Has Asia Learned From the 1997 Crisis?

Kim Dae-jung, the former president of South Korea, once told me a story that perfectly captures the spirit of reform that followed the 1997 Asian financial crisis. He was on an official trip to Vietnam when a panicked visitor from Seoul sought an audience. It was Kim Woo-choong, the flamboyant founder of Daewoo Group, then Korea's second-largest business house. Over breakfast in Hanoi, the businessman said his companies were spiraling toward financial ruin and begged the president for help.

In the past, such an appeal probably would've worked. Korean presidents had routinely supported the country's sprawling conglomerates, called chaebol, as the engines of rapid economic growth. But their shady business practices -- which led to debt, excess capacity and graft -- were also a key cause of the crisis. President Kim realized a new approach had become imperative, no matter how painful. He sent Daewoo's chief back home with nothing more than a lecture: Fix your own problems. Daewoo fell apart shortly thereafter.