Via Political Theory Daily Review, over at Princeton University Press:
ON A VISIT to a small Latin American country a few yearsback, my colleagues and I paid a courtesy visit to the minister of finance.The minister had prepared a detailed PowerPoint presentation on his economy’s recent progress, and as his aide projected one slide after another onthe screen, he listed all the reforms that they had undertaken. Trade barriers had been removed, price controls had been lifted, and all public enterprises had been privatized. Fiscal policy was tight, public debt levels low,and inflation nonexistent. Labor markets were as flexible as they come.There were no exchange or capital controls, and the economy was open toforeign investments of all kind. “We have done all the first-generation reforms, all the second-generation reforms, and are now embarking on third-generation reforms,” he said proudly.
Indeed the country and its finance minister had been excellent students of the teaching on development policy emanating from internationalfinancial institutions and North American academics. And if there were justice in the world in matters of this kind, the country in question wouldhave been handsomely rewarded with rapid growth and poverty reduction.Alas, not so. The economy was scarcely growing, private investment remained depressed, and largely as a consequence, poverty and inequalitywere on the rise. What had gone wrong?
Meanwhile, there were a number of other countries—mostly butnot exclusively in Asia—that were undergoing more rapid economicdevelopment than could have been predicted by even the most optimisticeconomists. China has grown at rates that strain credulity, and India’s performance, while not as stellar, has confounded those who thought that thiscountry could never progress beyond its “Hindu” rate of economic growthof 3 percent. Clearly, globalization held huge rewards for those who knewhow to reap them. What was it that these countries were doing right?