Attracting Investors: Lessons for Nigeria from Asia's 1997 crisis

Jul 04, 2023|Dumebi Oluwole

Key questions this article answers:

  1. Asia was celebrated for over two decades (1965-1990) for its strong economic growth and development. What changed in the late 1990s, triggering a financial crisis? 

  2. What lessons can Nigeria learn from the financial crisis that lasted almost two years (1997-1999)?


From 1965 to the early 1990s, nations admired most of East Asia for their sustained and fast economic growth, including spectacular improvements in their quality of life. Many called it a miracle, a term that quickly became fine print in our history books and Economics 101 lectures: The East Asian Miracle.


Countries like Thailand, Indonesia and Malaysia recorded GDP growths ranging from 8% to 13% between 1985 to 1994, while their GDP per capita more than tripled. In Malaysia, for example, GDP per capita grew 4x to $4,260 in 1990 from $1,545 in 1965.


But something changed in the late 1990s—precisely, 1997.

East Asia, particularly Southeast Asia, fell into a financial crisis where their stellar growth reversed, and foreign capital inflows wiped off. How did this crisis happen, and what lessons can Nigeria learn? These are the questions this article answers. But it is essential to note that the analysis focuses on five countries from East and Southeast Asia: Korea, Thailand, Malaysia, Indonesia and the Philippines. These five countries were hit the hardest during the financial crisis.

How did the crisis happen? 

Externally, four main events started affecting Southeast Asian economies before 1997: High-interest rates and the 1990-91 US recession, devaluation of the Chinese Renminbi, Japan’s asset bubble after the Plaza Accord of 1985 and volatility in the global semiconductor market. 

In 1990-91, the US slipped into recession for eight months, an offshoot of the First Gulf War when Iraq invaded Kuwait in 1990. This led to a global oil price shock that dwindled the already fragile business and consumer confidence in the US—a result of several recessions post World War II. Inflation was high, the US Fed kept rates elevated at 8%, and unemployment climbed. However, this recession in 1990-91 was not as painful as in the 1980s, and investors expected a quick recovery, which happened by the end of 1991.

The effect on

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