Latin American Crisis and Social Costs: What Lessons for Asia?
By Nora Lustig, Michael Walton (03/98, En) See also Poverty and Inequality
The following article was published in the International Herald Tribune on May 29, 1998.
East Asia's financial crisis is almost a year old. The social dimensions of the crisis are still unfolding, dramatically in Indonesia, quietly in the lives of many individuals in Korea, Thailand, the Philippines and Malaysia, through job losses, service cutbacks and lower incomes. Economic crises have been relatively rare in the region, with the Philippines the major exception. By contrast, in the last fifteen years, Latin America experienced two major crises, both starting with Mexico, and both with substantial social costs. In the 1980s Mexico's debt crisis spread throughout Latin America on the back of terms of trade shocks and weak public finances; the period became known as the "lost decade". In 1995, Mexico's liquidity crisis, whose root lay in excessive private lending spread only to Argentina. What can East Asia learn from the experience of Latin America?
* Nora Lustig is Chief of the Poverty and Inequality Advisory Unit at the Inter-American Development Bank and non-resident Senior Fellow at the Brookings Institution. Michael Walton is Director for Poverty Reduction in the World Bank.
Last updated: 05/08/07
