Henry,
I agree on the need for real structural reforms in developing economies,but the implementation of the reforms really requires some subtlety and some regard for human and political realities. It's all very easy for an IMF bureaucrat to require new taxes, higher interest rates, and elimination of subsidies, but in many cases a government that takes these steps will quickly find the populace expressing its displeasure in the streets, bringing the economy to a complete standstill. Particularly in countries like Indonesia or the Philippines, where large numbers of people already live at survival levels.
Economists frequently ignore these realities, finding them disturbingly unamenable to mathematical solution. But they are no less real because they cannot be accurately portrayed in computer models.
The basic problem is that success in a globalized world requires immediate reform, while the actual process of political reform takes years, if not decades. I don't know the solution. I do know that any easy answer is almost certain to be wrong.
Steve |
