The Cause of the Asian Financial Crisis

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This is a review of the political reasons that caused the Asian Financial Crisis in 1997. The review is made on 5 papers by 5 authors on the subject.


The Asian Crisis of 1997 and 1998 affected many of the East Asian and South East Asian countries surprised many. This was due to the fact that in the early and mid-1990s these same countries were lauded as model economies with high Gross Domestic Product (GDP). Yet within a space of a few months in mid-1997, the currency crisis become a financial/economic crisis as many of these countries currencies were greatly devalued resulting in the contraction of their economies. However, the severity of the Asian Crisis was not uniformly felt.
Many books, research papers and
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Due to this, “their states were ‘strong’ for their struggle to industrialize but ‘weak’ because of the web of enmeshment; they are semi-sovereign states” (Cummings, 1999).
The end of the cold war meant that America no longer had to rely so much on Japan and Korea to safe guard against the advancement of communist in South East Asia. Therefore from early 1990s, America has pushed for these countries to adopt multilateral economies (i.e. be more open to accept American goods and investment). However, Japan and Korea were resistant to this new form of economic policy.
Though no actual action by American was provided in the paper that resulted in the Asian Crisis, the author does state that the crisis allowed America, through the International Monetary Fund (IMF) to implement their economic model to Korea. This was done to maintain American’s hegemony in Asia, which before the crisis may have shifted to Japan. That is one of the reasons provided by the author on why America was firm in its refusal to allow the ‘Asian Fund’ proposed by Japan to materialise.

C. Jeffrey A Winters. 1999. The Determinant of Financial Crisis in Asia. In The Politics of the Asian Economic Crisis. Cornel University Press.
Winter’s paper seeks to explain the source of the crisis and the reason why certain countries were more affected by the crisis than others. The author “posit that the source of
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