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 to Stiglitz, the IMF policies not only did not improve the situation but also worsened the situation. Moreover, IMF policies of, excessively rapid financial and market liberalization was the cause of the crisis and responsible for the economic downturns.
Regardless of the economic growth in East Asia, the IMF has been avoiding to conduct a study in East Asia because those countries had not followed the Washington Consensus. The IMF stated that East Asian nations are in serious need of reform because their institutions and governments are corrupted. Stiglitz argues that the East Asia “Miracle” was not a coincidental miracle, but that their governments’ industrial policies allowed the East Asian nations to save and invest well concurrently and resulted in tremendous economic growth. The East Asian state-directed policies and the policies of the Washington Consensus besides one similarity, the emphasis on the macrostability, were in stark contrast to one other. The policies of the Washington Co...
... middle of paper ...
...ged; there was a possibility of resulting in default. The IMF policy of higher interest rate resulted in those firms in distress, exacerbated the downturn and caused contraction in supply and demand concurrently. The IMF’s defending on the policy is that higher interest rate would restore market confidence; however, this policy did not restore confidence because both foreign and local investors were discouraged to invest in those firms that were unlikely to repay. The IMF also argued that high interest rate was essential in order to prevent a collapse of the exchange rate; however, an increase in interest rate did not stabilize the currency. Stiglitz argues that the issue with IMF is also the desire to have control regarding the denying of Japan’s offer to establish the Asian Monetary Fund, which probably would have understood the situation in the East Asia better.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- ... It consist of one governor and one alternate governor from each member state. The Executive Board is responsible “for conducting the day-to-day business of the IMF” ; and it consist of 24 directors, who are also elected by member states. There are only 24 directors representing all the members of the IMF because each director represents a group of countries, yet countries like the United States and China are not part of any group therefore, they each have a director representing them at the Executive Board.... [tags: currency, community, economic, policies]
2389 words (6.8 pages)
- Argentina, the IMF, and the WTO In 1999, over 40,000 people came to protest in the streets outside the Seattle Conference Center, where the delegates from the World Trade Organization (WTO) and the International Monetary Fund (IMF) came to Seattle to discuss new international trade agreements. Many came to protest not only against the WTO and the IMF, but also against globalization itself; Thousands were protesting for anti-globalization because of increasing concerns that certain trade and investment measures were encroaching on national sovereignty.... [tags: economy, argentina, convertibility law]
2423 words (6.9 pages)
- The Argentina debt affected the country between the late 90’s to the early 2000’s and can be attributed to misdiagnosis and ineffective policy. During this time the IMF and Argetina’s government worked closely together. Previous to the crisis Argentina had been celebrated for its economic policies and growth. The government worked to put in place conservative economic policy, including the privatization of companies, looser trade regulations, among other conservative changes. Economic growth in that period appears to have been in large part the result of increasing amount of international debt.... [tags: Economics]
1880 words (5.4 pages)
- The International Monetary Fund (IMF) The International Monetary Fund (IMF) was established in 1946, along with the World Bank. The IMF was developed to promote all monetary cooperation and remedy economic problems incurred during the post - war reconstruction period (Baylis; 2008: 245). The IMF was therefore considered as the “rule keeper” and an important component in public international management. In the pursuit to stabilise the exchange rate system, the IMF reserves the authority to change exchange rates.... [tags: World Bank, International Monetary Fund]
1780 words (5.1 pages)
- It is a general fact that our world has not yet experienced world war III , and that alone is a sufficient proof that with the emergence of global financial crisis from time to time, the IMF and World bank has managed and has prevented world wars. There is a big difference between living in state with domestic or in civil war, or a state in war with global terrorism and the world at war as a whole. I am hoping that we can all agree based on our reading assignment, that one of the major goals of IMF is to prevent world wars, and we should give credit to the founding fathers and members of this institution, otherwise we all experience world war III, IV and so on already.... [tags: Philippines, Corazon Aquino, Ferdinand Marcos]
1015 words (2.9 pages)
- INTRODUCTION The term of financial crisis means that the situation happen when some of financial assets going loss and crashed a large amount of the nominal value. It would effects to the financial institutions when investors take out or withdraw all of their assets in the banks. This is because those of investor expect that the value of the assets would fell down if them saving in that institution. Besides that, the financial crisis also can be defined when the assets in financial institution is over valued.... [tags: policy, banking crisis]
2029 words (5.8 pages)
- “If you owe your bank a hundred pounds, you have a problem; but if you owe it a million, it has.(1)” In the year of 1327, Kind Edward III of England defaulted on his Italian debts. This caused the banks of Bardi and Peruzzi in Florence to collapse. Who would know that over 650 years later, the world would still have these types of problems. After World War II, the need for an organization like the IMF was finally realized. After the war, politicians and economists began to work on blue prints for a postwar world.... [tags: essays research papers]
2037 words (5.8 pages)
- The WTO IMF and World Bank The Uruguay Round in 1993was created to further reduce trade barriers. The result was the creation of the World Trading Organization (WTO). The main goal of the WTO is to police the international trading system. The data that the WTO has kept states that the volume of world trade has grown consistently faster than the volume of world output since the 1950’s. Two other types monitoring policies are the International Monetary Fund (IMF) and the World Bank. The IMF is an international institution set up to maintain order in the international monetary system.... [tags: Essays Papers]
750 words (2.1 pages)
- The IMF disease eating away our daily bread Pakistan’s economy has paid a huge price in partnering the war on terror with the USA. According to a recently released IMF report called “Pakistan Poverty Reduction Strategy Paper”, total losses, measured in terms of exports, foreign investment, industrial output and tax collection, are estimated to be around RS 2.08 trillion during the last five years period. The war on terror has outbalanced already stretched financial resources of the government as a consequence the development projects have been cut resulting in increase in poverty and unemployment.... [tags: Economics]
934 words (2.7 pages)
- This paper analyses the economy of Hong Kong mainly through the perspective of GDP, and then analyses its fiscal and monetary policies which are implemented by Hong Kong government and its Monetary Authority. Hong Kong is one of the world’s leading financial centers and it is an efficiency service-oriented free market economy. Hong Kong’s economic freedom score is 90.1 on a 100-point scale, making it the top-rated economy in the Index for the 20th consecutive year (Heritage.org, 2014). Hong Kong’s economy is normally characterized by its low taxation, light regulation and well established international trading environment.... [tags: GDP, capital, interest]
2027 words (5.8 pages)