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In 1997, the sky fell in Asia. Up until the moment the Thai currency crisis began in May of that year, most pundits could see no end to the "Asian miracle." Now many of those same pundits are predicting a more severe drop while others go so far as to suggest that Asia is entering a "lost decade." The hard truth, suggests Callum Henderson, the Managing Currency Analyst for Asia at Standard & Poor's, is not so dire or dramatic. While Henderson acknowledges that most of the affected countries, particularly Thailand, South Korea, Malaysia, and Indonesia, have a long way to go in transforming their economic systems, the long term outlook for Asia is good. The conditions that help to make high rates of growth possible--high savings rates, low taxation, good education systems, and high productivity--are still in place. What needs changing are the government policies that focused too heavily on exports as the main engine of economic growth.

Henderson traces how and why the currency crisis happened and finds useful parallels between it and the Mexican crisis that began in late 1994. He also offers specific remedies--such as the creation of a domestic bond market in Asia--and points to compelling opportunities in countries with mature financial systems such as Singapore. This is the first comprehensive look at the Asian financial crisis and should be useful to anyone doing business or investing in Asia. --Harry C. Edwards