Products non tradable services were non competing

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Unformatted text preview: of the relative price effect. Wealth of Asian foreigners decreased sharply in recession. Products Non-tradable services were non-competing with other countries because of unique location. Recession in neighbouring countries, also slow-down of growth in China, reduced the profitability of Hong Kong businesses. Causes of Asia’s Crisis Some Asian leaders push their development plans without regard for economic fundamentals and to grow instant international financial centres by liberalizing financial markets prematurely. Many Asian nations with outdated banking rules, weak supervision and corrupt practices were totally unprepared to handle a flood of foreign funds in a global capital market. The Asian nations' leaders and central bankers have overconfidence in their own ability to defend their currency against speculative attacks. Financial Crisis and Cost Deflation Began with the depreciation of Thai baht. Hong Kong Monetary Authority (HKMA) defended the link and inter-bank shot up to 280% in Oct. 1997. Mos...
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This document was uploaded on 03/26/2014.

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