Asia-Pacific economies after the global financial crisis
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Asia-Pacific economies after the global financial crisis

Lessons learned and the way forward

This publication is to understand why countries in the Asia and Pacific region were significantly less affected by the global financial crisis than the world’s most advanced economies of Europe and the United States, and what are the main lessons from their experience for building resilience from future crises. The majority of the essays collected in this volume are revised and updated versions of papers presented by experts from the region at a conference organized by the Economic and Social Commission of Asia and the Pacific in Manila in September 2011.
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English
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Author(s):
Kyungsoo Kim

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Financial globalization makes peripheral countries, especially small open economies with deep international financial linkages, vulnerable to credit shocks originating from the core countries. Regardless of their economic fundamentals, many emerging market countries (EMCs) were severely hit by the global financial crisis. In fact, one may even say that financial globalization has led to collateral damage, instead of the collateral benefits promised earlier (Kose and others, 2006). The Republic of Korea is a good example. This vulnerability has two specifics. One is the so-called capital inflows problem – that is the vulnerability of the economy and its financial system to massive capital inflows which could be suddenly stop. The other is the potential for high volatility in the foreign exchange (FX) market.