Date: Tue, 3 Aug 1999 22:47:41 -0500 (CDT)
From: email@example.com (Rich Winkel)
Subject: ECONOMY-ASIA: Still Looking for Answers in Region's Meltdown
/** ips.english: 444.0 **/
** Topic: ECONOMY-ASIA: Still Looking for Answers in Region's Meltdown **
** Written 9:04 PM Aug 2, 1999 by newsdesk in cdp:ips.english **
Copyright 1999 InterPress Service, all rights reserved.
Worldwide distribution via the APC networks.
Still Looking for Answers in Region's Meltdown
By Satya Sivaraman, IPS
2 August 1999
BANGKOK, Aug 2 (IPS) - Two years after the Asian economic crisis
shook the region and sparked off turmoil in global financial
markets, the debate still rages on the exact reasons for the
crisis and what steps should be taken to prevent a recurrence.
Economists, sociologists and political leaders gathered at one
such soul-searching conference in Bangkok identified land reform,
human resource development and control on global capital flows as
key lessons from the crisis for the future.
"The challenge is to draw the right lessons from mistakes of
the past, so the terrible pain of this crisis can be the starting
point for needed change," said Anand Panyarachun, former Thai
prime minister at the inaugural session of the conference last
Titled 'Back to Basics', the conference organised by the
Thailand-based Nation Multimedia group, sought to take another
look at the fundamental issues of land, labour and capital in the
context of the Asian crisis.
However, Anand also warned that it is not a simple matter to
determine exactly what change is needed and how it is to be
"Defensiveness, self-interest, pet theories, disputed or
incomplete data and manoeuvering for future economic advantage all
add to the smoke of intellectual battle that can obscure the best
way forward," he said.
As predicted by the former Thai prime minister, the two-day
conference saw a majority of speakers talk about the need for a
fundamental change in policies, but there were some who felt no
radical changes were required.
"The crisis that beset the region over the past two years
notwithstanding, East Asia remains the best model for development
the world has probably ever seen. Going forward, its countries
must build on the strengths of the past that led to the miracle,
but at the same time address those weaknesses," said Joseph
Stiglitz, Chief Economist at the World Bank.
Among the achievements of East Asian economies cited by
Stiglitz were decades of high growth and dramatic reductions in
Not surprisingly among those agreeing with Stiglitz on this
score were Thai Prime Minister Chuan Leekpai and his finance
minister Tarrin Nimmanahaeminda, both of whom claimed that
Thailand was already on the road to recovery without any major
overhaul of policies.
"We do not need to go back to the basics but move forward with
some adjustments," said Chuan, whose remarks were seemingly at
loggerheads with the very purpose of the conference.
Observers there pointed out that for both multilateral funding
agencies like the World Bank and governments in the region, all
talk of 'fundamental change' sounds suspiciously like an attack on
their past records.
The World Bank and the International Monetary Fund, along with
the region's political leaders, have been criticised widely for
blindly leading the region into the economic crisis which has had
devastating social consequences.
The Thai official view on economic recovery was countered by
former Thai finance minister and well-known economist Virabhongsa
Ramangkura, who said that any recovery was likely to be long and
painful because nobody had a clue to solving the countries massive
build-up of foreign debt. .
The currency crisis he pointed out had become a crisis of the
real sector, with nearly 50 percent of all industrial capacity in
Thailand lying idle due to recession.
Among those advocating long-term changes at the conference was
James Putzel, a sociologist from the London School of Economics
who argued for state-sponsored land reform in South-east Asia
similar to that undertaken in Japan and South Korea in the
immediate post-Second World War period.
Pointing out that the overall health of most Asian economies
will continue to be determined by their rural sectors, Putzel also
pointed out that "development programmes that encourage and
facilitate the self-organisation and education of people in the
rural areas remain crucially important".
According to Kamal Malhotra of the Bangkok-based NGO Focus on
Global South, a more immediate threat to the Asian rural sector
that needed to be warded off was the liberalisation of
agricultural trade forced upon Asian economies by western lobbies
at the World Trade Organisation negotiations.
A premature opening-up, he said, would devastate small farmers
in Asia and only benefit the highly subsidised farm sector in
regions like Europe and North America.
Human resource development was a key area identified by experts
for long-term improvement. Apart from raising overall rates of
literacy in countries like Thailand, it was recognised that the
future of economies lay in promoting greater information and
technology skills among the workforce.
On the capital front, several prominent speakers advocated the
use of some form of controls to prevent speculative movements of
short-term funds from ravaging economies of developing countries.
Identifying the Asian crisis as stemming from overspending by
the private sector and facilitated by bank misbehaviour, Clark
Anderson of the US investment fund Goldman, Sachs and Co warned
Thailand against "blind application of free-market thinking".
"A final lesson from the mess of the last couple of years is
that the entire premise of many financial-market players is
fundamentally flawed," he said pointing out that there was no
such thing as a 'global capitalist system'.
What existed, he says, was only a series of national capitalist
systems, each with their own unique character.
Among the suggestions made to counter short-term capital flows
was the setting up of an Asian Monetary Fund to bail out regional
economies well before they entered crisis stage.
A similar proposal made by the Japanese government two years
ago was shot down by the US government and the IMF, which critics
say feared loss of influence in the region.
On the long-term political front, Takashi Shiraishi of the
Centre for Southeast Asian Studies in Kyoto University, says the
ongoing crisis marked a historical turning point.
This is because the region was now faced with the choice of
following divergent interests of Japanese and US governments in
the region, Shiraishi says.
"While Japan drove Asian economic dynamism with its direct
investment, government aid and market-opening measures, the US
rode it with its short-term investment," he said.
Now, Shiraishi points out, each country in the region had to
negotiate with these two conflicting interests which play a key
role in shaping the regional structure, and to chart its own
[c] 1999, InterPress Third World News Agency (IPS)
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