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Capital Mobility and Coalitional Politics: Authoritarian Regimes and Economic Adjustment in Southeast Asia

Published online by Cambridge University Press:  13 June 2011

Thomas B. Pepinsky
Thomas B. Pepinsky
Affiliation:
Cornell University, tp253@cornell.edu.
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Abstract

This article investigates the coalitional bases of authoritarian rule to explain striking variation in adjustment policy to the Asian Financial Crisis in Indonesia and Malaysia. Given currency depreciation with financial sector fragility, holders of mobile assets prefer to maintain an open capital account, while owners of fixed assets and labor favor restrictions of capital mobility to facilitate expansionary macroeconomic policies. Differences in adjustment policy across the two countries reflect differences in the political coalitions supporting the authoritarian regimes. These findings illuminate the nature of political conflict during financial crises and show how a nuanced view of the coalitions supporting authoritarian rule can yield powerful insights into the political economy of authoritarianism and economic adjustment in a global economy.

Type
Research Article
Information
World Politics , Volume 60 , Issue 3 , April 2008 , pp. 438 - 474
Copyright
Copyright © Trustees of Princeton University 2008

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