Description
Book SynopsisIn the light of the Malaysian experience during the Asian financial crisis, this book examines the role of international capital mobility in making countries susceptible to financial crises and the use of capital controls as a crisis management tool. Malaysia provides an interesting case study of this subject given its significant capital market liberalisation prior to the onset of the crisis, and its fundamental shift in crisis management policy in September 1998.
The prime focus of the book is on Malaysia's radical policy decision to pursue an independent recovery path, cut off from world markets by a system of capital control, as a viable alternative to the conventional market centred approach. The analysis suggests that, against the initial dire predictions of many economists, the capital controls have actually played a crucial supportive role in crisis management. Whether the controls have played a special role in delivering a superior recovery outcome in Malaysia compared to IMF-program countries remains a point of contention. However, there is strong evidence to suggest that this pragmatic policy choice was instrumental in achieving recovery, while minimising potential economic disruption and related social costs.
The book provides an integrated view of the modalities and working of the capital-control based recovery package in the context of a comprehensive survey of macroeconomic management in Malaysia and from a comparative East Asian perspective. It will prove to be of great value to development macroeconomists, monetary and financial economists and students of Malaysian and East Asian development.
Trade Review'. . . essential reading for those interested in capital market liberalisation or economic policy in Southeast Asia.' -- M. Ramesh, Asian-Pacific Economic Literature
'This book makes an invaluable contribution to the growing interest in the 1997-98 Asian crisis and its policy responses by focusing specifically on the experience of Malaysia. . . . Overall, the book provides an important contribution to the debatable subject of capital controls. It does not focus only on Malaysia as an isolated case, it also brings other crisis-hit countries into the picture. That approach is illuminating and makes the book accessible to a broad range of readers.' -- Mansor H. Ibrahim, Canadian Journal of Development Studies
'. . . this book is a major pioneering work on the effectiveness of capital control in Malaysia. The arguments are well supported by empirical data and the book is informative, analytical and well written. It is certainly a significant contribution to the ongoing debate on a controversial and delicate subject.' -- Lai Yew Wah, Journal of Malaysian Studies
'. . . the Malaysian experiment is certainly one of the most successful attempts to buck IMF orthodoxy anywhere in the developing world in recent years, and, as such, many students and policymakers will wish to study it. This careful and scholarly monograph is an excellent place to start. . .' -- Anne Booth, Journal of Development Studies
Table of ContentsContents: Preface 1. State of the Debate 2. Pre-crisis Malaysian Economy: An Overview 3. Capital Account Opening, Capital Inflow and Share Market Boom 4. Capital Flows and Signs of Vulnerability 5. Onset of the Crisis, Policy Slippage and Economic Collapse 6. Policy Turnaround: From Muddling through to Capital Control 7. The Recovery 8. The Role of Capital Control 9. Conclusion Appendix References Index
