Assessing the Impacts of and Response to the 1997-98 Asian
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SOCIAL AND ECONOMIC POLICY WORKING PAPER ASSESSING THE IMPACTS OF AND RESPONSES TO THE 1997-98 ASIAN FINANCIAL CRISIS THROUGH A CHILD RIGHTS LENS Including Children in Policy Responses to Previous Economic Crises Nicola Jones Hannah Marsden Assessing the Impacts of and Responses to the 1997-98 Asian Financial Crisis through a Child Rights Lens: Including Children in Policy Responses to Previous Economic Crises © United Nations Children's Fund (UNICEF), Policy, Advocacy and Knowledge Management, Division of Policy and Practice Policy, Advocacy and Knowledge Management, Division of Policy and Practice UNICEF 3 UN Plaza, NY, NY 10017 December 2010 This is a working document. It has been prepared to facilitate the exchange of knowledge and to stimulate discussion. The findings, interpretations and conclusions expressed in this paper are those of the author(s) and do not necessarily reflect the policies or views of UNICEF The text has not been edited to official publication standards and UNICEF accepts no responsibility for errors. The designations in this publication do not imply an opinion on legal status of any country or territory, or of its authorities, or the delimitation of frontiers. The editors of the series are Isabel Ortiz, Gaspar Fajth and David Anthony of UNICEF Policy and Practice Division. For more information on the series, or to submit a working paper, please contact [email protected], [email protected], or [email protected]. UNICEF SOCIAL AND ECONOMIC POLICY WORKING PAPER December 2010 ASSESSING THE IMPACTS OF AND RESPONSES TO THE 1997-98 ASIAN FINANCIAL CRISIS THROUGH A CHILD RIGHTS LENS Including Children in Policy Responses to Previous Economic Crises Nicola Jones Overseas Development Institute Hannah Marsden Overseas Development Institute JEL Classification: H5, H12, O23, H5, I3, J3 Keywords: Asian financial crisis, public expenditures, child rights, macroeconomic impacts, microeconomic impacts, social spending, crisis recovery, poverty, social protection Comments may be addressed by email to the author at [email protected], cc: [email protected] Table of Contents Page Executive Summary ....................................................................................................................................... 1 1. Introduction ......................................................................................................................................... 8 2. Conceptual framework and methodology ........................................................................................... 9 3. Impacts of the Asian economic crisis: Assessing transmission belts from the macro through micro levels on children and caregivers ................................................................................................................ 11 3.1 Macroeconomic environment ................................................................................................... 11 3.2 Meso-level impacts on human development, poverty and inequality ..................................... 16 3.3 Age-specific impacts .................................................................................................................. 23 3.4 Gendered impacts ..................................................................................................................... 25 3.5 Micro-level impacts on households ........................................................................................... 30 3.6 Intra-household dynamics ......................................................................................................... 35 3.7 Impacts on children’s rights ...................................................................................................... 41 3.8 Summary of similarities and differences of crisis impacts on children’s rights ........................ 58 4 Policy responses ................................................................................................................................. 60 4.1 Political economy drivers ................................................................................................................... 61 4.2 Economic policy ......................................................................................................................... 65 4.3 Social sector reform and investment in basic services .............................................................. 69 4.4 Social protection ........................................................................................................................ 75 4.5 Informal social protection ......................................................................................................... 95 4.6 Impacts on social capital............................................................................................................ 96 4.7 Summary of policy responses .................................................................................................... 99 5 Conclusions and policy implications ................................................................................................. 100 References ................................................................................................................................................ 104 Data Sources ............................................................................................................................................. 112 Appendix 2: Micro-level impacts on households ...................................................................................... 119 Appendix 3: Intra-household dynamics .................................................................................................... 120 Appendix 4: Impacts on children’s rights .................................................................................................. 121 Executive Summary The ‘miracle’ of East Asian economic growth was brought to a standstill when the Asian financial crisis hit in 1997, unleashing a range of economic, political and social consequences across the region and exposing this transformation as fragile and unstable. This paper examines the macro–micro impacts of the 1990s crisis in order to assess the impact pathways through which macroeconomic shocks affected children, youth and caregivers, and the extent to which different packages of economic and social policy responses mitigated the negative impacts on child wellbeing. It focuses on four countries most affected by the crisis: Indonesia, South Korea, Malaysia and Thailand. The motivation for this study is as follows. The recent food, fuel and financial crises have sparked considerable debate as to how the effects of the resulting shocks on vulnerable populations in developing countries can best be mitigated. In light of the greater prevalence and distinctive nature of childhood poverty, it is important to ensure these discussions integrate age- and gender-specific considerations, and a more nuanced understanding of how previous economic shocks have affected children could help inform these debates. This study therefore seeks to add to this knowledge gap by drawing out important lessons from the experience of the Asian 1997/98 financial crisis, arguing that a review a decade after the 1990s crisis is particularly valuable because it allows for an assessment not only of the short-term effects of a major macroeconomic shock on child wellbeing but also of its more medium-term effects. More generally, given that 2009 is the 20th anniversary of the UN Convention on the Rights of the Child, it is obviously timely to consider the extent to which children’s rights have been affected by major economic and social policy choices and to tease out relevant learning for future crisis contexts. The first part of the paper explores documented impacts on children’s rights to survival (health and nutrition), development (education and time use), protection (from violence, abuse and neglect) and participation. The second half of the paper then examines the policy responses undertaken by governments in the region in terms of macroeconomic policies, social sector reform and basic services and social protection interventions. It pays particular attention to the political economy dynamics shaping these responses. Conceptual framework and methodology This paper is based on a systematic desk-based review of evidence drawing on academic literature, policy documents, grey literature and available datasets. It applies a framework on the impact pathways between macroeconomic shocks and children’s and their caregivers’ micro-level experiences of poverty and vulnerability developed by Harper et al. (2009). This framework identifies key impact pathways from the macro through meso and micro levels, but recognises that policy choices by governments and regional and international actors play a major role in filtering these impacts, as do gendered social norms and intra-household dynamics. Impacts of the Asian economic crisis: Assessing transmission belts from the macro through micro levels on children and caregivers 1 Macro-level shocks The Asian economic crisis was triggered after the Thai government allowed the baht to float in July 2007, which led to a crisis of confidence not only in the Thai economy but also among the Asian Tigers more generally. As the contagion effect from Thailand spread, the region experienced sudden capital flight and the drying up of liquidity. Reversing sometimes decades of positive economic growth, gross domestic product (GDP) growth contracted