Essays in Honour of J. George Waardenburg
Edited by Servaas Storm and C. W.M. Naastepad
Chapter 12: Liberalization and economic performance in developing and transition countries
Lance Taylor 1. INTRODUCTION As seen from the year 2000, economic policy in developing and postsocialist economies during the preceding 10–15 years had one dominating theme. Packages aimed at liberalizing the balance of payments, on both current and capital accounts, showed up throughout Latin America, Eastern Europe, Asia, and even in parts of Africa. Along with large but volatile foreign capital movements (often but not always in connection with privatization of state enterprises), this wave of external deregulation was the central feature of ‘globalization’ for the nonindustrialized world. In two recent research projects, the implications of external liberalization have been investigated through the use of quantiﬁed narrative histories for a number of countries, based on methodologies to decompose and analyse changes over time in eﬀective demand, productivity growth, employment and the sectoral/functional income distribution. The studies were done by nationals of the countries concerned – all highly respected internationally and at home. They appear in collections edited by Ganuza, Taylor and Vos (2000) and Taylor (2000).1 The former concentrates on countries in Latin America and the Caribbean, while the latter includes papers on Argentina, Colombia, Cuba, India, South Korea (hereafter simply ‘Korea’), Mexico, Russia, Turkey and Zimbabwe. The results are sobering. At their infrequent best, liberalization packages have generated modest improvements in economic growth and distributional equity; at their worst they have been associated with sharp deteriorations in economic performance (despite higher capital inﬂows). The obvious implication is that the liberalization strategy needs to be seriously...
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