For one thing, the region's entrepreneurs are not what they used to be. By and large, Asian institutions that looked on paper like modern corporations were really overgrown family firms, whose growth depended on the personal wealth of their owners and their ability to leverage that wealth through bank loans. Well, it will be a long time before Asian banks are able or willing to provide the kind of funding they used to--and, in any case, the entrepreneurs, their fortunes slashed by the crisis, cannot provide the necessary collateral.

Even before the crisis there were indications that Asia was facing diminishing returns--that rapid growth was being sustained only by ever more massive infusions of foreign capital. Foreign investors may have stopped fleeing, but they are not going to pour in funds the way they did a few years ago. Could the recovery be aborted, with an actual relapse? Not just yet. It would take several years of irresponsible borrowing to create the conditions for a repeat of 1997. Such things can be arranged, but the prospect does not seem imminent.

Inevitably, worries about Japan color the prospects of the whole region. And Japan was in trouble long before anyone even imagined that the words Asia and crisis could be used in the same sentence.

If developing Asia suffered from an acute, potentially lethal but short-lived fever, Japan suffers from a slow, wasting disease, the result not of the nation's vices but of its virtues. While there are many things wrong with Japan, the immediate problem is excessive thrift: Japanese households simply save more than the country's businesses can be persuaded to invest.

Has Asia's crisis laid the foundation for sounder economic growth in the future? The answer is a definite maybe. The crisis has reinforced democratic tendencies and made it much harder for paternalistic strongmen to claim they know best. Still, it is hard to escape the feeling that a dangerous complacency is setting in. When Mexico started to recover from its 1995 "tequila" crisis, policymakers and investors alike acted as if it had been a one-time event, never to be repeated. But it turned out to be a dress rehearsal for the Asian crisis a year later. Because the world didn't end this time around, everyone is starting to believe that the situation is under control--even though proposals for international reform have been watered down to homeopathic levels. Could investors and countries really be foolish enough to make the same mistakes yet again? Of course they could.