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Word Count: 748
The financial crisis that erupted in Asia in mid-1997 has led to sharp declines in the currencies stock markets and other asset prices of a number of Asian countries It is hard to understand what these declines will actually do to the world market This decline is expected to halve the rate of world growth in 1998 from the four percent that was projected pre-crisis to an estimated outcome of about 2 percent The countries that are included in the East Asian crisis known as Tiger economies are Hong Kong Indonesia South Korea Malaysia the Philippines Singapore Taiwan and Thailand For these countries to participate effectively in the exchange of goods services and assets an international monetary system is needed to facilitate economic transactions To be effective in facilitating movement in goods services and assets a monetary system most importantly requires an efficient balance of payments adjustment mechanism so that deficits and surpluses are not prolonged but are eliminated with relative ease in a reasonably short time period The Asian crisis of recent falls into this category of inefficient balance of payments facilitated by depreciation of its currency By competitively depreciating its currencies Asia is exporting its deflation its overcapacity and its lack of growth to the West particularly to the US History The past ten or fifteen years have seen an unprecedented expansion in the extent to which the countries of the world are tied together both by instant communication and by international trade institutions and markets including financial markets On the whole this process of globalization has been an enormously positive development It has opened new markets enhanced competition spurred innovation and provided new opportunities for workers farmers and businesses around the world For example more than 40 percent of US exports today are absorbed by developing countries an extraordinary increase over past export patterns and the jobs associated with these exports are high-paying good jobs The increasing productivity of our trading partners
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