An event that began in the
summer of 1997, with the decision of the
Thailand government to allow the value of the
Thai baht to
float. It then promptly plummeted, causing a region-wide
financial crisis that shook markets as far as the
New York Stock Exchange.
Among the countries most affected by the financial crisis was Indonesia (leading to the removal of the dictator Suharto), Thailand and Korea.
There have been many explanations for the cause of the crisis, and they include:
Overspeculation of Asian currencies and the lack of government capital controls to stop it
Over-extension of lending credit by banks (similar to the Great Depression
Official corruption
Nepotism and favoritism in many Southeast Asian governments
Lack of democracy and expression of popular opinion
Shaky basis of economic development
The long term result of the crisis was that the myth of the economic invincibility of the Asian Tigers was forever shattered. Capitalism regained its position as the dominant economic thought in the world. The Asian model (which focused on state direction and government-directed development) was discredited.