POL215Y1 Chapter Notes -Asian Values, International Financial Institutions, Washington Consensus
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Randall Peerenboom, China Modernizes: Threat to the West or
Model for the Rest?
•After the financial collapse in 1997 with Asian countries’ economies
regressing, critics lashed back by stating that the EAM was definitely
not here to stay.
•The countries that followed the EAM were: Taiwan, Hong Kong, and
oThe other countries such as Indonesia, Malaysia, Thailand, and
the Philippines who did not follow the EAM ended up suffering as
•China’s recovery from the crisis was done by their rejection of the
International Financial Institution’s advice in how to handle the crisis.
oHong Kong continued t prop up currency with injection of billions
oAnother example is South Korea opening its capital markets to
foreign investors, improved stock markets, and privatized state
•IMF blunders included: tight fiscal policies based on crisis intervention
•The EAM was successful because of the values that Asian businesses
oFor example: Family businesses and nature of how they help
cushion the shock by providing a social welfare network made it
•Combination of rapid economic growth with declining poverty/income
inequality, companies that emphasize the values of workers and taking
on a long term view of MAKING PROFIT(essentially rapid
modernization to preserve social stability and civil harmony)
BIG IDEA: IDEA OF INTERVENTIONAIST DEVELOPMENT STATE?
•Other factors include:
oUS support in Japan
oFavorable economic conditions
oImpact of Confucianism
Washington Consensus (John Willianmson)
•The Asian countries have followed the ideals of fiscal discipline,
redirection of public spending to education, health, infrastructure,
taxes to lower rates and increasing the base, and to encourage foreign
investment/promoting exports, and securing property rights.
oCompetitive EXCHANVE RATES