Asia’s 1997 financial crisis was the most severe of its kind to hit any region of the world since the Latin American debt crisis of the early 1980s. It brought to a crashing end a miracle that had taken but a single generation: the transformation of the pre-industrial Asian "tigers" into some of the most dynamic economies on Earth. Earlier, a similar transformation had turned Japan into the world’s second-largest economy, but it has been mired in an almost decade-long recession, which the crisis could only lengthen.

During the former times of prosperity, the economies of Japan and the tigers were characterized by strong government direction of selected industries, to which bank-dominated financial systems channeled the savings of thrifty households. But the 30 percent shrinkage of the total gross domestic product of Indonesia, Malaysia, the Philippines, South Korea, and Thailand in one year forced a basic rethinking of the respective roles of government, industry, and the market. The rise of the Internet has only hastened the rethinking.

Over the past two years, nearly all of the region’s countries have launched—some more wholeheartedly and successfully than others—a range of financial, corporate, and governmental reforms to get back into the game....