Growth and Resilience in an Uncertain Global Economy
Edited by Hal Hill and Maria Socorro Gochoco-Bautista
Chapter 4: Productivity and capital accumulation
It has been well documented that the major countries of the Association of Southeast Asian Nations (ASEAN) – Indonesia, Malaysia, the Philippines, and Thailand – as well as the Republic of Korea have experienced sharp declines in the ratio between gross fixed capital formation and gross domestic product (GDP) following the Asian financial crisis (AFC) of 1997–98 (Figure 4.1). Many studies have tried to answer why capital accumulation declined in crisis- hit Asia. The Asian Development Bank’s Asian Development Outlook for 2007 and 2008 (Asian Development Bank 2007, 2008) contains excellent surveys and analyses of this issue. It shows that in many countries the working- age population continued to grow, except in Indonesia; total factor productivity (TFP) rebounded; and financial markets recovered. In addition, saving rates remained high, capacity utilization rates recovered, and there was no sharp decline in public investment.
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