Books

Global Development Fifty Years after Bretton Woods Essays in Honour of Gerald K Helleiner

Roy Culpeper, Albert Berry, and Frances Stewart (editors)

Macmillan Press Ltd. London, 1997, viii + 400 pp., £52.50 (cloth), £26.00 (paper). St. Martin's Press, New York, 1997, viii + 400 pp., $65.00 (cloth), $22.95 (paper).

This collection of essays is the outcome of a colloquium held in Ottawa in June 1994 to honor the well-known Canadian international development economist, Gerald Helleiner, and to commemorate the fiftieth anniversary of the creation of the World Bank and the IMF. There is consistency between these two objectives-Professor Helleiner has devoted a great deal of intellectual effort to ensuring that the Bretton Woods institutions serve their member countries' aspirations.

The essays cover issues ranging from trade, aid, private capital flows, and foreign direct investment to reform of the Bretton Woods twins. The book does not pretend to provide a diversity of opinion. With one or two exceptions, the authors share a distrust of the prevailing paradigm of neoclassical economics, believing for the most part that market mechanisms are "too often inefficient" as well as "not able to bring about socially desirable or equitable outcomes." Moreover, they are critical of the Bank and the IMF, arguing persuasively for change. The authors-with one exception-believe, however, that these institutions can be reformed. The exception, Keith Griffin, would go as far as replacing the World Bank and development assistance as we know it with a system of international taxation and transfers. The essays are well written, balanced, and sometimes provocative, making this volume an easy and stimulating read.

The book's unifying argument is that market-based, neoclassical approaches are inadequate for meeting the challenges of development. The argument has several strands. Some emphasize market inadequacy, noting that market models don't fully explain development. A stronger variant is that market-based approaches do harm. Finally, there is the view that the focus on the markets misses the essential point. According to Roberto Frenkel, distinct market orientations in Latin America prior to the debt crises suggest the role of external factors in producing the crises. Benno Ndulu concludes that, domestically, it is the ownership of policy reform, improved governance, and development capacity that will determine whether changes for the better will stick.

The critique of the Bretton Woods institutions is concentrated in thought-provoking essays by Gustav Ranis and Tony Killick. Ranis attempts a comprehensive assessment of the World Bank's role, arguing that it has emerged as a dominant, self-confident leader in lending, data collection, research, and policy advice. This has led to what Ranis calls "an essential lack of self-restraint" that has contributed to its three main weaknesses: a tendency to "fill every vacuum," rather than relying on partners; the pressure to lend; and a highly centralized decision-making structure.

Killick confines himself to the IMF's relations with low-income countries. His assessment is that IMF-supported programs appear to have a limited impact on key macroeconomic variables other than the real effective exchange rate, largely because of slippage in program implementation. Killick attributes this weak impact to the borrower's limited sense of program ownership. Because governments typically come to the IMF when they are already in a crisis, "staff do not have the time to ensure that the government is fully on board, just as the government will not have the time (even when it has the desire) to undertake the consultations and public information necessary for consensus building." While the programs may not be effective, Killick rightly observes, the IMF now has less difficulty persuading governments of the wisdom of following its advice, given the increasing acceptance of the "Washington consensus."

One view, shared by Ranis, is that the IMF should leave stabilization and adjustment programs in low-income countries to the Bank. Killick rejects this view, arguing that the current collusive oligopoly facing low-income countries would be preferable to a monopoly, particularly because the Bank may suffer from some of the same problems and arrogance that are attributed to the IMF. Moreover, if the Bank is to take selectivity seriously, it would be inappropriate to expand its mandate.

A second view is that the IMF should design programs based on a cost-minimization framework, assuming a minimum required growth rate, rather than letting the growth rate be a residual. The IMF now pays much more attention to the impact of its programs on growth. But, here again, the advice is not easy to implement in a world of declining aid flows and donors' reluctance to foot the bills implicit in IMF programs.

Killick's analysis fails to focus on Bank-IMF relations. In best-practice situations, the two institutions complement each other, with the Bank's longer-term development focus integrated into the IMF's short-term stabilization programs. How to make this work consistently in favor of low-income countries is a challenge the two institutions must address.

The value of these writings in honor of Professor Helleiner is in placing human development, participatory methods, and institution building at the core of development priorities. Unfortunately, the considerable intellectual strength of the authors is directed more at what is missing from market-oriented approaches than at confronting the need for a positive, complementary agenda for action.

Vinod Thomas and Sarwar Lateef

Dani Rodrik

Has Globalization Gone Too Far?

Institute for International Economics, Washington, DC, 1997, xi + 128 pp., $20.95 (cloth), $17.95 (paper).

Dani Rodrik's book addresses important economic and social problems based on a careful review of the evidence, while offering some intriguing and original contributions. Every reader...