Chapter 3: The 1997 Economic Crisis, Reform and Southeast Asian Growth
3. The 1997 economic crisis, reform and Southeast Asian growth Chris Dixon INTRODUCTION The Southeast Asian economies made a slow recovery from the 1997 crisis. Between 1997 and 2001 growth was, compared to 1991–96, generally low and extremely uneven throughout the region, with two years (1998 and 2001) of negative growth for most of the economies. There was also a general disruption of regional trade and investment flows, with a significant reduction in intra-regional flows, particularly with East Asia. Despite this, the region as a whole and most of the major economies experienced a significant increase in foreign direct investment (FDI). The general expansion of FDI continued into 2002–06 with the growth of GDP and export earnings returning to near pre-crisis levels, before generally declining in the wake of the 2007–09 global financial crisis (Tables 3.1, 3.2 and 3.3). The recovery was associated with some significant changes, notably: the increased role of China in regional growth and integration; changes in the composition of FDI and its sources, with a striking increase in the contribution of mergers and acquisitions (M&A), and a decline in the East Asian share of inflows; and some important changes in the relative positions of some of the economies. Of the latter, particular interest has focused on the Philippines, so long an exception to the regional ‘miracle’, which achieved growth levels near to those of Malaysia, and Vietnam growing almost as fast as China. However, despite the general appearance of a Southeast Asian...
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