Liberalisation that Triggered the Asian Crisis and the Apparent Essay

Liberalisation that Triggered the Asian Crisis and the Apparent Insulation of China and India - Essay Example Least expected is that, in a very short period of time, a financial crisis sprouted in Thailand and spread like epidemic to the neighbouring countries of Southeast Asia and eventually triggered serious turmoil in the currency and financial markets of Japan and South Korea. While the extent of crisis differed from country to country, the Asian economies were brought face to face with serious difficulties that came from over-reliance on short-term foreign capital, speculative investments, and poor supervision by financial authorities. Even the resilient economies of Singapore, Taiwan, and Hong Kong have shown related problems, slowly being eroded by the persistent weaknesses of their neighbouring economies. What may have gone wrong that spelled the unfortunate events to take place? Why did some countries in the region, like China and India, have been unaffected by the crisis? What measures did these affected countries do to thwart the eventual downfall of their economies? What did policies did India and China foster in order to insulate them from the said crisis? As this paper explored answers to these questions, further recommendations by experts will also be tackled in order to prevent the same crisis from ever happening again. Liberalisation is termed as a programme of changes in the direction of moving towards a free-market economy. This normally includes the reduction of direct controls on both internal and international transactions, and a shift towards relying on the price mechanism to co-ordinate economic activities. In such a programme less use is made of licences, permits and price controls, and there is more reliance on prices to clear markets.