At an even more general level, the financial institutions were incapable of efficiently channelling the increased inflows into profitable investments. There is plenty of evidence that the accelerated investment spending of the early 1990s was relatively poorly used, with low rates of return and excessive investments in several sectors. Time has also shown that the financial crisis and its underlying causes were hardly unique to Asia. Since the outbreak of the Asian panic, Russia and Brazil also succumbed to a massive withdrawal of foreign creditors. Most of South America is likely to be pulled into financial crisis this year.
Successful development takes time and care.
Otherwise, capital spending will be directed at wasteful or superfluous purposes. Now let's run the clock forward rather than backward. Starting with the proximate cause of the crisis, financial panic, the worst is over. This is the secret of the rebound in exchange rates and lowering of interest rates in East Asia in recent months. Without panic, asset prices have returned to reasonable levels.