3 responses to “Towards a more productive debate”

  1. M. Erit

    http://www.cgdev.org/content/publications/detail/1424155/

    The Washington Consensus: Assessing a Damaged Brand

    In this paper, Nancy Birdsall, Augusto de la Torre, and Felipe Valencia Caicedo, of The Centre for Global Development, analyze the Washington Consensus, which at its original formulation reflected views not only from Washington but also from Latin America. We trace the life of the Consensus from a Latin American perspective in terms of evolving economic development paradigms. The paper documents the extensive implementation of Consensus-style reforms in the region as well as the mismatch between reformers’ expectations and actual outcomes, in terms of growth, poverty reduction, and inequality. It then presents an assessment of what went wrong with the Washington Consensus-style reform agenda, using a taxonomy of views that put the blame, alternatively, on (i) shortfalls in the implementation of reforms combined with impatience regarding their expected effects; (ii) fundamental flaws—in either the design, sequencing, or basic premises of the reform agenda; and (iii) incompleteness of the agenda that left out crucial reform needs, such as volatility, technological innovation, institutional change and inequality.

  2. Charles Arthur

    In a recent article in the Guardian, Ha-Joon Chang says the washing machine changed the world more than the internet, a tool we overestimate while ignoring its downsides.

  3. Melissa Aleksic

    I picked up a copy of your magazine with a major article by economist Ha-Joon Chang on ‘industrial policy’. That same day he argued in a newspaper article for more active use of it in African countries.

    In his article in Making It number 3, Chang defined industrial policy as “targeting” or “selective industrial policy” which included subsidies, regulation and state provision.

    In “Africa needs an active industrial policy to sustain its growth” (The Guardian, 13 July) , Chang pointed out the failure of what he called the “Washington orthodoxy” of “leaving things to the market”. As he described, “in the 1980s most African countries became heavily indebted to the World Bank and the International Monetary Fund. Their loans came with a lot of strings attached… [they] were made to cut government spending, privatise their state-owned enterprises, deregulate their financial markets, and liberalise international trade and foreign investment. The reasoning behind these policies was that big and intrusive governments were the main causes of poor economic performances of the African countries. Once you lift the “dead hand” of the state, it was expected, private sector entrepreneurs would burst out and revive their economies.”

    As Chang points out, “The expectation was, to put it mildly, unmet. In most African countries, there was no private sector that could rush in to fill the vacuum left behind by the shrinking state. Between 1980 and 2000, per capita income in sub-Saharan Africa fell by 9%.”

    As he points out, “Few African countries have been able to convert their recent resource bonanza into a more sustainable industrial base. Worryingly, over the past decade many African countries have increased, rather than reduced, their reliance on primary commodities, whose notoriously large price fluctuations make sustained growth difficult.”

    He goes on: “Hence the growing interest among the African countries in industrial development through more active industrial policy – similar to what we saw in the east Asian “miracle” economies, like Japan and Korea, between the 1950s and the 1980s… and further encouraged by the fact that the main source of Africa’s recent economic recovery itself – the Chinese economic boom – has been generated by such policy.”

    I have to agree with Chang when he says: “The bankruptcy of free-market policies in the core capitalist countries revealed by the 2008 global financial crisis is making it more difficult for local free-market economists to defend the Washington orthodoxy.”

    Melissa Aleksic, London.

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