|
INTERVIEWS
WITH ECONOMISTS
MARK
RIDER
Is what
has been happening in Asia a transitory phenomenon or a reversal
of the growth trend?
Over the medium
term the fundamentals for Asia are still very good and point to
growth well in advance of the industrial countries. Keys among
these are the fast growing, young populations, and the extent
of catch-up still to be achieved. The pace of growth is likely
to be, on average, a bit weaker than in the past couple of decades
but still very strong.
What, in
your opinion, are the causes, consequences and cures of the Asian
crisis?
Growth was
pushed too hard and for too long. One way this showed up was widespread
asset price inflation that, once it began to unwind, undermined
the banking systems and credit worthiness, more generally, of
these economies. The result will be sub-par growth until problems
in the financial system are worked out — some progress is
already apparent in this respect.
Do you
think that the world economy is likely to plunge into a 1930s-style
depression? If so, what can be done to avoid this possibility?
No, I don't.
There has
been a growing change of heart with respect to free-market reforms.
What is your view on this issue?
The key point
here is the extent of allowing free movement of capital between
countries. The large inflow of capital, and its sudden reversal,
were key elements of the collapse in Asian growth.
Do you
think that the IMF is doing a good job? If not, do you think that
it should be abolished?
It could do
better but I don't think it should be abolished.
Has globalisation
gone too far?
As discussed
above, the key problem here has been free capital mobility into
countries that have banking systems that are not as developed
and sound (well supervised) as in the industrial countries. The
basic principal of free trade and capital is still crucial for
economic development.
Given the
present circumstances, can you describe some sort of an optimum
global investment strategy?
Following
on the above, there should be a free movement of capital across
boarders that will enhance growth in developing countries, i.e.
foreign direct investment. Speculative or ‘hot money’
needs to be limited as it can be damaging in its inflow (overvalued
exchange rates) and its outflow (currency collapse and rising
interest rates).
|