Various different and sometimes contradictory lessons have been drawn from the 1997-1998 East Asian crisis experiences. The ideological implications and political differences involved have complicated the possibility of drawing shared lessons from the crises. The seeming calm and increased growth in most developing countries in the period since 2001 have also undermined the possibility of far-reaching developmental reforms following the experience. Perhaps most importantly, the vested interests supporting existing international financial governance arrangements continue to impede the possibility of implementing lessons drawn from the experience. Such interests are generally supported by conventional wisdom and reinforced by the financial media.

This paper considers various views of the origins of the crisis and its development and spread through the region (referred to as contagion). This is then set against the larger drama of the transformation of the East Asian miracle into a debacle. All this is placed in the larger context of policy advocacy for financial liberalization, especially since the late 1980s. It focuses on the consequences of financial liberalization in the region. It also argues that the crises were of a new type and were somewhat different from earlier currency and financial crises. In particular, it emphasizes the implications of easily reversible capital flows. While much of the literature stresses the problems associated with foreign bank borrowing, this paper also draws attention to the dangers of portfolio capital flows. It looks at the role of the International Monetary Fund (IMF) in exacerbating the crises. The paper then suggests six urgent areas for international financial system reform from a development perspective that go beyond crisis avoidance and management. It concludes with a consideration of why there has not been more progress in making needed reforms since the Asian crises.