a_unique_person
30th March 2003, 01:12 AM
neo-classical economics have failings. these failings affect countries differently. this has resulted in, for example, free market theory causing problems in economies when they are under stress. Advice forced an asian countries, to allow them to qualify for aid after the Asian economic crises, made things worse for them, rather than better.
Strong economic institutions and controls are necessary to help maintain stability.
It was a typical failing of economists mesmerised by the narrow neo-classical model to be oblivious to the key role played by institutions when urging developing economies to do dangerous things for which they were woefully underequipped.
Guess what? The IMF has discovered the importance of institutions. "The analysis suggests that financial globalisation should be approached cautiously and with good institutions and macro-economic frameworks viewed as preconditions," we are told.
"A growing body of evidence suggests that (the quality of domestic institutions) has a quantitatively important impact on a country's ability to attract foreign direct investment, and on its vulnerability to crises. There is accumulating evidence of the benefits of robust legal and (prudential) supervisory frameworks, low levels of corruption, high degree of transparency and good corporate governance."
And blow me down - the IMF has abandoned its fatwa against the evil of capital controls.
Institutional confessions of error do not come much bigger than this one.
http://www.theage.com.au/articles/2003/03/28/1048653857384.html
Strong economic institutions and controls are necessary to help maintain stability.
It was a typical failing of economists mesmerised by the narrow neo-classical model to be oblivious to the key role played by institutions when urging developing economies to do dangerous things for which they were woefully underequipped.
Guess what? The IMF has discovered the importance of institutions. "The analysis suggests that financial globalisation should be approached cautiously and with good institutions and macro-economic frameworks viewed as preconditions," we are told.
"A growing body of evidence suggests that (the quality of domestic institutions) has a quantitatively important impact on a country's ability to attract foreign direct investment, and on its vulnerability to crises. There is accumulating evidence of the benefits of robust legal and (prudential) supervisory frameworks, low levels of corruption, high degree of transparency and good corporate governance."
And blow me down - the IMF has abandoned its fatwa against the evil of capital controls.
Institutional confessions of error do not come much bigger than this one.
http://www.theage.com.au/articles/2003/03/28/1048653857384.html