APEC Economies Report Beyond Asian Crisis
Highlights
Progress Report "APEC Economies beyond the
Asian Crisis"
APEC Economic Committee
Where Do We Stand
in Understanding the Crisis?
* The controversy revolves
around two opposing views.
"The panic camp" holds that
the crisis was a self-fulfilling panic caused by inherent
instability of international financial markets. "The
home-grown camp" holds that the crisis was home-grown in the
sense that crisis-affected economies had their own problems.
There are views in between.
* Broad common understanding
has emerged.
Financial instability, particularly,
volatility of short-term capital flows played an important
role. At the same time, there were vulnerabilities in such
areas as the financial sector and exchange rate policy.
A
New Way of Looking at the Crisis
* A new angle is to
look into structural weaknesses the crisis has highlighted.
Its motivation is to maximize long-term growth potential.
The focuses of existing studies are on the causes, and
ways of crisis resolution and prevention. This new angle is
forward-looking and growth-oriented.
* Long-term growth
hinges on how structural weaknesses are addressed.
Although it remains an open question how much structural
weaknesses contributed to instigating the crisis, there is
no denying that structural weaknesses inhibit future
growth.
* Important to identify what structural
weaknesses the crisis has shed light on, and to address them
head on.
All APEC economies in Asia and beyond confront,
albeit to varied extents, similar structural problems the
crisis has highlighted for Asian crisis-hit economies.
*
The crisis has highlighted major weaknesses in four broad
areas:
* the financial sector (such as ineffectual
prudential regulations)
* the corporate sector (such as
weak corporate governance)
* economic policy making
(such as sequencing of liberalization)
* social safety
provision (such as securing minimal living standards in
times of crises)
* A well-developed SME sector was
helpful in weathering the crisis.
Growth Prospects of
APEC Economies
* Growth of developing APEC economies is
likely to slowdown over the next decade and beyond,
according to preliminary results.
That is because these
economies shift to higher developmental stages and
population grows less rapidly. Upgrading of human resources
will have positive effects on growth, however.
* Rich
growth potential of the APEC region is underscored, despite
some slowdown in growth.
Future development of trade and
investment in the APEC region will be examined in the next
step.
* Addressing structural weaknesses will make a
difference in realizing renewed growth over the longer term.
Reorienting APEC’s Strategy for Cooperation
* The
primary focus of APEC response to the crisis should be
longer-term issues of attaining robust growth.
APEC does
not have a strong comparative advantage over international
financial institutions in addressing acute issues of crisis
resolution, or fighting a raging fire.
* APEC has a
unique potential to assist member economies to redress
structural weaknesses, because of diversity.
* APEC
should consider that "consolidating the basis for growth in
the 21st century" be a priority unifying theme for APEC
cooperation for the next few year.
Under the new
unifying theme, ECOTECH can be focused on activities
directly bearing on strengthening markets and social
framework. TILF and ECOTECH can be also promoted in an
integral
manner.