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41. The Global Economic Crisis and Its Implications for Asian Economic Cooperation

Author:
Michael G. Plummer
Publication Date:
10-2009
Content Type:
Policy Brief
Institution:
East-West Center
Abstract:
The economic crisis of 2008–09 is the second major crisis in just over a decade that Asia has endured. Unlike the Asian crisis of 1997–98, however, the current crisis originated mainly in the West. Asia's excessive reliance on net exports as the principal driver of economic growth since the 1997–98 crisis rendered it especially vulnerable to external shocks, and most Asian countries have paid dearly. The more open the economy, the more vulnerable it is to such shocks. The newly industrialized Asian economies (Singapore, Hong Kong, South Korea, and Taiwan), which are among the most open and dynamic in the world, are expected to contract by about 6 percent in 2009.
Topic:
Emerging Markets, International Trade and Finance, Regional Cooperation, Global Recession, and Financial Crisis
Political Geography:
Taiwan, Asia, South Korea, Singapore, and Hong Kong

42. Russia and the Global Meltdown: Domestic and Foreign Policy Responses to the International Financial Crisis

Author:
Robert Jellinek
Publication Date:
03-2009
Content Type:
Working Paper
Institution:
Carnegie Endowment for International Peace
Abstract:
This paper has its origins in the observation that government responses to the global financial crisis are as much political phenomena as they are economic. The current global financial crisis, among its many consequences, has on a very high level shaken up the world political order. And while the crisis is international in origin—its roots lie in the breadth and the degree of the dispersal of risk associated with mortgagebacked securities, as well as the growing imbalance in international capital flows—its resolution is necessarily being carried out first and foremost on a domestic level. This is not least of all because, in the decade since the Asian financial crises, states have begun to play a dramatically increased role in international finance in relation to both multilateral financial institutions such as the IMF and traditional private actors. In an age where global economic ties are integral to domestic economies and where states themselves are becoming some of the biggest players in international capital markets, a state's global financial standing will more than ever determine its political clout on the world stage. With states acting as market makers, lenders of last resort, and regulators of last resort, the key to understanding the future of individual states in the global economic order can be found only by analyzing states' domestic and foreign policy decisions within the context of the specific constraints facing those states at home and abroad.
Topic:
Economics, Emerging Markets, Human Rights, International Trade and Finance, and Financial Crisis
Political Geography:
Russia and Asia

43. The Asian Financial Crisis, Uphill Flow of Capital, and Global Imbalances: Evidence from A Micro Study

Author:
Brahima Coulibaly and Jonathan Millar
Publication Date:
08-2008
Content Type:
Working Paper
Institution:
Board of Governors of the Federal Reserve System
Abstract:
This study assesses the role of the Asian Önancial crisis of the late 1990s in the emergence and persistence of the large current account surpluses across non-China emerging Asia, which have been a signiÖcant counterpart to the U.S. current account deÖcit. Using panel data encompassing nearly 3,750 Örms, we trace the current account surpluses to a marked and broad-based decline in corporate expenditures on Öxed investment in the aftermath of the crisis that cuts across a wide spectrum of countries, industries, and Örms. The lower corporate spending in turn depressed aggregate investment rates, widened the saving-investment gap, and allowed the region to turn into a net exporter of capital. We then consider the factors behind this reduction in postcrisis corporate investment. While weaker Örm-level fundamentals in the postcrisis period seem to explain part of the drop in investment rates, ongoing re-structuring owing to large debts accumulated and excess investment undertaken in the run-up to the crisis has been the main source of restraint postcrisis corporate investment. The results suggest that even after a decade, the e§ect of the Önancial crisis is still a§ecting corporate investment decisions in emerging Asia, and that as the restructuring completes its course, investment rates will likely rise to contribute to a gradual reduction in the regionís current account surpluses.
Topic:
Emerging Markets, Financial Crisis, Economic Inequality, and Investment
Political Geography:
Asia

44. Replacing Potemkin Capitalism: Russia's Need for a Free-Market Financial System

Author:
Kurt Schuler and George A. Selgin
Publication Date:
06-1999
Content Type:
Working Paper
Institution:
The Cato Institute
Abstract:
On August 17, 1998, Russia devalued the ruble and stopped payment on its government debt, creating a financial crisis that continues today. Some observers have blamed the financial crisis, and the poor performance of the Russian economy generally, on government policies that they claim are rigidly laissez faire. However, a closer look at the Russian financial system reveals that it remains fundamentally socialist, though it has superficial capitalist features.
Topic:
Debt, Economics, Government, and Financial Crisis
Political Geography:
Russia, Europe, and Asia