Japan, the World Bank, and the art of paradigm maintenance: The East Asian Miracle in political perspective

New Left Review

Volumn , Issue 217, 1996, Pages 3-35

  Wade, Robert ^a  

^a NONE

Author keywords

[No Author keywords available]

Indexed keywords

EID: 0030545999     PISSN: 00286060     EISSN: None     Source Type: Journal    
DOI: None     Document Type: Article

References (106)

1. In addition to the cited sources, this paper is based on interviews with officials in Tokyo and Washington, DC, who prefer anonymity, and on my own experience as a World Bank economist in 1984-88. I thank Ngaire Woods, Linda Weiss, Ronald Dore, Devesh Kapur, Chalmers Johnson, Thomas Biersteker, Manfred Bienefeld, Wendy Law-Yone and Toru Yanagihara for comments. The paper can be read as a companion to my 'Selective Industrial Policies in East Asia: Is The East Asian Miracle Right?', in Albert Fishlow et al., eds, Miracle or Design? Lessons from the East Asian Experience, Washington, DC, 1994. The theoretical ideas behind the critique are set out in my Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization, Princeton 1990.
2. In addition to the cited sources, this paper is based on interviews with officials in Tokyo and Washington, DC, who prefer anonymity, and on my own experience as a World Bank economist in 1984-88. I thank Ngaire Woods, Linda Weiss, Ronald Dore, Devesh Kapur, Chalmers Johnson, Thomas Biersteker, Manfred Bienefeld, Wendy Law-Yone and Toru Yanagihara for comments. The paper can be read as a companion to my 'Selective Industrial Policies in East Asia: Is The East Asian Miracle Right?', in Albert Fishlow et al., eds, Miracle or Design? Lessons from the East Asian Experience, Washington, DC, 1994. The theoretical ideas behind the critique are set out in my Governing the Market: Economic Theory and the Role of Government in East Asian Industrialization, Princeton 1990.
3. Stephen Krasner, 'Regimes and the Limits of Realism: Regimes as Autonomous Variables', International Organization, no. 36, Spring 1982; William Ascher, 'New Development Approaches and the Adaptability of International Agencies: The Case of the World Bank', International Organization, no. 37, Summer 1983.
4. Stephen Krasner, 'Regimes and the Limits of Realism: Regimes as Autonomous Variables', International Organization, no. 36, Spring 1982; William Ascher, 'New Development Approaches and the Adaptability of International Agencies: The Case of the World Bank', International Organization, no. 37, Summer 1983.
5. Note that 'trade' comes before 'industrialization' in the title. Anglo-American economists see trade and free-trade policy as the motor of industrialization, Japanese economists see trade and managed-trade policy as a subordinate part of industrialization and industrial strategy. See further Robert Wade, 'Managing Trade: Taiwan and South Korea as a Challenge to Economics and Political Science', Comparative Politics, vol. 25, no. 2 (1993), pp. 147-68.
6. See especially World Bank, World Development Report 1991. The Challenge of Development, Washington DC 1991.
7. The plan has not been translated into English but for a brief description in English, see Japan Economic Institute, report No. 22A, 18 June 1993, p. 9. The empirical and analytic underpinnings of the plan were put in place by studies of natural resources, trade and industrialization in Southeast Asian economies, over the 1970s and 1980s, by MITI economists and Japanese academics. The plan and its history illustrate the long-term nature of Japanese planning, and the coordination between government and firms. The contrast with the unstrategic nature of British and American aid and FDI policies is pronounced. One sees the results of the plan in the simultaneous spurt of Japanese FDI and aid to Thailand in 1988. Much of the aid was for the construction of industrial estates reserved for Japanese companies. The companies were exiting from Japan to escape quota restrictions on Japanese imports to OECD countries and environmental standards for industrial production, and to tap cheap Thai labour.
8. Tadao Chino, then vice-minister, Ministry of Finance, in 1991, cited in Edward Lincoln, Japan's New Global Role, Washington DC 1993, p. 124.
9. Masaki Shiratori was born in 1936, graduated from Tokyo University Law Faculty (1956-60), joined the Ministry of Finance in 1960, studied economics at Columbia University (1964-66), and was director of Coordination Division, International Finance Bureau (1984-85): after two more moves (1985-88), he became Senior Deputy Director-General of International Finance Bureau, then Executive Director for Japan, World Bank (1989-92), after which vice-president of the OECF (1992-). As chief of the International Financial Institutions division of the International Finance Bureau in 1981-84, in addition to raising Japan's rank in the IBRD, his second main goal was to get China accepted as a member of the Asian Development Bank, also successfully accomplished.
10. Emphasis added. The letter was signed by senior operational vice-president Moeen Qureshi. The Bank's interpretation is as follows: the story began in 1986 when the Bank agreed to help the government of the Philippines restructure two major public-sector banks - including the Development Bank of the Philippines. The banks were both bankrupt, partly because they had become patronage pots - with directed credit as the primary means of patronage. Their restructuring involved eliminating directed credit. Then along came the Japan-ASEAN Fund offering directed credit with a substantial subsidy element for narrowly earmarked purposes - the same instrument the banks had been using to dispense patronage. This was very difficult for the Bank to swallow. 'I remember many heated meetings in Tokyo and here in Washington', said a Bank official closely involved.
11. On the contrast between the Japanese and American approaches to these issues, see Hidenobu Okuda, 'Japanese Two Step Loans: The Japanese Approach to Development Finance', Hitotsubashi Journal of Economics, no. 34, 1993, pp. 67-85. See also Isao Kubota, 'The East Asian Miracle - Major Arguments on Recent Economic Development Policy', Finance (MOF'S monthly journal), December 1993 (in Japanese).
12. On the contrast between the Japanese and American approaches to these issues, see Hidenobu Okuda, 'Japanese Two Step Loans: The Japanese Approach to Development Finance', Hitotsubashi Journal of Economics, no. 34, 1993, pp. 67-85. See also Isao Kubota, 'The East Asian Miracle - Major Arguments on Recent Economic Development Policy', Finance (MOF'S monthly journal), December 1993 (in Japanese).
13. Kubota graduated from Tokyo University Law Faculty in 1966, joining MOF immediately. He undertook a BPhil in Economics, Oxford University, 1967-69. In 1985 he became director of the International Organization division of the International Finance Bureau of MOF. Seven years and four postings later, he became Senior Deputy Director General of the International Finance Bureau, the same job Shiratori had had before going as Executive Director to the World Bank.
14. Quoted in Kevin Rafferty, 'Sun Sets Upon Japanese Miracle', The Guardian, 15 January 1994, p. 10. On the SII see Kozo Yamamura, ed., Japan's Economic Structure: Should it Change?, Society for Japanese Studies, 1990.
15. Quoted in Kevin Rafferty, 'Sun Sets Upon Japanese Miracle', The Guardian, 15 January 1994, p. 10. On the SII see Kozo Yamamura, ed., Japan's Economic Structure: Should it Change?, Society for Japanese Studies, 1990.
16. See Chalmers Johnson, 'History Restarted: Japanese-American Relations at the End of the Century', in R. Higgott, R. Leaver, and J. Ravenhill, eds, Pacific Economic Relations in the 1990s: Conflict or Cooperation?, Boulder, CO 1993, pp. 39-61. And see his 'Wake up America!', Critical Intelligence, vol. 2, no. 8 (1994), for pungent views on a whole range of issues to do with Japan, Southeast Asia, and the US.
17. See Chalmers Johnson, 'History Restarted: Japanese-American Relations at the End of the Century', in R. Higgott, R. Leaver, and J. Ravenhill, eds, Pacific Economic Relations in the 1990s: Conflict or Cooperation?, Boulder, CO 1993, pp. 39-61. And see his 'Wake up America!', Critical Intelligence, vol. 2, no. 8 (1994), for pungent views on a whole range of issues to do with Japan, Southeast Asia, and the US.
18. This is the OECF's first Occasional Paper, thirty years after its foundation in 1961.
19. OECF, 'Issues Related to the World Bank's Approach to a Structural Adjustment: Proposal from a Major Partner', pp. 5-6. Isao Kubota was the chief promoter of the paper, supported by the president of the OECF, Mr. Nishigaki. They aimed to have the paper circulated widely at the Annual Meeting of the World Bank and the IMF in October 1991. Preparation was entrusted to Yasutami Shimamura, director of the Economic Analysis Department of OECF. In addition to drawing on the ideas of OECF people (notably Kubota and Kazumi Goto, a division chief in the Coordination Department), Shimamura also assembled a team of outside academic economists. They included professors Yanagihara (Hosei), Horiuchi (Tokyo), Horiuchi (JDB), Okuda (Hitotsubashi), Urata (Waseda). This group met once a month for five months. They 'found it very difficult to make a consensus' on the content of the Japanese critique, said a participant. Some of them saw little to criticize in the neoclassical paradigm, and others who were sceptical of it were hesitant to openly criticize the World Bank at this time. Eventually, with time before the Annual Meeting getting short, Shimamura wrote a draft, presented it to the research team, modified it to take account of reactions, and then presented it to the Board of OECF, even though some members of the research team were not happy with the result. The OECF Board approved release of the paper in time for it to be circulated at the Annual Meeting. The haste - and the overriding of the rule of consensus - came from the knowledge that if they missed the October deadline they would have to wait a year until the next Annual Meeting. The paper is very short (fourteen generously spaced pages in the English type-script) and the quality of the argumentarion leaves much to be desired. It is published (in Japanese) in OECF Research Quarterly, no. 73, 1991. (cont.) Shimamura has a bachelor's degree in economics from Keio University (1960-63), and an MBA from Colombia University (1968-70). He is currently professor of economics at Saitama University. His father is Osamu Shimamura, the celebrated author of the Income Doubling Plan (and PhD in economics from Tohoku University). Kubota has elaborated his views in 'The Case for Two Step Loans', and 'Reflections on Recent Trends in Development Aid Policy', both read at a biannual meeting between the World Bank and the OECF/J-EXIM, in May and November 1991, respectively; and also in 'The Role of Domestic Saving and Macroeconomic Stability in the Development Process', Economic Society of Australia, Economic Papers, vol. 10, no. 2, (1991) pp. 34-42. Masaki Shiratori's views are set out in 'Development Assistance to Developing Countries: Japanese Model More Relevant than Simple Marketism', Nihon Keizai Shimbun, 20 May 1992 (in Japanese) Kazumi Goto gives his opinion in 'Japan Loan Aid in Perspecrive: Alice's Adventures in OECF-Land', OECF, London Office, 3 December 1993. See also the views of Akiyoshi Horiuchi (professor of economics, Tokyo University) in, 'Comments on OECF Occasional Paper Number 1', OECF Research Quarterly 74, 1992 (in Japanese).
20. OECF, 'Issues Related to the World Bank's Approach to a Structural Adjustment: Proposal from a Major Partner', pp. 5-6. Isao Kubota was the chief promoter of the paper, supported by the president of the OECF, Mr. Nishigaki. They aimed to have the paper circulated widely at the Annual Meeting of the World Bank and the IMF in October 1991. Preparation was entrusted to Yasutami Shimamura, director of the Economic Analysis Department of OECF. In addition to drawing on the ideas of OECF people (notably Kubota and Kazumi Goto, a division chief in the Coordination Department), Shimamura also assembled a team of outside academic economists. They included professors Yanagihara (Hosei), Horiuchi (Tokyo), Horiuchi (JDB), Okuda (Hitotsubashi), Urata (Waseda). This group met once a month for five months. They 'found it very difficult to make a consensus' on the content of the Japanese critique, said a participant. Some of them saw little to criticize in the neoclassical paradigm, and others who were sceptical of it were hesitant to openly criticize the World Bank at this time. Eventually, with time before the Annual Meeting getting short, Shimamura wrote a draft, presented it to the research team, modified it to take account of reactions, and then presented it to the Board of OECF, even though some members of the research team were not happy with the result. The OECF Board approved release of the paper in time for it to be circulated at the Annual Meeting. The haste - and the overriding of the rule of consensus - came from the knowledge that if they missed the October deadline they would have to wait a year until the next Annual Meeting. The paper is very short (fourteen generously spaced pages in the English type-script) and the quality of the argumentarion leaves much to be desired. It is published (in Japanese) in OECF Research Quarterly, no. 73, 1991. (cont.) Shimamura has a bachelor's degree in economics from Keio University (1960-63), and an MBA from Colombia University (1968-70). He is currently professor of economics at Saitama University. His father is Osamu Shimamura, the celebrated author of the Income Doubling Plan (and PhD in economics from Tohoku University). Kubota has elaborated his views in 'The Case for Two Step Loans', and 'Reflections on Recent Trends in Development Aid Policy', both read at a biannual meeting between the World Bank and the OECF/J-EXIM, in May and November 1991, respectively; and also in 'The Role of Domestic Saving and Macroeconomic Stability in the Development Process', Economic Society of Australia, Economic Papers, vol. 10, no. 2, (1991) pp. 34-42. Masaki Shiratori's views are set out in 'Development Assistance to Developing Countries: Japanese Model More Relevant than Simple Marketism', Nihon Keizai Shimbun, 20 May 1992 (in Japanese) Kazumi Goto gives his opinion in 'Japan Loan Aid in Perspecrive: Alice's Adventures in OECF-Land', OECF, London Office, 3 December 1993. See also the views of Akiyoshi Horiuchi (professor of economics, Tokyo University) in, 'Comments on OECF Occasional Paper Number 1', OECF Research Quarterly 74, 1992 (in Japanese).
21. OECF, 'Issues Related to the World Bank's Approach to a Structural Adjustment: Proposal from a Major Partner', pp. 5-6. Isao Kubota was the chief promoter of the paper, supported by the president of the OECF, Mr. Nishigaki. They aimed to have the paper circulated widely at the Annual Meeting of the World Bank and the IMF in October 1991. Preparation was entrusted to Yasutami Shimamura, director of the Economic Analysis Department of OECF. In addition to drawing on the ideas of OECF people (notably Kubota and Kazumi Goto, a division chief in the Coordination Department), Shimamura also assembled a team of outside academic economists. They included professors Yanagihara (Hosei), Horiuchi (Tokyo), Horiuchi (JDB), Okuda (Hitotsubashi), Urata (Waseda). This group met once a month for five months. They 'found it very difficult to make a consensus' on the content of the Japanese critique, said a participant. Some of them saw little to criticize in the neoclassical paradigm, and others who were sceptical of it were hesitant to openly criticize the World Bank at this time. Eventually, with time before the Annual Meeting getting short, Shimamura wrote a draft, presented it to the research team, modified it to take account of reactions, and then presented it to the Board of OECF, even though some members of the research team were not happy with the result. The OECF Board approved release of the paper in time for it to be circulated at the Annual Meeting. The haste - and the overriding of the rule of consensus - came from the knowledge that if they missed the October deadline they would have to wait a year until the next Annual Meeting. The paper is very short (fourteen generously spaced pages in the English type-script) and the quality of the argumentarion leaves much to be desired. It is published (in Japanese) in OECF Research Quarterly, no. 73, 1991. (cont.) Shimamura has a bachelor's degree in economics from Keio University (1960-63), and an MBA from Colombia University (1968-70). He is currently professor of economics at Saitama University. His father is Osamu Shimamura, the celebrated author of the Income Doubling Plan (and PhD in economics from Tohoku University). Kubota has elaborated his views in 'The Case for Two Step Loans', and 'Reflections on Recent Trends in Development Aid Policy', both read at a biannual meeting between the World Bank and the OECF/J-EXIM, in May and November 1991, respectively; and also in 'The Role of Domestic Saving and Macroeconomic Stability in the Development Process', Economic Society of Australia, Economic Papers, vol. 10, no. 2, (1991) pp. 34-42. Masaki Shiratori's views are set out in 'Development Assistance to Developing Countries: Japanese Model More Relevant than Simple Marketism', Nihon Keizai Shimbun, 20 May 1992 (in Japanese) Kazumi Goto gives his opinion in 'Japan Loan Aid in Perspecrive: Alice's Adventures in OECF-Land', OECF, London Office, 3 December 1993. See also the views of Akiyoshi Horiuchi (professor of economics, Tokyo University) in, 'Comments on OECF Occasional Paper Number 1', OECF Research Quarterly 74, 1992 (in Japanese).
22. OECF, 'Issues Related to the World Bank's Approach to a Structural Adjustment: Proposal from a Major Partner', pp. 5-6. Isao Kubota was the chief promoter of the paper, supported by the president of the OECF, Mr. Nishigaki. They aimed to have the paper circulated widely at the Annual Meeting of the World Bank and the IMF in October 1991. Preparation was entrusted to Yasutami Shimamura, director of the Economic Analysis Department of OECF. In addition to drawing on the ideas of OECF people (notably Kubota and Kazumi Goto, a division chief in the Coordination Department), Shimamura also assembled a team of outside academic economists. They included professors Yanagihara (Hosei), Horiuchi (Tokyo), Horiuchi (JDB), Okuda (Hitotsubashi), Urata (Waseda). This group met once a month for five months. They 'found it very difficult to make a consensus' on the content of the Japanese critique, said a participant. Some of them saw little to criticize in the neoclassical paradigm, and others who were sceptical of it were hesitant to openly criticize the World Bank at this time. Eventually, with time before the Annual Meeting getting short, Shimamura wrote a draft, presented it to the research team, modified it to take account of reactions, and then presented it to the Board of OECF, even though some members of the research team were not happy with the result. The OECF Board approved release of the paper in time for it to be circulated at the Annual Meeting. The haste - and the overriding of the rule of consensus - came from the knowledge that if they missed the October deadline they would have to wait a year until the next Annual Meeting. The paper is very short (fourteen generously spaced pages in the English type-script) and the quality of the argumentarion leaves much to be desired. It is published (in Japanese) in OECF Research Quarterly, no. 73, 1991. (cont.) Shimamura has a bachelor's degree in economics from Keio University (1960-63), and an MBA from Colombia University (1968-70). He is currently professor of economics at Saitama University. His father is Osamu Shimamura, the celebrated author of the Income Doubling Plan (and PhD in economics from Tohoku University). Kubota has elaborated his views in 'The Case for Two Step Loans', and 'Reflections on Recent Trends in Development Aid Policy', both read at a biannual meeting between the World Bank and the OECF/J-EXIM, in May and November 1991, respectively; and also in 'The Role of Domestic Saving and Macroeconomic Stability in the Development Process', Economic Society of Australia, Economic Papers, vol. 10, no. 2, (1991) pp. 34-42. Masaki Shiratori's views are set out in 'Development Assistance to Developing Countries: Japanese Model More Relevant than Simple Marketism', Nihon Keizai Shimbun, 20 May 1992 (in Japanese) Kazumi Goto gives his opinion in 'Japan Loan Aid in Perspecrive: Alice's Adventures in OECF-Land', OECF, London Office, 3 December 1993. See also the views of Akiyoshi Horiuchi (professor of economics, Tokyo University) in, 'Comments on OECF Occasional Paper Number 1', OECF Research Quarterly 74, 1992 (in Japanese).
23. OECF, 'Issues Related to the World Bank's Approach to a Structural Adjustment: Proposal from a Major Partner', pp. 5-6. Isao Kubota was the chief promoter of the paper, supported by the president of the OECF, Mr. Nishigaki. They aimed to have the paper circulated widely at the Annual Meeting of the World Bank and the IMF in October 1991. Preparation was entrusted to Yasutami Shimamura, director of the Economic Analysis Department of OECF. In addition to drawing on the ideas of OECF people (notably Kubota and Kazumi Goto, a division chief in the Coordination Department), Shimamura also assembled a team of outside academic economists. They included professors Yanagihara (Hosei), Horiuchi (Tokyo), Horiuchi (JDB), Okuda (Hitotsubashi), Urata (Waseda). This group met once a month for five months. They 'found it very difficult to make a consensus' on the content of the Japanese critique, said a participant. Some of them saw little to criticize in the neoclassical paradigm, and others who were sceptical of it were hesitant to openly criticize the World Bank at this time. Eventually, with time before the Annual Meeting getting short, Shimamura wrote a draft, presented it to the research team, modified it to take account of reactions, and then presented it to the Board of OECF, even though some members of the research team were not happy with the result. The OECF Board approved release of the paper in time for it to be circulated at the Annual Meeting. The haste - and the overriding of the rule of consensus - came from the knowledge that if they missed the October deadline they would have to wait a year until the next Annual Meeting. The paper is very short (fourteen generously spaced pages in the English type-script) and the quality of the argumentarion leaves much to be desired. It is published (in Japanese) in OECF Research Quarterly, no. 73, 1991. (cont.) Shimamura has a bachelor's degree in economics from Keio University (1960-63), and an MBA from Colombia University (1968-70). He is currently professor of economics at Saitama University. His father is Osamu Shimamura, the celebrated author of the Income Doubling Plan (and PhD in economics from Tohoku University). Kubota has elaborated his views in 'The Case for Two Step Loans', and 'Reflections on Recent Trends in Development Aid Policy', both read at a biannual meeting between the World Bank and the OECF/J-EXIM, in May and November 1991, respectively; and also in 'The Role of Domestic Saving and Macroeconomic Stability in the Development Process', Economic Society of Australia, Economic Papers, vol. 10, no. 2, (1991) pp. 34-42. Masaki Shiratori's views are set out in 'Development Assistance to Developing Countries: Japanese Model More Relevant than Simple Marketism', Nihon Keizai Shimbun, 20 May 1992 (in Japanese) Kazumi Goto gives his opinion in 'Japan Loan Aid in Perspecrive: Alice's Adventures in OECF-Land', OECF, London Office, 3 December 1993. See also the views of Akiyoshi Horiuchi (professor of economics, Tokyo University) in, 'Comments on OECF Occasional Paper Number 1', OECF Research Quarterly 74, 1992 (in Japanese).
24. OECF, 'Issues Related to the World Bank's Approach to a Structural Adjustment: Proposal from a Major Partner', pp. 5-6. Isao Kubota was the chief promoter of the paper, supported by the president of the OECF, Mr. Nishigaki. They aimed to have the paper circulated widely at the Annual Meeting of the World Bank and the IMF in October 1991. Preparation was entrusted to Yasutami Shimamura, director of the Economic Analysis Department of OECF. In addition to drawing on the ideas of OECF people (notably Kubota and Kazumi Goto, a division chief in the Coordination Department), Shimamura also assembled a team of outside academic economists. They included professors Yanagihara (Hosei), Horiuchi (Tokyo), Horiuchi (JDB), Okuda (Hitotsubashi), Urata (Waseda). This group met once a month for five months. They 'found it very difficult to make a consensus' on the content of the Japanese critique, said a participant. Some of them saw little to criticize in the neoclassical paradigm, and others who were sceptical of it were hesitant to openly criticize the World Bank at this time. Eventually, with time before the Annual Meeting getting short, Shimamura wrote a draft, presented it to the research team, modified it to take account of reactions, and then presented it to the Board of OECF, even though some members of the research team were not happy with the result. The OECF Board approved release of the paper in time for it to be circulated at the Annual Meeting. The haste - and the overriding of the rule of consensus - came from the knowledge that if they missed the October deadline they would have to wait a year until the next Annual Meeting. The paper is very short (fourteen generously spaced pages in the English type-script) and the quality of the argumentarion leaves much to be desired. It is published (in Japanese) in OECF Research Quarterly, no. 73, 1991. (cont.) Shimamura has a bachelor's degree in economics from Keio University (1960-63), and an MBA from Colombia University (1968-70). He is currently professor of economics at Saitama University. His father is Osamu Shimamura, the celebrated author of the Income Doubling Plan (and PhD in economics from Tohoku University). Kubota has elaborated his views in 'The Case for Two Step Loans', and 'Reflections on Recent Trends in Development Aid Policy', both read at a biannual meeting between the World Bank and the OECF/J-EXIM, in May and November 1991, respectively; and also in 'The Role of Domestic Saving and Macroeconomic Stability in the Development Process', Economic Society of Australia, Economic Papers, vol. 10, no. 2, (1991) pp. 34-42. Masaki Shiratori's views are set out in 'Development Assistance to Developing Countries: Japanese Model More Relevant than Simple Marketism', Nihon Keizai Shimbun, 20 May 1992 (in Japanese) Kazumi Goto gives his opinion in 'Japan Loan Aid in Perspecrive: Alice's Adventures in OECF-Land', OECF, London Office, 3 December 1993. See also the views of Akiyoshi Horiuchi (professor of economics, Tokyo University) in, 'Comments on OECF Occasional Paper Number 1', OECF Research Quarterly 74, 1992 (in Japanese).
25. OECF, 'Issues Related to the World Bank's Approach to a Structural Adjustment: Proposal from a Major Partner', pp. 5-6. Isao Kubota was the chief promoter of the paper, supported by the president of the OECF, Mr. Nishigaki. They aimed to have the paper circulated widely at the Annual Meeting of the World Bank and the IMF in October 1991. Preparation was entrusted to Yasutami Shimamura, director of the Economic Analysis Department of OECF. In addition to drawing on the ideas of OECF people (notably Kubota and Kazumi Goto, a division chief in the Coordination Department), Shimamura also assembled a team of outside academic economists. They included professors Yanagihara (Hosei), Horiuchi (Tokyo), Horiuchi (JDB), Okuda (Hitotsubashi), Urata (Waseda). This group met once a month for five months. They 'found it very difficult to make a consensus' on the content of the Japanese critique, said a participant. Some of them saw little to criticize in the neoclassical paradigm, and others who were sceptical of it were hesitant to openly criticize the World Bank at this time. Eventually, with time before the Annual Meeting getting short, Shimamura wrote a draft, presented it to the research team, modified it to take account of reactions, and then presented it to the Board of OECF, even though some members of the research team were not happy with the result. The OECF Board approved release of the paper in time for it to be circulated at the Annual Meeting. The haste - and the overriding of the rule of consensus - came from the knowledge that if they missed the October deadline they would have to wait a year until the next Annual Meeting. The paper is very short (fourteen generously spaced pages in the English type-script) and the quality of the argumentarion leaves much to be desired. It is published (in Japanese) in OECF Research Quarterly, no. 73, 1991. (cont.) Shimamura has a bachelor's degree in economics from Keio University (1960-63), and an MBA from Colombia University (1968-70). He is currently professor of economics at Saitama University. His father is Osamu Shimamura, the celebrated author of the Income Doubling Plan (and PhD in economics from Tohoku University). Kubota has elaborated his views in 'The Case for Two Step Loans', and 'Reflections on Recent Trends in Development Aid Policy', both read at a biannual meeting between the World Bank and the OECF/J-EXIM, in May and November 1991, respectively; and also in 'The Role of Domestic Saving and Macroeconomic Stability in the Development Process', Economic Society of Australia, Economic Papers, vol. 10, no. 2, (1991) pp. 34-42. Masaki Shiratori's views are set out in 'Development Assistance to Developing Countries: Japanese Model More Relevant than Simple Marketism', Nihon Keizai Shimbun, 20 May 1992 (in Japanese) Kazumi Goto gives his opinion in 'Japan Loan Aid in Perspecrive: Alice's Adventures in OECF-Land', OECF, London Office, 3 December 1993. See also the views of Akiyoshi Horiuchi (professor of economics, Tokyo University) in, 'Comments on OECF Occasional Paper Number 1', OECF Research Quarterly 74, 1992 (in Japanese).
26. He was deputizing for the Finance Minister, who is the Governor of the Board for Japan.
27. World Bank, press release no. 16, 15 October 1991, cited in Chalmers Johnson, 'Comparative Capitalism: The Japanese Difference', California Management Review, Summer 1993, pp. 51-67.
28. Quoted in 'Japan Wants Strings on Aid: At Odds with us, Tokyo Urges Managed Economics', International Herald Tribune, 2 March 1992. Around this time, another event illustrated the divergence between the us and the Japanese position, and the Japanese willingness to challenge Bank management. In November 1991 the top management of the Bank and some key Western executive directors opposed publication of a study of World Bank support for industrialization in a number of industrializing countries (World Bank Support for Industrialization in Korea, India, and Indonesia, Washington, dc 1992). The study had been made by Sanjaya Lall, an Oxford economist, for the Operations Evaluation Department (OECD) of the Bank. It concluded that the Bank had failed to draw lessons from successful government intervention in Asian economies for the benefit of its lending practices elsewhere. One of the main lessons was that 'Industrial success at the national level depends on the interplay of three sets of factors: incentives, capabilities, and institutions...Just one set of factors by itself cannot lead to industrial development...Each of the three determinants of industrialization may suffer from market failure...Industrial strategy should address all these interrelated issues.' (ibid., pp. iv, v) The Bank, it said, has unwarrantedly discounted the positive role of industrial strategy, relying too heavily on incentives while underplaying the building up of capabilities and institutions. And it 'has only partially fulfilled the function of correctly analyzing Korea's experience with industrialization.' (p. vii) The report urged the Bank 'to help governments design industrial policies', and to 'adopt a more differentiated, nuanced approach to recommending policy packages to individual governments' (pp. 54, 55). The top management called for the report not to be made available outside the Bank until its conclusions had been suitably revised, on the grounds that it gave 'too strong an endorsement of government intervention...Even if the causes of government failure could be identified and minimized, the report calls for the impossible: fine-tuning an array of trade and industrial interventions to deal with real or perceived market failures is generally not feasible.' The report, says the 17 (cont.) Bank, offers an approach that 'is at variance with best practices as we know them, and would therefore be very counter-productive to the country dialogues'. It would open the way for governments 'to point out that the Bank's own evaluation department has concluded that the Bank's current approach is incorrect'. (This text is taken from a memorandum sent from a senior vice-president to the chairman of the Joint Audit Committee, who was also the American Executive Director, 11 November 1991. The Joint Audit Committee, made up of representatives from the Board of Directors of the Bank - none from management - is the body to which the Operations Evaluation department reports, which is why the senior vice-president was unable to squash the report himself). Several executive directors, mostly from borrowing countries but including, crucially, Japan's, pressed the Bank to publish the study as is. They prevailed and the study was published.
29. The title and quote come from an article by Rich Miller in the Journal of Commerce, 11 December 1991, p. 1a. See also 'Free Market Theory not Practical in Third World: Interview with Masaki Shiratori', EIR, 27 March 1992. And 'Japan Challenges World Bank Orthodoxy', Far Eastern Economic Review, 12 March 1992, p. 49; 'Japan Presses World Bank on Lending: Nation Begins Asserting Independent Voice in Global Forum', The Nikkei Weekly, 12 March 1992, p. 3.
30. The title and quote come from an article by Rich Miller in the Journal of Commerce, 11 December 1991, p. 1a. See also 'Free Market Theory not Practical in Third World: Interview with Masaki Shiratori', EIR, 27 March 1992. And 'Japan Challenges World Bank Orthodoxy', Far Eastern Economic Review, 12 March 1992, p. 49; 'Japan Presses World Bank on Lending: Nation Begins Asserting Independent Voice in Global Forum', The Nikkei Weekly, 12 March 1992, p. 3.
31. The title and quote come from an article by Rich Miller in the Journal of Commerce, 11 December 1991, p. 1a. See also 'Free Market Theory not Practical in Third World: Interview with Masaki Shiratori', EIR, 27 March 1992. And 'Japan Challenges World Bank Orthodoxy', Far Eastern Economic Review, 12 March 1992, p. 49; 'Japan Presses World Bank on Lending: Nation Begins Asserting Independent Voice in Global Forum', The Nikkei Weekly, 12 March 1992, p. 3.
32. The title and quote come from an article by Rich Miller in the Journal of Commerce, 11 December 1991, p. 1a. See also 'Free Market Theory not Practical in Third World: Interview with Masaki Shiratori', EIR, 27 March 1992. And 'Japan Challenges World Bank Orthodoxy', Far Eastern Economic Review, 12 March 1992, p. 49; 'Japan Presses World Bank on Lending: Nation Begins Asserting Independent Voice in Global Forum', The Nikkei Weekly, 12 March 1992, p. 3.
33. The plan was not formally a MITI document. It came out of the MITI Research Institute. See Fusae Ota, Hiroya Tanikawa, Tasuke Otani, 'Russia's Economic Reform and Japan's Industrial Policy', MITI Research Institute, typescript, n.d. (April 1992), emphasis added. For a summary, see Anthony Rowley, 'To Russia with Pride: Japan Offers Economic Model', Far Eastern Economic Review, 13 August 1992, pp. 59-60.
34. The plan was not formally a MITI document. It came out of the MITI Research Institute. See Fusae Ota, Hiroya Tanikawa, Tasuke Otani, 'Russia's Economic Reform and Japan's Industrial Policy', MITI Research Institute, typescript, n.d. (April 1992), emphasis added. For a summary, see Anthony Rowley, 'To Russia with Pride: Japan Offers Economic Model', Far Eastern Economic Review, 13 August 1992, pp. 59-60.
35. The Economist gives its own gloss to this point. Talking about foreign car makers coming into Asian countries, it says, 'Once in, the foreigners have a nasty habit of becoming as protectionist as any local. Their aim is to persuade Asian governments not to open up their car markets or allow in new investors until their local operations have grown big enough to become competitive' (15 October 1994, p. 81).
36. Ichiro Ozawa, Nihon Kaizo Keikaku, p.17, cited in Chalmers Johnson, 'The Foundations of Japan's Wealth and Power and Why they Baffle the United States', typescript, UCSD 1993.
37. What of the relative importance of the four reasons? One might proceed by comparing what the Japanese want for the World Bank and what they do in the Asian Development Bank. From the beginning they have had much more influence in the ADB than in the World Bank - from which one can infer that the pattern of ADB lending gives a close reflection of their principles. Relations between the Japanese President and the US Executive Director have been strained over the past several years, in connection with lending priorities and the need to raise the ADB'S capital stock.
38. Max Weber, of course, would have agreed, and also Gunnar Myrdal.
39. Standard and Poors is one of the two main US investment rating agencies.
40. This, at least, is how Bank officials often state the matter. The truth is more complicated. The Bank's top-grade credit rating primarily depends upon its non-borrowing governments' guarantees and its first claimant status for borrowing governments - this status being enforced by knowledge that a non-repaying government will get no more aid from a World Bank-affiliated government. So the Bank's top-grade credit rating does not depend on financial markets' evaluation of the quality of its loan portfolio. Rather, the link between its credit rating and its reputation for 'sound' lending conditions comes via the legislatures of the non-borrowing governments. The decision to honour the guarantees would not, in practice, be automatic. The US Congress, in particular, would have to authorize the expenditure, and has a long history of delaying authorization of foreign appropriations. If it held a low opinion of the Bank, it might delay authorization of the guarantee expenditures for a long time. Whether it holds the Bank in disrepute depends on the Bank's reputation in the eyes of financial markets. Much of what the Bank says in its flagship publications is vetted with this in mind; see especially the two recent World Development Reports that have provided a broad overview of development experience and theory, those for 1987 and 1991.
41. This is based on the staff of the research complex (PRE) in 1991. Of the total 465 Higher Level Staff, 290 had graduate degrees from US universities, 74 from the UK, 10 from Canada, and none from Japan. I thank Devesh Kapur for this information.
42. In fact, since the early 1990s, the Bank has begun to talk more overtly about politics, but warily and in the reassuringly technical language of governance - 'accountability', 'transparency', 'predictability', and so on. Even this has generated unease and opposition within the Bank and the Board, on the grounds that it risks being inconsistent with the charter. The issue came to a head in a Board discussion about a research department study, three years in the making, entitled 'Bureaucrats in Business', in July 1995, when some Executive Directors argued strongly that the Bank should not be talking about these issues - the French Executive Director in particular, perhaps with governance in ex-French Sub-Saharan African countries in mind.
43. Nick Stern, 'The Bank as an Intellectual Actor', paper for World Bank History project, London School of Economics, 1993. See also John Markoff and Veronica Montecinos, 'The Ubiquitous Rise of Economists', Journal of Public Policy, vol. 13, no. 1 (1993), pp. 37-68.
44. Nick Stern, 'The Bank as an Intellectual Actor', paper for World Bank History project, London School of Economics, 1993. See also John Markoff and Veronica Montecinos, 'The Ubiquitous Rise of Economists', Journal of Public Policy, vol. 13, no. 1 (1993), pp. 37-68.
45. The money came from Japan's amply endowed Policy and Human Resource Development trust fund for the World Bank. Many rich country members of the Bank have trust funds which are controlled jointly by the member country and the Bank to cover jointly agreed operational expenses of the Bank. 20 per cent of the Bank's operational budget is now met from trust funds. The great advantage of this arrangement from the rich countries' view is that each government has a direct say in how 'its' money is used. If, at the same time, these countries squeeze the regular budget, they are able to gain pleasing bilateral influence over the Bank. In the late 1980s, the Bank had similarly got the governments which had been voicing concern about the impact of structural adjustment programmes on vulnerable groups - the 'soft' northern governments - to finance much of the Bank's work on the design of anti-poverty programmes.
46. It emerged as Operational Directive 8.30, Financial Sector Operations, February 1992. It was largely the work of those who had earlier written the Levy Report. The Japanese were its main opponents in the Board.
47. The Bank's staff costs were about $800,000 ($150,000/year × 1.5 years × 3.5 persons). The Bank provided another $200,000 for miscellaneous costs. This brought the total Miracle budget to $2.2 million, about the same as for a World Development Report.
48. Other Bank staff included Ed Campos (Filipino, US PhD in the social sciences but de facto in economics, from Caltech, working on institutional issues), Marylou Uy (Filipina, us PhD in economics from UCLA, working on financial issues). Page, Campos and Uy worked full-time on the study; Birdsall worked half-time. The main consultants included Max Corden (Australian, trade economist, working on macroeconomics); Joseph Stiglitz (American, economic theorist, working on finance); Howard Pack (American, development economist, University of Pennsylvania, working on tests of the effectiveness of selective industrial policy); Richard Sabot (American, development economist, Williams College, working on human capital). Nancy Birdsall also worked with Sabot on human capital. A commentator on an earlier draft, who helped to manage the study, queried my presentation of the personnel: 'Why do you emphasize the fact of so many Americans? It seems you are implying that because we are Americans we had pre-determined conclusions. In fact, we were eager to find a story that would be new. Anyway, you are misleading because the team's composition was about average for World Bank economists.' It is true that the Bank employs very few East Asian economists - but a lot of US-or UK-certified South Asian economists. Experience of employing Japanese economists has been disappointing, perhaps because the Bank is unwilling to hire in groups.
49. The JDB'S data were also made available to two American economists for independent econometric assessment of the effectiveness of the credit policies.
50. There was also a comparative study of tax systems in Japan, Taiwan, Korea, and India. The additional studies had a combined budget of $1.8 million from the Japanese Trust Fund.
51. MacDonald, also an American, worked intensively on the drafts and redrafts from March to September 1993.
52. Ramgopal Agarwala and Vinod Thomas, Sustaining Rapid Growth in East Asia and the Pacific, World Bank Publications, Washington DC 1993.
53. The East Asian Miracle: Economic Growth and Public Policy, p. 88, figure 2.1.
54. Ibid., p. vi.
55. Ibid., box 2.1, p. 85.
56. 'Government as referee' has a powerful resonance in neoclassical economics, and the link to contests takes it towards East Asian realities; but it obscures the point that the government sometimes acts as both referee and player at the same time.
57. To be Under Secretary to the Treasury for International Affairs in the new Clinton administration.
58. See for example, The East Asian Miracle, p. 188.
59. The draft was also debated in a Singapore round-table discussion (including senior or ex-senior government officials from Singapore, Malaysia and Indonesia) and in Tokyo -three meetings with individual senior officials who gave detailed comments on the first draft: Kubota (MOF), Tsukuda (number two in the OECF), and Ogata (Deputy Governor, Bank of Japan). Individual chapters were presented by members of the Bank team to academic seminars in Singapore, Indonesia, and Korea.
60. The East Asian Miracle, p. 242, emphasis added.
61. Ibid., p. 356, emphasis added.
62. Ibid., p. vi, emphasis added.
63. Ibid., pp. 312, 354.
64. See the papers by Rodrik, Wade and Haggard in Fishlow et al, eds, Miracle or Design?; Ajit Singh, 'How did East Asia Grow so Fast? Slow Progress Towards an Analytical Consensus', UNCTAD Discussion Paper no. 97, 1995; Alice Amsden, 'Why Isn't the Whole World Experimenting with the East Asian Model to Develop? Review of The East Asian Miracle', World Development, vol. 22, no. 4, (1994) pp. 627-34; Sanjay Lall, 'The East Asian Miracle: Does the Bell Toll for Industrial Strategy?', World Development, vol. 22, no. 4, (1994) pp. 645-54; Aadne Cappelan and Jan Fagerberg, 'East Asian Growth: A Critical Assessment', Forum for Development Studies, no. 2, 1995. See further, Michael Hirsh, 'The State Strikes Back', Institutional Investor, September 1992, pp. 82-92 (for which I was a prime source).
65. See the papers by Rodrik, Wade and Haggard in Fishlow et al, eds, Miracle or Design?; Ajit Singh, 'How did East Asia Grow so Fast? Slow Progress Towards an Analytical Consensus', UNCTAD Discussion Paper no. 97, 1995; Alice Amsden, 'Why Isn't the Whole World Experimenting with the East Asian Model to Develop? Review of The East Asian Miracle', World Development, vol. 22, no. 4, (1994) pp. 627-34; Sanjay Lall, 'The East Asian Miracle: Does the Bell Toll for Industrial Strategy?', World Development, vol. 22, no. 4, (1994) pp. 645-54; Aadne Cappelan and Jan Fagerberg, 'East Asian Growth: A Critical Assessment', Forum for Development Studies, no. 2, 1995. See further, Michael Hirsh, 'The State Strikes Back', Institutional Investor, September 1992, pp. 82-92 (for which I was a prime source).
66. See the papers by Rodrik, Wade and Haggard in Fishlow et al, eds, Miracle or Design?; Ajit Singh, 'How did East Asia Grow so Fast? Slow Progress Towards an Analytical Consensus', UNCTAD Discussion Paper no. 97, 1995; Alice Amsden, 'Why Isn't the Whole World Experimenting with the East Asian Model to Develop? Review of The East Asian Miracle', World Development, vol. 22, no. 4, (1994) pp. 627-34; Sanjay Lall, 'The East Asian Miracle: Does the Bell Toll for Industrial Strategy?', World Development, vol. 22, no. 4, (1994) pp. 645-54; Aadne Cappelan and Jan Fagerberg, 'East Asian Growth: A Critical Assessment', Forum for Development Studies, no. 2, 1995. See further, Michael Hirsh, 'The State Strikes Back', Institutional Investor, September 1992, pp. 82-92 (for which I was a prime source).
67. See the papers by Rodrik, Wade and Haggard in Fishlow et al, eds, Miracle or Design?; Ajit Singh, 'How did East Asia Grow so Fast? Slow Progress Towards an Analytical Consensus', UNCTAD Discussion Paper no. 97, 1995; Alice Amsden, 'Why Isn't the Whole World Experimenting with the East Asian Model to Develop? Review of The East Asian Miracle', World Development, vol. 22, no. 4, (1994) pp. 627-34; Sanjay Lall, 'The East Asian Miracle: Does the Bell Toll for Industrial Strategy?', World Development, vol. 22, no. 4, (1994) pp. 645-54; Aadne Cappelan and Jan Fagerberg, 'East Asian Growth: A Critical Assessment', Forum for Development Studies, no. 2, 1995. See further, Michael Hirsh, 'The State Strikes Back', Institutional Investor, September 1992, pp. 82-92 (for which I was a prime source).
68. See the papers by Rodrik, Wade and Haggard in Fishlow et al, eds, Miracle or Design?; Ajit Singh, 'How did East Asia Grow so Fast? Slow Progress Towards an Analytical Consensus', UNCTAD Discussion Paper no. 97, 1995; Alice Amsden, 'Why Isn't the Whole World Experimenting with the East Asian Model to Develop? Review of The East Asian Miracle', World Development, vol. 22, no. 4, (1994) pp. 627-34; Sanjay Lall, 'The East Asian Miracle: Does the Bell Toll for Industrial Strategy?', World Development, vol. 22, no. 4, (1994) pp. 645-54; Aadne Cappelan and Jan Fagerberg, 'East Asian Growth: A Critical Assessment', Forum for Development Studies, no. 2, 1995. See further, Michael Hirsh, 'The State Strikes Back', Institutional Investor, September 1992, pp. 82-92 (for which I was a prime source).
69. See the papers by Rodrik, Wade and Haggard in Fishlow et al, eds, Miracle or Design?; Ajit Singh, 'How did East Asia Grow so Fast? Slow Progress Towards an Analytical Consensus', UNCTAD Discussion Paper no. 97, 1995; Alice Amsden, 'Why Isn't the Whole World Experimenting with the East Asian Model to Develop? Review of The East Asian Miracle', World Development, vol. 22, no. 4, (1994) pp. 627-34; Sanjay Lall, 'The East Asian Miracle: Does the Bell Toll for Industrial Strategy?', World Development, vol. 22, no. 4, (1994) pp. 645-54; Aadne Cappelan and Jan Fagerberg, 'East Asian Growth: A Critical Assessment', Forum for Development Studies, no. 2, 1995. See further, Michael Hirsh, 'The State Strikes Back', Institutional Investor, September 1992, pp. 82-92 (for which I was a prime source).
70. Dani Rodrik, 'King Kong Meets Godzilla: The World Bank and the East Asian Miracle', in Miracle or Design?, pp. 35-9.
71. The set of High Performing Asian Economies includes Japan, Taiwan, South Korea, Hong Kong, Singapore, Thailand, Malaysia, Indonesia; not China and not the Philippines.
72. The East Asian Miracle, pp. 24, 301.
73. Ibid., p. 301.
74. Ibid., table A6.2.
75. As does Rodrik in 'King Kong Meets Godzilla'.
76. There are many other examples of dubious evidence in the report; see the papers by Rodrik, Wade and Haggard in Miracle or Design?, and the references cited therein.
77. Indeed, Irene Trella and John Whalley go so far as to conclude, from their own quantitative analysis and that of others, that 'outward-oriented policies in Korea have little significance in driving growth'. Trella and Whalley, 'The Role of Tax Policy in Korea's Economic Growth', in T. Ito and A. Krueger, eds, The Political Economy of Tax Reform, Chicago 1992. See also Colin Bradford, 'From Trade-Driven Growth to Growth-Driven Trade: Reappraising the East Asian Development Experience', OECD Development Center, 1992; Dani Rodrik, 'Getting Interventions Right: How South Korea and Taiwan Grew Rich', mimeo, Economics Department, Columbia University, 1994; UNCTAD, 'The Visible Hand and the Industrialization of East Asia', Trade and Development Report, 1994; and Robert Wade, Governing the Market, pp. 47-8, chapters 6 and 9. Nor does the report examine what many analysts, though few economists, consider to be central to East Asia's economic success: the 'informal sector', the skeins of relational networks that operate behind the apparently formal institutions of finance, business and government across the region.
78. Indeed, Irene Trella and John Whalley go so far as to conclude, from their own quantitative analysis and that of others, that 'outward-oriented policies in Korea have little significance in driving growth'. Trella and Whalley, 'The Role of Tax Policy in Korea's Economic Growth', in T. Ito and A. Krueger, eds, The Political Economy of Tax Reform, Chicago 1992. See also Colin Bradford, 'From Trade-Driven Growth to Growth-Driven Trade: Reappraising the East Asian Development Experience', OECD Development Center, 1992; Dani Rodrik, 'Getting Interventions Right: How South Korea and Taiwan Grew Rich', mimeo, Economics Department, Columbia University, 1994; UNCTAD, 'The Visible Hand and the Industrialization of East Asia', Trade and Development Report, 1994; and Robert Wade, Governing the Market, pp. 47-8, chapters 6 and 9. Nor does the report examine what many analysts, though few economists, consider to be central to East Asia's economic success: the 'informal sector', the skeins of relational networks that operate behind the apparently formal institutions of finance, business and government across the region.
79. Indeed, Irene Trella and John Whalley go so far as to conclude, from their own quantitative analysis and that of others, that 'outward-oriented policies in Korea have little significance in driving growth'. Trella and Whalley, 'The Role of Tax Policy in Korea's Economic Growth', in T. Ito and A. Krueger, eds, The Political Economy of Tax Reform, Chicago 1992. See also Colin Bradford, 'From Trade-Driven Growth to Growth-Driven Trade: Reappraising the East Asian Development Experience', OECD Development Center, 1992; Dani Rodrik, 'Getting Interventions Right: How South Korea and Taiwan Grew Rich', mimeo, Economics Department, Columbia University, 1994; UNCTAD, 'The Visible Hand and the Industrialization of East Asia', Trade and Development Report, 1994; and Robert Wade, Governing the Market, pp. 47-8, chapters 6 and 9. Nor does the report examine what many analysts, though few economists, consider to be central to East Asia's economic success: the 'informal sector', the skeins of relational networks that operate behind the apparently formal institutions of finance, business and government across the region.
80. Indeed, Irene Trella and John Whalley go so far as to conclude, from their own quantitative analysis and that of others, that 'outward-oriented policies in Korea have little significance in driving growth'. Trella and Whalley, 'The Role of Tax Policy in Korea's Economic Growth', in T. Ito and A. Krueger, eds, The Political Economy of Tax Reform, Chicago 1992. See also Colin Bradford, 'From Trade-Driven Growth to Growth-Driven Trade: Reappraising the East Asian Development Experience', OECD Development Center, 1992; Dani Rodrik, 'Getting Interventions Right: How South Korea and Taiwan Grew Rich', mimeo, Economics Department, Columbia University, 1994; UNCTAD, 'The Visible Hand and the Industrialization of East Asia', Trade and Development Report, 1994; and Robert Wade, Governing the Market, pp. 47-8, chapters 6 and 9. Nor does the report examine what many analysts, though few economists, consider to be central to East Asia's economic success: the 'informal sector', the skeins of relational networks that operate behind the apparently formal institutions of finance, business and government across the region.
81. Indeed, Irene Trella and John Whalley go so far as to conclude, from their own quantitative analysis and that of others, that 'outward-oriented policies in Korea have little significance in driving growth'. Trella and Whalley, 'The Role of Tax Policy in Korea's Economic Growth', in T. Ito and A. Krueger, eds, The Political Economy of Tax Reform, Chicago 1992. See also Colin Bradford, 'From Trade-Driven Growth to Growth-Driven Trade: Reappraising the East Asian Development Experience', OECD Development Center, 1992; Dani Rodrik, 'Getting Interventions Right: How South Korea and Taiwan Grew Rich', mimeo, Economics Department, Columbia University, 1994; UNCTAD, 'The Visible Hand and the Industrialization of East Asia', Trade and Development Report, 1994; and Robert Wade, Governing the Market, pp. 47-8, chapters 6 and 9. Nor does the report examine what many analysts, though few economists, consider to be central to East Asia's economic success: the 'informal sector', the skeins of relational networks that operate behind the apparently formal institutions of finance, business and government across the region.
82. M.E. Porter, The Competitive Advantage of Nations, New York 1990, ch. 10.
83. The East Asian Miracle, p. 356.
84. Rodrik, 'King Kong Meets Godzilla', p. 28.
85. The version sent to the Board had been revised in the month between being sent to the Board and actually being discussed by it. Many of the revisions addressed issues that the Board brought up, and were subsequently reported to the Board as being made in response to Board suggestions.
86. Financial Times, 27 September 1993, p. 16. Nihon Keizai Shimbun, 26 September 1993, p. 7, emphases added.
87. Financial Times, 27 September 1993, p. 16. Nihon Keizai Shimbun, 26 September 1993, p. 7, emphases added.
88. The Far Eastern Economic Review (owned by the American firm Dow Jones)
89. The Daily Yomiuri begins its report, 'Economic policies that fuelled East Asia's dynamic economic growth over the past thirty years can also work in other developing regions of the world, according to a new World Bank study...' (27 September 1993, p. 7)
90. Masaki Shiratori, 'The Role of Government in Economic Development: Comments on the "East Asian Miracle" Study', paper presented to OECF seminar on the East Asian Miracle, Tokyo, 3 December 1993.
91. Isao Kubota, 'On the "Asian Miracle"', mimeo, Ministry of Finance 1993, his emphasis. An American source close to the Bank, who has talked at length to senior MOF officials about the report, characterizes their reaction as follows: 'We feel intellectually vindicated, because the report does recognize that selective credit has worked effectively in Japan and Korea. We are now beginning to find our intellectual voice on development issues, even if our voice does not yet match the size of our financial contribution. We regard the Miracle study as a start. We will now wait, regroup, and exert quiet pressure on the Bank to be more pragmatic in its policy advice.'
92. Chalmers Johnson, 'History Restarted: Japanese-American relations at the End of the Century', in R. Higgott, R. Leaver, and J. Ravenhill, eds, Pacific Economic Relations in the 1990s: Conflict or Cooperation?, 1993, p. 59.
93. Indeed, a watershed has already been reached in Japan's trade: for the first time, the surplus with Asia exceeded the surplus with the US in the fiscal year 1993-94.
94. This is from an American source close to senior levels of the Bank (and himself a former senior official), who asked the most senior manager for his view of the report.
95. See Lyn Squire, remarks in Proceedings of the Symposium on the East Asian Miracle, Tokyo 1993, emphasis added. The Bank may have continued to do a little more, on the research side, if any of the three main protagonists, Summers, Birdsall, and Page, had remained in or close to their positions; but they all moved far from where they could influence the follow-up. Nancy Birdsall went on to be executive vice-president of the Inter-American Development Bank, John Page became Chief Economist for the Bank's Middle East region, and Lawrence Summers, as we have seen, joined the Clinton administration.
96. In Bank parlance, Higher Level Staff. Total staff, including temporaries, in Financial Year 1994 was just over eight thousand.
97. Bruno Frey et al, 'Consensus and Dissensus Among Economists: An Empirical Inquiry', American Economic Review, vol. 74, no. 1, (1984).
98. This is based on the Myers-Briggs personality inventory, administered to over 1,000 Bank managers in the early to mid-1990s. The results show that over two-thirds of Bank managers (directors, division chiefs, task managers) are 'TJS'; and that among directors (just below vice-presidents) 70 per cent process information in an 'Intuitive' (patterns, linkages) rather than 'Sensing' (detailed) kind of way, compared to 58 per cent of division chiefs.
99. Peter Gibbon, 'The World Bank and the New Politics of Aid', European Journal of Development Research, vol. 5, no. 1, (1993) pp. 35-62.
100. I worked in the Bank's Trade Policy division in 1987-88, at the time when a team from the division was formulating a paper setting out the Bank's trade policy and its empirical and conceptual underpinnings. As a member of the same small division, I repeatedly urged the team to examine East Asia's import-control regime, and especially to consider whether the regime contained design features that enabled Japan, Korea, and Taiwan - all three having highly protected economies for long periods - to escape some of the expected neoclassical costs. I indicated possible mechanisms (as in 'Managing Trade: Taiwan and South Korea as Challenges to Economics and Political Science', Comparative Politics, vol. 25, no. 2, (1993) pp. 147-67; and, 'How to Protect Exports from Protection: Taiwan's Duty Drawback Scheme', The World Economy, vol. 14, September 1991, pp. 299-310),
101. I worked in the Bank's Trade Policy division in 1987-88, at the time when a team from the division was formulating a paper setting out the Bank's trade policy and its empirical and conceptual underpinnings. As a member of the same small division, I repeatedly urged the team to examine East Asia's import-control regime, and especially to consider whether the regime contained design features that enabled Japan, Korea, and Taiwan - all three having highly protected economies for long periods - to escape some of the expected neoclassical costs. I indicated possible mechanisms (as in 'Managing Trade: Taiwan and South Korea as Challenges to Economics and Political Science', Comparative Politics, vol. 25, no. 2, (1993) pp. 147-67; and, 'How to Protect Exports from Protection: Taiwan's Duty Drawback Scheme', The World Economy, vol. 14, September 1991, pp. 299-310),
102. and offered to provide relevant literature. But the team was unwilling even to consider the possibility that protection East Asian-style might have brought benefits as well as costs, and the trade policy paper refers to the import-control regimes in East Asia only in terms of their liberalization. See 'Strengthening Trade Policy Reform', World Bank, Washington DC, November 1989.
103. Ian Little was professor of economics at Oxford University, Anne Kreuger was World Bank vice-president for research, and both are well-known conservative economists. See for example Little, Economic Development: Theory, Policy and International Relations, New York 1982.
104. My argument does not imply that these techniques were deliberately deployed in an attempt to maintain the Bank's central beliefs. One does not need to embrace postmodernism to agree that people's commitment to a particular paradigm has a large subjective element - is underdetermined by the evidence - and that they are largely unaware of how the commitment is protected, by themselves and others, from contrary evidence or interpretations.
105. Ascher, 'New Development Approaches and the Adaptability of International Agencies', p. 436.
106. American hegemony in the Bank is eclipsed or ceded in regions where other major countries have particular interests. France's ex-colonies in West Africa are a good case in point. There the Bank acts within narrow limits set by the Elysée's advisor on African Affairs, occultly coordinating with the Ministre de la Coopération and French military intelligence.