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Japan’s Crisis: Evolution and Implications

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Abstract

Japan is linked to the Asian Crisis in two principal ways. First, it is deeply involved in the economies of the crisis countries (see Table 11.1), and their crises in various ways. It has been claimed, with some justification, that Japan exported its bubble to other Asian countries following the collapse of its own bubble in 1990. From just $40 billion in early 1994, Japan’s loans to Asia surged to some $265 billion in 1996, helping tofinance current-account deficits in the run-up to the crisis. Following the baht fall on 2 July 1997, Japan played an important role in putting together the financial aid package for Thailand, but after its attempt toforge a regional Asian Monetary Fund (AMF) was squashed by the US, it was sidelined in the remaining packages.1 Instead, Japan was portrayed, again with some justification, as part of the continuing problem, unable to help the crisis countries get back on their feet, and threatening to cause further turmoil by its inability to deal with its own problems.

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© 2001 Cambridge Political Economy Society

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Whittaker, D.H., Kurosawa, Y. (2001). Japan’s Crisis: Evolution and Implications. In: Chang, HJ., Palma, G., Whittaker, D.H. (eds) Financial Liberalization and the Asian Crisis. Palgrave Macmillan, London. https://doi.org/10.1057/9780230518629_11

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