The 1997-98 Asian crisis: a property rights perspective

In 1997 the "Asian miracle" came to a sudden and dramatic end. A group of East Asian economics that had performed remarkably well over the previous two decades suddenly found their currencies under intense speculative pressure, their stock markets fell dramatically, and their economic growth rapidly declined. The Asian crisis spread to other emerging market economics, notably in Latin America and Russia. Speculation on the causes of the 1997-98 crisis varies from an old-fashioned financial panic (Radelet and Sachs 1998), to poor regulatory environments and conspiracy theories (Krugman 1999). Events such as this call for policy responses and for a reformation of the international "financial architecture," which McKinnon (1996) refers to as "the rules of the game." Irrespective of what the precise rules are, they have common objectives: To foster efficiency in trade of goods and assets; to provide stability; and to provide an equitable, socially acceptable distribution of income and wealth (Swoboda 1999:2).