Convergence Between the EU and Central and Eastern Europe
Edited by David G. Dickinson and Andrew W. Mullineux
Chapter 10: The Asian financial crisis and lessons for CEE economies
David G. Dickinson and Andrew W. Mullineux INTRODUCTION The Asian financial crisis can be traced, in chronological terms, to the collapse of the pegged exchange rate regime in Thailand in mid-1997. Whether this was the catalyst for a contagious bout of ÔAsian financial fluÕ where the symptoms were more important than the causes, in itself indicating the speculative nature of much international capital movement, or whether the result of the Thai crisis was to highlight the domestic economic inadequacies of several of the economies of the region is a matter of intensive debate. However, what is clear is that the financial crisis had sustained real effects with large falls in output (in the Association of South-East Asian Nations (ASEAN) region as a whole the International Monetary Fund (IMF) has reported a 9.4 per cent drop in 1998), although the performance for 1999 and the outlook for the year 2000 is more optimistic. Financial crises elsewhere (in Russia and Brazil) have created additional clouds on the horizon and the global financial system seems currently to be in a state of shock. As a result, finding the reasons for the crisis, and the appropriate policy response, is a matter of concern to the international policy community and as we shall discuss here, an issue of great interest to the economies of Central and Eastern Europe. This chapter takes the view that the inadequacies of the economic, legal and regulatory structure (particularly in the financial system) lie at the heart of the problems...
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