Financial Systems and Economic Policy in Developing Countries


Stephan Haggard and Chung H. Lee (eds.)


Ithaca: Cornell University Press

Available From: CUP Services
Publication Date: 1995
ISBN: 0-8014-8130-9
Binding: cloth
Pages: xi, 265


Using new theoretical insights and cumulative empirical evidence, editors Stephan Haggard and Chung H. Lee question the wisdom of a free-market system where financial markets are concentrated and lack prudent supervision.

The growing economic interdependence and the power of the international marketplace make it ever more necessary to understand the politics involved in financial sector reform. As the debate rages over the relative merits of a free-market financial system versus government intervention, the World Bank, the International Monetary Fund, and the Organisation for Economic Co-operation and Development must determine why active government involvement in the economy has worked so well in much of east and southeast Asia but been disastrous in parts of Latin America.

Advocates of a free-market system assert that liberalization would spur economic growth. The country specialists who contribute to this original collection challenge that claim and the premise behind it. The case studies—of Korea, Taiwan, Indonesia, Thailand, the Philippines, Chile, and Brazil—suggest that the success of government intervention in promoting economic development often depends on formidable institutional requirements that many developing countries cannot afford.

© Cornell University Press


"The book shows the role of the state in a new light by emphasizing 'the pervasiveness of transaction and costs and the role of the organizations and organizational innovations in reducing them' . . . one of the best books of its genre, with its main theses well articulated, its empirical evidence ingeniously marshaled, and the political dimensions of financial liberalization clearly and relevantly defined."

Deen Khathate
Finance & Development

"This outstanding collection of essays is required for those interested in the political economy of development, as well as those concerned with the politics of finance more generally. The editors' analytical essays are superb summaries of the issues and arguments, while each chapter treats expertly and in detail the experience of one developing country. Together, the volume is a model of the integration of theoretical background with empirical analysis."

Jeffrey A. Frieden
University of California, Los Angeles