In addition, many of these financial intermediaries are unregulated, thus they are subject to moral hazard problem of borrowing excessively from abroad and lending excessively at home. In fact, short-term external liabilities grow faster than its international liquid assets in many Asian economies and they eventually lead to international illiquidity. Incorporated with the of the government's attempt to promote economic growth, financial intermediaries often fail to properly access the risk of borrowers and projects but have incentive to engage in risky investment. It is observed that many of the investment project in Asia turn out to be non-performing loans or have very low level of return. Human Capital And Economic Growth.
Human capital is one of the dominant factors that leads to economic growth.
It plays a major role in the miracle of the east Asian countries. With human capital investment, the availability of skilled labour increases, which allows the economy's productive capacity and growth potential to expand rapidly. However, the recent economic crisis in the east Asian countries have slowed down the growth, and some countries even have negative economic growth. The objective of this paper is to argue that although several factors do play important roles, such as the low inflation rates and fast adoption of advanced technology, human capital accumulation is the major catalyst to economic growth in the past, and it will continue its main role as one of the medicines to the Asian flu. Exchange Rate Instability and Current Account Imbalances.