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The Asian Economic & Financial Crisis

Those studies are relevant to this research paper only insofar as they help American businesses plan and manage their affairs in the region. Nevertheless, certain important themes emerge:

1. Much of the rapid economic growth of the region was achieved at the expense of a more balanced approach to development. The rapid spread of the crisis proved that no nation can prosper in the long run in today's global interdependent economy if it disregards the imperative of keeping its industries and economy internationally competitive. Chowdhury and Paul said the lessons of the "Asian financial meltdown" were clear: "governments should focus more sharply on what has made the region so successful in the past-including honest administration, prudent use of debt, and a respect for market forces."

The NICS in the region pegged their currencies to the American dollar. They did so, said Pettway, because "it was thought that fixed exchange rates lead to a more credible monetary policy, low inflation, and predictable exchange rates enhanced trade and investment." When Japan's overemphasis on export-led growth without sufficient regard for profitability led to large asset accumulations and uneconomic bank loans, resulting in bank failures and an economic slowdown in 1989-1991, the value of the U.S. dollar rose in relation to the yen, "reducing the previously favorable price advantage of non-Japanese Asian goods." The exports of South Korea and Southeast Asian nations declined, which helped precipitate the crisis. The crisis exposed other weaknesses in the economies of many East Asian nations. Many domestic industries were non-competitive in world markets, because of protectionism, government bailouts, uneconomic and discriminatory credit practices, cronyism and corruption, the promotion in some countries of uneconomic infrastructure projects, discrimination and restrictive government policies toward many domestic service sectors, the despoilatio...

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The Asian Economic & Financial Crisis. (1969, December 31). In Retrieved 00:33, August 21, 2017, from
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