Advanced Search
MyIDEAS: Login to save this paper or follow this series

The Decline of Investment in East Asia since the Asian Financial Crisis: An Overview and Empirical Examination

Contents:

Author Info

  • Park, Dong-hyun

    (Asian Development Bank)

  • Shin, Kwanho

    (Korea University)

  • Jongwanich, Juthathip

    (Asian Development Bank)

Abstract

A key legacy of the Asian financial crisis of 1997–1998 is a sustained drop-off in the investment rates of East Asian countries that were hardest hit by the crisis. We first review the stylized facts of investment in those countries, and then explore and evaluate the various possible explanations for the decline in investment. In our empirical analysis, which expands upon Park and Shin (2009) by updating the data to include 2005–2008, we investigate the extent to which the investment rates of Asian countries can be explained by the underlying fundamental determinants of investment such as gross domestic product (GDP) growth and demographic variables. We also empirically revisit the various hypotheses put forth to explain the investment drop-off, in particular competitive pressures from the People's Republic of China and heightened risk and uncertainty. Our analysis yields two main findings: (i) some evidence of overinvestment in the precrisis period but (ii) very little evidence of underinvestment in the postcrisis period. The results suggest that investment rates are currently more or less at appropriate levels despite their postcrisis decline. The salient policy implication is that quantitatively boosting investment may be less important for future growth than enhancing the investment climate.

Download Info

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
File URL: http://www.adb.org/Documents/Working-Papers/2009/Economics-WP187.pdf
File Function: Full text
Download Restriction: no

Bibliographic Info

Paper provided by Asian Development Bank in its series ADB Economics Working Paper Series with number 187.

as in new window
Length: 30 pages
Date of creation: Dec 2009
Date of revision:
Handle: RePEc:ris:adbewp:0187

Contact details of provider:
Web page: http://www.adb.org
More information through EDIRC

Related research

Keywords: Investment; capital accumulation; growth slowdown; East Asia; Asian crisis;

Find related papers by JEL classification:

This paper has been announced in the following NEP Reports:

References

No references listed on IDEAS
You can help add them by filling out this form.

Citations

Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
as in new window

Cited by:
  1. Naughton, Barry, 2013. "China and the Two Crises: From 1997 to 2009," Working Papers 53, JICA Research Institute.

Lists

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

Statistics

Access and download statistics

Corrections

When requesting a correction, please mention this item's handle: RePEc:ris:adbewp:0187. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Maria Susan M. Torres).

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.