The Asian economic market was seen as a success in terms of rate of growth and gains in living standards. Their remarkable achievement in sustaining a high rate of economic growth over a long period was significantly fostered by their active participation in the globalization process. This enabled them to take advantage of the increasing opportunities for using trade as an engine of growth and for accessing external capital and technology. In almost all Asian countries, the export centre was the main growth engine, although the governments role in promoting specific industrial and export policies varied across the region.
Growth continued largely unabated during the early 1990s, during which time it was fuelled by significant inflows of capital, especially from Europe and Japan. However, hints of weaknesses began to emerge towards the mid-1990s. In many Asian countries, signs that the economies were exceeding their capacity, and thereby overheating, became evident; high levels of short-term foreign debts accumulated; corporations became highly leveraged and export levels started to drop.
With the Asian economy receiving much praise what actually went wrong? Part of the answer seems to be that the countries within the Asia pacific became victims of their own success. The high rate of growth had led domestic and foreign investors neglecting the Asian countries economic weaknesses.
It wasn't until the second half of 1997, several East and South-East Asian economies fell victim to some of the pitfalls associated with closer integration into the international economy. The most seriously affected, albeit with varying degrees of severity, were Thailand, Indonesia, Malaysia, the Philippines, and the Republic of Korea. Three of these (Indonesia, the Republic of Korea and Thailand) were forced to seek emergency assistance from IMF.
Thailand experienced some currency problems which quickly developed into a financial and economic crisis and spread to...