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Economic Growth in East Asia Before and After the Financial Crisis

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  • Robert J. Barro

Abstract

In 1997-98, five east Asian countries -- Indonesia, Malaysia, South Korea, the Philippines, and Thailand -- experienced sharp currency and banking crises. The contraction of real GDP was severe in relation to the previous history and in comparison with five east Asian countries that were less affected by the financial crisis. Recoveries in the five crisis countries in 1999-2000 were strong in most cases, but it is unclear whether the pre-crisis growth paths will be reattained. Indications for permanently depressed prospects come from the sharp reductions in investment ratios, which have recovered only slightly, and the lowered stock-market prices. A panel analysis for a broad group of economies shows that a combined currency and banking crisis typically reduces economic growth over a five-year period by 2% per year, compared with 3% per year for the 1997-98 crisis in east Asia. The broader analysis found no evidence that financial crises had effects on growth that persisted beyond a five-year period.

Suggested Citation

  • Robert J. Barro, 2001. "Economic Growth in East Asia Before and After the Financial Crisis," NBER Working Papers 8330, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:8330
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    References listed on IDEAS

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    More about this item

    JEL classification:

    • O4 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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