Implications of the Asian Financial Crisis.
The Asian Financial Crisis also called the "Asian Contagion". This was a series of currency devaluations and other events that spread through many Asian markets beginning in the summer of 1997. The currency markets first failed in Thailand as the result of the government's decision to no longer peg the local currency to the U.S. dollar. Currency declines spread rapidly throughout South Asia, in turn causing stock market declines, reduced import revenues and even government upheaval.
Although the economic storm that swept through Asian in 1997 has now declined, the wreckage left in its wake has undoubtedly take years to repair. By indulging in a debt spree that ultimately bought its high flying economies crashing to the ground, Asia may have lost a decade of economic progress. Beyond this, however, the crisis has raised a series of fundamental policy questions about the sustainability of the so called Asian Economic Model, the role of the IMF, and the virtues of floating and fixed exchange rates. The crisis also has important implications for international businesses. For a decade, the Asian Pacific region has been promoted by many as the future economic engine of the world economy. Businesses have invested billions of dollars in the region on the assumption that the rapid growth of the last decade would continue. But at the dawn of the aforementioned crisis, it has come grinding to a halt. So what could this mean for international businesses with a stake in the region, and for those that compete against Asian companies?
Back in the late 1980s and early 1990s a number of authors were writing articles about the superiority of the Asian Economic Model or Asian Capitalism. According to its advocates, the countries of the Asian Pacific region, as exemplified by Japan and South Korea, had put together the institutions of