Financial crisis and elusive recovery - Lessons from South Korea and Thailand

The current crisis in emerging markets may signify the end of a phase of in ternational capitalism in which deregulation and increased economic integra tion have led to increased volatility and uncertainty. This article examine s - with a focus on Thailand and South Korea - the factors that led to fina ncial liberalisation, the link between financial openness and crisis and th e problems that persistence with open regimes creates for efforts to overco me the crisis. The experience shows that developing countries will have to control and regulate capital flows in accordance with national priorities.