East and Southeast Asian governments today appear to be models of fiscal responsibility. South Korea has won praise for its timely delivery of financial information to the public; Thailand has introduced tougher bankruptcy laws; Indonesia has taken steps to clean up bad loans and recapitalize its banking system. Despite these accomplishments and a revival of Gross Domestic Product (GDP) in these Asian countries, many Western critics warn that the progress has been too slow and that the underlying weaknesses that led to the crisis remain. The critics fear that most Asian businesses have gone as far as they are willing to go in restructuring operations – but that this is not nearly far enough. What the critics disregard is that Asian businesses have responded rationally to particular social and institutional contexts. Their practices led to growth in the past and in some situations could continue to permit short-term growth. Rectifying these deeper problems will require not just economic policy reforms, but major social and political changes.
