Much has been made of corruption in Asia, with countless commentators arguing that
cronyism and Asian business practices were ultimately at the heart of the crisis. There is little
question that there was extensive corruption in Asia, and that these practices undermined the
allocation of capital and weakened financial systems. Suharto=s growing family empire, for
example, contributed to the crisis both because of the government ultimately guaranteed many
risky investments and because Suharto was unwilling to make the family firms make adjustments
in the early stages of the crisis. But two facts make it hard to argue that the crisis was primarily
the result of corruption. First, corruption on at least a similar scale had existed in Asia for
decades, and yet these economies had grown very rapidly without any sign of a crisis. If anything,
corruption in Korea was probably worse in the mid-1980s than in the mid-1990s, and yet it did
not face a similar crisis at that time.