Governance in Pacific Asia: Political Economy and Development From Japan to Burma by Peter Ferdinand

Author:Peter Ferdinand [Ferdinand, Peter]
Language: eng
Format: epub
Tags: International Relations, Globalization, Comparative Politics, Political Science, General
ISBN: 9781441105912
Google: pyTNDwAAQBAJ
Publisher: Bloomsbury Publishing USA
Published: 2012-02-02T09:41:40+00:00

Conclusion

This chapter has outlined the changing role of finance and banks in the economies of the region. Despite specific national differences, economies throughout the region suffered from financial repression. Other sectors of the economy – initially industry, but later agriculture – enjoyed a higher priority. As long as the economies grew rapidly, the weaknesses of the banking systems could be overlooked. However, the losses that could be attributed to those weaknesses became more onerous. The Asian financial crisis of 1997–1998 and its aftermath concentrated minds around the region on the need for reform. Most of the states initiated banking reforms to bring their systems more into line with practice in the United States and Europe, not to mention what was recommended by the Bank for International Settlements and the IMF. This has also led to major changes in the way that businesses in the region operate – one example being the increasing significance of financial markets instead of bank credit in funding companies, as shown in Table 8.1. Financial markets have both widened and deepened – for example, as the segmentation of different groups of financial actors has eroded. Probably no sector in Pacific Asia has been more transformed by the neoliberal version of globalization over the past decade than has the financial sector.

That does not mean, however, that policies and practices have become indistinguishable from those of Anglo-American capitalism. Two things should be noted. The first concerns the degree of actual implementation of neoliberal economic regulation. There remains a significant gap between the principles and the actual practice. ‘Banking crises are better at changing rules than altering practices’ (Martinez-Diaz, 2009: 177). Walter (2008) similarly argues that the key domestic actors that dominate business across Pacific Asia, for example, large family-owned conglomerates, have successfully obstructed attempts by governments to apply neoliberal international principles and standards of economic regulation, and sometimes government has been reluctant to press the issue. This is a legacy of decades of close connections between government and business in these states, an issue to which we shall return in Chapter 9. Also, the restoration of strong economic growth has weakened the pressure for regulatory reform. ‘Indeed, as the memories of the crisis have receded and Asian economies have regained confidence, there are as many signs of retreat from the rhetoric of neoliberalism as of relentless progression towards it’ (Walter, 2008: 178). In Japan, fears of a neoliberal ‘big bang’ have failed to materialize. Indeed, when the Democratic Party replaced the Liberal Democratic Party in government in 2009, it seemed inclined to reverse many of the reforms. The legacies of banking practices in earlier decades can still be felt. The old ways still have their adherents.

The second difference concerns government attitudes towards the international financial system. While Pacific Asian authorities accepted the need for major financial reform after the crisis of 1997–1998, they also drew one other conclusion: never again did they want to have to put themselves through a restructuring at the hands of the IMF if they could avoid it.

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