Changing Perceptions and Altered Reality : title: Emerging Economies in the 1990s author: Burki, Shahid Javed. publisher: World Bank isbn10 | asin: 0821345923 print isbn13: 9780821345924 ebook isbn13: 9780585162744 language: English Developing countries--Economic policy, Economic development, Poverty-- subject Developing countries, Financial crises-- Developing countries, Economic history-- Developing countries. publication date: 2000 lcc: HC59.7.B857 2000eb ddc: 338.8/009172/4 Developing countries--Economic policy, Economic development, Poverty-- subject: Developing countries, Financial crises-- Developing countries, Economic history-- Developing countries. Page i Changing Perceptions and Altered Reality: Emerging Economies in the 1990s © 2000 The International Bank for Reconstruction and Development / THE WORLD BANK 1818 H Street, N.W. Washington, D.C. 20433, U.S.A. All rights reserved Manufactured in the United States of America First printing January 2000 1 2 3 4 5 03 02 01 00 This report has been prepared by the staff of the World Bank. The judgments expressed do not necessarily reflect the views of the Board of Executive Directors or of the governments they represent. The material in this publication is copyrighted. The World Bank encourages dissemination of its work and will normally grant permission promptly. Permission to photocopy items for internal or personal use, for the internal or personal use of specific clients, or for educational classroom use, is granted by the World Bank, provided that the appropriate fee is paid directly to the Copyright Clearance Center, Inc., 222 Rosewood Drive, Danvers, MA 01923, U.S.A., telephone 978-750-8400, fax 978-750-4470. Please contact the Copyright Clearance Center before photocopying items. For permission to reprint individual articles or chapters, please fax your request with complete information to the Republication Department, Copyright Clearance Center, fax 978-750-4470. All other queries on rights and licenses should be addressed to the World Bank at the address above or faxed to 202-522-2422. The painting on the cover is by Jamaican artist Ken Spencer and is in the Latin American and Caribbean collection of the author. Library of Congress Cataloging-in-Publication Data Burki, Shahid Javed. Changing perceptions and altered reality : emerging economies in the 1990s / Shahid Javed Burki p. cm. Includes bibliographical references. ISBN 0-8213-4592-3 1. Developing countriesEconomic policy. 2. Economic development. 3. PovertyDeveloping countries. 4. Financial crisesDeveloping countries. 5. Economic historyDeveloping countries. I. Title. HC59.7.B857 1999 338.8'009172'4dc21 99-047581 CIP CIP Page iii CONTENTS Preface v Part I: An Evolving View of Development Challenges 3 Chapter 1: Changing Perceptions and Altered Reality 5 Chapter 2: Development Challenges: Reaching a Better 23 Understanding Chapter 3: Toward Open Regionalism in LAC 33 Part II: Alleviating Poverty 47 Chapter 4: Global Economic Crisis and Poverty 51 Chapter 5: Protecting the Poor during Periods of 53 Economic Crises Chapter 6: Crime and Poverty 61 Chapter 7: Poverty Returns to Pakistan 69 Part III: Globalization, Financial Crises, and Volatility 81 Chapter 8: Globalization: Institutional and Organizational 83 Imperatives for the Developing World Chapter 9: Latin American Economic Crises and 91 Prospects Chapter 10: New Initiatives to Tackle International 101 Economic Turmoil: A Comment Page iv Chapter 11: Latin American Economies and the Global 105 Economic Turmoil Chapter 12: Volatility, Contagion, and Possible 111 Dollarization Part IV: Countries in Economic Crises 119 Chapter 13: The Language of Economic Discourse 121 Chapter 14: From Globalization to Localization 129 Chapter 15: Pakistan in Crisis: A Diagnosis of Its Causes 133 and an Approach for Resolving It Chapter 16: A Fate Foretold: The World Bank and the 175 Mexican Crisis Chapter 17: The Relevance of the Chinese Model for 187 Bringing Cuba into the International Economic System Chapter 18: Integrating Small States in a Fast-Changing 195 Global Economy Page v PREFACE This Small Volume is Being Published Under the auspices of the knowledge management program of the World Bank's Latin American and Caribbean Region (LAC). An important part of this program is to assist staff to reflect upon their experiences in the World Bank for the benefit of their colleagues. I am leaving the Bank after 25 years, 12 of which were spent in operations. I was the director of its China Department for nearly seven years and regional vice president for LAC for five and a half years. A South Asian, arriving to work in Latin America and the Caribbean after having spent some time working on China, was bound to look at the countries for which he was now responsible from a different angle. That is the subject of the first section of the book. It tells how I first saw the Latin America region in early 1994, and how my perceptions changed over time. It also details some of the initiatives I took to improve ourin particular myunderstanding of the economic and social problems faced by the countries of the region. The second section of the book deals with povertya long-time concern of mine. Throughout my stay at the World Bank, I was involved in one way or another with our work on poverty. When I moved to LAC, I brought this interest with me. From the very beginning I focused on two characteristics of Latin American and Caribbean poverty: the fact that most of it is urban, and that its incidence changes dramatically over time. Economic ups and downs have a profound impact on the number of people living in poverty. This is the subject of a several speeches included in this volume. This section also includes a speech I gave in Pakistan on poverty in that country. It is included in this volume to underscore an important point: unless policymakers are vigilant, even when it is reduced significantly, as was the case in Pakistan, poverty can return with a vengeance. The third section includes a number of speeches on various aspects of globalization. My emphasis in dealing with this subject was on three questions: what was meant by globalization, how did it affect the developing world, and was it possible to control the volatility associated with it by devising something called a new financial architecture. The last section of the book presents four case studies dealing with countries in crises. The main point of including these case studies is to underscore the view that