Trade and the East Asian Crisis

Trade and the East Asian Crisis

This economic policy note addresses the issue of the East Asian financial crisis, suggesting that recent trade socks, were both a cause and a consequence of this crisis. It further suggests that, though it appears that these trade shocks were largely cyclical in nature, structural changes and policy choices may also have played a role. Dramatic trade changes in the region took place, where the region's overall imports dropped by 4 percent, with a significant 18 percent drop in imports from Japan. Export growth is considered to be a major prospect for short-term economic expansion in the region, depending in part on the composition and pattern of trade flows. The note also suggests that policy implications should be considered, such as heavy investments in education and skills upgrading. Furthermore, macroeconomic policies will be required to capitalize on the initial boost to competitiveness, provided by recent devaluations in the region. The inevitable risk of adjustment pressures in OECD markets exists, though raising barriers should be avoided, since this would harm East Asia's recovery.

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Bibliographic Details
Main Authors: Hoekman, Bernard, Martin, Will
Language:English
Published: World Bank, Washington, DC 1998-04
Subjects:TRADE, FINANCIAL CRISES, IMPORTS, EXPORT PERFORMANCE, ECONOMIC RECOVERY, TRADE ISSUES, POLICY REFORM, MACROECONOMIC POLICY, MACROECONOMIC REFORM, COMPETITION (ECONOMIC), BARRIERS, EXPORT MARKETS AVERAGE TARIFFS, CHANGES IN TRADE, COMPETITIVENESS, CURRENCY, DEBT, DEMAND SHOCKS, DEVALUATION, DEVELOPMENT ECONOMICS, DOMESTIC DEMAND, ECONOMIC EXPANSION, ECONOMIC POLICY, EXCHANGE RATES, EXPORT GROWTH, EXPORT MARKET, EXPORT MARKETS, EXPORT PRICES, EXPORT SHARE, EXPORT SHARES, EXPORT VOLUME, EXPORT VOLUMES, EXPORTERS, FINAL GOODS, FINANCIAL CRISIS, GDP, GLOBAL EXPORTS, GROSS EXPORTS, HIGH TARIFFS, IMPORT PRICES, INCOME, INCOME EFFECT, INFLATION, INTRAREGIONAL TRADE, MACROECONOMIC POLICIES, MARKET SHARE, NATURAL RESOURCES, NET EXPORTS, PREFERENTIAL TRADE, PRIVATE CONSUMPTION, REAL EXCHANGE RATE, REAL EXCHANGE RATES, REGIONAL TRADE, SHARE OF WORLD EXPORTS, SPECIALIZATION, TERMS OF TRADE, TRADABLE GOODS, TRADE AGREEMENT, TRADE DIVERSION, TRADE FLOWS, TRADE LIBERALIZATION, TRADE PATTERNS, TRADE POLICY, TRADE POLICY REFORMS, TRADE REGIMES, TRADE SHOCKS, TRADE SURPLUS, WORLD MARKETS,
Online Access:http://documents.worldbank.org/curated/en/1998/04/438766/trade-east-asian-crisis
https://hdl.handle.net/10986/11553
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Summary:This economic policy note addresses the issue of the East Asian financial crisis, suggesting that recent trade socks, were both a cause and a consequence of this crisis. It further suggests that, though it appears that these trade shocks were largely cyclical in nature, structural changes and policy choices may also have played a role. Dramatic trade changes in the region took place, where the region's overall imports dropped by 4 percent, with a significant 18 percent drop in imports from Japan. Export growth is considered to be a major prospect for short-term economic expansion in the region, depending in part on the composition and pattern of trade flows. The note also suggests that policy implications should be considered, such as heavy investments in education and skills upgrading. Furthermore, macroeconomic policies will be required to capitalize on the initial boost to competitiveness, provided by recent devaluations in the region. The inevitable risk of adjustment pressures in OECD markets exists, though raising barriers should be avoided, since this would harm East Asia's recovery.

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