The goal of this project is to inform policy makers in East Asia and in international financial institutions of alternative possibilities for reform.
The Asian financial crisis of 1997-98 was caused by a failure of institutions. This failure was on multiple levels. In most accounts, the crisis is laid at the door or Western capitalism, especially the inadequate regulation of speculative capital that cascaded in and out of fragile markets in the developing world, or at the door of the IMF, for its questionable approaches to coping with this crisis—in other words, a failure of the Bretton Woods system. This had led to much debate about reforming the "international financial architecture".
When attention was drawn to the individual countries affected by the crisis, the focus was on a failure of institutional accountability, understood as the absence of transparency, moral hazards, the inadequate rule of law--in short, "crony capitalism". Dismantling the institutions of crony capitalism and replacing them with regulatory agencies had become the thrust of reform demanded by international financial institutions.
This project considers the relative merits of reform proposals for institutions in East Asia and takes a fresh look at the array of institutions that are found wanting by the International Monetary Fund (IMF) and many other Western analysts. The purpose of the project is to suggest, based on improved historical and comparative understanding of East Asian institutions—and those in other regions where reforms were enacted with external impetus and varying levels of success—the parameters of reform that would be likely to take hold and work.
The project focuses on problems of:
- lack of transparency and the rule of law;
- industrial policy;
- "inflexible" labour markets and social policy;
- private sector governance; and
- developmental norms and ideology.
Research seeks to examine economic bureaucracies and other institutions of industrial policy in parts of East Asia, especially in the Republic of Korea. It also scrutinizes the so-call "inflexible" labour markets that are rapidly being dismantled in East Asia, as well as the issue of business governance. And it considers the need to rethink the cultural and ideological institutions under criticism.
This project, which began in 1999, is externally co-ordinated by Meredith Woo-Cumings. She is based at Northwestern University in Evanston, Illinois.
Funding for the project has been provided by the Rockefeller Foundation.