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Miracle to Meltdown in Asia
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Miracle to Meltdown in Asia

Business, Government and Society

Norman Flynn
Oxford UP, 1999
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Editorial Rating

8

Qualities

  • Analytical
  • Overview
  • Background

Recommendation

Norman Flynn summarizes many arguments and viewpoints about Asia’s 1997-1998 financial crisis. Flynn, who thoroughly documents his information with examples, charts and graphs, lays out the key pre-crisis weaknesses in the Asian economies. Then, he examines ways that "expressive" personal relationships, especially among the élites, define much of Asia’s economic and political activity. He examines shifts in society, as globalization and supranational institutions (read IMF) move power from governments and élites to the markets. Flynn leans away from drawing conclusions - he prefers to present various points of view - but when he does state a conclusive opinion, he is persuasive. The book is packed with useful information, despite being short, very dense, and rather academic. getAbstract recommends this excellent book to anyone with a serious interest in investing or doing business in Asia.

Summary

Lessons from the Asian Crisis

In July 1997, the collapse of the Thai baht set off a financial meltdown throughout East Asia, hitting the currencies of Taiwan, Korea, and Singapore. By year’s end, the Thai stock market lost 90% of its value, Indonesia lost 85%, Korea lost 80%, and Singapore lost 60%. How did this happen so fast? Until the crisis, the region was an investment-magnet viewed as an economic miracle. Sure, some economies had problems: Growth was slow in Japan, balance sheets were weak in Korea, and "crony capitalism" was rampant in Indonesia, but even strong economies, such as Singapore’s, were devastated.

Explanations for the early success of the Asian economies include economic fundamentals (controlled inflation, competitive exchange rates); the international system and geopolitics; local governance, and culture. Despite regional variances, cultural standards include hard work, obedience, and emphasis on the good of the extended family or nation. After the onset of the crisis, some observers blamed the free market; some blamed heavy-handed market control. Others still argue that evil foreigners conspired to destroy entire nations.

Your favorite explanation...

About the Author

Norman Flynn is a Research Fellow at the London School of Economics. Formerly, he was Professor of Public Management at the City University of Hong Kong. He has consulting experience in China, Hong Kong and many countries in Europe.

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