THE ASIAN CRISIS AND ITS INTERNATIONAL REPERCUSSIONS/219In the five years running up to the crisis, the external debt of these
countries had more than doubled. The 1997 crisis unleashed a
renewed explosion of debt, suddenly making it very difficult for the
countries to meet their financial obligations. Taiwan and China are
exceptions to the rule, but for how long? Growth in the 'dragon'
countries (Thailand, with a population of 60 million; Indonesia with
203 million; the Philippines with 73 million and Malaysia with 20
million) was driven by an inflow of foreign capital, by the importation
of goods and machinery and by low salaries. This soon led to the
appearance of two negative factors. First, the external debt - largely
in the form of short-term loans contracted on the financial markets
- grew rapidly; second, the trade deficit continued to rise. Indeed,
imports were systematically higher than exports. In other words, the
productivity of these countries remained structurally lower than that
of the industrialised countries with which they were trading. The
four 'dragons' have retained the characteristics of Third World
economies and therefore suffer under the effects of unequal trade.
The relative price of their exports is lower than the relative price of the
goods they must import in order to reach their growth targets and
satisfy the consumer demands of the wealthiest sectors of the
population. It is only these layers of the population that have the
necessary purchasing power to buy high-quality consumer goods. A
large sector of the population did not benefit from the fruits of growth,
which explains why the gap between rich and poor within the
countries in question actually grew in size, in spite of an overall
increase in the national income. Now that the crisis has struck, the
richest sectors of the population continue to amass riches while the
majority of the population - including most in the middle classes -
have seen their income plummet. This will only serve to accentuate
the characteristic features of an 'underdeveloped' economy.
Thailand was the first country to plunge into crisis, its money being
pegged to the dollar (which was not the case for the other three
'dragons'). The Thai bhat therefore kept in step with the dollar, which
had strongly risen in value. This made Thai exports much less
competitive, provoking capital flight. The three other 'dragons' were
dragged down by the Thai collapse.
Thailand is the fifth most indebted Third World country in absolute
terms, just behind Brazil (population 170 million), Mexico
(population 90 million), China (population 1.2 billion) and South
Korea (population 45 million).