Early this month, I was in Hanoi to attend the annual meetings of the Asian Development Bank. Hanoi was all spruced up for the visit by thousands of bankers, academics and members of the press. The city is a blend of the old and the new; Hanoi has preserved much of its colonial French architecture, while building outside the city centre. Everyone seemed to be on the move, a city chock-full of young people on mopeds, simultaneously driving while chatting on their mobile phone. There was a buzz in the air, as if the city and the country were reaching for the Asian century.
The Sofitel Metropole by the lake in central Hanoi is as elegant as ever, with old-world service and new-world amenities. Hanoi is the ideal place to reflect on the future, even as we look backwards to our history and our culture.
To look forwards, it may be worthwhile looking back in two ways. First, it was not that long ago that the world suffered the Asian financial crisis - between 1997 and 1999. Few who went through the pain of that crisis would forget that the journey out of darkness involved months of sleepless nights and stress-filled days. But that pain was worth it because there was sufficient change that allowed us to weather the current global financial crisis. There was enough creative destruction to ensure that new competitors and better governance emerged out of the ashes. Having said that, there is still a long way to go for Asian standards to meet global standards. Hence, reform in Asia is still a work in progress.
Second, to judge whether Asia has made sufficient progress in the past decade, we need to look back from the hypothetical point in the future when Asia overtakes the West in terms of total gross domestic product. What must Asia achieve to attain that goal, recognising that competition is never static? Indeed, the pain and humiliation that advanced countries are going through may be precisely the spur for the needed structural reforms that they have delayed for years.
The current momentum of growth in Asia and other emerging markets cannot be taken for granted. This global financial crisis is a stark reminder that, for all the improvements in macroeconomic management, we have not avoided the trade cycle.
Nor must we forget that Asia is still dependent on the advanced countries for exports, innovation and technology. If they slow down further in the next five years and Asia mismanages this current round of overheating, the next global crisis will again be Asia-based.
What did Asia do right during the Asian crisis, what are the advanced countries doing wrong this time round and what should Asia do in the years ahead?