Book Notices

Book notices

Lauchlin Currie and focus in objectives and terms of refer- cal stability, a strong cadre of technicians, The Role of Economic Advisers ence; sensitivity to national goals and condi- and a sound resource base, Colombia en- in Developing Countries tions; modesty and feasibility of proposals joys many advantages over other countries Greenwood Press, Westport, CT, U.S.A., 1981, rather than recommendations for sweeping even at its per capita income level. Short- xiv + 270 pp., $27.50. reforms; and provision for policy imple- term macroeconomic measures are often mentation. The actual results of policy ad- more effective in steering growth there than Dr. Currie's book fills an important gap in vice, according to Dr. Currie, have been elsewhere. Dr. Currie's focus on markets development literature. After more than 40 mixed in Colombia. In fact, the contribution and demand expansion as a means to spur years' experience advising governments, he of development and aid agencies—in pro- growth is particularly well placed in the Co- tries to pull together the threads and to seek moting the physical integration of the coun- lombian situation, and it is also a message a greater consensus on appropriate devel- try, supporting macro and sectoral policies, worth emphasizing in many countries where opment objectives and policies. Dr. Currie and in fostering capital markets—has per- these factors are neglected. However, many played a central role in the formulation of haps been greater in Colombia than the others have severe supply constraints, not New Deal policies in the United States in the author recognizes. He may also have under- simply relating to physical capital, but per- mid-1930s; he led the first World Bank study stated the potential role of the international haps more important, to human capital, skill mission—to Colombia, in 1949; and there- community in the developing world. levels, and management capabilities. This after he has been advising the Colombian The author's personal convictions on de- study of Colombia and of the five countries Government. He is, therefore, in a unique velopment are reflected in the book's con- chosen for comparisons—Brazil, Hong position to reflect on the role of economic clusions. It is noted, for example, that in Kong, Republic of Korea, Singapore, and advisers. complex macroeconomic areas, there is no Taiwan—is not likely to help these others The book arises out of the author's experi- effective substitute for trained national econ- adequately. On the other hand, a full com- ence with macroeconomic advice—notably omists. It also emphasizes the importance of parative discussion of developmental expe- advice on monetary, exchange rate, tax, and not recommending policies that could im- riences is not the purpose of the book. price policies—and with sector and project pede growth—as would measures to slow or Dr. Currie sums up his reflections: "The advice, before addressing more general de- reverse rural-urban migration and mobility. less developed a country, the greater the velopment issues such as the role of market Another lesson the book passes on is that a need to satisfy basic human needs and forces versus specific policies. The process "direct assault" on mass rural poverty re- lessen inequality. But the less developed the of development, according to Dr. Currie, quires a degree of administrative expertise country, the greater the danger that giving strengthens a country's capacity to adapt—a beyond the capacity of most developing top priority to these objectives will tend to process implying "profound changes in hab- countries. The solution lies in increasing the extend the period of underdevelopment its, attitudes, customs and training." These demand for labor outside agriculture to raise Therefore, advice and aid are likely to be cultural changes are far more important than the incomes of the gradually declining num- more effective the more they facilitate and the quantifiable improvements in physical bers engaged in agriculture. This lesson promote ... transformations and reinforce output and economic conditions that so runs counter to the practice of many de- rather than obstruct natural or market much of the literature emphasizes. Through- veloping country governments and donor forces." He concludes that "The greatest out, the book combines insights specific to institutions. contribution a government ... can make to his experience with Colombian develop- How far can conclusions based on experi- development is the initial adoption of policies ment, many of which are relevant to other ence in Colombia (or in any single country) that lead to a sustained period (ten years or countries as well. be applied to other developing countries? more) of high economic growth." Various principles for fruitful external as- With a coalition government of the presiden- sistance and advice are set out: coherence tial form that has experienced relative politi- Guy Pfeffermann and Wood Thomas

Frances Stewart and Arjun Sengupta; edited by Salah nomic Order, reviews the main sources of The book covers seven major areas of Al-Shaikhly dissatisfaction and provides a range of alter- concern and presents proposals for a re- International Financial native proposals to solve the problems of the formed international monetary order: (1) Re- Cooperation: A Framework for system. The authors claim "the interest of cycling. The authors argue that developing Change development as the major consideration," countries will continue to require major Westview Press, Boulder, CO, U.S.A., 1982, but take into account the interests of the transfers of resources. The recycling by xxviii + 204 pp., $24 (cloth), $10.50 (paper). other parties in the world economy, namely, commercial banks—the major source of fi- The central theme of this interesting book is the industrial countries and the members nancing in the 1970s—should continue, but that the current international monetary sys- of the Organization of Petroleum Export- additional resources can be channeled by tem provides an unsatisfactory framework ing Countries (OPEC). Unfortunately, the strengthening existing public institutions and for international trade and payments and book's analysis ends in 1981, and some im- by creating new organizations, such as a therefore requires far-reaching reforms. The portant elements of the system it seeks to Third World Agency, that would move funds book, issued by Oxford University's Center reform have changed since then—OPEC from OPEC to the Third World directly. for Research on the New International Eco- surpluses in particular. (2) Improvement in international financial

42 Finance & Development I March 1983

©International Monetary Fund. Not for Redistribution mechanisms. The uncertainty about loan In general the "South" should attempt to in- ment and conditionality recommended by terms could be reduced by loans denomi- stitute its own Bretton Woods. the Fund and to some extent by the World nated in special drawing rights (SDRs), by The authors indicate that most of the pro- Bank. The authors question conditionality using other forms of indexing, or (for fi- posals require a degree of cooperation that and present alternative lines of action. It is nancing imports to the developing world) by is not present in existing organizations that indicated that Fund programs place empha- a global loan guarantee scheme. (3) Low- are viewed as efficient—the World Bank, the sis on the control of inflation and on a turn- income countries. Aid could be increased Fund, and the regional development banks. around in the balance of payments without and redirected to the poorer countries in the But the book fails to point out that reform an explicit emphasis on the fulfillment of form of direct transfers, interest rate sub- would require a shift of attitudes within the basic needs or on income distribution. What sidies, and loan guarantee facilities. (4) Con- organizations as well as a modification of the is not recognized is that initially all corrective ditionality. The conditionality associated with institutional environment. Therefore, it is un- programs have to deal with major adjust- the Fund's financial support is reviewed crit- realistic in assuming that success of the re- ments of aggregated demand to keep them ically. Other sources of finance and alterna- forms described is likely. in line with available resources. These ad- tive policy packages are explored. (5) Inter- Past developments are discussed with justments are not determined by different national currency. The book dismisses particular poignancy and balance, and in a objectives, economic philosophy, or the po- proposals for commodity-backed interna- well-documented fashion, based on material litical system, but by the economic reality tional currencies as impractical and supports issued by international organizations. The imposed by prevailing international eco- the use of the SDR to provide better control relevance of the changes the book proposes nomic conditions and the circumstances of on international liquidity and to transfer re- is unfortunately somewhat dated. The large the particular country. The adjustment has to sources to the developing world through a OPEC surpluses, on which it bases many occur in any event, and some alternatives link between SDR allocations and conces- proposals, have narrowed for many OPEC proposed in the book may be more painful, sional finance. (6) World economic manage- countries since 1981 and were reversed into with more reduction in efficiency and greater ment. In light of the alleged vacuum in world large deficits for others. In consequence, the costs in terms of income distribution, than economic management, it is proposed that a industrial countries are returning to the tradi- would have occurred in the context of a Fund World Development Council be founded, ini- tional surplus position they experienced program. Finally other proposals are errone- tially as an advisory body. (7) South-South prior to the oil price increase of 1973, there- ously based on financing as an alternative cooperation. A number of proposals are by shifting the source of funds for developing and not as a complement to adjustment. presented to improve cooperation among country borrowers. developing countries, to strengthen their Many of the various proposals described Claudia M. Loser "self-reliance," and to promote "South- in the book have been amply discussed but South" trade and ease payments problems. one central issue may be noted: the adjust-

does not inspire confidence. But its main virtue Henry C. Wallich Other books received lies in presenting all the varieties of monetary theory and it reaches fairly moderate conclusions that Boy Hofhetnz, Jr. and Kent E. CaMer Monetary Policy and Practice: seem to suggest that the schism between Key- A View from the Federal Reserve The Eastasia Edge: nesians and monetarists is not as sharp as it has Board Why an entire region Is overtaking been made out to be. A nontechnical book, It the West In technology, exports, would be of benefit to undergraduate students. Lsxfngtofl Books* 0*C* t tooth wxf Cofflpdrty, Lexington, MA, and management U.S.A., 1962, w+395 pp., $19.95 (doth). Baste Books, New York, U.SA, 1982, ix+296 pp., $14.95. In this analysis of the spectacular economic R.C.Q. Matthews, C.H. Feinstein, and J.C. OdDng-Smee As the subtitle of this book indicates, Wallich achievements of some East Asian economies, the British Economic Growth 1856-1973 writes from the unique perspective of a seven- authors lay great stress on the political structures Stanford University Pan, Stanford, CA, USA, 1982, xxBH- year member of the U.S. Federal Reserve Board. and policies that provide the organization and mo- 712 pp., $65. The views of an "insider" are always interesting. tivation for rapid growth. They do not see much A study of trends between 1856 and 1913, the Add to that Wallich's broad-ranging approach and chance of successtal duplication of the East Asian interwar, and the post-World War II years, which well-reasoned and highly readable prose, and you success hi other countries and regions In the ab- examines not only the immediate causes of have a most useful compendium of papers and sence of similar political conditions. growth—the inputs of capital and labor—out also speeches. Although there are sections on inter- the more fundamental causes, such as structural national monetary problems and international Sheila C. Dow and Peter E. Earl change, demand, and international transactions. banking, the book is essentially a discussion of Money Matters: A Keyneslan issues in the context of the U.S. economy (there is Approach to Monetary Economics a section on "investments and the stock market," John M. LeSche (editor) hardly an international concern). For the inter- Bames&Nobte.Totows, NJ, U.SA, 1982,vttl + 270pp., S28.50. International Economic Policies and ested reader, there is a convenient summary at Economics is full of schools, tendencies, and Their Theoretical Foundations: the beginning of the book to guide him. inflation approaches—some inevitably growing out of the A Source Book has always appeared to Wallich "in part at least as development of the discipline and others linked to a moral problem, transcending economics. In- ideology. "Monetarism" and "the monetary ap- Academic Press, Inc., 111 Fifth Avenue, New York, 1982, flation is a form of cheating. It also has seemed to proach to the balance of payments" have, for in- lx+674 pp., $27.50 (doth). me that economists have had a great deal to do stance, occupied center stage for some years A nine-part volume comprising essays by dis- with paving the way for the inflation we are now now. This book surveys the entire monetary field tinguished economists on the terms of trade, experiencing." Monetary policy Is important but with occasional references to real situations. Its world food, common markets, cartels and com- not as a panacea nor because there is any mys- coverage is broad rather than deep and, In the modity agreements, multinationals and interna- terious causal relationship between money supply process, it adds to the proliferation of groupings tional investment, commercial policies, and inter- and output and prices. Wallich does not like the by detecting gradations within schools. Its brief, national payments in the context of the evolution excess movements and unpredictability of ex- inaccurate sketch of how adjustment programs of the international economic environment. A change rates, but sees no alternatives at the are designed and how they are to operate (p. 219) readable compendium. present time. Altogether, a valuable collection.

Finance & Development / March 1983 43

©International Monetary Fund. Not for Redistribution Russel J. do Lucia, Henry D. Jacoby and others nomics and, together with the Princeton series, Energy Planning for Developing provide the generalist as well as the specialist with Countries: A Study of Bangladesh solid analysis and considered judgments on the T.E. Barker. A.S. Dowries, and J.A. Sackey (editors), economic issues of our time. Perspectives on Economic Development, University The Johns Hopkins University Press, Baltimore, MD, U.S.A., Press of America, Washington, DC, 1982, xx + 304 pp. 1982, xx+298 pp., $24 (doth). Robert Solomon David Bigman, Coping with Hunger: Toward a System A useful reference work for developing countries The International Monetary System of Food Security and Price Stabilization, Ballinger, that are starting to engage in energy planning. 1945-1981 Cambridge, MA, U.S.A., 1982, xxxii + 351 pp., $35 This work provides a readable account of the Harper and Row, New York, 1982, xvi+432 pp., $26 (cloth). (cloth). methodology behind energy demand estimates, energy price analysis, agricultural analysis for en- Jacob S. Dreyer, Gottfried Haberler, and Thomas D. Willett Landrum R. Boiling with Craig Smith, Private Foreign (editors) ergy planning, and the links between energy and Aid: U.S. Philanthropy for Relief and Development, macroeconomic models. However, the efforts put The International Monetary System: Westview Press, Boulder, CO, U.S.A., 1982, xv + into each of these activities should be carefully A Time of Turbulence 330 pp., $25 (cloth). tailored to the specific needs of energy managers American Enterprise Institute for Public Policy Research, Rod Cross, Economic Theory and Policy In the UK, Washington, DC, 1982, iii+523 pp., $25.95 (doth), $14.95 so that the output is timely and capable of being Martin Robertson, Oxford, U.K., 1982, ix + 223 pp., (paper). achieved. In many cases what the authors call £10. "crashing through"—a rapid diagnosis of energy If the international monetary system continues to issues and options—is likely to be more valuable be beset by problems and difficulties, it is surely Carl K. Eicher and Doyle C. Baker, Research on Agri- to countries in the short to medium term. not because of a lack of writing on the subject. cultural Development In Sub-Saharan Africa: A Much of this avalanche of literature, as is the case Critical Survey, MSU International Development Pa- per No. 1, Michigan State University, East Lansing, Ml, with these two books, consists of reissues of pre- Essays and papers on economic U.S.A., 1982, xi + 335 pp., free to individuals and insti- issues from the International vious writings and the proceedings of numerous tutions in the Third World; $8 in higher income Monetary Fund, the Group of Thirty, conferences on this subject. The Solomon book is countries. and the Institute for International an updated and expanded version of an earlier Economics work that covered 1945-76. It is essentially a his- T. Scarlett Epstein, Urban Food Marketing And Third torical book by someone who for many years was World Rural Development, Croom Helm Ltd., Totowa, In economic literature there has always been very close to the center of international monetary NJ, U.S.A., 1982, 260 pp., $28.50 (cloth). room for short, topical, and well-written essays on developments. It is quite an enjoyable book for the specific issues. The advantage of this genre is that personal touch the author brings to his subject Pere Escorsa (editor), El desarrollo industrial en los anos 80, Marcombo Boixareu Editores, Barcelona, essays are more focused than a book, more fresh and for the flow and clarity of his writing. By con- Spain, 1982, x +464 pp. than collections of seminar papers, and more "rel- trast, the book edited by Dreyer ef al is more un- evant" and accessible than articles in academic even and somewhat more technical. But it con- journals. Readers will be familiar with the long- Just Faaland, editor, Population and the World Econo- tains a number of papers that can complement my In the 21st Century, Basil Blackwell, Oxford, U.K., established Essays in International Finance, pub- and add analytical focus to issues brought up by 1982, viii + 264 pp., £17 (cloth). lished by Princeton University and currently under Solomon. The Dreyer book records the pro- the direction of Peter Kenen. Three relatively new ceedings of a 1980 conference that brought to- Richard E. Feinberg, Subsidizing Success: The series have been added to the distinguished gether a large number of distinguished academics Export-Import Bank In the U.S. Economy, Cam- Princeton line. The first is the Occasional Papers and policymakers, too numerous to name. The bridge University Press, New York, 1982, xi + 189 pp., $34.50. published by the Fund. These constitute fairly long issues these two books discuss (such as ex- papers on a variety of issues originally prepared change rate volatility) have not gone away; but in by Fund staff members for internal purposes. The Bent Hansen and Samir Radwan, Employment oppor- a sense both seem somewhat dated in light of the tunities and equity In a changing economy: Egypt unique feature of this well-researched series is huge debt problems that have afflicted the inter- In the 1980s, International Labor Office, Geneva, that they present a great deal of information that is national economy in the past year. Unemployment 1982, xviii + 293 pp., SwF 35. generally not available elsewhere, since much of has become a major international concern, but it is based on primary sources to which Fund staff given the recent course of events, authors and John Hudson, Inflation: A Theoretical Survey and Syn- have unique access in the course of their work. conference organizers need not fear this fate. thesis, Allen & Unwin, Inc., Winchester, MA, U.S.A., The September 1982 and March 1983 issues of 1982, xii +171 pp., $24.50. Finance & Development carry a list of the most Jagdish Bhagwati (editor) Prof. Ryushi Iwata, Japanese-Style Management: Its recent papers in this series, with details of how to Import Competition and Response obtain them. Foundations and Prospects, Asian Productivity Organization, Tokyo, 1982, iv + 123 pp. The second series consists of the Occasional The University of Chicago Press, Chicago, 1982, ix+410 pp., $32.50 (doth), $15 (paper). Papers published by the Group of Thirty (obtain- Melvyn B. Krauss, Development Without Aid: Growth, able from The Group of Thirty, Two World Trade A conference volume of mathematical papers that Poverty and Government, McQraw Hill, New York, Center, Suite 9630, New York, NY 10048 U.S.A.). aims to fill a gap in trade theory, especially regard- 1982, xi + 208 pp., $17.95 (cloth). These essays are quite short and somewhat sche- ing issues such as import penetration and com- matic in nature; recent publications include Co- petition. The papers fall into three major cate- Richard Medley (editor), The Politics of Inflation: A ordination of National Economic Policies by gories: economic theory (papers on adjustment to Comparative Analysis, Pergamon Press, New York, Jacques Polak and Exchange Rate Policy Recon- imports, the efficiency cost of dynamic adjust- 1982, xii-t-249 pp., $29.50. sidered by Otmar Emminger. The third series of- ment, and the case for protection and adjustment Pierre Pascallon, Le Systems Monetalre Interna- fers po//cy analyses in international economics assistance, respectively); political economy of tional—Theorie et Realite, Les Editions de protection (including papers on the potential for published by the Institute for International Eco- L'Epargne, Paris, 1982, 528 pp., F 120. nomics (11 Dupont Circle NW, Washington, DC lobbying for changes in policy on labor migration 20036 U.S.A.). These comprise longer and more and capital flows, a trade model with economies of Hubert Schmitz, Manufacturing in the Backyard: Case substantive papers with a distinctive policy bent. scale and product diversification, a model of tariff Studies on Accumulation and Employment In Publications to date include The Lending Policies lobbying in the context of a simple two-sector Small-scale Brazilllan Industry, Allenheld Osmun & of the International Monetary Fund by John Will- economy, and an analysis of the possibility of gov- Co., Totowa, NJ, U.S.A., 1982, 232 pp., $26.50. iamson, "Reciprocity": A New Approach to World ernments buying out protectionist lobbies); and Trade Policy? by William Cline, and Trade Po/;cy empirical analysis of adjustment problems and Jonathan E. Sanford, U.S. Foreign Policy and the Mul- tilateral Development Banks, Westview Press, in the 1980s by Fred Bergsten and William Cline. policies (including a very interesting discussion of Boulder, CO, U.S.A., 1982, xiv + 279 pp., $20. These three series constitute a major con- the impact of adjustment in a Lancashire town). tribution to the literature on international eco- For academia and trade specialists.