As a country develops and grows wealthier and accordingly the level of people's income rises, it will constantly be exposed to stronger competition from countries with lower wages. This is a natural development for industrialized countries, and they must accept it as inevitable challenges. They need to continue adapting flexibly to change by industrial restructuring and fostering high value-added industries to lead the economy.
Both the Asian private and government sectors cut back sharply and this shows up as a fall in the investment ratio of about 7 or 8 per cent of GDP to a lower level, at which it has stayed (see Graph 3). The governments of the region reached the conclusion that they “had to make their economies more resilient to international capital flows.