Barbarians at the Gate?

When the reigning orthodoxy has used the Asian economic crisis of 1997-98 to retrospectively indict administratively guided industrialisation strategies, this article argues that it was the very success of 'developmental states' that rendered national industrial plans increasingly incoherent. It demonstrates that the progressive cross-border expansion of production and procurement networks eroded the competence of regulatory mechanisms and led to an uncoordinated expansion of production. At the same time, the accelerated transfer of manufacturing operations to low-wage areas did not correspondingly expand markets. The resulting crisis has exposed fissures in the social bases of support that ruling elites had been able to paper over during years of rapid economic growth. In this context, the reforms imposed by the IMF have led to a transfer of corporate assets in the ailing economies to overseas investors and further constrained policy options for governments. Most notably, this analysis indicates that the economic crisis is merely the surface manifestation of a much deeper crisis: the collapse of the political coalitions that had made the developmental state feasible. Hence, no economic or financial 'fix' is likely to provide a tourniquet and the region is likely to face prolonged instability.