Contrast the economic experience of the high-growth Asian economies with the experience in Latin America, especially with regard to the 1980s and in terms of weathering financial crises

Question

What will be an ideal response?

Answer 1

The high-growth Asian economies have grown more steadily and consistently and with a broader effect on all income levels in society. The high-growth Asian economies successfully emphasized land reform, free public education, free basic health care, and significant investments in rural infrastructure, such as clean water, transportation, and communication systems, that helped bring a broader sector of society along in terms of development. The difference in growth is especially notable in the 1980s, when growth in the high-growth Asian economies continued and even accelerated while Latin America was experiencing the "Lost Decade." In terms of handling financial crises, the time periods were different, but the high-growth Asian economies tended to keep budget deficits and foreign debts at generally manageable levels. Governments were committed to low inflation, which helped avoid severe real appreciations in the exchange rate. In the HPAE, differences between the real exchange rate, the real interest rate, and the inflation rate were relatively low, fostering greater security in the minds of investors.