Two years ago, the first tremors of Asia's financial crisis were felt in Thailand. But before July 1997, Asia's economies were widely praised for their rapid growth. The World Bank coined the term "East Asian Miracle" to describe the region's robust economic growth, and the development strategies of the region were held up as models for other developing countries to emulate.
The "miracle" came to a crashing halt when the value of many Asian currencies was halved, stock markets plunged, banking systems collapsed, and millions of people lost their jobs in societies without social safety nets.
It's now fashionable to blame Asia's economic woes on corruption. This is understandable. Corruption, broadly defined, is the abuse of public roles and resources by public or private parties for personal gain. It's been endemic in countries like Thailand and Indonesia for decades. When Thai military dictator Sarit Thanarat died in 1963, he'd amassed a fortune that, factored for inflation, was equivalent to 26 percent of Thai government expenditures in 1990. Time magazine alleges former Indonesian President Suharto and his family are worth $15 billion - despite his $36,000 annual salary and no exceptional business acumen shown by any family members.
Despite such egregious greed, one must ask: Did corruption cause Asia's financial crisis?
For centuries Asians accepted that officials could treat their office as a private domain and a legitimate tool for generating illicit revenue. Before the crisis, Indonesia, Thailand, and South Korea had relatively high corruption ratings, according to Transparency International's Corruption Index. Yet these nations were among the world's fastest growing economies since the 1980s.
In all of these nations there was a close relationship between government and the private sector. While these relationships promoted long-term investment and growth, they also fostered corruption. But there was no sudden increase in corruption in the five years prior to the crisis, according to the International Country Risk Guide.
Because of the fundamental difference between a certain and an uncertain cost for investors, some argue that predictable corruption - where the bribe amount is known and no further bribes are demanded - is less damaging than corruption that causes uncertainty.