The financial crisis is a lesson for Asian countries<\/p>\n
The current financial crisis affecting most of Asia would not
\nhave come about if there was some kind of mechanism to regulate
\nexcessive foreign capital flows, argues Sri Lankan economist
\nGamani Corea in this Inter Press Service commentary.<\/p>\n
COLOMBO: The explanation frequently cited in the international
\nmedia for the Asian financial crisis poor economic "fundamentals"
\nsimply is not convincing.<\/p>\n
It is implausible that the Asian tigers could have sustained
\nrates of expansion so high and for so long, nearly transforming
\ntheir economies, while all the time the so called "fundamentals"
\nwere not right. Certainly there were weaknesses and excesses, but
\nthese were not so common as to cause a re-enactment of this
\ncrisis in country after country.<\/p>\n
If anything was wrong, it was the fact that the nations
\nexposed themselves excessively to footloose speculative movements
\nof capital, and to short term capital flows, with no regulations
\nor control mechanisms set up in advance. This was partly because
\nof the prevailing philosophy of openness to all kinds of
\nfinancial flows.<\/p>\n
For many years this produced positive results and people
\napplauded. But the immediate causes of the current crisis has not
\nbeen an over investment in real estate, or the corruption and
\ncrony capitalism, that we read about which are to be found in
\nall the economies in the world, not only in East Asia.<\/p>\n
The central fact is that Asia became very dependent on foreign
\ninvestors, whose concern was not whether a country had its
\nfundamentals in order, but what other speculators were thinking.
\nThis created a very volatile situation and ultimately a chain
\nreaction of crises.<\/p>\n
One of the major lessons to be drawn from the present
\nsituation is that there is an appalling absence of any kind of
\nmechanism to moderate and regulate these developments once they
\nappear to get out of hand.<\/p>\n
There is no ex ante preventive system internationally to
\nmonitor the situation, anticipate possible weaknesses and take
\naction. Instead there is an ad hoc and ex post response.<\/p>\n
Unfortunately any kind of preventive regulations by
\ngovernments, or even by international organizations, is
\nconsidered contrary to the prevailing liberalization philosophy.
\nThe result is a very large exposed and vulnerable economic area.<\/p>\n
If there is to be an international legacy from this crisis it
\nshould be the establishment of mechanisms to monitor and react in
\ntime. This should top the list of the agenda for the evolution of
\nthe international financial system.<\/p>\n
There are other issues. One of the casualties of the great
\neuphoria about globalization and liberalization has been the
\ndebate on international development cooperation: there have been
\nno serious negotiations on a North-South basis for the last 15
\nyears.<\/p>\n
All the changes which the South has been pushing tariff
\npreferences for developing countries, concessional aid targets,
\ncommodity stabilization arrangements, codes for the transfer of
\ntechnology and restrictive business practices have been put
\naside. As a result, the whole burden of action, and virtually the
\nwhole focus of attention, is now being placed on the internal
\ndomestic policies of developing countries.<\/p>\n
Developing countries are told that now there is an express
\ntrain called "globalization and liberalization". If they get
\naboard, they will be carried on a great distance but, if they
\nfail to do so, they will be left behind and marginalized.<\/p>\n
The secret of boarding is in their own policies: if they
\nliberalize, deregulate, privatize, balance their budgets, and so
\non they would be beneficiaries of the process.<\/p>\n
The North South dialogue thus has been replaced by a sort of
\n"do it yourself kit" for developing countries who are told that
\nthey don't need big discussions and conferences on international
\ncooperation, aid flows, the terms of trade and so on.<\/p>\n
Nevertheless, it remains as true as ever that developing
\ncountries need a global economic environment that is supportive
\nof the development process and stability in the world economy.
\nThis will not come about through the country by country
\nimplementation of internal structural adjustment policies
\nalone.<\/p>\n
There are major issues that can only be addressed through
\nmultilateral actions, and a revival of discussions and
\nnegotiations on these is clearly needed. One of these is the
\ninternational financial system and the way it should evolve. This
\nmust be the subject of inter governmental actions rather than of
\nnational policies alone.<\/p>\n
There also are other issues: trade, capital needs, debt
\nrelief, regionalism and global environmental concerns that
\ninvolve an inter-dependent world and effect both developing and
\ndeveloped countries.<\/p>\n
The present situation presents developing countries with a
\nchallenge: they must reshape their platform to reflect the
\nchanging world scene. They need also to harness their numerical
\nstrength and cohesiveness in multilateral fora.<\/p>\n
Otherwise they will lack an agenda of their own, and their
\nresponses to world trends and events, at best, will be reactive.<\/p>\n
-- IPS<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/the-financial-crisis-is-a-lesson-for-asian-countries-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }