Re: Bank on Asian Miracles

[Paul Bowles <paul@xxxxxxxx>]

I haven't read the report yet but have seen summaries of its main
arguments. As well as the points re industrial policy etc. another
interesting aspect is what it has to say about financial systems. The
East Asian NICs (and earlier Japan) had, until very recently, very
tightly controlled and subordinated financial systems; policy loans were
significant and played an important role in fostering structural change
and promoting key industries. The central banks were much less autonomous
than elsewhere. All of this goes against the volumous literature on the
benefits of financial deepening and liberalisation (a la McKinnon, Gurley
Shaw and repeated with such gusto in the Bank's World Development Report
1989) and the literature extolling the benefits of independent central
banks. This is certainly an area where an effective counter-attack might
be possible to follow up on Travis Barr's suggestion.
Paul Bowles