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Abbreviations and acronyms -- Acknowledgments -- Foreword -- Executive summary -- 1. East Asian crisis: an overview -- 2. Trade and competition -- 3. The financial sector: at the center of the crisis -- 4. Corporations in distress -- 5. From economic crisis to social crisis -- 6. Environment in crisis: a step back or a new way forward? -- 7. Priorities for a sustainable recovery -- References.

East Asia ' s financial crisis quickly has deteriorated into an economic and social crisis. This study presents an analysis of the crisis, provides a report card on progress within the region, and suggests policy directions that will affect the pace of recovery. There were three weaknesses in the foundation of East Asia ' s growth: i) Large current account deficits, financed with short-term flows, exposed East Asian economies to sudden reversals. ii) Liberalization of domestic financial markets without adequate prudential regulation and supervision allowed banks and corporations to assume unhedged foreign borrowing positions that left them vulnerable to sudden currency fluctuations. and iii) Companies, in the absence of fully developed bond and equity markets, borrowed heavily from banks to finance their rapid expansion, and in the process became very highly leveraged. This left them vulnerable to interest rate surges. The most urgent task ahead is to restore the conditions for robust economic growth throughout the region. Three elements form the basis of strategy: a) enacting structural reforms to restore high quality economic growth; b) ensuring that low-income groups are protected during crisis and then share in eventual recovery; and c) the international capital flow must be restored.