, Shuib, & Ajis, 2011). As Asia becoming an economic fastest growing markets (Vinayak HV, 2014), the so called economy’s Goliath China is extremely high beyond its neighboring countries. Thus, ASEAN was established with the signing of ASEAN Declaration (Bangkok Declaration) in Bangkok on 8 August 1967 (ASEAN Secretariat, 2010) by five founding

In this report we attempted to study the involvement factors towards the achievement of ASEAN, include economic, political and some other factors contributing to the success of ASEAN.

In 1997, the group was suddenly faced by a financial crisis which brought down the economic gains of each member state at that time to catastrophic levels, especially Indonesia and Thailand. The group responded by pursuing an integrated economic policy and made the historic decision of transforming the region into a single market and