It is always a great pleasure for readers to pick up a book whose title promises to answer many questions they have been asking themselves, whether integral or tangential to their research interests, and discover that their hopes and expectations have not been disappointed. As a student of global finance with a particular interest in the political economy of financial crises and the social mechanisms by which they develop, I found Two Crises, Different Outcomes to be a particularly gratifying read in this context. The editors have developed and executed a strong and coherent research design and assembled a highly expert team of world-class scholars, including one contemporarily serving as the Indonesian finance minister, in order to address this agenda.

The editors set before their collaborators two key questions. The first is why the Asian financial crisis (AFC) of 1997 and the global financial crisis (GFC) of 2008 had such disparate effects on the trading nations of East Asia. The 1997 crisis resulted in a multi-year regional depression that brought down one East Asian government (Indonesia) and fatally weakened another (Thailand). Nearly all states in the region veritably sailed through the 2008 crisis without much more than a year of annual GDP downturn. Refreshingly, instead of offering us the “usual suspects” answers from a largely economic analysis, the authors offer rich and persuasive political economy explanations featuring not only the institutional vulnerabilities to exogenous shocks but also deep, satisfying analysis of how the domestic politics of the states in the regions contributed to the development of the postures of their financial institutions and how these postures weathered the approaching financial storms of the GFC, and buckled under the tempests that buffeted them in 1997. The second question, addressed in the back of the volume, is whether East Asia is now poised for more robust economic growth.

Five factors emerge in the text that are key to answering the questions posed by the volume. The first concerns the region’s various developmental strategies and how they fare when they come into contact with the forces of global finance. An essential feature of these strategies proves to be precisely the very close governmental–business relations that neoliberal economists in the West have sought to denigrate as “crony capitalism.” The other essential feature in the context of development policy is the enormously high levels of investment in productive capital characteristic in particular of the strongest economies in the region.

A second factor emerges as an unintended consequence of these essential features. The economic vitality that these features of Asian developmental states engender also attracts high levels of foreign portfolio flows, which can rush into the region, exacerbating asset bubbles and just as quickly rush out leaving the regional economies with painful banking and liquidity crises.

A third factor explains the 2008 resilience, namely, a number of prophylactic actions taken by most states in the regions to strengthen their economies' stability against future exogenous shocks. Not the least of these are domestic institutional reforms to enhance financial regulatory oversight in order to limit international financial exposure, and massive self-insurance against future currency crises by building up huge central bank reserves in global reserve currencies, irrespective of the opportunity costs that this entails for investment in the domestic economy.

A fourth factor constitutes the inverse of the third for the Western states. Financial deregulation, particularly in the United States, an embrace of financial short-termism, and too-sophisticated products of financial engineering left the West vulnerable to the GFC, when the consequences of failed social policy, especially in the guise of failed housing policy, are accounted for. The fifth factor is associated with the resilience of East Asian economies since 2010 and the question of where “a second miracle” will develop, or at least new economic leadership (pp. 10–13).

After the editors set the agenda in an introduction T. J. Pemple outlines the origins of the two crises from a political economy perspective in a remarkably short space in the first chapter. Heavy Asian reliance upon bank lending and unfortunate structures of capital-account opening, as well as unfortunate sequencing, emerge as major problems for East Asian nations during the AFC. For Western countries, a global savings mismatch, a failure to productively invest borrowed funds and excess monetary emission (rates too low for too long) comprise the major economic policy errors of the West, while domestic pressures for financial deregulation, an ideology of financial self-regulation, and governmental goals to maximize home ownership emerge as key political economic explanations of the GFC, along with regulatory failures in the area of sophisticated financial produce, loan-to-value levies on residential mortgages, and the absence of incentives for key actors in the mortgage initiation and banking industries to perform due diligence on the quality of residential mortgages and securities constructed from pools of them. Pemple concludes his chapter with a litany of post–AFC reforms from a political economy perspective that permitted East Asian nations to “escape” (p. 33) the worst effects of the GFC, including contagion effects.

The next four chapters in Part I on the ways in which East Asian nations dealt with the crisis provide rigorous, rich, and valuable insights into the political economy of each nation and its consequences for that nation’s capacities to manage exogenous shocks to the domestic economy. These chapters constitute the heart of the volume, in my view, in addition to the luminous international political economy–oriented chapters (6 and 7) by Pepinsky and Doner on political business relations and export-oriented economies, respectively, and external vulnerability. It would take a wiser scholar than I can recall meeting to avoid learning enormously from these contributions. The necessarily speculative concluding chapter, dealing with the editors’ second question regarding the prospects of East Asia’s economic future, seems quite sanguine, but in a fashion that is necessarily contingent. An assessment of the value of these projections will have to await events in China as it grapples with major modifications in its development model, while simultaneously attempting to deal with what is finally, and quite clearly, a perfectly horrific housing bubble.

Volume contributors draw upon deep knowledge and fine scholarship of the domestic political and institutional milieus with which the forces of global finance interact, both before the AFC and subsequent to AFC-induced reforms in each country. Area scholars and students of international political economy alike will learn a great deal from vibrant developments by the contributors of the political economies of Indonesia (Basri), Taiwan (Chu), Korea and Thailand (Okabe), China (Noughton), and Japan (Keiichi Tsunekawa). A special treat for this reader was Pepinsky’s chapter on political business and external vulnerability in the region, which ascribes enormous causal significance to the changing views of investors in the region as to the propriety of many key practices associated with the Asian development model, particularly bank-firm-state cooperation, so derided by neoliberal economists as “crony capitalism” during and subsequent to the AFC. An account focusing on the causal significance of changing social conventions concerning what investors and the markets believe is, in an essential manner, constructivist in orientation, however unintended.