WORLD ECONOMIC AFFAIRS World Economic Affairs PIERRE LEMONDE Volume I, Number 3, Spring/Summer 1997 President and Publisher CHRISTOPHER RAGAN Editor JAN-PETER OLTERS Co-Editor LETTERS TO THE EDITOR ...... 1

GÉRARD DAB, Consulting Editor FROM THE EDITOR MARC UZAN, Consulting Editor CHRISTOPHER RAGAN NANCY KLEINS, Copy Editor ...... INGRID KRISTJANSON, Copy Editor The Debate Over Labour-Market Flexibility 4 MARDIGRAFE INC., Graphic Design DAVID HALE ADVISORY BOARD Greenback to Remain in Strong Demand ...... 7 JEAN-PIERRE BÉGUELIN Chief Economist, Pictet & Co., Geneva, Switzerland FORUM: IS JOB SECURITY DESIRABLE? DAVID HALE Chief Economist and Senior Vice-President, SEAMUS HOGAN Zurich Kemper Investments, Chicago, USA Should Governments Mandate Job Security? ...... 11 ALEXIS JACQUEMIN Professor of Economics, Université Catholique de Louvain, and Principal Advisor to the MARC VAN AUDENRODE European Commission, Brussels, Belgium A Partial Defence of Job-Security Provisions ...... 19 PIERRE MARC JOHNSON Attorney, Heenan Blaikie, and Professor, McGill University, Montreal, Canada EUROPE PAUL KENNEDY ULRICH SCHRÖDER Director, International Security Studies,Yale University, New Haven, Connecticut, USA Can Germany Revitalise Its Economy? ...... 24 MICHEL KOSTECKI Professor of Economics, University THE AMERICAS of Neuchâtel, Switzerland MYRON FRANKMAN JOHN LIPSKY Chief Economist and Managing Director, The Rating Game and the Chilean Chase Manhattan Bank, NewYork,USA Model Revisited ...... 26 PATRICK LOW Senior Counsellor,World Trade Organisation, Geneva, Switzerland ASIA/PACIFIC PATRICK MESSERLIN DANEAL CHARNEY Professor of Economics, Institut d’Études politiques de Paris, France Managing Human Resources in China ...... 28 SYLVIA OSTRY Chairman, Centre for International Studies, University of Toronto,Toronto, Canada INTERVIEW JEFFREY SACHS Director, Harvard Institute for International Unconventional Wisdom Development, Harvard University, Cambridge, Massachusetts, USA INTERVIEW WITH YOSHIAKI TODA JOHN KENNETH GALBRAITH ...... 31 Chairman, NCB Systems Co. Ltd.,Tokyo, Japan VICTOR URQUIDI Emeritus Professor, El Colegio de Mexico, Mexico City, Mexico WILLIAM WATSON Editor of the Editorial Page, World Economic Affairs is published thrice a year in co-operation with the World Ottawa Citizen, Ottawa, Canada Economic Policy Institute. Articles and columns can be submitted to World Economic Affairs at the following addresses: World Economic Affairs, 204 rue du Saint-Sacrement, Suite 201, Montréal, Québec H2T 1W8 CANADA or through our e-mail address: [email protected] • Distribution, North America: Les Mes- sageries de Presse Internationale Inc. (LMPI); Europe: Johnson International News Limited and Naville Presse. • ISSN 1205-7916 • Printed in Canada.

WORLD ECONOMIC AFFAIRS ● SPRING/SUMMER 1997 2 DOSSIER: ECONOMICS AND SOCIAL DEMOCRACY IN CHILE LUIS RIVEROS Toward Chile’s Second Independence ...... 41 MANUEL AGOSIN Capital Inflows and Economic Policy in Chile ...... 47

INTERVIEW Economic Stabilisation and Shared Prosperity INTERVIEW WITH THE HONOURABLE EDUARDO ANINAT, CHILE’S MINISTER OF FINANCE ...... 53

ARCHIBALD RITTER The Rise of a Chilean Model of Economic Development ...... 57

WORLD TRADE GABRIELLE MARCEAU The Success of Singapore ...... 64

INTERNATIONAL BUSINESS LAW BERNARD COLAS The OECD’s Legal Influence in a Global Economy . . . . . 66 CHRISTOPHER LINGLE Some Doubts About the Coming “Asian Century” . . . . . 69

BOOK REVIEW PIERRE SAINT-LAURENT The Good Society by John Kenneth Galbraith ...... 76

POLITICS JAN-PETER OLTERS Fiscal Policies After Globalisation ...... 78

MARKETWISE STEPHEN POLOZ Where Do Stocks Go From Here? ...... 80

EDITORIAL COMMITTEE

BERNARD COLAS AADITYA MATTOO MARC PAQUIN Lawyer with Colas and partners in Montreal, Canada, and with Economist,World Trade Organisation, Lawyer, Secretary to the Council and Programme Manager at the NAFTA Villard et associés in Paris, France Geneva, Switzerland Commission for Environmental Co-operation (CEC), Montreal, Canada BERNARD HOEKMAN TSUNIHIRO OGAWA PIERRE SAUVÉ Senior Economist,The World Bank Group,Washington, USA Director, Research and Analysis Office, Principal Administrator, Organisation for Economic Co-operation and Development, Paris, France MICHAEL LEIDY Asia-Pacific Economic Co-operation Senior Economist, International Monetary Fund,Washington, USA (APEC) Secretariat, Singapore STEPHEN WOOLCOCK Senior Research Fellow, London School of Economics, London, UK GABRIELLE MARCEAU STEPHEN POLOZ Legal Affairs Officer,World Trade Organisation, Managing Editor,The International Bank AMERICO ZAMPETTI Geneva, Switzerland Credit Analyst, Montreal, Canada Senior Economist, External Relations, European Commission, Brussels, Belgium

WORLD ECONOMIC AFFAIRS ● SPRING/SUMMER 1997 3