Geography 484

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• Geography 484
• Southeast Asia
• Jim Glassman
• Lecture 11a
• November 12, 2008

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Discussion question

• What are the major causes of the 1997-98 Asian
  economic crisis, according to your understanding?

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Different theoretical approaches to the Asian
economic crisis

• Neo-liberal approaches
• Neo-Weberian approaches
• Marxist approaches
• Neo-Marxist (geographical-historical materialist)
  approaches

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Neo-liberal approaches

• Emphasis on subversion of market forces
• Nepotism, corruption, lack of transparency as
  causes of problem
• Further liberalization as solution
• Problem why didnt corruption stall growth
  before?

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Neo-Weberian approaches

• Emphasis on subversion of state by international
  capital
• Increased FDI and portfolio investment, loans
• Pressures on state to loosen grip
• Liberalization as cause of problem
• Large flows of capital destabilizing
• Changing rules of game (by West)
• Reassertion of role for state as solution
• Deflationary policies of IMF hurt, not help
• Need for Tobin tax?
• Problem why were states suddenly unable to
  control capital?

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Marxist approaches

• Emphasis on class and class-relevant struggles
• Crises in general reflect class character of
  capitalism
• Declining profits profit squeeze vs.
  overinvestment
• Crisis tendencies of capitalism are deepest
  causes of problem
• Class struggle and profit squeeze
• Overinvestment, declining profits
• Revolutionary struggle as solution to problem
• Problem did national class struggles cause
  downturn?

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Neo-Marxist approaches

• Emphasis on changing geographical-historical
  conditions
• End of Cold War
• Slow-down of Japan
• Rise of China as competitor
• Social struggles in this context as causes of
  crisis
• Labor struggles and competition from China
• Political struggles in post-Cold War state
• Regionalized/internationalized social struggles
  as solution
• Problem Were all countries affected in this same
  way?

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Causes of falling profit rates

• Economic slowdown in Japan
• Increasing competition from China, Mexico
• Rising wages
• Export slowdown of 1996

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Outbreak of crisis in Thailand

• Rising wages, overcapacity, declining profits
• Financial liberalization of 1990s
• Portfolio inflows and real estate inflows
• Boom in land speculation
• Falling exports in 1996
• Collapse of property and stock markets
• Currency traders vs. Bank of Thailand
• Baht devalued, loses half of its value
• IMF called in for 17 billion stabilization loan
• IMF policies throw gasoline on flames?

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The spread of the crisis

• Contagion effects spread crisis throughout region
• Investor panic and crises in stock markets and
  currency markets throughout region
• IMF 25 billion stabilization package in
  Indonesia
• Countries less affected by crisis
• The Philippines mini-crisis
• Malaysia affected but refused to go to IMF
• Singapore relatively unaffected
• Transition economies affected but not heavily