Asia, a Guilty Bystander

Chi Lo

Chapter 4 in China After the Subprime Crisis, 2010, pp 54-73 from Palgrave Macmillan

Abstract: Abstract By living below their means, frugal Asians piled up a huge amount of savings which flowed westwards to support the spendthrift Americans in living beyond their means. The global saving–investment imbalance remained in a stable disequilibrium state for almost fifteen years until the subprime crisis broke. So, although Asia did not have a financial crisis due to its relatively sound economic and financial fundamentals, it was a guilty bystander in the global credit quake. Still, it could not escape the economic impact of the subprime shock, because of its heavy reliance on exports to and capital inflow from the developed world.

Keywords: Foreign Direct Investment; Banking System; Capital Inflow; Foreign Debt; Foreign Exchange Reserve (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-29896-5_5

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DOI: 10.1057/9780230298965_5

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