In July 1997, the promise of the Asian economic miracle and the Pacific century devolved into economic chaos and the onset of what has become known as the Asian financial crisis. One by one, many of the regions great economic success stories suffered damage to their financial markets, their currencies, and economic well-being.This volume, the result of an April 1999 conference organized by the Chung-Hua Institution for Economic Research and the Brookings Institution, examines the sources and lessons of the Asian financial crisis. Experts from both sides of the Pacific have drawn valuable policy lessons from the failures and successes of four key economies in the region: Indonesia, South Korea, Thailand, and Taiwan. In examining Taiwans relative success in weathering the storm, this volume helps explain the widely varying degrees of performance of the regions affected economies. The concluding chapter focuses on general principles for the liberalization of financial markets and stabilization of macroeconomy in developing countries.This work provides much-needed new understanding and reasoned policy lessons to help the Asia-Pacific region meet its vast economic potential. It will be useful for academics and economic policymakers in governments, international organizations, universities, and research institutions, both in the region and beyond, as they assess and implement strategies for more stable regional and global economic development.
Book Description
Editorial Reviews
About the Author
Peter C.Y. Chow is professor of economics at the City College and Graduate Center of the City University of New York. He is the co-author of Trade: The Engine of Growth in East Asia (Oxford University Press, 1993). Bates Gill is senior fellow in Foreign Policy Studies and director of the Center for Northeast Asian Policy Studies at the Brookings Institution. He examined the troubled U.S.-China relationship in "Limited Engagement," a July 1999 article in Foreign Affairs. His forthcoming book examines the strategic relationship between the United States and China.
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3.0 out of 5 stars
Good, as far as it goes,
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This review is from: Weathering the Storm: Taiwan, Its Neighbors, and the Asian Financial Crisis (Paperback)
This book, and the conference organised by the Chung-Hua Institution for Economic Research on which it is based, asks a question which is fundamental to Asia's future: how did Taiwan ride out the 1997 financial storm when Thailand, Indonesia, and Malaysia were almost capsized by the wave?Several essays in the book note that small and mid-sized firms make up nine-tenths of Taiwan's economy, with equity financing being the norm rather than debt financing. This meant that there was far less opportunity for speculative funds to sweep into and out of the economy, and also meant that the business sector was much more stable than in some of Taiwan's neighbours. The capital sector was also strong, with a minimum of exchange rate controls and most financial institutions in private rather than government hands. When the crash came, non-performing loans accounted for less than five per cent of credits, compared to 16 per cent in Malaysia and 19 per cent in Thailand. Taiwan's financial institutions had also been markedly more successful at mobilising private capital and channelling it into productive investments than its neighbours. At the macroeconomic level, Taiwan's performance had been solid, with growth at over five per cent and a current account surplus of about 4.5 per cent of GDP. Not spectacular, but the point is that Taiwan had been turning in good results for a substantial period, rather than looking like an overheated economy heading for a fall. In spite of Taiwan's sturdy foundations, the meltdown still had a punch. There was a 15 per cent currency depreciation in 1997-98 and a steep drop in the stock market. But this did not translate into an economic free-fall, mainly due to decisive action by the Central Bank. It stabilised the exchange rate with sales of foreign reserves and then, crucially, let the domestic currency float. In 1999, the Central Bank buttressed its success by promoting growth with low interest rates and new investments. Credibility was a key asset, with the Central Bank being widely seen as prudent and competent, run by technocrats rather than political cronies. In some ways, the retreat of government may have gone a little too far: several contributors to the book note that Taiwan might have fared even better if the Central Bank had had a wider range of monetary instruments to use. But the bottom line for Taiwan remains: a solid base and a swift response meant that the '97 storm was mostly distant thunder. Weathering the Storm sets its points with admirable clarity, but there are subjects which are not covered. The underlying issues of macroeconomic/currency policy are hardly touched, and there are comparisons (such as with South Korea) on which there is insufficient depth. Perhaps these issues were discussed in the conference, but they are not in the book.
3.0 out of 5 stars
An uneven collection of essays,
By A Customer
This review is from: Weathering the Storm: Taiwan, Its Neighbors, and the Asian Financial Crisis (Paperback)
As with many conference volumes, the quality of papers collected in this book varies. Some (Frank Flatters on Thailand, for example) are informative, some less so. None of the papers considers the financial crisis as a regional or systemic crisis -- instead the focus is on country by country analyses. Oddly enough, none of the papers on Taiwan deal with its decision in the fall of 1997 to devalue its currency, the New Taiwan dollar, which arguably intensified the crisis, at least with respect to Hong Kong and South Korea. One can find some interesting material in these essays, but one will have to look elsewhere for an in depth analysis of the Asian financial crisis, even with respect to Taiwan.
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