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Friday, 31 March, 2000, 02:06 GMT 03:06 UK
Asia learns its lessons
Korean demonstrators
The Asian crisis caused social and political unrest

By the BBC's Caroline Gluck in Seoul

Asian stock markets have recovered sharply from the crisis years of 1997 and 1998, when mass currency devaluations triggered capital flight across the region, threatening to destabilise the world economy.

But have the underlying economies of countries such as Korea, Thailand and Indonesia really turned around?

Around 600 participants, including finance ministers from more than 20 countries, are in Seoul, South Korea for a two-day meeting organised by Apec - the Asia-Pacific Economic Co-operation Forum - to discuss ways of preventing future crises.

They hope to share lessons learnt in dealing with the recent Asian economic meltdown and formulate policies to cope better with future economic challenges.

It's been a turbulent time for Asian economies, battered by the financial crisis which took hold nearly three years ago. But many countries are now well on the road to recovery, and there is a new mood of optimism, if no real agreement on how to proceed.

Sharing prosperity

That's reflected in the theme of the Apec forum, which aims for shared prosperity and harmony despite the diverse nature of the organisation.

Many believe that there are important lessons to be learned and shared from the period of economic hardship about how to carry out economic reform.

The idea for the forum was first suggested by South Korean President Kim Dae Jung at the Apec leaders' meeting in New Zealand last year.

His country, the world's 11th largest economy, was among the hardest hit by the crisis.

On the verge of bankruptcy, it was forced to swallow its national pride and ask the International Monetary Fund (IMF) for help, with a loan package worth nearly $60bn.

Drastic restructuring

Since then, the government has undertaken drastic economic reforms, liberalised and opened its markets to increased foreign investment.

South Korea has made a remarkable recovery and paid back its IMF loans.

Last year, GDP rose by more than 10%, while unemployment and interest rates have fallen and foreign direct investment stands at record levels.

But many worry that as recovery takes hold, complacency will set in and the momentum for further reform might be halted.

There are concerns in South Korea that the brakes could be put on economic reform if there are substantial gains for opposition parties in next month's general election.

Political worries

Government officials have played down such talk and promised that economic reforms will continue in the banking and finance sectors and that local markets will be opened further to attract foreign investment.

Finance Minister Lee Hun-Jai told forum delegates at a welcoming dinner that the government was committed to stepping up reform efforts - and would not rest on the achievements of the past two years.

But some worry that as Korea's strong reform programme had a lot to do with leadership at the top, any weakening of that leadership could make it much harder to tackle the chaebols - Korea's huge companies that still dominate the economy.

Help for weaker members

The forum will also look at specific action plans to alleviate social and economic disparities between and within member states - including the possibility of an Apec social safety net.

Another session will focus on trying to reduce the knowledge gap among members through cyber-education and the transfer of technology.

Apec, set up just over 10 years ago, is the world's largest trading bloc. Its member countries have a combined GDP of $16 trillion, half of the world's output.

But its credibility was seriously damaged during the crisis as countries could not agree on what action to take - whether to protect their currencies or allow the free market to run its course.

Many now hope that this meeting will mark a turning point.

An organisation that has essentially been a large talking shop could be moving to a body that is more action-oriented.

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See also:

15 Oct 99 | The Economy
Korean unions to sue IMF
13 Sep 99 | The Economy
Apec calls for trade liberalisation
19 Jul 99 | The Economy
Daewoo's life and debt struggle
14 Jul 99 | Asia-Pacific
South Korea: Chaebol flex their muscles
29 Jun 99 | The Economy
Apec fails on trade deal
16 May 99 | The Economy
Strains show at Apec
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