Recession in the 1990s: The Resistible Rise of Neoliberalism

Abstract

Throughout the 1980s, international financial markets expanded markedly due to improvements in information technology and deregulation. Financial liberalisation was primarily inspired by the United States and the United Kingdom — where it was pushed by the Reagan and Thatcher governments. Yet small open OECD economies readily took part in this trend by liberalising their markets and, as a consequence, grew more vulnerable to external shocks (Kurzer, 1993; Quinn and Inclan, 1997; Simmons et al., 2006). Financial market growth fuelled a credit boom once OECD economies had recovered from the crisis of the 1970s. Low oil prices in the mid-1980s gave an additional positive impetus to the global economy. Global economic growth peaked in 1989–1990 (Allen, 1999; Jonung, 2009).