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Economic Crises and the Breakdown of Authoritarian Regimes

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  • 17 b/w illus. 31 tables
  • Page extent: 346 pages
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  • Weight: 0.48 kg

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 (ISBN-13: 9780521744386)

Economic Crises and the Breakdown of Authoritarian Regimes
Cambridge University Press
9780521767934 - Economic Crises and the Breakdown of Authoritarian Regimes - Indonesia and Malaysia in Comparative Perspective - By THOMAS B. PEPINSKY
Frontmatter/Prelims

Economic Crises and the Breakdown of Authoritarian Regimes: Indonesia and Malaysia in Comparative Perspective

Why do some authoritarian regimes topple during financial crises, whereas others steer through financial crises relatively unscathed? In this book, Thomas B. Pepinsky uses the experiences of Indonesia and Malaysia and the analytical tools of open economy macroeconomics to answer this question. Focusing on the economic interests of authoritarian regimes’ supporters, Pepinsky shows that differences in cross-border asset specificity produce dramatically different outcomes in regimes facing financial crises. When supporters are divided by the mobility of their capital assets, as in Indonesia, they desire mutually incompatible adjustment policies, yielding incoherent adjustment policy followed by regime collapse. When coalitions are not divided by the mobility of their assets, as in Malaysia, regimes adopt radical adjustment measures that enable them to survive financial crises. Combining rich qualitative evidence from Southeast Asia with cross-national time-series data and comparative case studies of Latin American autocracies, Pepinsky reveals the power of coalitions and capital mobility to explain how financial crises produce regime change.

Thomas B. Pepinsky is Assistant Professor of Government and a faculty affiliate of the Southeast Asia Program at Cornell University. His research appears in World Politics, European Journal of International Relations, Journal of East Asian Studies, Journal of Democracy, Studies in Comparative International Development, and several edited volumes. He received his Ph.D. from Yale University and taught at the University of Colorado at Boulder from 2007 to 2008. He held a Fulbright-Hays Doctoral Dissertation Research Abroad Fellowship in Indonesia and Malaysia from 2004 to 2005.


Economic Crises and the Breakdown of Authoritarian Regimes

Indonesia and Malaysia in Comparative Perspective

THOMAS B. PEPINSKY

Cornell University


CAMBRIDGE UNIVERSITY PRESS
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Information on this title: www.cambridge.org/9780521744386

© Thomas B. Pepinsky 2009

This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press.

First published 2009

Printed in the United States of America

A catalog record for this publication is available from the British Library.

Library of Congress Cataloging in Publication DataPepinsky, Thomas B., 1979–Economic crises and the breakdown of authoritarian regimes : Indonesia and Malaysia in comparative perspective / Thomas B. Pepinsky.p. cm.Includes bibliographical references and index.ISBN 978-0-521-76793-4 (hardback) – ISBN 978-0-521-74438-6 (pbk.)1. Indonesia – Politics and government – 20th century. 2. Authoritarianism – Indonesia. 3. Indonesia – Economic policy – 20th century. 4. Indonesia – Economic conditions – 20th century. 5. Malaysia – Politics and government – 20th century. 6. Authoritarianism – Malaysia. 7. Malaysia – Economic policy – 20th century. 8. Malaysia – Economic conditions – 20th century. I. Title.JQ776.P42 2009959.505′4 – dc22 2008055952

ISBN 978-0-521-76793-4 hardback
ISBN 978-0-521-74438-6 paperback

Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party Internet Web sites referred to in this publication and does not guarantee that any content on such Web sites is, or will remain, accurate or appropriate. Information regarding prices, travel timetables, and other factual information given in this work are correct at the time of first printing, but Cambridge University Press does not guarantee the accuracy of such information thereafter.


If the fields are ruined, then the city too will be short of sustenance.
If there are no subjects, then clearly there will be other islands that come to take us by surprise.
Therefore let them be cared for so that both will be stable; this is the benefit of my words to you.
– Mpu Prapañca, the Nāgarakṛtāgama

Many are the places and lands which have been destroyed by the depredations of the young scions of the ruling house, whose rapacious hands can no longer be tolerated by the people.

– Abdullah bin Abdul Kadir Munsyi, Hikayat Abdullah


Contents

List of Tables
ix
List of Figures
xi
Acknowledgments
xiii
Terms and Abbreviations
xv
1       Crises, Adjustment, and Transitions
1
Two Countries, Two Trajectories
1
Understanding Adjustment and Authoritarian Breakdowns
4
Data and Methods
9
The Plan of the Book
11
2       Coalitional Sources of Adjustment and Regime Survival
14
The Reform Game
16
Financial Crises and the Problem of Adjustment
20
The Global Scope of the Argument
32
Conclusion
35
Appendix
36
3       Authoritarian Support Coalitions: Comparing Indonesia and Malaysia
40
The New Order
42
Mahathir’s Malaysia
61
Discussion: Alternative Models of Authoritarian Politics
77
4       Adjustment Policy in Indonesia, June 1997–May 1998
82
Crisis Onset
85
Fiscal and Trade Policy
87
Monetary Policy
91
Finance and Corporate Policy
94
Exchange Rate and Capital Account Policy
105
Alternative Explanations?
115
5       Adjustment Policy in Malaysia, June 1997–December 1999
119
Crisis Onset
121
Fiscal and Trade Policy
124
Monetary Policy
130
Finance and Corporate Policy
133
Exchange Rate and Capital Account Policy
143
Alternative Explanations?
152
6       Authoritarian Breakdown in Indonesia
155
Ex Ante Unlikely, Ex Post Inevitable
156
Late New Order Politics
166
Riots, Exit, and Endgame
180
Conclusion
185
Postscript: From Authoritarian Breakdown to Democratization
187
7       Authoritarian Stability in Malaysia
192
“The Tragedy That Didn’t Happen”
193
Mahathir’s Malaysia in 1997
198
International Retreat and Domestic Offensive
210
Conclusion
222
8       Cross-National Perspectives
225
Capital Account Restrictions and Regime Survival
226
Debt Crises in the Southern Cone
238
Mexico: 1980s and 1990s
250
Conclusion: Cross-National Perspectives on Crises, Coalitions, and Change
260
9       Conclusions
264
Implications for Social Science
266
Normative Implications
274
References
279
Index
313

List of Tables

2.1     Cross-Border Asset Mobility: Adjustment Policy Preferences
27
2.2     Twin Crises, 1975–1997
33
2.3     Twin Crises and Authoritarian Breakdowns
34
3.1     Ten Largest Military-Linked Business Groups
48
3.2     Twenty-five Leading Konglomerat in 1997
55
3.3     Party-Linked Malay Business Leaders in Malaysia
71
4.1     Economic Adjustment in Indonesia: Policies, Losers, Implementation
84
4.2     Selected Indonesian Debt Indicators
86
4.3     Wholesale Price Inflation, Forty-four Largest Cities, December 1997–May 1998
90
4.4     Some Beneficiaries of Liquidity Support in Excess of 500 Percent Equity
97
4.5     Exports by Commodity Type, January–April 1997 and January–April 1998
109
4.6     “Love Indonesia Campaign” Donations
111
5.1     Adjustment Policy in Malaysia: Policies, Losers, Implementation
120
5.2     Key Policy Measures in Malaysia
121
5.3     Selected Malaysian Debt Indicators
122
5.4     Deferred Investment Projects in Malaysia, by Month
125
5.5     Malaysian Exports by Commodity Type, 1997 and 1998
146
5.6     Quarterly Investment Flows, 1997–1998
147
5.7     Regulations on Capital Account Transactions, September 1, 1998
148
6.1     Families of Explanations for the New Order’s Breakdown
157
6.2     Key Appointments to the Seventh Development Cabinet
178
7.1     Families of Explanations for Malaysia’s Stability
194
7.2     Malaysia’s 1999 General Election Results
220
7.3     Malaysia’s Parliamentary Election Results, by Component Party and State
221
8.1     Authoritarian Breakdowns: Variables, Definitions, and Sources
229
8.2     Authoritarian Breakdowns: Descriptive Statistics
229
8.3     Determinants of Autocratic Breakdowns during Twin Crises
230
8.4     Descriptive Statistics for the Panel Analysis of Authoritarian Breakdowns
234
8.5     Grouped Duration Results of the Panel Analysis
235
8.6     Coalitions, Adjustment, and Breakdown in the Latin American Debt Crisis
238
9.1     Probability of Autocratic Breakdown, by Crisis and Coalition Type
273



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