Why India, china and brazil are recovering faster than US?
Why did China, India and Brazil all emerge so much more rapidly from the global financial crisis than advanced economies did? In a presentation in Denver to the National Association for Business Economics, Nobel Prize-winning economist Michael Spence, now of New York University, offered several reasons:
- These economies learned bitter lessons in the 1997-98 crisis that afflicted them more than advanced economies.
- They were in “a good initial position” with relatively low leverage, and thus didn’t get hit with the severe “balance sheet recession” that hit the U.S.
- They hadn’t any complex securitized financial instruments.
- They had built up large foreign-exchange reserves.
- Their central banks responded, much as advanced countries’ central banks did, with speed and agility to the credit tightening.
- Their economic managers displayed “a high degree of competence.”