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The Politics of IMF LendingIMF Conditionality and the Asian Crisis

The Politics of IMF Lending: IMF Conditionality and the Asian Crisis [Although it has become eclipsed by the global financial crisis, the Asian financial crisis is considered one of the most dramatic episodes in recent economic history. It should come as no surprise that the IMF’s role has been analyzed extensively in the years since the crisis.1 The previous chapter has important lessons for those interested in understanding conditionality during the Asian crisis. It found a statistically significant relationship between G5 economic interests and the number of binding conditions, across hundreds of IMF agreements from 1997 to 2006. One would therefore expect there to be fewer binding conditions during the Asian crisis, given the exceptionally high exposure of the G5. However, despite the shareholders’ exposure to the crisis, the affected countries received many binding conditions and in some cases hundreds of non-binding conditions. This chapter investigates this statistical abnormality by analyzing the issue of conditionality in Thailand, Indonesia, and Korea. It also asks a number of important questions. Why did conditionality deviate so much during the crisis? Which processes identified in the theoretical framework unfolded during the crisis? Which processes did not? Should the book’s theoretical framework be modified in light of the Asian crisis or was conditionality in that period and that particular context unique?] http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png

The Politics of IMF LendingIMF Conditionality and the Asian Crisis

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Publisher
Palgrave Macmillan UK
Copyright
© Palgrave Macmillan, a division of Macmillan Publishers Limited 2013
ISBN
978-1-349-44277-5
Pages
141 –157
DOI
10.1057/9781137263810_9
Publisher site
See Chapter on Publisher Site

Abstract

[Although it has become eclipsed by the global financial crisis, the Asian financial crisis is considered one of the most dramatic episodes in recent economic history. It should come as no surprise that the IMF’s role has been analyzed extensively in the years since the crisis.1 The previous chapter has important lessons for those interested in understanding conditionality during the Asian crisis. It found a statistically significant relationship between G5 economic interests and the number of binding conditions, across hundreds of IMF agreements from 1997 to 2006. One would therefore expect there to be fewer binding conditions during the Asian crisis, given the exceptionally high exposure of the G5. However, despite the shareholders’ exposure to the crisis, the affected countries received many binding conditions and in some cases hundreds of non-binding conditions. This chapter investigates this statistical abnormality by analyzing the issue of conditionality in Thailand, Indonesia, and Korea. It also asks a number of important questions. Why did conditionality deviate so much during the crisis? Which processes identified in the theoretical framework unfolded during the crisis? Which processes did not? Should the book’s theoretical framework be modified in light of the Asian crisis or was conditionality in that period and that particular context unique?]

Published: Oct 12, 2015

Keywords: Binding Condition; Large Shareholder; Asian Financial Crisis; Foreign Exchange Reserve; Asian Crisis

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