Asian economic recovery the real thing, Stiglitz says

Asian Economic News, Sept 18, 2000

MELBOURNE, Australia, Sept. 11 Kyodo

A former chief economist of the World Bank, Joseph Stiglitz, said Monday economic recovery in Asia is real because the crisis that began in 1997 never brought a structural downturn.

''The speed of recovery over the last one or two years has demonstrated the fundamental strengths of the Asian economy are really there,'' he told a conference of the Geneva-based World Economic Forum in Melbourne.

He said the economic crisis in Asia did not lead to a wholesale structural meltdown as was widely expected. In South Korea, for instance, big conglomerates retain their important role, and some, such as Samsung, have even done well in spite of high interest rates mandated by the International Monetary Fund, he added.

The Asian economy has retained a high savings rate and a lot of investment in human resources, not only in primary school but also technical university education, he said.

Although these successful ingredients brought growth to the region over the past three decades, the Asian economy will also need new technology for the coming decade, he said.

''Hopefully, the new technology, notably the Internet, is a real driver for change in Asia,'' he said.

However, some problems could block economic growth in the region, he said, adding that knowledge of new technology in Asia remains low. ''Few countries in Asia have developed a nexus of university and business like in the U.S. In (South) Korea, people may have much technology knowledge, but not in other Asian economies,'' he said.

Some negative elements of globalization, as well, will create a backlash for Asian growth because certain aspects of development have been ignored, he said.

''We need to remember that market liberalization, privatization and similar other keywords are not an end by themselves but they are means to improve living standards,'' he said.

Stiglitz, a professor of economics at Stanford University, played down the current rise in oil prices. ''The situation makes a country more aware of those kinds of fluctuations and try to keep stability,'' he told reporters in a separate news briefing.