the rise and fall of the washington consensus as a paradigm for developing countries abstract the introduction of the washington consensus involved not simply a swing from state led to market oriented policies but also a shift in the ways in which development problems were framed and in the types of explanation through which policies were justified key changes were the partial globalization of development policy analysis and a shift from historicism to ahistorical performance assessment the main challenge to this approach is a latent southern consensus which is apparent in the convergence between east asian developmentalism and latin american neostructuralism the demise of the washington consensus is inevitable because its methodology and ideology are in contradiction

the hazard of moral hazard untangling the asian crisis abstract the paper critically examines the explanations of the asian crisis which emphasize the role of national policies and institutions that allegedly created moral hazard by overprotecting the investors industrial policy crony capitalism and government guarantees accorded to banks and industrial firms that are considered too important to fail we also discuss the international dimension of the moral hazard argument in the presence of international monetary fund imf bail out the paper finds these explanations theoretically ill defined and empirically weak and argues that the prescriptions for changes in policy and institutions based on them are unlikely to prevent similar kinds of crises in the future

african economic development in a comparative perspective conventional explanations of poor african economic performance generally fail to pay adequate attention to causal mechanisms of growth decline and stagnation many african countries experienced investment booms after independence but in contrast to east asian newly industrialising economies these were not sustained owing to failure to establish a virtuous growth circle involving complementary increases in savings and exports structural adjustment programmes dismantled stat mediated mechanisms of accumulation without putting viable alternatives in place and failed to tackle the structural constraints which impede productivity growth in agriculture a new policy approach drawing on the experience of both post colonial and adjustment periods is necessary copyright 2001 by oxford university press

interpreting the korean crisis financial liberalisation industrial policy and corporate governance as the interpretation of its economic miracle has been so the interpretation of the recent crisis in korea remains highly controversial 1 although there are many important issues which have been raised by the korean crisis such as exchange rate policy labour market policy and the architecture of the international financial system chang 1998a three issues have been especially controversial in the debate financial liberalization industrial policy and corporate governance

neo liberalism sme development and the role of business support centres in the transition economies of central and eastern europe support for sme development was one of the most important policy interventions initiated by post communist governments in central and eastern europe from 1990 onwards substantial financial support for this was forthcoming from both the international assistance agencies and western governments one major result was the formation of networks of business support centres bscs the design of the bscs was very much informed by the neo liberal approach to business development which was still in the ascendancy in the late 1980s as a consequence the bsc networks were structured to be private sector led financially self sustaining to involve minimal local government participation and essentially pressed into focusing upon support initiatives which were consonant with short run market imperatives with several years of experience now behind them it is possible to begin to make an assessment of their operations and impact upon the sme development process unfortunately the bsc networks almost everywhere are failing to deliver upon the heady promises of both their domestic and international supporters and the sme development process is beginning to falter crucially they compare very badly with previous historical episodes of sme development facilitated and co ordinated by the local state a new sme discourse is called for which explicitly recognises that a local developmental state approach could have a much greater if not a pivotal role to play in sme development in the transition economies

toward an economic model of the japanese firm i owe a great deal to professor moses abramovitz who suggested that i write this article i appreciate his constant encouragement and guidance which aided me throughout its preparation i am also indebted to three anonymous referees of the journal and to professors ryutaro komiya and michael riordan for their critical comments and helpful suggestions needless to say i am solely responsible for the views expressed in this paper

big business and urban congestion in taiwan the origins of small enterprise and regionally decentralized industry respectively abstract two pillars of taiwan s economy that are regarded as models for other developing countries to follow are small and medium size enterprises smes and regional decentralization of industry this paper suggests that the historical roots of both phenomena make the policies necessary to reproduce the taiwan model elsewhere less straightforward than is typically supposed by the mid 1960s the major factor behind regional decentralization was urban congestion big business seems to have been instrumental in the growth of smes

third world competition and de industrialisation in advanced countries rapid industrialization in the third world during the last three decades and the continuing fast expansion of the south s manufacturing exports to the advanced countries has raised the question whether these have or will in the future lead to deindustrialization in the north this paper provides a consistent conceptual framework for analyzing this issue which is then applied to the experience of the u k economy it is concluded that in the 1970s u k manufacturing trade with the south lead to an increase rather than a decline in output and employment however the paper also provides evidence that in the future this trade is likely to become a source of disequilibrium and may contribute to deindustrialization copyright 1989 by oxford university press

income distribution and growth in east asia it is widely believed that the east asian economies performed exceptionally well not only in generating growth but also in keeping inequality low this study tries to answer the questions raised by the claims of exceptionality of income distribution in east asia central findings are that only japan korea and taiwan have legitimate claims to low inequality that the east asian economies distinguished themselves by their ability to translate high profit shares into high savings and investment rates and that low inequality and high profit shares coexisted primarily due to the unusually even distribution of wealth

macroeconomic modeling for assessing sustainability of bioethanol production in thailand abstract the development of bioethanol can bring about socio economic and environmental impacts to support the sustainability analysis of bioethanol development and the decision making on bioethanol promotion in thailand this study aims at assessing the socio economic and environmental effects of bioethanol production using recursive dynamic computable general equilibrium cge modeling the assessment is carried out based on the bioethanol production targets in thailand s alternative energy development plan aedp 2015 capturing cassava ethanol and molasses ethanol simulation scenarios are set up to incorporate the role of bioethanol support policies such as tax reduction production efficiency improvement and widening the price gap between gasoline and gasohol into the analysis the results show that increasing bioethanol production together with improving the efficiency of feedstock cultivation is the most efficient way to enhance economic growth however the higher production and consumption would also lead to more irrigation water demand and air emissions the presentation of bioethanol support policies role in promoting bioethanol along with widespread socio economic and environmental effects focus are novel not only are the results useful for the decision making towards sustainable bioethanol development the methods presented in this study should also be a guideline for other socio economic and environmental impact assessment schemes

mechanisms of the aid curse lessons from south korea and pakistan abstractrecently scholars have argued that far from contributing to development foreign aid hinders development but in the 1960s the east asian countries developed rapidly despite receiving large amounts of aid to examine why aid seems to undermine development in some cases but not in others we conduct a detailed comparison of the mechanisms of the aid curse in south korea and pakistan we show that south korea saw astonishing levels of corruption but this did not hinder its development and pakistan had a strong bureaucracy which did not help it to grow the key difference between the two countries was in the strength of their tax systems foreign aid in the context of underdeveloped tax administration leads to increasing cycles of debt that undermine development when foreign aid arrives in the context of commitment to strong taxation a country can avoid the aid curse

the political economy of industrial policy in korea the article aims to provide some additional empirical support and theoretical consolidation for the emerging alternative interpretation of the korean developmental experience which emphasizes the role of the state after briefly reviewing some mainstream interpretations it presents a detailed account of state intervention in korea where it is revealed that industrial policy played the central role then it explains how the korean state was able to avoid some of the obvious dangers of such a policy which is often associated with economic failures in developing countries it then explores the basis of state power in korea which provided a background for such an outcome copyright 1993 by oxford university press

the desirable form of openness for indian agriculture how open should a developing country s agriculture be to the world economy what are the medium term effects for growth and income distribution of close integration with world agricultural markets through trade liberalisation and domestic reform and what are the implications of the strategic integration of agriculture with world markets using a dynamic computable general equilibrium model these questions are addressed for the indian economy the simulation results show that the costs of close integration are large and unevenly distributed irrespective of whether the agricultural reform is immediate or gradual one form of strategic integration is operationalised that yields more desirable outcomes in terms of growth and income distribution the paper also compares the effectiveness of the two policy regimes in coping with an adverse supply shock copyright 2001 by oxford university press

openness and the market friendly approach to development learning the right lessons from development experience abstract two central policy issues in economic development today are how open should a developing country be to the world economy and what should the government do or not do to promote rapid growth this paper examines these questions in relation to the highly successful east asian countries and contributes to the debate between world bank and heterodox economists the paper suggests that there has been significant convergence between the two schools on analytical and empirical issues but not on policy it takes this debate further by analyzing the principal issues still in contention

the maturation and growth of infant industries the case of korea abstract this paper first shows that contrary to evidence from most developing countries korean infant industries under protection have tended to mature it also shows that output grows faster in infant industries than in mature ones the paper then discusses probable factors that have made the maturation and growth of infant industries possible in korea overall the empirical evidence and its interpretation support the revisionist rather than neoclassical or market friendly view in the recent debate on east asian industrialization

combining bottom up and top down abstract we motivate the formulation of market equilibrium as a mixed complementarity problem which explicitly represents weak inequalities and complementarity between decision variables and equilibrium conditions the complementarity format permits an energy economy model to combine technological detail of a bottom up energy system with a second best characterization of the over all economy our primary objective is pedagogic we first lay out the complementarity features of economic equilibrium and demonstrate how we can integrate bottom up activity analysis into a top down representation of the broader economy we then provide a stylized numerical example of an integrated model within both static and dynamic settings finally we present illustrative applications to three themes figuring prominently on the energy policy agenda of many industrialized countries nuclear phase out green quotas and environmental tax reforms

the impact of buyers expectations on entry deterrence abstract a model of entry deterrence is presented in which consumers are perfectly informed about an incumbent monopolist s product quality but are imperfectly informed about the qualities of potential entrants to deter entry the monopolist chooses a higher price and quality than he would in the absence of an entry threat

corporate profitability and the dynamics of competition in emerging markets a time series analysis the paper presents time series analyses of corporate profitability in seven leading developing countries dcs using the common methodology of the persistence of profitability pp studies and systematically compares the results with those for advanced countries acs surprisingly both short and long term persistence of profitability for dcs are found to be lower than those for acs the paper concentrates on economic explanations for these findings it also reports the results on the persistence of the two components of profitability output capital ratios and profit margins these too raise important general issues of economic interpretation for pp studies which are outlined

korea the misunderstood crisis abstract the article argues against the conventional wisdom that the current korean crisis is a crisis from underregulation rather than from overregulation it argues that ill managed financial liberalization abandonment of investment coordination and poor exchange rate management were the underlying causes of the crisis it then argues that while certain structural changes made such policy shifts somewhat inevitable there were also poor strategic choices and ideological prejudices involved the article finally discusses whether the current international monetary fund program of institutional reform in the anglo american direction will be able to revive the korean economy in the long run

optimal cross licensing arrangements collusion versus entry deterrence this paper analyzes optimal cross licensing arrangements between incumbent firms in the presence of potential entrants the optimal cross licensing royalty rate trades off incentives to sustain a collusive outcome vis a vis incentives to deter entry with the threat of patent litigation we show that a positive cross licensing royalty rate which would otherwise relax competition and sustain a collusive outcome dulls incentives to litigate against entrants our analysis can shed light on the puzzling practice of royalty free cross licensing arrangements between competing firms in the same industry as such arrangements enhance incentives to litigate against any potential entrants and can be used as entry deterrence mechanism

strategic behaviour of incumbent firms in the uk abstract the main purpose of this paper is to examine the incidence of strategic behaviour in the uk by means of a questionnaire study performed across three broad manufacturing industries food electrical engineering and chemicals of the strategies which have received substantial theoretical attention r d and advertising appear widely used patenting pricing and excess capacity much less so vertical instruments such as purchasing policy also stand out as important but possibly only a minority of firms in our sample actively pursue strategic instruments

the investment profits nexus in east asian industrialization abstract both orthodox and heterodox interpretations of east asian industrialization have concentrated on questions of resource allocation and neglected overall capital accumulation and the role of government in accelerating it this paper argues that corporate profits and other profit related incomes were the main source of investment in the most successful east asian economies government policies played a major role in promoting capital accumulation by creating rents and animating the dynamic interactions between profits and investment this was achieved through a broader set of measures than those usually identified as selective industrial policies

savings investment and the corporation in the east asian miracle abstract the east asian countries have achieved a spectacular average rate of economic growth over the last 30 to 40 years with very substantial diversification and economic development korea for example managed to transform itself from being a largely agricultural society in 1960 to the point where it became the third country after the us and japan to export 256 k memory chips developed by its own firms it is no exaggeration to say that the post wwii development of east asia including japan is the most successful story of sustained economic growth in the history of mankind how does one account for this extraordinary economic success

growth and imperfect competition on factor markets increasing returns and distribution abstract although seldom modeled outside the monopolistic competition framework market incompleteness and imperfect competition are central to the new growth theories we propose here a strategic model of imperfect competition with endogenous growth and endogenous market structure where we focus on labor market issues for growth to be possible we assume increasing returns at the firm level due to heterogeneity on the labor market the market structure is not degenerate then because of increasing returns short run efficiency is maximized under monopoly and free entry implies too many firms in the market however in the long run competition can generate growth through a distribution effect whereas a monopoly leads to a zero growth steady state thus there is a trade off between static and dynamic efficiency this trade off implies the existence of a growth maximizing degree of competition in our economy

the role of the state in financial markets this paper reexamines the role of the state in financial markets and identifies seven major market failures that provide a potential rationale for government intervention in practice government interventions in capital markets even in industrial countries have been pervasive the paper provides a taxonomy of those interventions with respect to both the objectives they serve and the instruments they employ there is a role for the government in financial markets but the success of government interventions has been mixed it is important that interventions be well designed the paper sets out principles for government regulatory interventions and applies them to prudential regulation it then examines three other areas of intervention directed credit finanical repression and competition policy and identifies circumstances in which some amount of financial repression may actually be beneficial

the limits of trade policy reform in developing countries trade reform is now raising some new issues this paper deals with three sets of questions first how can trade reform be sustained can governments convince business labor or consumers that trade reform will be lasting so as to forestall possible adverse reactions that would jeopardize the sustainability of the reform second what role should trade reform play when it is implemented in the context of macroeconomic instability are there potential conflicts between the standard desiderata for trade reform and the requirements of macro stability finally should we be worried about the consequences of trade reform in the imperfectly competitive market environments that characterize the developing economies

was japan s industrial policy successful some discordant voices however began to be heard by the mid 1970s while european writers were still supporting the conventional wisdom michalski et al 1972 carducci and padoa schioppa 1973 sautter 1973 boltho 1975 doubts about the effectiveness of government intervention were expressed in the united states in an authoritative survey of the economy patrick and rosovsky 1976 more recently this form of revisionism has gone further in a very careful reading of the evidence trezise 1983 has come to a sceptical conclusion about the role of japan s industrial policy according to him the major actor in post war growth was the free play of market forces driven by dynamic entrepreneurs and buttressed by high saving propensities

the optimal degree of competition and dynamic efficiency in japan and korea abstract this paper is concerned with the neglected role of competition policy in east asian development michael porter considers japan s development to have benefitted from intense competition among firms by contrast caves and uekusa criticize miti s role in creating recession cartels and entry barriers which are thought to have resulted in allocative inefficiency this paper argues that competition policy in both japan and korea was oriented towards creating dynamic efficiency the highest long term productivity growth rate it did so by measures operating at both the industry and firm level which sometimes restricted competition and sometimes encouraged it

economy wide impacts of biofuels in argentina abstract argentina is one of the world s largest biodiesel producers and the largest exporter using soybeans as feedstock using a computable general equilibrium model that explicitly represents the biofuel industry this study carries out several simulations on two sets of issues i international markets for biofuel and feedstock such as an increase in prices of soybean soybean oil and biodiesel and ii domestic policies related to biofuels such as an introduction of biofuel mandates both sets of issues can have important consequences to the argentinean economy the simulations indicate that increases in international prices of biofuels and feedstocks would increase argentina s gross domestic product and social welfare increases in international prices of ethanol and corn also can benefit argentina but to a lesser extent the domestic mandates for biofuels however would cause small losses in economic output and social welfare because they divert part of biodiesel and feedstock from exports to lower return domestic consumption an increase in the export tax on either feedstock or biodiesel also would lead to a reduction in gross domestic product and social welfare although government revenue would rise

is free trade passe abstract if there were an economist s creed it would surely contain the affirmations i understand the principle of comparative advantage and i advocate free trade yet the case for free trade is currently more in doubt than at any time since the 1817 publication of ricardo s principles of political economy and this is due to changes that have recently taken place in the theory of international trade while new developments in international trade theory may not yet be familiar to the profession at large they have been substantial and radical in the last ten years the traditional constant returns perfect competition models of international trade have been supplemented and to some extent supplanted by a new breed of models that emphasizes increasing returns and imperfect competition these new models call into doubt the extent to which actual trade can be explained by comparative advantage they also open the possibility that government intervention in trade via import restrictions export subsidies

new perspectives on east asian development conventional explanations of rapid growth in east asia have focused on the efficient allocation of resources resulting from market led outward oriented strategies this study challenges that approach east asian success has centred around the accumulation dynamic both because of its direct importance to the growth process and also because of its close and interdependent linkages with exports on this basis the study considers the institutions and policies which were used to manage economic rents in support of rapid growth and to ensure a more strategic and orderly integration into the world economy the study also examines the contribution of regional trade and investment flows to east asian industrialisation the potential for replicating similar strategies is considered