Economic liberalization: No panacea. Edited by Tariq Banuri. Oxford University Press, New York, 1991, 238 pp.
| DOI | http://doi.org/10.1002/pad.4230130212 |
| Author | G. K. Chadha |
| Date | 01 May 1993 |
| Published date | 01 May 1993 |
Book
Reviews
177
also provides some useful hints in its bibliographical guide, especially for those who are
relatively new to the subject area.
RAINER ROHDEWOHLD
Berlin
ECONOMIC LIBERALIZATION: NO PANACEA
Edited
by
Tariq Banuri
Oxford University Press, New York, 1991,238 pp.
By now, in the contemporary literature
on
development economics, the diverse global economic
crises of the 1980s are well recorded and universally accepted. These crises injected.
inter
atia,
a highly uneven pace of economic growth among the developing economies. in general,
the Latin American economies witnessed a steep slowdown in their growth performance,
the East Asian countries managed to sustain their earlier growth tempo, while the big South
Asian economies registered a discernible improvement in their past performance. Thus, in
the contemporary Third World, the Latin American block stands out as a highly depressed
spot (of course, along with large parts of Africa). If one goes along with the mainstream
economists, Latin America cannot get out of the morass unless the ‘neoclassical wisdom’
is drawn upon. The standard prescription includes: economic liberalization, elimination of
all restrictions
on
international trade, deregulation and internationalization of the financial
sector, privatization, labour deunionization and elimination of all kinds of regulatory arrange-
ments clamping the
laissez faire
fetters on the state’s role in economic affairs. The virtues
of free market, competitiveness and financial openness are distilled, as it were, from the ability
of East Asian economies to withstand the same set of external shocks. if East Asia could
do it, the Latin America should do it as well.
The book under review stoutly challenges, both theoretically and empirically, this neoclassi-
cal philosophy of binding all
types
of economies to a common code of economic management,
whether in the realm of external trade, exchange rate adjustment, foreign borrowings and
investment or in regulating domestic economic matters, such as tightening fiscal discipline,
wage freezes and privatization of trade and industry. The volume is based on a set of six
papers presented at a conference on global macroeconomics held in August 1986 at the World
Institute of Development Economics Research, Helsinki. It is indeed daring and, therefore,
highly commendable first to deal with the difficult theme of the causes and consequences
of the slowdown and volatility of the world economy since 1970, and then to dismantle the
mainstream arguments, one by one, with full empirical rigour and substantiation. Perhaps,
hardly ever done by writings on international comparisons, the book
puts
elements of pure
and abstract economic thinking face to face with the political economy of the regime, most
ostensibly the nature and the limitations
of
the state. This approach naturally gives new
interpretations, new judgements and new policy directions. No wonder, therefore, the outcome
is a more realistic and balanced view of the contemporary realities. The book lends no room
for self- (or imposed-) despair if cognizance is taken of the institutional and political rigidities
under which nearly all the Latin American countries had to steer through their economic
affairs; as well as the ‘more hostile’ and structurally ‘more unaccommodative’ external environ-
ment faced by them during the 1980s compared with the 1970s. Likewise, the commendatory
and emulative overtones for the East Asian performance are mellowed down the moment
one takes cognizance of
a
few positive external shocks neutralizing the ferocity of the negative
ones. It is almost sure that retaliatory ‘eye-brows’ would be raised in the mainstream circles;
very soon, the ball would be thrown back to Banuri and company. it is equally sure nevertheless
that Balassa, Krueger, Sachs and other neo-liberalists of their hue are momentarily put on
defensive, and some moderation in IMF-conditionahties and the assessment yardsticks of
other international lending and developing agencies may follow. If this happens, the book
would serve well the third world as a whole.
Although a critical scrutiny of the neoclassical arguments runs through each of the six
chapters, each chapter has its own orientation and mode of analysis. No interested reader
would like to miss any chapter. In chapter
1,
Banuri carries us through the whole book;
the reader’s curiosity is raised to a level of impatience. In particular, the distinction between
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