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THE ASIAN FINANCIAL CRISIS AND PHILIPPINE RESPONSES: LONG‐RUN CONSIDERATIONS
Author(s) -
ALBURO Florian A.
Publication year - 1999
Publication title -
the developing economies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.305
H-Index - 30
eISSN - 1746-1049
pISSN - 0012-1533
DOI - 10.1111/j.1746-1049.1999.tb00242.x
Subject(s) - financial crisis , citation , history , political science , economics , keynesian economics , law
ORE than a year after the outbreak of the Asian financial crisis, there still does not seem to be a consensus as to its proximate causes and therefore what measures ought to be attended to avert its recurrence. Despite the numerous papers (scholarly as well as popular), conferences, publications, and official meetings that have proliferated, there is no convergence on its explanation—its unpredicted occurrence, its severity, and its wide spread across Asia and the rest of the world. At one extreme is a school of thought that the crisis was caused by fundamental weaknesses in the economies of the affected countries manifested by macroeconomic imbalances, excessive borrowings, overvalued currencies, and poor investments, among others (Moreno, Pasadilla, and Remolona 1998; Glick 1998). At the other extreme is an argument that the crisis was triggered by speculators and their panic behavior of fleeing emerging markets in fear of losses (Moreno 1998; Montes 1998). Between these two extremes are various shades of explanation. There is the notion of lack of governance in both public and private transactions especially in terms of close relationships between financial institutions and regulators. There is the notion that corruption weakens the system of investment decision making in emerging markets. There is the notion that “Asian values” had dictated the manner of financial exchanges. There is the notion that the crisis is essentially a bubble crisis (Nomura 1999). While the truth may lie somewhere between these two extremes, these have different policy implications. If the crisis was caused by fundamental weaknesses of the economy, the crisis-hit countries should carry out reforms to improve the foundation for sustainable development. On the other hand, if the crisis was caused by the sudden loss of confidence among shortterm investors and speculators not directly related to country fundamentals, then the essential task is not really reforms nor would they be necessary. Restoring confidence where the basic fundamentals are “correct” may require other measures