The Determinants and Prospects of Economic Growth in Asia

This paper analyses Asia's growth experience in a broad historical and international context. East Asian countries grew faster than the rest of the world for four key reasons: they had substantial potential for catching up, their geography and structural characteristics were by- and large favorable, demographic changes worked in favor of more rapid growth, and their economic policies and strategy were conducive to sustained growth. Although the financial crisis of 1997 abruptly brought a halt to Asia's period of robust growth, there was little in Asia's fundamental growth strategy that inevitably led to the crisis. The key to the crisis was too much short-term capital flowing into weak and under-supervised financial systems. This suggests that with better financial management and a return to the core policies that resulted in rapid growth, the East Asian economies can again return to sustained growth. [O11, O40, O53]