Can you elaborate on this? I know nothing about either their policies or the IMF+World Bank's policies. What are they and how do they differ?
To poorly summarize the book, the path that works is
1. Land reform to give small plots to families. This boosts yield and turns unskilled labor into foreign currency.
2. Protectionist policies balanced by government requirements to export so companies have to innovate instead of milking the local market.
3. Financial controls to prevent capital flight and make capital available to strategic industries. Often at the expense of savers.
I highly recommend this book to anyone interested in History, Economics, or Current Events.
1. Land reform 1918.
2. Protectionist policies, import restrictions and increasing exports trough war reparations after WWII.
3. Strict financial controls and industrial policies. Finland ended financial controls in 80's. (Most Nordic countries ended their financial regulations in the 80's).
The White faction won the war, and it ended in a bloodbath. with the Reds severely repressed. But the law about land reform was approved two months after the civil war ended.
Twenty years later, when Soviet Union attacked the country as Stalin believed the Reds still wanted a retribution, he faced a unified nation where the sons of Reds and Whites alike fought together, well enough to avoid occupation at the end of WWII, though the reparation payments were heavy indeed.
And then, at present day, many people say that "the land reform was the biggest mistake of the century" because it created lots of small farms instead of big, centralized agriculture.
Anyway, giving people a patch of their own land seems to be a good way to commit them to defend and work for it.
If U.S. hadn't been willing to play ball with their protectionist, export-centered industrial policies from the 1950's through the 1970's, the story could have been very different.
The most-favored-nation status came trough GATT agreement 1947 and it was not US favoring other countries. It was trade agreement. Japan joined 1955.
After 1979 Tokyo Round agreement, Japan had the lowest average tariff level among industrial countries, 2.5 percent against 4.2 percent for the US.
Before 1980, most of the friction in trade was generated by U.S. industries seeking protection from Japanese imports, including textiles, steel, televisions, and automobiles. Japan solved all these cases by agreeing to to voluntarily restrain exports of the disputed items.
Japanese markets were ridiculously hard to penetrate, but often the reason was not trade barriers. Usually it was just different customer preferences and sales channels. For example, at one time US companies offered cars to sale in Japan with left-hand side steering and complained about sales.
Japanese have very protectionist agriculture policies but this seems to be universal for everyone.
The IMF and the World Bank both predate those "policies". And they were giving loans and advise before.
Truth is: they're an easy scapegoat. It's that simple.
Countries have succeded by following the IMF/WB "Neo-Liberal" advise and other countries have failed by doing the same. Countries have also succeded by not following the IMF/WB "Neo-Liberal" advise and other countries have failed by the same.
Most of the time, local politics is the real issue.
Not necessarily what the IMF tends to like to do.
Hong Kong/Singapore just did the latter. China, Japan, Taiwan, SK all did/do the former too.
The IMF/World Bank thinks that countries should tear down trade barriers and take on external debt, not build them up and run a current account surplus.
I generally take it as an axiom that efficient markets benefit all participants, and increasing trade barriers would seem to make the market less efficient.
Would you rather have the more efficient version where all the benefit goes to a small number of rich foreigners or the less efficient one with local distribution of benefits?
If you assume comparative advantage is static and a 3rd world country will always be a 3rd world country, removing trade barriers appears to be more efficient.
In the 1840s it was used to justify exporting food from Ireland while the Irish died in a famine: http://www.historyireland.com/18th-19th-century-history/food...
So it's not like this is news.