Asia: investment still hasn’t recovered from 1997 | beyondbrics

Asia: investment still hasn’t recovered from 1997 | beyondbrics:

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An interesting take on the 1997 Asia crisis from Carmen Reinhart, known for her influential (before it was corrected) paper on the relation between growth and debt, and Takeshi Tashiro.

A new research paper from the two economists this week argues that Asia still hasn’t recovered from 1997 in one key regard: investment is still pitifully low, from India to South Korea.

The average level of investment as a share of GDP in nine countries – China, India, Indonesia, Japan, Korea, Malaysia, Philippines, Singapore and Thailand – was 6 percentage points lower in 1998-2012 than in the decade leading up to 1997. Strip out China and India, countries in which investment has risen since 1997, and the decline in investment is 9 percentage points (see the second graph, below).

Source: NBER

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