The Asian economic crisis provides a dramatic backdrop to this, the fourth volume of the Hongkong Bank of Canada Papers on Asia. The papers in this volume focus on two elements that are key to business decisions in East Asia: fiscal frameworks and financial systems. They provide valuable information about taxation and financial systems that can affect the business decisions foreign investors make.

The basic premise of the volume is that financial and fiscal systems can contribute to economic growth, but they can also significantly constrain growth and foreign investment if they are underdeveloped. As Professor Richard Bird and Duanjie...

Businessmen often see taxes simply as costs to be minimized. In contrast, governments view them both as a means of securing revenues and as a way to influence the level and shape of private business activities taking place within their jurisdictions. While each of these views is valid from its own perspective, it can be extremely difficult to discern how they combine in practice to affect growth and the relative competitiveness of foreign and domestic firms. Nowhere is this more true than for the economies of East and Southeast Asia, where even local businesses often find it difficult to know...

As the economic crisis in East Asia has unfolded, many investors have assumed that East Asian business and financial assets are becoming available at fire sale prices. One of the reasons the crisis reached such serious proportions, however, was the lack of adequate information about the financial markets of these economies. Investors with shortterm capital, attracted by the East Asian growth record, overwhelmed the financial systems of small open economies and failed to carry out due diligence on their potential investments. Ignorant of or disregarding the risks, they subsequently fled when they re-evaluated them after the crisis began in Thailand...