The chain reaction of financial crises in 1997 rewrote the report cards of Asian economies and in the process discredited the long-embraced "Flying Geese Theory"of Asian studies academics.
Books, such as Japan expert Chalmer Johnson's MITI and the Japanese Micracle and Ezra Vogel's Japan as No. 1 all became less persuasive in light of new facts. Few were willing to believe the theories of a mercurial Asian regional economy and their books no longer hold the same weight they did before the crisis. Classes with titles like The Rise of the Industrial Asia also disappeared from college curricula. The shock was so deep, all of Asia felt dizzy.
Of the countries hardest hit -- Thailand, South Korea and Indonesia -- only South Korea has gone through a re-birth and gotten back on its feet now five years on. As an example, the Daewoo Group, South Korea's third largest conglomerate, completely collapsed and was acquired by foreign businesses, surprising Asian tycoons by putting paid to their motto that "the biggest horse never dies.".
Nicholas Kristof and Sheryl WuDunn indicate in their book Thunder from the East, recently translated into Chinese, that the Asian financial crisis forced all countries to place an even greater focus on the open market, democracy and the rule of law.
"Pressure is coming from outsiders, like foreigners who are bringing in new attitudes toward shareholder governance and a greater reverence for profitability. And the Asian financial crisis brought about a great deal of self-reflection and national inward-thinking about how to create the right system for regeneration," he says.
If anyone asks what the positive impacts of the Asian financial crisis have been, then realizing and implementing "economic democratization" is doubtless the most valuable gain. Simply put, Asians learned "how to be master of their own pocket" and to no longer be manipulated by conglomerates and realized the preciousness of "the freedom to choose."
Kristof's book does not touch on Taiwan much, perhaps because in comparison with neighboring countries, Taiwan's economy remained more solid and policy implementation was more successful during the crisis. Nor was Taiwan bogged down by major foreign debts. In Taiwan, the capitalist free-market economy was already deeply instilled.
Each year more than 30,000 companies are shut down in Taiwan, yet another new 40,000 new ones are launched. Through this mechanism of the survival of the fittest, the industrial structure of Taiwan, which comprises primarily small- and mid-size enterprises, enjoys an upper hand in the implementation of economic democratization in comparison with Japan and South Korea.
But, it is still too early to tell whether the escape from the Asian Financial Crisis was a good or bad thing for Taiwan. Taiwan's economic recession of the past few years is only a minor trial. It did not trigger the shock therapy or so-called destructive creativity that ultimately has reshaped the South Korean economy.
As Taiwan's government declares its determination to revive the economy, the most pressing issue is the people's commitment to "returning to pragmatism and
In comparison with his New York Times colleague Thomas Friedman's self-aggrandizing style, and Harvard professor Samuel Huntington's heavy-handed academic writing, Thunder from the East is much more down to earth. The use of case interviews and Kristof and WuDunn's flowing journalistic style make it a much easier read.
However, they hold a very optimistic view about the future of Asia. This is in strong contrast with Gordon Chang's pessimism about China.
The future of Asia is tied to the development of China -- that is without any doubt. However, whether China's tactic of completely copying the development model of South Korea and stimulating national development and construction through hosting the Olympic Games in 2008 will prove successful warrants close observation.
Kristof fails to mention that after the 1988 Olympic Games, South Korea experienced an economic slow-down caused by over-production.
Plus, in the wake of material abundance and confidence came the people's strong desire for democracy, leading to a vibrant labor movement and an explosion in wages. All this created social instability during the reign of Roh Tae-woo.
This will be a harsh test that China will necessarily have to face after 2008. After the Beijing Olympic Games, where will China go? This is key to the future development of Asia.
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