Asia's string of fincial crises has exposed the fact that the fast growth of many companies has depended critically bn easy money. The ready availability of bank loans, often extended at government behest and at attractive interest rates, allowed Indonesia's nascent conglomerates and South Korea's chaeboll to pursue market share and expand into-new fields without worrying about rates of return. Their restructuring will mean redundancies and plant closures, which will make the economic situation all the more serious. One of Asia's so-called Tigers, however has fared far better than the rest. While Korea and South-east Asia are struggling , Taiwan has so far escaped with a small currency devaluation and a really modest decline in share prices.
Economic growth remains strong.
Working out,why Taiwan has out perfromed its neighbours will keep economists busy for years to, come. A light foreign-debt, burden is one likely explanation. Better banking regulation is another. A new paper by Bee Yan Aw and Mark J. Roberts of Pennsylvania State University and Xiaon-tin Chen of the World Bank, offers a partial answer. One secret of success, they suggest, is that Taiwan makes it easy for new companies to get a start and for old ones to fail.