Jennifer Ann Dwyer
Introduction Many economists have said that the growth experienced by Southeastern Asian countries during the 1980s and early 1990s was a "miracle." Japan, Malaysia, South Korea, Indonesia and other countries in the region experienced annual growth rates of over 7 percent. Along with this rapid growth, these countries also saw very little unemployment and an almost invisible wealth gap between the different social and economic classes of citizens. Circumstances have dramatically changed, however. In the summer of 1997, Southeast Asia experienced a time of great financial and economic turmoil. At first, the economic crisis was isolated in Thailand's financial sector, but it quickly spread to Malaysia, Indonesia and South Korea as well. The Prosperous Times It seems that Southeast Asia has always been able to turn bad times around and recover to end up as some of the strongest economies in the world. South Korea, for instance, was very weak and vulnerable after fighting a civil !war with North Korea in 1953. However, between 1960 and 1990, the country experienced remarkable economic growth and recovery, and soon the world's 11th most powerful economy. Many other Southeast Asian countries had similar experiences. South Korea, Hong
businesses to cut their prices and improve productivity in order to be more competitive. Japan's automobiles and electronics were rivaled U. Japan and Hong Kong slowly regained strength, Their economies have been relatively stable since the beginning of 1998. stock markets reacted by falling as well. They fear that many of these changes will reduce Asia's power to determine its own economic policies and could result in severe financial hardship. They have stated that that IMF reforms in Asia will mean increased bankruptcies, more bank closures and higher prices for consumer goods. Other forces would have little or no effect. South Korea also made a number of pledges to the IMF. Asia's increased globalization has helped boost U. 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. Corruption was also rampant in this region, causing further problems in Southeast Asia. If free market policies are followed, the long-term effects are likely to be positive, at least when society as a whole is considered. " The deals the IMF struck with Southeast Asia largely supported the view that the region needed to strengthen its free-market syst!em in order to avoid similar crises in the future.
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