Overcapacity and the East Asian Crisis

The New Face of Unequal Exchange: Low-Wage Manufacturing, Commodity Chains, and Global Inequality

“…A fourth concern is that competition among emerging industrial sectors to secure greater export market share can lead to overcapacity when growth of production outstrips the growth of global demand (Erturk 2002). Such excess capacity will place downward pressure on prices and production costs, thereby further limiting the ability of producers and workers to capture the value generated along global commodity chains.…”

“…In addition, current competitive pressures might constrain the capacity for up-grading of the new generation of low-wage exporters by limiting the resources and the flexibility needed for pursuing long-run strategies of industrial development. Furthermore, as more and more countries compete on the global export market, the opportunities for additional export penetration could be curtailed (Erturk 2002). The four original Asian tigers were able to successfully up-graded their industries because of their industrial policies and the existence of extensive governmentindustry linkages; these strategies might not be available to all countries.…”

The Introduction of the Philosophy of Sufficiency Economy and Its Application to Consumer Context

“…One of the well-known examples of the unfavorable effect of globalization is the 1997 East Asian economic recession. Previous research on globalization has proposed that one of the potential causes of this economic crisis was the condemnation of the economic development plan which was launched in Thailand during 1961 (Erturk 2001;Smith 2005). This development plan emphasized the economic growth especially in the private sector through first, the exploitation of Thailand's natural resources; second, the emphasis of urban economic development through private enterprise; and third, the acquisition of technology via foreign investment (Baker and Phongpaichit 2014).…”

Trade Variety and Export Performance of ASEAN-5

“…This intense competition will further reduce developing countries' terms of trade, and in this sense, unskilled labor-intensive manufactured products are being 'commoditized', behaving similar to primary commodities, which are experiencing a downward trendin terms of trade (Ghani 2006b). Erturk (2001Erturk ( /2002 argued that one of the causes of the East Asian crisis was the investment boom in East Asia in the early 1990s. As these countries exited from their niche in producing labor-intensive products, they created overcapacity in more skilled and capitalintensive goods; consequently, export prices for East Asian manufactured productswere reduced, which ultimately lead to the crisis (the East Asian financial crisis has also weakened most of the East Asian countries' currencies; hence their real effective exchange rate depreciated).…”