Learning Curve
The World Bank’s September 18 East Asia Brief highlights the region’s recovery from its 1997 financial crisis, noting strong regional growth, employment at pre-crisis levels, rising foreign investment, stable currencies, and relatively low interest rates. The unlikely pair at the core of this revival: South Korea and Malaysia, which grew by 10.7 percent and 5.6 ...
The World Bank's September 18 East Asia Brief highlights the region's recovery from its 1997 financial crisis, noting strong regional growth, employment at pre-crisis levels, rising foreign investment, stable currencies, and relatively low interest rates. The unlikely pair at the core of this revival: South Korea and Malaysia, which grew by 10.7 percent and 5.6 percent, respectively, in 1999.
The World Bank’s September 18 East Asia Brief highlights the region’s recovery from its 1997 financial crisis, noting strong regional growth, employment at pre-crisis levels, rising foreign investment, stable currencies, and relatively low interest rates. The unlikely pair at the core of this revival: South Korea and Malaysia, which grew by 10.7 percent and 5.6 percent, respectively, in 1999.
When Asia’s currencies tumbled more than three years ago, South Korea dutifully swallowed the recommended doses of economic orthodoxy required by the International Monetary Fund (IMF). But Malaysia? There, Prime Minister Mahathir Mohamad imposed capital controls and denounced IMF policies, which he recently said were designed to pry open poor countries’ markets "so that foreign companies could… take over local businesses."
Yet Mahathir’s policies did not match his rhetoric. Even as he assailed the world’s hedge funds, Mahathir quietly watered down the capital controls in 1999, eventually eliminating a one-year ban on portfolio investment repatriation and replacing it with a profits tax. The IMF also seems to have softened its stance against capital controls, admitting that they gave Malaysia "breathing space" to implement financial-sector restructuring. For all the good news, rest assured that the debate over its causes will continue.
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