GROWTH POTENTIALAND SIX STRUCTURAL PROBLES IN EAST ASIA

Abstract

The economic crisis of East Asia teaches us that high growth cannot last indefinitely.The East Asian economic crisis is composite and consists of two parts: currency-financial crisis and structural crisis. Six structural problems are more or less common to ailing East Asian countries.They are (1) high-exchange economy (structural high dependence on both imports and exports), (2) weak inter-industry linkages (dual industrial structure), (3) mismatch between expanded economic size and supporting financial system (vulnerable banks), (4) adaptation to global standards, (5) weak intraregional cooperation, and (6) critical shortage of self-help.These problems are interdependent, inherent and chronic.The solution requires persistent, coherent and cooperative endeavors.No optimism is in store.East Asian economies will remain vulnerable and input-driven, unless drastic restructurings become successful.They will probably suffer from economic stagnation for many years, say, twenty years.Any recovery in the meantime will be temporary and unstable.