stries. Southeast Asian governments engaged in acts that promoted certain industries and businesses. They provided them with tax credits or subsidies. These policies allowed Asian government leaders to pick the leading industries and helped to ensure their success rather than allow the free trade market to dictate such decisions. Thus, these countries had a power to control and dictate the market, much more so than other Western powers.Supporters of the Asian system argued that such government intervention in the marketplace was necessary to ensure economic stability. They argued that policy makers could focus on industries with high growth potential. Many of these industries would have otherwise had great difficulty raising capital to start operations. Asian political leaders also implemented tariffs and other protection measures to protect their domestic industries from international competition. The result was the growth of large corporations that became powerful competitors in international markets. Trouble BeginsIn late June of 1997 sixteen Asian financial companies collapsed which alerted investors to the stresses the economy was currently facing. . By July money market traders believed the government could be forced to abandon its pledge to link the currency unit of Thailand, the Baht, to the US dollar. They felt that the dollar was much stronger than the Baht, and thus pegging the value of the Baht to the value of the dollar greatly overestimated the value of the Baht. On the second of July the Thai government announced a managed float of the Baht. They then called on the International Monetary Fund (IMF) for technical assistance. That day the value of the Baht fell approximately 20 percent in comparison to the US dollar.Many investors were concerned that the baht would become unstable and suddenly decline in value. So, large numbers of investors exchanged the currency for dollars. They felt the value of the dollar on the intern...
