ABSTRACT
One feature of open economies is the transmission of economic effects, including downturns, across countries. Of course, this may be due more to changes in finance and short-term capital flows than to trade as such. The experience of the Asian crisis of the late 1990s could well be understood to have shown the importance of controlling short-term capital movements, while allowing for openness in trade and long-term capital movements. Nevertheless, there is the key problem of how to deal with the greater vulnerability of livelihoods and wellbeing to changes in the international situation. Looking at the manner in which this was dealt with in the Asian crisis would be useful in drawing lessons for future policy.
