Economic Lessons For Poorer Nations
FOR several decades, economists have been studying what makes a developing country grow and prosper. Have they learned anything?
Yes, says Stanley Fischer, who was until last September chief economist at the World Bank in Washington. For one thing, comparisons between dozens of developing countries show that those that managed their economies well - keeping budget deficits down, limiting inflation, and watching their balance of payments so as not to pile up massive external deficits - have done better than those that did not.
``There is a need for macroeconomic stability,'' says Dr. Fischer, who is now back at the Massachusetts Institute of Technology. ``A lot of what we know is what we have relearned.''
The Brazils of the world, Fischer notes, are finally deciding that rapid inflation ``does get you in the end.'' He sees an increased understanding among developing-country policymakers of ``the importance of the basics.'' And many countries are at last making changes in economic policies.
Argentina, for example, has just launched ``massive'' policy reforms that could reduce inflation, slim the bureaucracy, and allow that nation's economy ``to stabilize and rejoin the rest of the world,'' says Fischer. Among economists, Argentina is infamous as a country that has regressed economically because of poor government management.
Some countries, notes Fischer, have trouble implementing desirable economic policies ``for political reasons.''
Looking at Latin America and the Caribbean, the just-released annual report of the Inter-American Development Bank sees some promise for the 1990s as a result of lessons learned: ``Despite the short-run costs associated with stabilization and structural adjustment policies adopted by the countries of the region, the outlook for the decade is positive, provided that governments maintain their resolve to reform the public sector, restructure the productive sector, and search for innovative and efficient w ays to position their countries within the international economic framework.''