The East Asia Miracle Case Study

a noble prize winning economist, Joseph Stiglitz analyzed the IMF’s policies during the economic downturn in East Asia, in his Globalization and its Discontents, Chapter 4. A single event the collapse of the Thai baht on July 2, 1997 unexpectedly threatened an economic downturn in its neighbors, Asia, and eventually the entire world. The impressive development of East Asian’s economies was decreasing poverty, “The East Asia Miracle”, stumbled as the economic crisis begun with the fall of baht, which affected its neighbors as well, taking many of the region’s banks, stock market, and even entire economies down. The International Monetary Fund (IMF) imposed policies that were supposedly help resolve this economic crisis; however, according

Countries gave money to the firms so they can pay back its loan. Because the firms repay its loan, the lenders do not have to face the consequences of having made bad loans. The money that IMF provided alternative conditions to ensure that this massive money is being used “correctly” towards the recovery of the economy. The conditions include high interest rates, decrease in government spending, and increase in taxes, structural reforms such as “increased openness, and transparency, and improved financial market regulation” (Stiglitz 96). Accepting the Fund aid with these conditions meant less autonomy in its recipient nations to regulate. The programs with all of these conditions failed, the exchange rate continued to fall and became the burden of the nation. The crisis resulted in increase in unemployment, increase in poverty, plummeting of GDP, closing of banks, and more pressure on the rural sector. The decline in middle class resulted in bankruptcy in small business and will have social, economically, and politically effects for years to come. An economic downturn in Thailand affected its neighbors, Russia who depended on their natural resources and all the way to Argentina because the investors were more cautious in investing in developing