These policy measures took India into a higher growth trajectory in the 1980s but in its wake created some macroeconomic imbalances leading to a crisis in 1991 that triggered more comprehensive and sustainable reforms. The policies since 1991 provided ample opportunities to build on the strong foundations in economic, political and social sphere, laid during the pre-reform period of planned development. II.
The counterpart to that reaction was that these countries ran large current account surpluses – they switched from being net importers of capital to net exporters. The resulting increased global saving flowed into advanced economies and put downward pressure on interest rates there. An alternative explanation of a higher desired saving rate focuses more on the advanced economies than emerging Asia.