2 results
Discussion
- from Part One - General Accounts
-
- By Sule Ozler
- Edited by Pierre-Richard Agénor, The World Bank, Marcus Miller, University of Warwick, David Vines, University of Oxford, Axel Weber, Johann Wolfgang Goethe-Universität Frankfurt
-
- Book:
- The Asian Financial Crisis
- Published online:
- 26 February 2010
- Print publication:
- 04 November 1999, pp 64-66
-
- Chapter
- Export citation
-
Summary
I congratulate the authors of chapter 1 on their taxonomy of the Asian crises. They make a very complete coverage of the nature and sources of vulnerabilities in the East Asian countries that have experienced the most recent financial crisis. In most discussions of international financial crises – the present as well as the historical – a central debate concerns whether the crises are due to domestic or external factors. Conclusions often lean in the direction of a crisis being generated as a consequence of a combination of domestic as well external factors, but opinions differ on their relative importance. In their chapter 1, the authors deny that they are undertaking any discussion of international aspects of the crisis. Instead, the chapter is an attempt to identify the nature and the sources of vulnerabilities in the East Asian economies.
Having narrowed the focus to an analysis of domestic factors leaves the task of identifying which domestic factors were behind the crisis. Historical experience and economic theory tell us that short-term macroeconomic policies, as much as structural microeconomic attributes, institutional setting and inevitably their interaction deserve attention. The chapter starts with the assertion that ‘the build-up of financial vulnerabilities in East Asia was associated with reinforcing dynamics between capital flows, macro policies and weak financial and corporate sector institutions.’ Put this way, I find very little to disagree with the authors' analysis, and find that they present a highly informative and valuable overview.
Comment by Sule Ozler
-
- By Sule Ozler
- Edited by Dean Baker, Economic Policy Institute, Washington DC, Gerald Epstein, University of Massachusetts, Amherst, Robert Pollin, University of Massachusetts, Amherst
-
- Book:
- Globalization and Progressive Economic Policy
- Published online:
- 04 August 2010
- Print publication:
- 05 November 1998, pp 192-194
-
- Chapter
- Export citation
-
Summary
The author's main contention is that financial globalization has not brought the benefits that were promised by the “current orthodoxy.” Taking this one step further, he argues that financial globalization has had growth-retarding effects. As a policy conclusion, the author suggests that money center countries levy a uniform tax to curb financial globalization at its source.
Reading this chapter led me to reflect upon several issues. First, the chapter draws attention to the context in which financial flows take place. I see a sharp break in the post-1973 period from the earlier 1948–73 period in many respects, including ideological, political, and economic ones. In the earlier period, Keynesian aggregate demand management was being implemented internationally as well as nationally; the capital flows provided by the U.S. government in the form of aid is a manifestation of this policy. Even though many developing countries were implementing import substitution policies, the funds were primarily used to purchase capital goods from the U.S. Such policies could of course benefit the U.S. to the extent that it kept its privileged position.
In contrast, the post-1973 period, following the first oil crisis, is a time of capitalist crisis in the core countries and the loss of U.S. hegemony. At this time, “monetarism” – effectively a new version of 19th century liberalism – appeared as a new dominant ideology in reaction to the crisis of declining profit rates.