|ASIAN ECONOMIC TURMOIL|
The Fallout of the Yamaichi Collapse
December 8, 1997
Return to this forum's introduction.
Questions answered in this forum:
Won't this have a negative impact on the U.S. economy? What signs will indicate improvement? Why does Singapore seem more stable? What is the IMF and how does it work? How would an Asian Monetary Fund affect economic and political dynamics?
Joseph A. McDonald of Burlington, VT asks:
Many critics say the International Monetary Fund (IMF) does more harm than good by forcing countries to adopt policies that hinder economic recovery in exchange for loans. For example, the IMF is insisting that South Korea slow its economic growth rate next year. What is the IMF, and how does it help or hinder countries trying to rebuild their economies?
Arthur Alexander responds:
I'll leave this question on the IMF to my colleague here, who is more of an expert on that institution.
Nariman Behravesh responds:The IMF's key role is the global "lender of last resort." The fundamental problem is not that the IMF is forcing the Asian countries to clean up the mess they created, rather it is that the governments in the region encouraged the profligate behavior that led to this mess.
There is no easy way out for these countries. The Mexican crisis and the response of the government there to the crisis and IMF bailout provides a very good role model for the Asian countries. By quickly implementing an IMF program, Mexico was able to return to 7 percent growth in a couple of years.
Next: How would an Asian Monetary Fund affect economic and political dynamics?