Asia's four-in-one crisis Different Asian economies face very different structural problems, as Maxime Durand explains One of the most striking phenomena of this decade is the Japanese model's running out of steam. With a growth rate of roughly 4% until 1991, Japan was the best performer of the G7. But, since 1992 Japan has been dragging along at about 1% a year, and is doing less well on average than the European Union.
For a while it was possible to think that this was a cyclical downturn, and 1996 seemed to signal a new takeoff, but slow growth is back on the agenda. The main external reason is the slowdown in exports, which amounted to 9.3% of GDP in 1996, i.e. less than the 10.2% in 1986. But the crisis of growth also results from an incapacity to make up for this through an additional increase of internal demand
The limit here is profitability, and the novelty of the current cycle is a particularly noteworthy fall in enterprises' margins. At the same time, the rate of return on capital - a good indicator of the effects of rise in organic composition on the rate of profit - is going down regularly by two points a year. The endemic financial crisis has neutralised the effects of counter-cyclical fiscal policy, which is now having to be abandoned.
The second crisis is the crisis of the "Tigers" (Thailand, Malaysia, Philippines, Indonesia) which exploded in July 1997, first in the form of a speculative attack on their currencies, then as a stock market CrISIS.
This crisis is the crisis of the neoliberal model of openness to exports. It is characteristic of dependent countries that have inserted themselves only in a rickety way in the international division of labour.
tina are in danger of going through. The outcome is a severe purging and an injection of capital under IMF control. What happens next depends on the dynamism of South Korea's export crisis
The third crisis is the South Korean crisis, which has to do with a specific model that in many ways differed from the IMF model. South Korea stood out notably because of the high degree of state intervention in industrial policy.
What we are reading about South Korea in the newspapers is mostly false. The mass media invoke, corruption, the weight of monopolies, and debt, as if these were the
Korea has in fact made a prodigious breakthrough on the world market: its exports rose from $17 billion in 1980 to $130bn in 1997 (France's rose from $110bn to $269bn in the same period). Since the early 1990s Korea has had a dizzying growth rate led by exports, and the degree of openness of its economy made a true leap forward, from 33% in 1992 to 47% in 1997. To talk of protectionism or a bureaucratic economy in these conditions is ridiculous.
The most remarkable point, and one that distinguishes Korea from the Tigers, is that there has not been any drag on the imports side, at least as far as volume
What threw everything out of balance
- i.e. before the crisis broke out in Thailand in July 1997 - was a terrible fall in export prices in dollars (15% in 1996, about 12% in 1997).
During these two years the volume of exports increased by 37%, which is enormous, but this brought in only 5% of statist for the IMF and to discourage those in other countries who might have been tempted to imitate it.
Without falling into conspiracy theories, it is thus no exaggeration to speak of a success for imperialism in Korea. China next?
The last facet of the Asian economic crisis is the looming crisis in China. There is a dual transmission mechanism here. The falling prices resulting from devaluation of the region's currencies hurt the competitiveness of Chinese exports.
In addition, the stock exchange collapses threaten to spread to China -through Hong Kong - and to interfere with China's unparalleled economic dynamism.
In general, these four crises reinforce one anther, because of the trade relations and investment flows that bind these countries together in a tight network, with the Chinese diaspora acting as relay.
The complex structuring of a whole region, until now presented as the motor of global growth, has been deeply destabilised by mechanisms reminiscent of capitalist anarchy and inter-imperialist struggles.
The reaffirmed US supremacy, particularly on the level of technological domination, has in a certain way as its counterpart a blockage of the intensive Japanese growth based on innovation and then articulated in a hierarchical way throughout the zone.
But this destabilisation is pregnant with a boomerang effect. The slowdown of Asian growth will in fact tend to cut back one of the main sources of financing for the long cycle of growth in the US, which is showing a tendency towards deepening trade deficits.
Even if it does not degenerate into a generalised financial crash, this crisis has already put in question the unstable equilibrium of the world economy. *
INTERNATIONAL INSTITUTE FOR RESEARCH AND EDUCATION
They export more but impors rise even faster.
This uneven development finally cracked because of a trade deficit that got out of hand. This is the same scenario that
Mexico went through in 1994, and that countries like Brazil, Poland and Argen-
Eric Toussaint and Peter Drucker (Eds.)