On December 18, 2014, Cornell University Press published Two Crises, Different Outcomes: East Asia and Global Finance. The book is based on the research project entitled “The Second East Asian Miracle? Political Economy of Asian Responses to the 1997/98 and 2008/09 Crises” conducted by JICA-RI with researchers from Asian countries and the US between July 2010 and March 2014.
Edited by Professor Keiichi Tsunekawa of the National Graduate Institute for Policy Studies (former JICA-RI Director) and Professor T. J. Pempel of the University of California, Berkeley, this book focuses on East Asian resilience to two financial crises: the Asian financial crisis of 1997-98 (AFC) and the global financial crisis of 2008-09 (GFC). The book addresses the two key questions; the reason why the impact of the GFC was minimal while the AFC caused huge economic losses in East Asian countries and; the question of whether East Asia’s successful weathering of the GFC suggest that East Asia is poised for a “second Asian miracle” or not.
In an effort to answer these two questions, the authors focus on five key factors. First, the two crises are understood to have occurred as a result of a collision between national development strategies and the forces of global finance. The second is the fact that high levels of investment and close ties between government and business in East Asian countries led to economic growth, while they left these countries vulnerable to the AFC at the same time. The third point is the preventive measures that East Asian countries had taken to improve their economic resilience against any future recurrence of the AFC, and the fourth is the fact that, the GFC was an endogenous crisis stemming from the US and European economies unlike the AFC. Finally, this book examines whether East Asian countries’ economic resilience after the GFC will lead to a return to sustained growth as an engine of the global economy.
Each chapter analyzes one or a few cases of East Asian countries from a political economy perspective. The contributors from JICA-RI, Professor Tsunekawa has worked on comparative analysis of Japan and South Korea, and Senior Research Fellow Yasunobu Okabe has discussed the cases of South Korea and Thailand.
The analyses in each chapter show optimistic perspective on the future of East Asian economies in the short to medium term. In the medium to long term, however, East Asia faces serious challenges that may hamper continued economic development in future, such as an aging society, the middle-income trap, the redistribution of wealth, and political instability. East Asia countries should not be overly optimistic about the future without addressing these issues.