times between early 1719 and early 1720. So many large fortunes were made so quickly – and subsequently lost in many cases – that the term
*
Access to academic books is crucial in enhancing the productive capabilities of developing countries, as my own experience with pirate-copied books, described in the Prologue, suggests. Rich country publishers should be encouraged to allow cheap reproduction of academic books in developing countries – they are not going to lose much by this, because their books are too expensive for developing country consumers anyway. We could also set up a special international fund to subsidize the purchase of academic books by developing country libraries, academics and students. A similar argument can put the current hysteria in the rich countries about counterfeit products from developing countries into perspective. As I pointed out in the Prologue, it is not as if those people who buy counterfeit products in developing countries (including many tourists who buy them there) can afford the genuine articles. So, as long as they are not smuggled into the rich countries and sold as the genuine articles (which rarely happens), the original manufacturers lose little actual revenue from the counterfeit goods. One could even argue that the developing country consumers are, in effect, doing free advertising for the original manufacturers. Especially in high-growth economies, today’s counterfeit consumers are going to be tomorrow’s consumers of the genuine articles. Many Koreans who used to buy fake luxury goods in the 1970s are now buying the real things.
Chapter 7
1
Of course, the boundary between macroeconomic policy and microeconomic policy (policy that affects particular agents in the economy) is not always clear. For example, regulation regarding the kinds of assets that financial firms (e.g., banks, pension funds) can hold is typically classified as a microeconomic policy, but this can have macroeconomic impacts, if the amount of assets concerned is large.
2
Domingo Cavallo, ‘Argentina must grow up’,
3
4
S. Fischer (1996), ‘Maintaining Price Stability’,
5
Interview with
6
For further discussion, see H-J. Chang & I. Grabel (2004),
7
Fischer (1996), p. 35.
8
Moreover, neo-liberals believe that government spending is, by nature, less efficient than private spending. Martin Feldstein, the economic advisor to Ronald Reagan, once put it: ‘Increased government spending can provide a temporary stimulus to demand and output but in the longer run higher levels of government spending crowd out private investment or require higher taxes that weaken growth by reducing incentives to save, invest, innovate, and work.’ The quote is from: http://www.brainyquote.com/quotes/quotes/m/martinfeld333347.html
9
A. Singh (1995), ‘How did East Asia grow so fast? – Slow Progress towards an Analytical Consensus’, UNCTAD Discussion Paper, no. 97, Table 8. The other statistics in the paragraph are from the IMF database.
10
The average annual inflation rates (defined as the average annual percentage growth of consumer price index) for the 1960s were 1.3% in Venezuela, 3.5% in Bolivia, 3.6% in Mexico, 10.4% in Peru and 11.9% in Colombia. The rate in Argentina was 21.7%. The information is from Singh (1995), Table 8.
11
The average inflation rates were 12.1% in Venezuela, 14.4% in Ecuador and 19.3% in Mexico. The rates were 22% in Colombia and 22.3% in Bolivia. The data are from Singh (1995), Table 8.
12
The details are from F. Alvarez & S. Zeldes (2001), ‘Reducing Inflation in Argentina: Mission Impossible?’ http://www2.gsb.columbia.edu/faculty/szeldes/Cases/Argentina/
13
Moreover, in the neo-liberal argument, economic stability is wrongly equated with price stability. Price stability is, of course, an important part of overall economic stability, but the stabilities in output and employment are also important. If we define economic stability more broadly, we cannot say that neo-liberal macroeconomic policy has succeeded even in its self-proclaimed goal of achieving economic stability over the past two and a half decades, as output and employment instabilities have actually increased during this period. For a full discussion of this issue, see J. A. Ocampo (2005), ‘A Broad View of Macroeconomic Stability’, DESA Working Paper, no. 1, October, 2005, DESA (Department of Economic and Social Affairs), United Nations, New York.
