« Equal treatment | Main | Help! It's getting crowded in here »

December 12, 2007

Comments

Etienne Calame

I am not an economist, just one of the thousands of citizens of privileged countries around the world who decided one day to settle in a less privileged country. Working and living in a country that struggle to exports its goods toward the EU or USA yet ranking in the top world economies I can say that from a practical, empiric experience it is true that opening the barriers profit in priority to the riches. The poor buys at premium prices in expansive currencies equipments ranging from megawatt sized power plants to simple tools or fertilizer; the riche imports only the cheapest products with low added values, and pay with precious USD or EUR that devaluate furthermore the already shacked local currency. This is true for agriculture, food, textile, toys, packaging, furniture… and armament. Helping a local and balanced development would probably work slower but bring a healthier result.

robertdfeinman

I'm in the middle of Paul Collier's "The Bottom Billion" and am having a hard time placing him in the spectrum of opinions about the faults and fixes for under developed countries.

I don't know if the large number of contradictory ideas is due to ideological biases, poor data or some other factors, but I don't see how anyone can feel confident giving these nations advice under the circumstances.

Per Kurowski

Let me add what I think since from what I have read (and heard) I believe there are some substantial differences between the two.

Though both are critical about the possibilities for the market delivering what others preaches it can, Stiglitz slightly more so, Rodrik is much more skeptical about our being better than the markets at that than Stiglitz.

Second Rodrik would never be quoted by Hugo Chávez as an inspiration for his "Bank against the North"

And, if I am totally wrong, then remember what the credit ratings like to tell us…”it is just our opinion”

Chandan

a) Poor countries need money to finance development activities. It is a must!

b) the IMF extends "concessional" loans and some grants.

c) with (b)comes a set of commitments (ooops...conditionalities!) that countries need to follow.

d) with (b) and (c) comes a free package of a forceful imposition of IMF's beliefs in default.

e) Often (d) is poorly thought by IMF appointed consultants, who care more about theories with practically unfitting constraints...

f) the country's economy gets screwed up...then comes more advice from IMF...again, gets screwed up...

Does not this indicate that policy failure is mainly due to multilateral donors (chiefly the IMF) who are intent on blindly imposing growth theories that they think right, irrespective of local circumstances?

Hence, bad policies are not self-imposed but imposed by someone else! So, No 2. is not convincing. I agree with Stiglitz.

Dan Olner

I concur with Chandan. My understanding was that developing countries, particularly in Africa, were given loans only if certain policies were imposed. In many (all?) countries this included having World Bank and IMF people right in the centre of the finance ministries, which themselves were designed by Western donor institutions. Such aid makes up huge chunks of African country's budgets. I think there's one where it was 50% for a while.

So I wonder what Dani thinks? It is true that leaders could have rejected the policy-loan package - but their budgets would have been decimated. And where else could they turn? - those few countries that *did* reject Western assistance - Mozambique, for example - tended to find themselves under military attack from Western sponsored proxies who saw any left turn as a door for the USSR to sneak in through. (Possibly true, but that doesn't change the basic point: politics and power ratcheted African leaders toward a Western economic consensus.) Any leader who rejected the West's methods might well find themselves overthrown in a US-backed coup.

All horrible over-generalisations, I know, and I don't buy into some great global capitalist conspiracy. It is feasible that an African country may have found a way to pilot safely through the dangerous waters of the cold war and maintained independence, and their own development policy. But politically, financially and structurally the odds were enormously against that happening.

Hopefully this gets the point across: in various places, at various times, African leaders have had less freedom to move than Dani says they have had. Particularly as regards the need of leaders to keep aid money flowing just to keep afloat, there's no reason to think this has changed.

John Jenkins

Chanda and Dan both commit the same logical fallacy: that any country must borrow from the IMF (or other institutions). If the conditions that come with the loans are so onerous that the conditions outweigh the benefit of the loans, then do not take the loans.

The conditions are very much voluntarily adopted, and certainly not forced on anyone. Just because the government wants a bigger budget (or more likely, the despot-of-the-week needs money for himself and his cronies), does not mean the bigger budget is required. Even if the policies of the IMF are wrong, the IMF does not get to make its policies the law of a sovereign country. That country's government does, and if that is a bad decision, then the fault lies with the government, not the IMF.

Mauricio Santoro

Dear prof. Rodrik,

I have just read Stiglitz´s "Making Globalization Work" and it made me think a lot about the points in common with your own books and posts.

Certainly, your work gives much more freedom for policy makers than Stiglitz´s and I think your reflections are very well suited for major developing countries like Brazil and India. As a Brazilian, I find hard to agree with the importance that Stiglitz puts in IMF or Wold Bank. The National Development Bank of my country has larger assets than the WB and our plans to curb inflation were usually very heterodox and not in the best line of IMF. Of course, it was different in Argentina, but even so, I agree with you that the main responsibility lied with Argentine politicians themselves.

Or if we look to the WTO, foreign trade is just not that important to Brazil, 80% or more of the GDP is related to the domestic market. But it is always easier to blame the international organizations, with all their problems of lack of transparency and democratic deficit, than to look to our contries´ internal problems.

All the best,

Na Prática a Teoria é Outra

Just in order to qualify the notion that Stiglitz sees IMF intervention as always harmful, I've seen Stiglitz saying, during a lecture in Oxford in 2004 (I think), that the IMF did a good job in Brazil.

corvad

I'm with Chandan and Olner, but am definitely ambivalent about the degrees of freedom afforded "countries." As pointed out by others, states ruled by despots (not too different from states ruled by leaders selected by socioeconomically dominant minorities) may have chosen to cooperate with IMF conditionalities with the knowledge that they could shift the costs of structural adjustment to socioeconomically subaltern majorities. In this case who got the shaft and who was free to choose? The nation-state as a unit of analysis is a problem here, and different states at different times have clearly been exposed to variable forms of leverage. Kirchner's Argentina seems to provide evidence that states can sometimes stand up to IMF conditionalities without absolute refusal, but then again Argentina was essentially a first world country, in terms of industrialization and wealth, until very recently. Not sure of course how much the fact that it's still a first world country, ethnically [thanks to 19th century genocide, a la the US], has to do with things.

corvad

which is all to say that substantially justified critiques of the Washington Consensus increasingly mobilized by national elites, at least in Latin America and the Caribbean serve to deflect responsibility from local oligarchic institutions and actors -- one of the reasons why I find Rodrik's arguments very compelling. After all, the "que se vayan todos" crowd celebrated by Naomi Klein finds itself in agreement with Dani "bad books [Klein's] that need to be burned") on the issue of local responsibility!

Chandan

John, so what is restricting countries from borrowing from sources other than the IMF? You might signal out international financial institutions and bilateral donors? Well, the former bases (mostly) its decision on lending based on the IMF's assesment. This means that rejecting the package from IMF would mean not getting credits from other donors?

A case in point: the relationship between WB's PRSP and PRGF. Loans are increased by the WB only if the IMF thinks that a borrowing country is fulfilling previous commitments. No more further loan is sanctioned if the IMF's assessment is negative, which of course happens if a country does not abide by conditonalities (tight budget, often pressuring governments to slash health and education funds, tight monetary policy, liberalization, privatization, flexible exchange rate...all these in one shot!)...

So who will give money to cash-strapped developing countries like Nepal, Bhutan, Burkina Faso, etc?

paine

dani
i feel let down

a moment of clarification
turned to pea soup

point one

has this mind bender
"the world economic system "
talk about holistication...

are you saying there is no north tilt
no trans nat advantage
built into
the global game
in practice if not rules??
"I see the main constraints as being internal--domestic politics and policies"

main constraints ???

as in look at
people's china
or singapore
the rules didn't stop them
would joe disagree ??
i suspect you've missed characterized joe here

"I see very little benefits from Doha for the poor countries under the best of scenarios"
here god bless your acuity
you simply
out joe joe

on point two
you are claiming
the south is its own worse enemy
how useful that line is around
the average imf meeting
and trans nat board room
"hey so we give bum advice..well then
why the f do they take it "

you gotta be fooling here
are you saying the imf has no big stick
or at least won't use it ??

point three
hardly shows a "substantive" difference
invoking the old
fox vs hedgehog dodge
to me
this lack of specifics amounts to a charge
of
"easy for you to say joe
flying over head at 10,000 feet "
yes policy on the ground involves
specifics and he he
the opportunity to fail ..

and btw that's why
i'm with you
lets get to the brass tacks here

stiglitzian
"holism "
like bryanian "holy -ism"
ends with
hollow dongs
symbolic gestures
and kabooooooki images
lots of hot sacred air
full of
banishing money changers
and defaming
crosses of gold and such

on point four
i think joe has
you by
the hairs on
your chinny chin chin

inflation is a fear for bankers
and mugabe baiters

south world
inflation in itself
never starves
anyone
and usually
runs amock only
long after dracula
has taken over the wheel
of the blood wagon

StevenT

During the 1997 economic crisis, the IMF told the Malaysian government that if you do not follow our policy, your country will go broke. Malaysia did not take the loan from IMF but instead from Japan. A few years later, Malaysia recoved at a much greater pace than the asian countries which took the IMF route.

corvad

well, yes, precisely: what happens when governments don't toe the line? During the Cold War, it meant they often turned to the Soviet Union, or even if they didn't or weren't about to such a possibility meant political and economic destabilization led by the US. That option is not so much on the table, except for possibly Venezuela (Per, this is why although I'm critical of Chavista patrimonialism and domestic gas subsidies, I'm not so critical of him handing out AK-47s, and not all critical of his effort to catalyze regional alternatives to the neoliberal model). Now, the only excuses the US has for standing in the way of democracy -- or blocking its emergent possibilities -- are the war on terror and the war on drugs (possibly the human rights issue can be abused as a trojan horse too). Historically, everything has been sacrificed to the god of capital.

The question in my mind is, what happens to a country that despite the threat of loan cutoffs and so forth, more governments had said not no, but not sure, we'll go ahead and do it all at once? I think Malaysia is a good example, I'm not a regional specialist but isn't it the case that many SE Asian countries drove a harder bargain with the Washington Consensus than did Latin American and African countries.

The question of local responsibility, for me, turns on the variability of different governments at different times displaying different amounts of sensitivity -- including but not limited to rejection -- to adopting structural adjustment wholesale and shoving it down the throats of their constituents. My sympathies are with the rejectors, but how much of the W.C. was something that was sold as precisely that, an expert opinion that smart leaders should adopt if they ever hoped to catch up? to the extent that it was, there is indeed a fair share of blame to be laid on the shoulders of national bourgoisie. Not that that makes the IMF any less coercive ...

Tarek

Well, thinking about how developing countries could pull themselves out of poverty is an extremely hard task. However, it can always be reduced, in my opinion, to the lack of productive and creative workers. The most straight forward way for governments to raise the productivity of its work force, in my opinion, is by paying more attention towards educating people. None the less, a lot of under developed countries argue that increased spending on education didn't have any positive impact on their growth rates. They even extend their argument by providing empirical evidence in support of their claims. However, they always provide evidence of increased spending and not evidence of raising educational standards. After all, spending more money on education doesn't necessarily mean that the extra money managed to raise the educational standards. That’s why i still think that access to better education is the only way theses countries would be able to grow out of poverty. That's not to say that no institutional changes would be needed; the benefits of having more creative and productive workers in the economy would never be visible unless the whole institution supports their contributions and listens to what they have to say.

The real question is though, do these governments really want to do what’s necessary to grow out of poverty. In my opinion, the answer is no. As previously mentioned the real reason for the poverty of these countries is the un productivity of it’s workers. And, if some how productive and creative individuals managed to appear in the horizon, the institution will always put obstacles in their way instead of providing them with the necessary assistance. Strange as it might seem, for those who never lived in places like that, creative and productive individuals, in unproductive societies, are always treated like enemies and not friends, not for anything but the fact that they are more productive and creative than the others. That’s probably why these countries will always stay the way they are.

Thomas

Chandan--in your response to John, that's all fine. But governments turn to the IMF only when things have gone horribly wrong, usually as a consequence of poor prior policy decisions. So, a simple solution is to avoid poor prior policy choices and thus avoid needing to draw from the IMF.

Chandan

Thomas:
"But governments turn to the IMF only when things have gone horribly wrong..."

well, I don't think so. Governments turn to the IMF or any other donor primarily to get funds to finance development activities/reforms. They do not turn to the IMF after getting in trouble caused by themselves. In fact, joining the IMF eases the problem of credit crunch to fund internal economic reforms/activities!

fallen earth chips

After all, spending more money on education doesn't necessarily mean that the extra money managed to raise the educational standards.http://www.playerassist.com/darkfall/

Online Pharmacy

marley and i is the same history in here yeah ,

Online Pharmacy

this is a good experience also let me tell u that for a good life enjoy food.

rado watches

Why is everyone just montblanc watches willing to accept power cuts? Don't you think that patek philippe watches having continious power is your right? If people aren't going to demand rado watches 24X7 power, don't expect anything zenith watches to change. The government needs to look at other sources parmigiani watches of power generation. The only solution is more power panerai watches production. Nothing less.
http://www.watchvisa.com/montblanc-watches.html
http://www.watchvisa.com/patek_philippe-watches.html
http://www.watchvisa.com/rado-watches.html
http://www.watchvisa.com/tudor-watches.html

buy generic viagra

well joe u have a terrific blog right here

rolex watches

People usually say :"Seeing is believing." http://www.tt88times.com
Each attempt has a corresponding gain, in part or obvious, or vague. At least we have the kind of satisfaction After I bought this watch ,in a sense,it means a great deal to me. http://www.fashionhairfu.com

buy propecia

Wholefood Farmacy is a place that's capitalizing on the new organic health market on the forefront today-- that doesn't mean they're not OK, that just means they've discovered a niche and put themselves 100% in it.

mbt shoes sale

Thank you for introducing me the useful information.And .....Totally boring. can you tell me where is the red and gold colors...? I predict a very low seller....I look forward your answer.thank you!

replica rolex paypal

私はアメリカではないので、ブログの記事は、よく書かれて、私はとても好き読み取り、すべての単語の私は非常に理解、ほとんどまだ読んでいないが、私はあなたの資料では、知識を学ぶことを望んでまた、我々は良い友達になることを願って。ありがとうございました! !

cheap fashion handbags

For me, I live out of my car… which means I live out of my cheap fashion handbags, too. I need one with a lot of size, tons of pockets and that will last. Make sure to check the stitching and handle joints. And when you’re not using them, make sure to keep them in a cheap Brand wallets. Good quality items should last, and they will if you care for them properly. http:///www.freewholesale.net

Louis Vuitton Laptop Sleeve

China has agreed to the posting of U.S. safety officials in its food plants, reports the NYT. According to the story, U.S. FDA officials will be "eventually be embedded in China’s food safety bureaucracy to help train Chinese officials and keep records on their inspections." Sounds good. I guess now U.S. authorities will 467467

louis vuitton pouch

Why is everyone just montblanc watches willing to accept power cuts? Don't you think that patek philippe watches having continious power is your right? If people aren't going to demand rado watches 24X7 power, don't expect anything zenith watches to change. The government needs to look at other sources parmigiani watches of power gener
http://www.louisvuitton4love.com/louis-vuitton-popincourt-long-m40008-p-913.html
http://www.louisvuitton4love.com/louis-vuitton-le-somptueux-wallet-m95854-p-699.html
http://www.louisvuitton4love.com/louis-vuitton-marilyn-white-m40127-p-970.html

louis vuitton pouch

Why is everyone just montblanc watches willing to accept power cuts? Don't you think that patek philippe watches having continious power is your right? If people aren't going to demand rado watches 24X7 power, don't expect anything zenith watches to change. The government needs to look at other sources parmigiani watches of power gener
http://www.louisvuitton4love.com/louis-vuitton-popincourt-long-m40008-p-913.html
http://www.louisvuitton4love.com/louis-vuitton-le-somptueux-wallet-m95854-p-699.html
http://www.louisvuitton4love.com/louis-vuitton-marilyn-white-m40127-p-970.html

5785

classic cardy

Water Lillies brought out the essence of life. http://www.uggsbailey.co.uk/sitemap.html

jordan shoes

Thanks for sharing your article. I really enjoyed it. I put a link to my site to here so other people can read it. Came across your blog when I was searching bing I have found the bit of info that
I found to be quite useful.

jordans for sale

I think this is a great post. One thing that I find the most helpful is number five. Sometimes when I write, I just let the flow of the words and information come out so much that I loose the purpose. It’s only after editing when I realize what I’ve done. There’s defiantly a lot of great tips here I’m going to try to be more aware of.

jordan shoes

It's good to see this information in your post, i was looking the same but there was not any proper resource, than now i have the link which i was looking for my research.

viagra online

Well, I have been reading your blog posts daily and the reason I come on your blog frequently is its compelling content… As far as education is concerned, I was just thinking about an issue and wanna discuss it over here

ugg boots

a story

ugg outlet

i agree with you!your sayiing is right!

weddingdresses

The first stage Wedding Dresses of spring wedding will give you so many things to plan and organize. Taking some time first to think and jot down some initial wedding ideas or Evening Gowns themes is really important before referring to any wedding vendors or Evening Dresses
venues. In this way, you will be able to easily conceptualize the perfect touches Quinceanera Dresses for your spring wedding day.As we all know, spring is the mark of time of birth and renewal. Having your wedding in this beautiful season can bestow a marriage life full of excitement and adventure.

moncler

I craved to impart you for this high content!! I definitely enjoyed every bit of it and I acquire you bookmarked your diary to ascertain out the new choke you move in the time.

wholesale replica handbags


I can't believe how much of this I just wasn't aware of. Thank you for bringing more information to this topic for me. I'm truly grateful and really impressed.

wholesale new era caps

My friend told me that this blog is competitive.wholesale new era caps i will read more. Once again great post. You seem to have a good understanding of these themes.When I entering your blog,I felt this . handbags wholesale Come on and keep writting your blog will be more attractive. To Your Success!

Thanks for sharing your article.cheap LV handbags I really enjoyed it. I put a link to my site to here so other people can read it.chanel handbags online Came across your blog when I was searching bing I have found the bit of info that
I found to be quite useful.

Generic Viagra Online

This is a great comment made up here. I really like the story that has been given here. Lovely.

Emu Boots

You may or may not be able to tell if your tree or trees need care. Branches growing down toward the ground, dead branches and diseased branches all need to be trimmed. Generally speaking most healthy trees could use trimming.

Latest Dubai offers

Dubai is the centre of the international trade. People from all over the world come to Dubai to shop various products and articles on regular basis. Latest promotions offered by this international city are many starting from most economical packages to highly luxurious business-to-business trade promotions.

Account Deleted

hay man have a look at this post it's great too see u.

Men Footwear

Account Deleted

raf

Thanks for article.

3Dhomemovies

Even if I don't always agree with your posts, I always appreciate reading them. Columbus Hotels

Account Deleted

Helpful advises above. I have noticed that many people are using twitter for marketing. I would love to try this too for my business.
pakistan visit

Account Deleted

Nice post. This post is different from what I read on most blog. And it have so many valuable things to learn.Thank you for your sharing!
laptops

Account Deleted

Raf
raf

Thanks to you !!

Account Deleted

Raf
raf

Thanks for visiting ;)

Account Deleted

Raf
raf

Thanks for this ...

Account Deleted

Raf
raf

Account Deleted

Thanks for sharing your article. I really enjoyed it. I put a link to my site to here so other people can read it
sexyshop

Account Deleted

What about the differences in skill intensities across industries? The job losses in the relatively unskilled-labor intensive battery industry should have little effect on the relatively skilled-labor intensive machinery
sexshop online

Account Deleted

Many places and centers offer business and trade promotions to both buyers and supplier
sexshop

Account Deleted

This is good site to spent time on .I just stumbled upon your informative blog and wanted to say that I have really enjoyed reading your very well written blog posts. I will be your frequent visitor, that's for sure.


organic seo service

Account Deleted

powerpoint recovery file

Thanks for the interesting article!

Verify your Comment

Previewing your Comment

This is only a preview. Your comment has not yet been posted.

Working...
Your comment could not be posted. Error type:
Your comment has been posted. Post another comment

The letters and numbers you entered did not match the image. Please try again.

As a final step before posting your comment, enter the letters and numbers you see in the image below. This prevents automated programs from posting comments.

Having trouble reading this image? View an alternate.

Working...

Post a comment

Your Information

(Name is required. Email address will not be displayed with the comment.)