ECON 315 Lecture Notes - Lecture 8: Washington Consensus, Capital Accumulation, Developing Country
23 Jun 2017
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Document Summary
Economic agents count not self-coordinate to promote economic development before 1960. Therefore, large potential for the government to intervene and solve these coordination failures: private investment, the governments of these two countries supported private investment by coordinating and subsidizing it. Public investment (complementarity: imports and exports, to increase investment, the two countries had to rely on imported machinery. Instead of blocking imports, they fostered them: how did the countries pay for the increased imports, by exporting more goods to foreign countries. Support of specific industries allowed south korea and taiwan to become competitive increased rate of exports. South korea"s and taiwan"s growth policies to take two important illustrations, exhibit significant departures from washington consensus. Neither country undertook significant deregulation or liberalization of their trade and financial systems well into the 1980"s. Far from privatizing, they both relied heavily on public enterprises. South korea did not even welcome direct foreign investment. Both countries deployed an extensive set of industrial policies:
