Globalization and Development: Why East Asia Surged Ahead and Latin America Fell Behind

278 Pages·2013·1.65 MB·English

by  Anthony Elson (auth.)

Globalization and Development
Globalization and Development
Why East Asia Surged Ahead and
Latin America Fell Behind
Anthony Elson
GLOBALIZATION AND DEVELOPMENT
Copyright © Anthony Elson, 2013.
Softcover reprint of the hardcover 1st edition 2013
All rights reserved.
First published in 2013 by
PALGRAVE MACMILLAN ®
in the United States—a division of St. Martin’s Press LLC,
175 Fifth Avenue, New York, NY 10010.
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this is by Palgrave Macmillan, a division of Macmillan Publishers Limited,
registered in England, company number 785998, of Houndmills,
Basingstoke, Hampshire RG21 6XS.
Palgrave Macmillan is the global academic imprint of the above companies
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the United Kingdom, Europe and other countries.
ISBN 978-1-349-44584-4 ISBN 978-1-137-31639-4 (eBook)
DOI 10.1007/978-1-137-31639-4
Library of Congress Cataloging-in-Publication Data is available from the
Library of Congress.
A catalogue record of the book is available from the British Library.
Design by Newgen Knowledge Works (P) Ltd., Chennai, India.
First edition: December 2013
10 9 8 7 6 5 4 3 2 1
To
Marjorie Louise Frieder, Amanda Erin Toledano,
and Kerry Mackinnon,
the three special, lovely women
in my life
Contents
List of Illustrations ix
Preface xi
1 Introduction—Globalization and Economic Divergence 1
2 The Economic Development of East Asia and Latin America
in Comparative Perspective 19
3 Changing Paradigms in Development Economics 37
4 Initial Conditions for the Postwar Development of East Asia
and Latin America 53
5 Economic Policy Choices—Macroeconomic and
Financial Stability 73
6 Economic Policy Choices—Savings, Investment,
and Industrialization 95
7 The Role of Institutions and Governance 123
8 The Political Economy Factor in Comparative
Economic Development 139
9 Three Cross-Regional Case Studies 161
10 Conclusions and Lessons for Development Policy 197
Notes 213
Bibliography 231
Index 265
Illustrations
Chart
5.1 Latin America and the Caribbean: Rate of GDP growth
1961–2011 75
Boxes
4.1 A re the Philippines More Similar to Latin America
than East Asia? 54
5.1 Chile’s Struggle to Achieve Macroeconomic Stability 78
7.1 The Institutional Features of China’s Successful
Economic Reforms 126
8.1 The Political Economy of Income Inequality in Brazil 153
Tables
1.1 Real GDP per capita in relation to that of the
United States 3
1.2 Global trade and investment 5
1.3 Global trade and GDP 9
2.1 Comparative regional growth, 1870–2008 20
2.2 Comparative macroeconomic data for East Asia (EA)
and Latin America and the Caribbean (LAC) 22
2.3 Poverty headcount table 25
2.4 Structural economic change: East Asia and Latin America
and the Caribbean 26
2.5 Growth decomposition 32
2.6 Decomposition of productivity growth, 1990–2005 33
4.1 Initial social conditions in East Asia and
Latin America (1960) 66
4.2 Flying geese pattern: Structural economic shifts for Japan 70
x ● Illustrations
5.1 Indicators for “debt intolerance” 85
5.2 Financial savings, bank credit, and real lending rates 89
6.1 World Bank doing business indicators 99
6.2 Drivers of technological capability 104
6.3 Relative shares of agriculture and manufacturing:
East Asia and Latin America and the Caribbean 110
6.4 Index of competitive industrial performance (CIP) 111
6.5 East Asia (EA) and Latin America and the
Caribbean (LAC) in global trade 113
7.1 Governance indicators (percentile rankings) 135
9.1 Comparative data for Jamaica and Singapore 164
9.2 Comparative data for Chile and Malaysia 174
9.3 Comparative data for Indonesia and Venezuela 186
Preface
T
his book, along with G overning Global Finance: The Evolution
and Reform of the International Financial Architecture , published
by Palgrave Macmillan in 2011, constitute what I like to call
my “professional biography.” The first book was institutionally based
and examined a number of international institutions and bodies, such
as the International Monetary Fund (IMF), the Bank for International
Settlements (BIS), the Financial Stability Forum (now Board), the
World Bank, and the G7/20 (that form part of the international finan-
cial architecture), with which I became very familiar during a career
at the IMF and a period of consulting at the World Bank. The cur-
rent book is thematic and, obviously, based on country and regions,
and deals with a number of countries in East Asia and Latin America
with which I worked for many years as a professional staff member
of the IMF and World Bank consultant. The operational focus of the
IMF provided a unique perspective on the macroeconomic policy and
performance of a number of countries across these two regions, while
frequent contact with counterparts in the World Bank (along with my
work as a consultant) provided a medium- to long-term developmental
perspective on these countries to complement my institutional focus at
the IMF. This experience provided an important background for fram-
ing many of the issues raised in this book.
Following my career at the IMF, I spent an academic year at St.
Antony’s College (Oxford) and the London School of Economics, where
I began to think more intensively about the issues raised in this book. In
England, I had the opportunity to interact with a number of prominent
development scholars, such as Jeffrey Chwieroth, Paul Collier, Rodrigo
Cubero, Valpy Fitzgerald, Sanjaya Lall, Frances Stewart, Rosemary
Thorpe, Andrew Walter, and Robert Wade, among others, with whom I
was able to test some of my views on comparative development and who,
for their part, significantly influenced my thinking about the process
xii ● Preface
of economic development. As a first step toward the production of this
book, I developed an academic curriculum on the comparative economic
development of East Asia and Latin America, which I have been using,
and adapting, for a course I have been teaching at the Johns Hopkins
School of Advanced International Studies (SAIS) in Washington, DC
and the Duke Center for International Development (DCID) since
2004. A brief discussion of some of the major themes raised in that
course (and in this book) was presented in my paper published in the
April–June 2006 issue of W orld Economics , and in a shorter form in an
issue of Finance and Development in that same year.
This book draws directly from many of the issues raised in that course,
and in those papers, and follows their interdisciplinary approach. My
first debt of thanks for this book, then, is to the academic scholars men-
tioned above, whose ideas have significantly influenced my thinking
on regional and global development issues. My second debt of thanks is
to the teams of students at Johns Hopkins SAIS and DCID who have
taken my course, and during the evolution of my teaching have both
influenced my thinking on certain issues and confirmed it on others.
Over time, the generally positive response I have received from these
students to my course has influenced my decision to proceed with the
preparation of this book.
M y interest in Latin America preceded my career at the IMF and was
first ignited by a summer tour of the region I made as a college student
with my university glee club. Following that tour, I began the study of
Portuguese more intensively and started to think about the issues of
economic development for the first time, and how, more specifically, for
example, one could try to understand why Brazil and the United States,
two large, resource-rich countries, had had such different development
trajectories since the time of their colonization by European powers. (In
effect, I have been thinking about this question for many decades right
up to the time of writing this book!) After completing my undergraduate
education, I enrolled in Columbia University’s School of International
and Public Affairs and its Institute for Latin American Studies to pur-
sue in a more focused way my interest in development issues. This two-
year degree program was followed by a Fulbright Fellowship to Brazil
where I was affiliated with the Instituto Joaquim Nabuco de Pesquisas
Sociais, which was founded by Gilberto Freyre in Recife, Pernambuco.
Over time, as my academic interest began to focus in a more disci-
plined way on the contemporary problems of economic development
for Brazil and the rest of the Latin American region, I continued my
studies at Columbia University in its Department of Economics, where