Jomo Kwame Sundaram’s Blog

When we fail to act on lessons from a crisis, we risk exposing ourselves to another one. The 1997-¬1998 East Asian crises provided major lessons for international financial reform. Two decades later, we appear not to have done much about them. The way the West first responded to the 2008 global financial crisis should have reminded us to do more. But besides accumulating more reserves, Southeast Asia has not done much else. Crisis prevention and management First, existing mechanisms and institutions for preventing financial crises remain grossly inadequate. Financial liberalization continues despite the crises engendered. Too little has been done…

The G20 leaders meeting in Hamburg, Germany, on 7-8 July comes almost a decade after the grouping's elevation to meeting at the heads of state/government level. Previously, the G20 had been an informal forum of finance ministers and central bank governors from advanced and emerging economies created in 1999 following the 1997-1998 Asian financial crisis. The new grouping's record in steering the global economy since the first summit in Washington, DC in November 2008 after the global financial crisis (GFC) was acknowledged by financial markets to have begun a couple of months before. London Summit's high point At the following…

After months of withstanding speculative attacks on its national currency, the Thai central bank let it ‘float' on 2 July 1997, allowing its exchange rate to drop suddenly. Soon, currencies and stock markets throughout the region came under pressure as easily reversible short-term capital inflows took flight in herd-like fashion. By mid-July 1997, the currencies of Indonesia, Malaysia and the Philippines had also fallen precipitously after being floated, with stock market price indices following suit. Most other economies in East Asia were also under considerable pressure. In November 1997, despite South Korea's more industrialized economy, its currency also collapsed following…

The World Bank and other influential international financial institutions and development agencies have been touting Southeast Asian (SEA) newly industrializing countries as models for emulation, especially by African developing countries seeking to accelerate their development transformations. But these recommendations are usually based on misleading analysis of their rapid growth and structural transformation. Sub-regional differences Typically, various cultural and other justifications are offered to justify recommending SEA, rather than Northeast Asia (NEA), as the better sub-region for emulation. Consequently, important lessons from East Asian experiences have been misrepresented, drawing erroneous lessons from the region's undoubtedly impressive economic performance during its high…

International recognition of East Asia's rapid economic growth, structural change and industrialization grew from the 1980s. In Western media and academia, this was seen as a regional phenomenon, associated with some commonality, real or imagined, such as a supposed ‘yen bloc'. Others had a more mythic element, such as ‘flying geese', or ostensible bushido and Confucian ethics. Every purported miracle claims a mythic element, invariably fit for purpose. After all, miracles are typically attributed to supernatural forces, and hence, cannot be emulated by mere mortals. Hence, to better learn from ostensible miracles, it is necessary to demystify them. The World…

Even before the term ‘Washington Consensus’ (WC) was popularized, it was already coming under great criticism despite the ‘counter-revolutions’ against ‘development economics’ and Keynesian economics associated with Thatcherism and Reaganomics. At the World Bank, the Japanese Executive Director argued that the WC menu of policy advice and conditionalities had resulted in the 1980s’ ‘lost decade’ in Latin America and Africa. In contrast, the East Asian region had seen rapid growth and industrialization. At Japanese government expense, the Bank published the East Asian Miracle (EAM) volume in 1993. But instead of recognizing that the WC was in fact the problem, the volume contributed…

To her credit, Dr Mahaletchumy has pioneered and promoted science journalism in Malaysia. This is indeed commendable in the face of the recent resurgence of obscurantism of various types, both traditional and modern. But she has done herself, journalism and science a great disservice by using her position of influence to lobby for her faith in genetic engineering, promoting another obscurantism in the guise of science. In her blatantly polemical GE advocacy, she uses caricature and rhetoric to misrepresent and defame those she disagrees with. She accuses us of “spreading flawed arguments and inaccurate information”, “demonising private industry”, and making “a number…

Wide-ranging economic reforms following the demise of the Soviet Union at the end of December 1991 mainly resulted in economic collapse in most successor states. By the mid-1990s, output had fallen by about half compared to 1989. Meanwhile, income inequalities rose sharply as real incomes declined dramatically for most, while death rates increased by over half as life expectancy declined dramatically. In Russia, output fell by 45% during 1989-1998, as death rates increased from 1% in the 1980s to over 1.5% in 1994, equivalent to over 700,000 additional deaths annually. In some former Soviet states embroiled in military conflicts, such…

International currency and financial crises have become more frequent since the 1990s, and with good reason. But the contributory factors are neither simple nor straightforward. Such financial crises have, in turn, contributed to more frequent economic difficulties for the economies affected, as evident following the 2008-2009 financial crisis and the ensuing Great Recession still evident almost a decade later. Why international coordination? Why is global co-ordination so necessary? There are two main reasons. One big problem before the Second World War was the contractionary macroeconomic consequences of the ‘gold standard'. In 1944, before the end of the Second World War,…

Why is it so difficult to achieve meaningful coordination when everybody agrees that it is desirable, if not necessary? President Richard Nixon's withdrawal of the US from and hence termination of the Bretton Woods system in 1971 confirmed the end of the post-war Golden Age. This led to slower growth, greater volatility, more instability, and reduced progress in raising economic welfare, among other consequences. Multilateral governance compromised The Bretton Woods institutions (BWIs) -- World Bank and International Monetary Fund (IMF) -- were initially conceived as part of a post-war system of multilateral governance to ensure the conditions for peace, growth,…