Georgetown Economics Professor George J. Viksnins spoke Wednesday about the meltdown of the Asian economy at the Delta Phi Epsilon Professional Foreign Service Fraternity.
A Georgetown faculty member since 1964, Professor Viksnins has addressed students countless times. However this may have been one of the last opportunities for the Georgetown community to hear from their beloved professor since following spring semester Viksnins plans to retire from teaching.
Viksnins began by reviewing the economic development of the past 50 years in East and Southeast Asia, asserting, “There are some lessons for the rest of the world to learn from these eight to 10 countries which basically followed a market-oriented liberal development row.”
Viksnins also spent several years in Thailand during the late 1960s, which contributed to his expertise on the financial development of the region between 1950 and 1990. Strong growth in the financial sector is mainly attributed to the expanding private enterprise and free market system, he said. He added that the United States also greatly facilitated this expansion, since it wanted to secure the support of these countries during the Cold War.
According to Viksnins, in 1993 success was so overwhelming that “the World Bank published a book by [the] name, The East Asian Miracle,” praising the improvement of the East Asian economies. He attributed the accomplishment to four internal factors: the overall financial deepening of the region; the general “guarding against inflationary policies;” the increased basic human needs, measured by the Human Development Index; and, finally, Asian values changing to demonstrate “a marriage of Confucian ethics and modern macroeconomics.”
Viksnins also explored the sudden downturn of the Asian economy during 1990. In 1997, inflation rates skyrocketed as the exchange rate collapsed in East and Southeast Asia. Viksnins said he believes there were many factors behind the Asian meltdown. “Banks were able to make money on arbitrage basically as long as the exchange rates were fixed,” he said. Additionally, a number of countries harbored “crony capitalists,” as Viksnins called them, and countries were only beginning to try these individuals for corruption. Indonesia suffered the biggest exchange rate collapse, even worse than what Turkey has faced in the last year, followed by Malaysia, he said. Even Singapore, who “certainly never really did anything to deserve it,” suffered a 30 percent depreciation rate.
He asserted, “many people have attacked the IMF . I disagree” about the culpability of the IMF. He supported his argument with the fact that the Asian stock markets recovered to some degree in 1999 and that, “overall, the growth in the year 2000 was very positive.”
Viksnins, however, said he is doubtful about growth this year, or even for the next several years, because of the United States’ “major confidence crisis” and the resulting drop in the stock market. In all, Viksnins said he is not predicting a world depression, but does not believe we should count on “robust growth” either.
Questions from the audience followed Viksnins’ lecture. Terry Boyle (F ’63, L ’72), who has known Viksnins since he was a Georgetown undergrad and a Delta Phi Epsilon member himself, said, “Georgetown students don’t know how lucky they are. They’re witnessing the end of an era with faculty members like George whose first love is teaching undergraduates. The absolutely outstanding reason they get up in the administration is because they want to teach undergraduates, not just recite a lecture and collect a paycheck.”
The Delta Phi Epsilon Professional Foreign Service Fraternity hosted “Miracle to Meltdown – The Asian Economy” as a part of The Greatest GU Professors Lecture Series.