That warm glow and soft purring emanating from South Korea was the International Monetary

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Fund trying, yet again, to put the Asian financial crisis behind it.

The IMF needs Asia on its side. As the fastest-growing part of the world economy, the region will wield more clout at global institutions like the IMF and provide more of their funding.

The problem, to put it bluntly, is that Asia does not need the IMF or like the IMF, whose invasive policy prescriptions are blamed in the region for having exacerbated the 1997/98 meltdown.

Hence the charm offensive by the fund's managing director, Dominique Strauss-Kahn, at a big conference in the central South Korean city of Daejon last week.

"Let me be candid: we have made some mistakes," he said. "We have learned the importance of focusing on essential policies, and of protecting the most vulnerable, when tackling a crisis."

Declaring that he wanted Asian countries to see the IMF as a second home, Strauss-Kahn added: "Asia's time has come in the global economy, and so it must be at the IMF."

But there was an implicit quid pro quo. In return for a bigger role, Asia had to take more responsibility for reducing global imbalances. Governments had to nurture a "second engine of growth", domestic demand, instead of relying so much on exports now that Europe and America face years of belt-tightening.

In a nutshell, Strauss-Kahn seemed to be saying, the IMF is ready to change. Is Asia? "The decisions made now will impact Asia's performance for decades to come," the IMF chief said.

Against that background, it's reasonable to ask whether Asia will be able to rise to his challenge.

Shares in Indonesia are near record highs, reflecting confidence in economic reforms. India and Malaysia have both cut domestic fuel price subsidies to reduce their budget deficits.

Yet some contributors to a recent VoxEU.org publication, "Rebalancing the Global Economy: A Primer for Policymaking", wonder whether Asia really can change its spots.

POOR INVESTMENT CLIMATE

The most striking imbalance in Asia is that it saves too much, and a major reason for that thriftiness is beyond the control of governments: the bulk of Asians are in their prime working years when people salt away money for their old age.

But policymakers could do much more to promote more balanced growth, for example by building social safety nets to lessen the need to save for a rainy day, allowing currency appreciation and reducing corporate savings.

Jong-Wha Lee, chief economist at the Asian Development Bank, said governments should give priority to enhancing the investment climate; Asia's current account surpluses reflect in part a paucity of domestic investment, especially in long-term infrastructure, he argued.

"The business environment across the region lags behind the world's competitive economies because of serious shortcomings in regional institutions and skill shortages. Remedying these weaknesses will help translate domestic savings effectively into domestic investment," Lee wrote.

His case is buttressed by a new World Bank report, "Investing Across Borders, 2010", which examines the openness of 87 economies to foreign direct investment.

East Asia and the Pacific score poorly, with more curbs than any other region in the world on foreign equity ownership, starting a local business and accessing industrial land.

Underdeveloped financial sectors are also holding up Asia's economic transformation.