THE NEW DEVELOPMENT ECONOMICS - After the Washington Consensus: K.S. Jomo and Ben Fine — Editors; Tulika Books, 35 A/1, III Floor, Shapur Jat, New Delhi-110049, and Zed Books, London and New York. Rs. 650.
Nobel Laureate Joseph Stiglitz was the Chief Economist of the World Bank in the 1990s. He criticised the World Bank and the IMF for pushing market-based economic reforms and ignoring other parameters of development such as good governance, environment and education. He was removed from his post for this `indiscretion'. He has since become the chief proponent of `new development economics', which holds that the market alone will not secure economic development. It seems that Stiglitz is a serious opponent of the World Bank's neoliberal ideology. However, according to K. S. Jomo of University of Malay, Kuala Lumpur and Ben Fine of University of London, Stiglitz's opposition of market-based reforms of the World Bank is a facade. In this book they say that Stiglitz wants to bring issues such as governance, environment and education within the purview of the market. Truly, the market promoted by Stiglitz has a broader and deeper reach though it appears he is opposing the supreme role of the market. On the other hand, Jomo and Fine give many examples of the positive role of the state in economic development. The government had a critical role in bringing forth rapid economic growth in the East Asian countries in the 1990s. It regulated domestic competition to optimal levels. It did not allow excessive competition while also preventing establishment of monopolies. This carrot-and-stick policy led to the domestic companies growing rapidly. That was the source of the Asian Miracle. The domestic banks and companies were provided easy loans under government guidance in Japan. The Chaebols were similarly supported by the government in Korea. These examples show that the government can have a positive role in economic development.
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