#Neo colonialism free
In other words, these economies were pressured into an increasingly Westernized economic model, characterized by liberalization of the “free market” and increasing reliance on volatile global financial relationships.Īs Alan Greenspan expressed one year later in 1998, the greatest effect of the Asian crisis was a global move toward ”the Western form of free market capitalism.” In his words, ”What has happened here is a very dramatic event towards a consensus of the type of market system which we have in this country.”īeyond the macroeconomic effects, the IMF has also been criticized for the conditions under which the Thai government was allowed to use the rescue funds. Broadly, these SAPs required governments to maintain high interest rates, implement severe austerity measures (cut public spending), increase privatization, deregulate large sectors of the economy, reduce tariffs, and weaken restrictions on foreign ownership and investment. These so-called rescue programs came with highly specific policy instructions that receiving nations were forced to adopt in order to collect money.
#Neo colonialism series
In western developed economies, in contrast, market forces have been allowed much freer rein to dictate production schedules… Alan Greenspan, 1997Īccordingly, the International Monetary Fund (IMF) intervened in the Asian crisis by distributing aid through a series of conditional loans and Structural Adjustment Programs (SAPs). Such a system inevitably has led to the investment excesses and errors to which all similar endeavors seem prone… The current crisis is likely to accelerate the dismantling in many Asian countries of the remnants of a system with large elements of government-directed investment, in which finance played a key role in carrying out the state’s objectives. In the words of Alan Greenspan, Chairman of the Federal Reserve at the time: In response to the crisis, the very same financial institutions that once upheld these markets as models of development in the third world, quickly stepped in with a series of loans aimed at re-stabilizing these “developing economies.” However, these loans came with steep tradeoffs.įrom the Western perspective, these economic issues had arisen not because of over-speculation from Western investors, but because the collapsing Asian markets were not “Western” enough. As a result, visions of the so-called “ Asian Economic Miracle” formerly touted by international financial organizations dissolved under the present reality of regional economic tailspin.
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It would go on to set off a chain reaction of devaluation a reduction in the value of a currency relative to other currencies and capital flight the rapid flow of money or assets out of a country that, in just a matter of months, would decimate the economies of most of Southeast Asia. Unbeknownst to policy makers at the time, this decision was a critical tipping point in an already burgeoning economic crisis in Thailand. On July 2nd, 1997, the government of Thailand floated its national currency, the Baht, untethering it from its fixed exchange rate with the US dollar.