Southeast Asia and the Asian and Global Financial

Southeast Asia and the Asian and Global Financial Crises

Summary • While arguing that the impact from the 1997– 98 crisis which was far more impactful and worse than the 2008 crisis, the paper states that labour markets in the region continued to be dominated by informal, vulnerable and precarious employment. Labour protests emphasising such vulnerable markets have triggered vigorous national and regional debates on rules for labour contracting, minimum wage adjustments and social protection

Summary • The article examine the impact of the crises on the electronics and automotive industry, which have been major pillars of industrial exports from various ASEAN nations. • They argue that the Asian financial crisis actually strengthened exports following a fall in US dollar-based wages, while a severe contraction in external demand following the global financial crisis affected exports from these countries

Is it really over ? • The globe is still experiencing the aftermaths of the financial crisis in 2008. • Despite a lot of research on this even in hindsight, at times it becomes difficult to wrap one’s head around on how did this actually happen and how we could have prevented this ! • There’s still a gloomy atmosphere and open questions around bottoming of growth rates in developed economies.

Southeastern Asian markets and crisis • The paper briefly talks about how southeastern Asian markets dealt with the crisis in 1997 -1999. • It sheds some light around how these markets are interlinked and how a contagion spread across these markets. • Despite being so much harmonised, how these individual countries are unique and what worked for each of them in the crisis and what didn’t. • Idea behind the paper is to see if some sense can be made out of this combined research of so many individuals contributions to this interesting topic on crises.

Southeastern Asian markets dynamics • Various tax treaties, trade agreements have ensured these markets benefit from so called international trade within these southeast Asian waters in normal times. • However when the Asian crisis happened, it all started to fall into pieces. Sharp reverse of fortunes left the decades of government’s efforts on poverty alleviation undone. • Due to huge diversity in ethnicity and distribution of powers across the markets, different sections were impacted differently • Countries that were dependent more on agricultural income fared better as compared to international trade due to sharp decline in exports.

Southeastern Asian markets dynamics • Not just the market, but also politicians faced the heat of recession ! • The crises turned over political hegemony of various ruling parties through these emerging countries. With obviously new powers going to parties pushing on growth agendas and ethnic restructuring. Various research papers though criticize these small horizon viewed policies shaping the upcoming future of these developing nations • Governments promoting heavy industries such as steel and aircraft saw the heat of recession taking them back to school to offer fundamental solutions around basic infrastructure and agriculture.

Southeastern Asian markets dynamics • Another interesting perspective offered in the paper to judge the domestic crisis and the global crisis in 2008 is to judge the impact on the automotive and the electronic industries • Pre-domestic crisis, electronics was more of an exports oriented and automotive was a inward oriented industry within the southeastern asian markets • Post-domestic crisis, the automotive industry actually got a bit of global presence with exports in India and other nations.

Southeastern Asian markets dynamics • Key things to learn from the entire analysis is decoupling or segregation on two major factors • Financial and Real economy • Eastern and western economy (broadly around developed and developing economy) • Segregation on these factors will help economists devise strategies to cope up with the market crisis • Southeastern Asian markets crisis may not be the ideal situation to infer the above findings from, however, it is quite a rare situation where after effects of the two crisis, occurring within a decade, differ quite significantly due to policy stances taken by the economists.

Uniqueness of the situation • On account of the factors mentioned in the previous slide, this paper sheds light on quite an unique situation and may be a really good learning experience. • This paper intends to address cohesively this lightly researched but critical area where real dynamics of impact and responses can be carefully discerned. • The multidisciplinary focus on Southeast Asia will also allow us to go beyond the esoteric and mechanistic ways in which macroeconomic assessments have often captured these issues.

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