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Overcapacity and the East Asian Crisis

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  • Korkut A. Erturk

Abstract

The historic success of East Asian economies prior to the 1997 financial crisis depended on their ability to escape the trap of deteriorating terms through a regional pattern of development known as the flying geese model. However, this pattern of development has come under increasing strain in the second half of 1980s. As competitive pressures intensified, producers throughout the region early-exited their niches of production in a futile attempt to safeguard their competitive position. The investment boom this has caused in the early 1990s led to the creation overcapacity throughout the region and the reemergence of the fallacy of composition inherent in a generalized system of export led growth, paving the way for the financial crisis of 1997.

Suggested Citation

  • Korkut A. Erturk, 2001. "Overcapacity and the East Asian Crisis," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 24(2), pages 253-275, December.
    • Handle: RePEc:mes:postke:v:24:y:2001:i:2:p:253-275
    DOI: 10.1080/01603477.2001.11490326
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    1. Prebisch, Raúl, 1950. "The economic development of Latin America and its principal problems," Sede de la CEPAL en Santiago (Estudios e Investigaciones) 29973, Naciones Unidas Comisión Económica para América Latina y el Caribe (CEPAL).
    2. Guillermo Calvo & Mervyn King (ed.), 1998. "The Debt Burden and its Consequences for Monetary Policy," International Economic Association Series, Palgrave Macmillan, number 978-1-349-26077-5, December.
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    Cited by:

    1. Jane D'Arista & Korkut Erturk, 2010. "The Monetary Explanation of the Crisis and the Ongoing Threat to the Global Economy," Challenge, Taylor & Francis Journals, vol. 53(2), pages 5-29.
    2. You, Kefei & Raju Chinthalapati, V.L. & Mishra, Tapas & Patra, Ramakanta, 2024. "International trade network and stock market connectedness: Evidence from eleven major economies," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 91(C).
    3. Youze Lang & Qiuyi Yang, 2019. "Does Public Infrastructure Breed Consumption Downgrade and Overcapacity in China? A DSGE Approach on Macroeconomic Effects," Sustainability, MDPI, vol. 11(3), pages 1-23, February.
    4. Jianjia Wang & Chenyue Lin & Yilei Wang, 2019. "Thermodynamic Entropy in Quantum Statistics for Stock Market Networks," Complexity, Hindawi, vol. 2019, pages 1-11, April.
    5. Stephanie Seguino & Caren A. Grown, 2006. "Feminist-Kaleckian Macroeconomic Policy for Developing Countries," Economics Working Paper Archive wp_446, Levy Economics Institute.
    6. Gairuzazmi Ghani, 2006. "Export Promotion Policies and the Crowding‐out Effect in Developing Countries," Asian Economic Journal, East Asian Economic Association, vol. 20(3), pages 319-331, September.
    7. Zhang, Yanfang & Zhang, Ming & Liu, Yue & Nie, Rui, 2017. "Enterprise investment, local government intervention and coal overcapacity: The case of China," Energy Policy, Elsevier, vol. 101(C), pages 162-169.

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