South East Asian Crisis - 2585 Words

September 10, 2011 September 10, 2011 Report Report South East Asian Crisis South East Asian Crisis INTRODUCTION The South East Asian financial crisis was a period of financial crisis that gripped much of Asia beginning in July 1997, and raised fears of a worldwide economic meltdown due to financial contagion. The crisis started in Thailand with the financial collapse of the Thai Baht caused by the decision of the Thai government to float the Baht, cutting its peg to the USD, after exhaustive efforts to support it in the face of a severe financial overextension that was in part real estate driven. At the time, Thailand had acquired a burden of foreign debt that made the country effectively bankrupt even before the collapse†¦show more content†¦Western importers sought cheaper manufacturers and found them, indeed, in China whose currency was depreciated relative to the dollar. Lessons for the developing countries from the Asian crisis: 1. Need for great caution about Financial liberalization and Globalization One of the most important lessons from the Asian crisis is that it is prudent and necessary for developing countries to have measures that reduce its exposure to the risks of globalization and thus place limits on its degree of financial liberalizations. In a globalized world, developing countries often face tremendous pressures coming from developed countries, international agencies, transnational and national companies to completely open up their economies. It is proven that liberalization can and has played a positive role development, however; the Asian crisis has shown up that in some circumstances, liberalization can play havoc, especially on small and dependent economies. This is more so prominent in the field of financial liberalization, where lifting of controls over capital flows can lead to such extreme results as a country accumulating a mountain of foreign debts within a few years, the sudden sharp depreciation of its currency, and a sudden rush of foreign owned and loc al owned funds out of the country in a few months. So, * Developing countries should exercise caution whileShow MoreRelatedImpact Of The Asian Financial Crisis Of 1997 On The Region s Development1704 Words   |  7 PagesExamine the impact of the Asian Financial Crisis of 1997 on the region’s development â€Å"Since World war II, development has been the most important term used to describe economic, social and political changes in what have come to be known as Third world countries† (Zhang, 2003). The Asian financial crisis of 1997 had a major impact on the regions development as it was the end of the East Asian economic miracle, a time that showed staggering economic growth throughout the Asia Pacific. HoweverRead MoreEssay east asian crisis1420 Words   |  6 Pages East Asian financial crisis are an evidence of fact that economies are prone to fianacial pressures in spite of a stable sustainable growth rate. The East Asian economic crisis is the most important economic event in the region of the past few decades. That much is agreed. Beyond this, there is yet no unanimity about its root causes nor about the solutions. The differences of views are being debated in academic and policy circles and reflected in the media. One thing though is certain: the earlierRead MoreImpact of the Economic Global Crisis: Current Situation and Prospects in the Philippines1677 Words   |  7 PagesImpact of the Economic Global Crisis: Current Situation and Prospects in the Philippines Asia in general was not affected by the current global financial crisis (1). The source of the crisis did not come from the developing countries as seen in the 1990s during the Asian crisis. In 2008 - 2009, the developed world initiated the global financial crisis with the sub prime lending implosion; thus, affected the rest of the world. The Philippines in particular did not fall into a recession since theRead MoreThe Pattern And Content Of East Asian Economic Integration783 Words   |  4 Pages4.1.1. The Pattern and Content of East Asian Economic Integration The most representative regional economic organization in East Asia is ASEAN, which was established in Bangkok and formed by five founding members, Indonesia, Malaysia, Philippines, Singapore, and Thailand. Brunei, Laos, Myanmar, Vietnam and Cambodia also joined successively to form the ten countries of ASEAN. ASEAN is abbreviated by Association of Southeast Asian Nations, which was built to contain the Communist forces with the purposeRead MoreThe Crisis And The Prospects For Ifis811 Words   |  4 PagesKorea’s â€Å"IMF† Crisis and the Prospects for IFIs In 1997, the Thai baht came under speculative attack from international investors and the Thai government was eventually unable to support its currency peg. Due to the interconnected nature of the global economy, contagion occurred and the problems affecting Thailand spread to countries such as Malaysia, Indonesia, the Philippines, and South Korea. This event came to be known as the Asian Financial Crisis in the West. However, in South Korea it is knownRead MoreEast Asia is a diverse region housing some of the largest nations in the world as well as some of1300 Words   |  6 PagesEast Asia is a diverse region housing some of the largest nations in the world as well as some of the smallest. Remarkably, over the past 20 years, the region of East Asia has experienced overwhelming success and growth rates. East Asia currently ranks as one of the top regions in the world in terms of economic success and growth. According to Thomas Leipziger, (Leipziger, 3) The East Asian countries have a record of maintaining political and economic stability and of pursuing long-term economicRead MoreThe Asian Financial Crisis and Thailand: Catalyst for Change...or More of The Same? 1647 Words   |  7 PagesEurope almost a century, the East Asian tigers (Hong Kong, Singapore, South Korea, and Taiwan) and the newly industrializing economies (Indonesia, Malaysia, and Thailand) accomplished in a matter of decades, which led many to believe in an East Asian miracle. However, in 1997 Thailand became the first country swept into an economic crisis that spread throughout the region within months. Why did Thailand unexpectedly fall into a rapid economic crisis and how has the crisis shaped the current politicalRead MoreAnnotated Bibliography On Hierarchical Order Within South East Asia Essay1407 Words   |  6 PagesHierarchical order in South East Asia aims to explain the surprising peace and mutual co-operation which grew out of South East Asia followi ng the post-Cold-War period. Her main argument is that it is the South East Asian states themselves which created this peace and co-operation through two broad ‘pathways’: Omni-enmeshment on a regional and inter-state level and the creation of a ‘complex balance of influence.’ My main criticism with her argument is that the current order in South East Asia has yet toRead MoreGlobalization Is Not a Substitute for Development1122 Words   |  5 Pageslack of confidence in the IMF and its policies which is demonstrated by the settlement of liabilities ahead of time by Brazil and Argentina (Dieter, 2006). More perplexing yet is the role liberalization policies played in the Asian crisis of 1997. East Asian countries like South Korea and Taiwan had enjoyed a high economic growth for thirty years and had done it by encouraging policies now frowned upon by the IMF. However, in the early 1990s these countries were forced by Western powers to rapidly liberalizeRead More Asian Crisis Essay examples746 Words   |  3 Pages The financial crisis that erupted in Asia in mid-1997 has led to sharp declines in the currencies, stock markets, and other asset prices of a number of Asian countries. It is hard to understand what these declines will actually do to the world market. This decline is expected to halve the rate of world growth in 1998 from the four percent that was projected pre-crisis to an estimated outcome of about 2 percent. The countries that are included in the East Asian crisis, known as quot;Tigerquot;