The trend toward more representative systems of government
has been due in part to increasing prosperity and
the growth of an affluent and educated middle class. Although
Indonesia, Burma, and the three Indochinese
states are still overwhelmingly agrarian, Malaysia and
Thailand have been undergoing relatively rapid economic
development.
In the late summer of 1997, however, these economic
gains were threatened, and popular faith in the ultimate
benefits of globalization was shaken as a financial crisis
swept through the region. The crisis was triggered by a
number of problems, including growing budget deficits
caused by excessive government expenditures on ambitious
development projects, irresponsible lending and investment
practices by financial institutions, and an overvaluation
of local currencies relative to the U.S. dollar.
An underlying cause of these problems was the prevalence
of backroom deals between politicians and business
leaders that temporarily enriched both groups at the cost
of eventual economic dislocation.
As local currencies plummeted in value, the International
Monetary Fund agreed to provide assistance, but
only on the condition that the governments concerned
permit greater transparency in their economic systems
and allow market forces to operate more freely, even at
the price of bankruptcies and the loss of jobs. In the early
2000s, although there were signs that some political leaders
recognized the serious nature of their problems and
were willing to take steps to resolve them, the political
cost of such changes remained uncertain.
World History
