Why did Austrailia's economy act differently than Thailand's during the `97 crisis?
The main reason Austrailia's economy acted differently and survived the Asian crises is the fact that she is an advanced developed form of capitalism, compared to the tiger-nations that were an infant form of capitalism or outright mercantilism. The key word here is mercantilism. This is capitalism's oldest nemesis. Any dictionary gives a good enough meaning. All need be done is to substitute t-bills for gold and you have the answer - statecrafted manipulation of values and markets.
Nations who try to over-protect the local market with low exchange rate manipulation for export gain always lose when the rate or market fears turns against them, whereas Austrailia has always [in recent years] possessed a large consumption society to support it in downturns. Of course, the tigers had no well organized internal consumption market to turn to when foreign markets turned against them, so crash they did - too few exports and too little internal demand.
Markets must always be somewhere's near balanced to survive, long term. The balance must be internal and external markets, otherwise punishment is ahead. Even though the U.S., at present, is extremely unbalanced, it is able to survive such massive imbalances because it also possesses the world's largest consumption market, and one of the world's smallest export or import necessity markets. On the other hand, if you look at Japan, you will see an example of her mercantilist troubles played out since the early `90's. Japan was a large export and re-export market far too long, while over-protecting her local economy, thus overpricing her. When the exchange rate turned against her in `85 to `91, crisis developed - a major deflationary crisis. She's still not free and clear. At present, she has a large balance of payments surplus, yet her internal market is still in the dumper, due to the surplus coming from her MNC's overseas profits - after many abandoned the local market, due to exchange rates forcing them out, but originally due to her mercantilist state actions for years.
Now, the entire world is faced with big ol' mercantilist China and her copy-cat minions all over the world. We, the more well developed nations, face massive mercantilist pressures from all the world's low exchange rate and manipulated low rate nations. Just check for balance of payments surplusses by otherwise poor nations, and you will recognize these as mercantilist candidates - capitalism's massive problem. Even looking back at recent history, both Spain's and England's empires over-protected the local country with imperial preference trade laws, thus were mercantilist in nature. Only local entrepreneurial bussiness ventures and spirits, building local consumption markets beat this old demon, then, and now we possess the ability to pass the right trade and exchange laws, if the nations could be awakened from their great, Marxist era, trade sleep...
For an author to check out further writings, I would suggest a native of your own country, Stephen Kirchner at: Link Check out many of his links. As a matter of fact my last post at macromouse was from his site. Institutional Economics site is also listed in the links on macromouse at: Link Also check out Morgan Stanley's year end digest of 25 posts by their top economists from all over the world at: Link If you lose track of this address, as they change it, you can look it up in their site's archive of December 17, 2004. I just read it yesterday. It is quite thorough, and mentions some about mercantilism as does Kirchner's site.