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http://hdl.handle.net/10685/75
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| Title: | Unraveling the Enigma of East Asian Economic Resiliency:The Case of Taiwan |
| Other Titles: | The Second East Asian Miracle ?: Political Economy of Asian Responses to the 1997/98 and 2008/09 Crises |
| Authors: | Chu, Yun-han |
| Keywords: | Taiwan
Central Bank of China
State-owned Banks
Fiscal Conservatism
QFII System
Financial Supervisory Commission |
| Issue Date: | 30-Mar-2012 |
| Series/Report no.: | 44 |
| Abstract: | Taiwan was one of the few Asian economies that had emerged from the 1997-1998 East Asian financial crisis relatively unscathed. During the 2008-2009 global financial crisis, the island’s shock-absorbing capability turned out to be once more quite respectable. Taiwan inherited a relatively healthy state of financial systems prior to the sub-prime loan crisis and built up a huge
foreign reserve. Also foreign banks’ participation in domestic loan market was quite limited. The state dominated the banking sector and closely supervised its lending policy and balance sheet.
The island’s macro-economic fundamentals were quite healthy and the government still enjoyed
spare fiscal capacity to borrow and spend. Many elements that define Taiwan’s economic resilience have been fostered by some entrenched institutional arrangements and established policy orientations over a long time. Taiwan managed to retain the bulk of these long-running
sources of economic resilience despite of the tremendous external pressures by neo-liberal policy
advocates to dismantle these “out-dated” policy thinking and practices. Furthermore, despite of the political turmoil after the first power rotation of 2000, the legacy of an independent and
proactive central bank, whose reputation and credibility had been strengthened by its record of steering the island safely through the financial crisis as well as the Strait missile crisis, was kept intact. The legacy of prudential financial regulation was also largely kept intact with the concentration of regulatory authority in a new cabinet-level supervisory commission. Taiwan was
able to cope with the 2008-09 global financial crisis thanks also to a more enabling regional
environment. The political backlash against IMF-imposed austerity measures precipitated a
growing awakening among East Asian policy thinkers. Most developing countries in the region
have insured themselves through managing exchange rates and building huge currency reserves,
so that they could be protected against the tempests of currency speculation and never again would have to call on the IMF. The ideological milieu and the cooperative institutional
arrangements in East Asia have changed so much between the two crises. |
| URI: | http://hdl.handle.net/10685/75 |
| Appears in Collections: | Political Economy of Asia
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| JICA-RI_WP_No.44_2012.pdf | | 241Kb | Adobe PDF | View/Open |
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