Question

Discuss the role of crony capitalism in the economic crisis of the 1990s in this region.

Answer 1

Crony capitalism is an economic system in which enterprises thrive not as a result of risk but as a return on money accumulated through a nexus between a business class and the political class. This is often accomplished by using state power rather than competition to administer licenses, government grants, tax cuts, or other types of state interference over resources where the state retains monopoly control over public goods, such as primary product mining concessions or public works contracts.

The quick development of the Asian economies during the 1980s and 1990s, with their supposedly unmistakable way to deal with government inclusion in the market, represented a test to the indicated prevalence of American private enterprise; the Asian Financial Crisis delegitimized this supposed elective model of free enterprise, as was welcomed "with an away from of merriment" from numerous American reporters; observers asserted that an underlying driver of the emergency was "buddy private enterprise" – the supposed inclination to make credits dependent on political or social associations instead of anticipated returns – as a feature of a rising account about how the "Asian Alternative" had fizzled;

As we have been reminded from recent events, a problem with relatively unregulated global finance is the risk of a serious financial crisis. Perhaps there was a desire in some quarters when that happened in 1997 to say that the problem was not unregulated global finance as such, but rather its "corruption" by crony capitalism in the Asian-style. That may well be, then at least we are in (temporary) agreement on this point.