The 1998 economic crisis in Asia provided exporters of everything from potato chips to computer chips a surprise lesson in just how tightly connected the global economy is, says John Page.
“In all honesty we didn’t see it coming,” the chief economist and social economic development director for the Middle East and North Africa Regions of the World Bank told South Sound business leaders at a luncheon at the World Trade Center Tacoma earlier this month, “It was a new style crisis—we couldn’t see the macro-indicators.”
But in its aftermath, the ripple effect produced by even faraway events has become obvious. It’s why business representatives gathered at the luncheon sponsored jointly by the Seattle and Tacoma branches of the World Affair Council to hear Page’s advice for responding to such crises.
Many local companies had some type of investment in the Asian market at the time of its crash, Page said, but companies such as Boeing and Microsoft were probably hardest-hit, he said.
“Exports used to be a fringe benefit,” Page said. “Now exporting plays a greater role in business management. As a result, the health of a company depends on the health of the global economy, which is different from the presumption that as long as the United States is all right, the company will do well.”
Page said there is hope for the world market, but it will take time and effort on the part of investors to regain control of the Third World Market.
“Think of the integration of the global economy much like you would the integration of a marriage,” Page said. “You need something old, something new, something borrowed and even something blue.”
The old, Page said, is the need for macro-management to remain a business priority. But attention also must be paid to human skills, investments, private-sector economies and reductions in trade barriers.
The new, he said, are better sources of information about market volatility, to which he added the need among trading partners for sound banking systems and the need for emerging markets to discourage what he referred to as hot money—weak financial backing.
The borrowed, Page said, is simply the need for private investments that can help drive foreign, as well as domestic, markets.
Blue is how you feel when you realize that there will always be risks and losses
“Financial crises will continue to occur,” Page said. “But effective management may have a higher pay off than previous efforts at prevention.”
Page conceded that he is biased in his campaign to persuade American businesses to reinvest in Third World countries. but he believes it can and will be done.
“The future is in the Asian market,” he says.
Among the businesses represented at the luncheon were Simpson Tacoma Craft, Key Bank, Heritage Bank, the Port of Tacoma and Columbia Bank.
By Bekki Janson, Business Examiner contrubutor