G A B R I E L A
N
E T W O R K U
S AA Philippine-US Women's Solidarity Mass Organization, est. 1989
BURSTING THE
BUBBLE
FINANCIAL CRISIS HITS EAST ASIAN "MIRACLE" ECONOMIES
While Fidel Ramos has been busily complying with World Bank and International Monetary Fund admonitions to liberalize, deregulate and privatize over the last few years, other Asian leaders have consistently expressed doubt over the efficacy of such programs. At a recent ASEAN (Association of South-East Asian Nations) Ministerial Meeting in Kuala Lumpur, many agreed that currency speculation posed a threat to development in all developing countries. Malaysian Prime Minister Dr Mahathir Mohamad even branded currency trading as immoral, demanded that it be criminalized, and advocated capital controls. For this he was roundly attacked by Western media, who portrayed him as being ‘seriously out of touch’ with the modern world of finance, and whose inflammatory rhetoric was destabilizing regional markets.
Developments over the last few months must vindicate Mahathir to some extent. East Asia has been hit by a financial crisis which can no longer be dismissed as a temporary blip on the upward march of the ‘miracle economies.’ In South Korea, Thailand, Indonesia, Malaysia, the Philippines and Singapore, financial markets have been rocked by wild fluctuations, currencies have fallen often more than 50% against the US dollar, and bank closures and impending unemployment are casting a serious shadow on the region’s economic future.
There is now talk of the unraveling of the South-east Asian model of development. This was a model of high-speed growth fueled by huge infusions of foreign capital, gained through a thorough liberalization of financial markets, opening up economies to the free inflow and outflow of funds.
In the 1990s, the Philippines has exemplified this trend, with the government attempting to create one of the most foreign capital-friendly systems in the region. In recent years, foreign exchange restrictions have been lifted, investors granted full and immediate repatriation of profits, dividends, and capital, and the banking system opened to foreign banks. Foreign investment rushed in, sending the stock price index in the Philippine Stock Exchange sky-rocketing.
The volatility of such foreign capital was overlooked as authorities hailed the ‘new Philippine economy.’ Unfortunately, much of the capital had gone, not into the productive sectors of the economy but into the speculative areas, like property development. Construction booms and high growth rates masked the fact that industrial growth was slowing and massive debt was accumulating.
Eventually, foreign investors began noticing that traditional Philippine exports were performing badly, with garment exports, for instance, falling by 27 per cent in 1996. As in Malaysia, Thailand and Indonesia, exports in the Philippines were slowing down dramatically, dampening the enthusiasm of many foreign investors.
While there is some consensus in Asia that the crisis is in part a product of the weak controls on the flow of international capital, US officials are taking exactly the opposite position: that it was incomplete liberalization that was one of key causes of the crisis. The fixing of local currencies to the US dollar has been targeted as the major culprit, ignoring the fact that many investors (and even the IMF) had emphasized the stability that fixed rates brought to financial markets.
Under IMF tutelage, the Philippines is already the most structurally adjusted country in East Asia, and Thailand, Indonesia and Malaysia are now in the process of being liberalized by the IMF. South-east Asia may be facing an era of low and fluctuating growth such as that experienced by Latin America and the Philippines in the 1980s, when they underwent comprehensive adjustment programs at the hands of the World Bank and the Fund.
The majority of the population in the Philippines has already experienced what structural adjustment and liberalization mean: cutbacks in public spending on social infrastructure such as health, education and social security; price hike-ups on basic goods which dramatically raise the cost of living for the poor; and a race to the bottom in terms of wages, working conditions, and workers’ rights.
Women have carried much of this burden. They have been on the front lines in their position as managers of households struggling for survival, as the lowest paid sector of the industrial workforce, as the majority of ‘labor export’ workers sent overseas to support their families, and as ‘hospitality’ workers prostituted for foreign capital.
Across Asia, women’s jobs in manufacturing tend to be non-unionized and their jobs in the service sector semi-skilled. Those who work in Asia’s many export zones, on which export-oriented development has been founded, are vulnerable to transfers and lay-offs as firms search for cheaper locations to do business. Some 80 per cent of workers in garments and export processing zones are women. A growing number of women are also in the informal sector and home-based work, where labor standards are difficult to enforce and whose contributions are not always reflected in national statistics. As economies undergo this tremendous financial turbulence, it is women, already occupying the bottom rungs of the economic ladder, who will be most adversely affected.
The financial crisis has demonstrated irrefutably the unsustainable and destructive nature of capitalist development that is built on parasitic speculation at the top and exploitation and pain from below. More IMF-dictated structural adjustment is not the answer.
KAWOMENAN SPRING 1998
Contents:
Bursting the Bubble: Financial Crisis hits East Asian "Miracle" Economies
Action Analysis: On the Intensifying Sex Trade in the Philippines
Community-Based Health Programs in the Philippines: 25 Years of Commitment and Service to the People
Growing Up Female and Filipina in America: Some Glimpses into Childhood
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