Abstract

In 1997, the Asian economic crisis, initially spawned in Thailand, debilitated the miracle economies of East Asia. Even though East Asian countries bounced back with remarkable agility and quickly climbed up the other side of their V-shaped economic growth curve, their resilience is yet to be assured. This study argues that the state as the main governing mechanism lost its institutional capacity as a locus of governance in the face of globalization and financial liberalization. A governance crisis occurs when the state's monitoring and disciplinary capacities become weak and its credible commitment to ensure a secure economic development becomes severely challenged. Ultimately, the state as a governing mechanism needs to address its capacity problems in order to return to a path of sustainable growth and move towards liberal capitalism. However, because of a web of socio-political networks and contingent historical experiences, the extent to which the East Asian model of capitalism will transform into the Western model of liberal capitalism is limited.