Wednesday, May 11, 2016
The 1997 E. Asian financial crisis and world trade
Loomis in a Lawyers Guns & Money post linked to this piece that in turn linked to this piece by Dean Baker. I was particularly interested in Baker's point that many poorer countries started running large trade surpluses with most of the developed world after the '97 East Asian financial crisis. Governing elites in the S.E. Asian countries after the crisis felt they needed to build up large foreign exchange reserves (and were also, in effect, told to by the IMF); hence, the need to increase their exports as much as possible to the rich countries. The U.S., unlike Europe and Japan, was running a trade deficit with these countries before the '97 crisis, but the U.S. trade imbalance with them got larger after that, peaking in 2005. One result was increased loss of U.S. manufacturing jobs. Anyway, you can read the links for the details of the argument.