Asia was impressive but still human.docVIP

Asia was impressive but still human Krugman: Asia was impressive but still human MIT Economics Professor Paul Krugman wrote an article quot;The Myth of Asia’s Miraclequot; published in Foreign Affairs in 1994. In that article, he denounced the Asian miracle and believed that Asia’s growth could not be sustained. During his visit to Singapore last month, he talked about the current Asian economic crisis and suggested some radical measures. The following is an abstract of his interview with Business Times. Q: In your ‘Foreign Affairs’ article, you argued that Asia’s growth could be basically explained by high rates of investment. But how did that growth manage to be sustained for so long --close on 30 years? A: There were three things going on. The first was high rates of investment. The second was high rates of labour force growth. Finally, you had increases in education levels. So if you took into account those triple sources of growth, which were all measurable inputs, they somewhat surprisingly seemed to explain pretty much all of what had happened in Asia. There’s nothing paradoxical about that: the mobilisation of resources was immense. Q: What were the earliest signs of things being wrong? A: The stuff I talked about in 1994 wasn’t a sign of an impending crisis -- at least I didn’t think so. But I suppose you could look at the indicators there and say there were signs there that Asia’s growth at that pace was not sustainable. The first I began to see that some kind of crisis might be in the offing was some time in 1995 or early 1996, when I began to notice how similar the balance of payments developments were in South-east Asia to those in Latin America a couple of years before. Like a lot of people, I saw the very large current account deficits and the buildup of short-term debt and I thought: this looks awfully like Mexico an