By Emily Vuong. Over the past half a century, a collection of eight nations across Eastern Asia have experienced consistent and incredible rates of economic growth. Paul Krugman wrote a famous paper in the s outlining the myths surrounding the Asian miracle of the 20 th century.
The Asian Crisis. Additional maps. East Asia had been willing to allow non-residents to move money in and out freely and to purchase property.
Asia's financial crisis began in Thailand nearly two years ago when a sharp devaluation of the Thai currency triggered a chain reaction affecting Indonesia, Malaysia and Korea. Recent signs indicated that things are looking up for South Korea as well as Thailand. Here's another kind of Asian miracle.
To which the answer has to be a question: who are you talking about? Since the early s there have been three big waves of capital flows to developing countries. The first wave was to Latin American countries that liberalized trade and opened their markets in the wake of the 80s debt crisis.
The onset of the Asian financial crisis took the world by surprise. Its severity and the alarming speed at which it spread sent shock waves around the world. There is still no consensus as to the real causes of this catastrophe although a steep fall in export demand with exchange rates pegged to an appreciating US dollar clearly caused current account deficit problems, which were exacerbated by imprudent bank lending and debt management practices.
Jump to navigation. Once upon a time, Western opinion leaders found themselves both impressed and frightened by the extraordinary growth rates achieved by a set of Eastern economies. Although those economies were still substantially poorer and smaller than those of the West, the speed with which they had transformed themselves from peasant societies into industrial powerhouses, their continuing ability to achieve growth rates several times higher than the advanced nations, and their increasing ability to challenge or even surpass American and European technology in certain areas seemed to call into question the dominance not only of Western power but of Western ideology.
Can the East Asian Miracle Persist? It is a great pleasure for me to be back in Princeton again. As mentioned in the introduction, I spent two formative periods of my life in Princeton, first as an MPA student in the late s, and more recently as a visiting professor in the Woodrow Wilson School.
It seems safe to say that nobody anticipated anything like the current crisis in Asia. True, there were some Asia skeptics - including myself - who regarded the claims of an Asian economic miracle as overstated, and argued that Asia was bound to run into diminishing returns eventually. And some people - again including myself - raised warning flags a year or two before the Thai crisis, noting that the current account deficits of Southeast Asian countries were as high as or higher than those of Latin America inand arguing that Asian economies had no special immunity to financial crises. But even pessimists expected something along the lines of a conventional currency crisis followed by at most a modest downturn, and we expected the longer-term slowdown in growth to emerge only gradually.