How Has Business Responded to the East Asian Financial Crisis - Essay Example

The paper "How Has Business Responded to the East Asian Financial Crisis? " is an outstanding example of an essay on category. The East Asian economic crisis is one of the most prominent financial calamities that have had tremendous effects on the international policymakers, and that had not been foreseen. The depths of the problems that have followed the occurrence arising from pure economic and political factors are great. Business operators in Korea and China have been affected by the crisis to the point of stagnation, and some have deteriorated to be weak and fragmented. For instance, in China, the problems have become more fundamental especially where privately interested parties have been allowed to gain access to the policy process leading to instability (Hunter, Kaufman, and Krueger, 2009, p.137). The expectations of the nations that the catastrophe would not take long have been proved wrong with great transformations into a recession or a period of depression. The gross domestic product growth is low and the rate of unemployment has risen with the problem even spreading to other continents.

 The crisis has been blamed on the domestic ill judgment from banks and financial institutions, collusion between governments and business owners, over-speculation in real estate and share market, poor policies in rates and currency and account deficits. Besides these, other players noted were financial deregulation, liberalization, technology, development of large institutional financial players, debt crisis, fall in output, liquidity squeeze and fiscal and monetary policies. In China, for instance, the crisis started as a result of financial speculators. Business enterprises and financial institutions have taken critical measures to address the parameters leading to the emergency.

 The response by most operators has been in the focus of questioning the role of international monetary fund (IMF) in addressing key prospects within international trade, currency, and market. This has been a call for a change in IMF policies so as to address high-interest rates and balance of payment problems that have far dominated the industry.

 Businesses have taken upon themselves as governed by the rules to organize debt rescheduling practices between countries and foreign creditors. In Korean businesses and companies, for instance, strong monetary policies and reduction of budget deficits have been imposed so as to reduce inflation, but which have had contrary results. Most business enterprises have a major challenge in ensuring that the cost of production is much less so as to produce high profits. Owners have resulted in advanced research on proper ways of production and the use of machine-controlled activities instead of investing in human resources.

 The businesses have seen increased output so as to curb the recession in the real economies of production. Output as a major cause of the financial crises has been addressed leading to a turnaround in the current account of GDP. The balance of payments has become healthier due to an increased trade surplus brought about by the output increase (Hunter, Kaufman, and Krueger, 2009, p.168). On the other side, business institutions have cut broadly on the large inflows of foreign funds mainly to the banks and companies as a loan or as equity investments on the stock. This has reduced the debt, economic slowdowns, and depreciation, and the aspect of trade liberalization financially has been observed with the relevant authority and policies being regulated as per the IMF requisitions.