Would they have been even stronger had they followed IMF advice, raised taxes, and immediately and completely reformed their financial systems? Probably not. Were they stronger because the IMF brought a punchbowl to the party? Surely yes.
>
>I think your picture of Mexico's recovery is too sanguine - yeah,
>the GDP turned around, but real people's real lives haven't anywhere
>near as much.
Yeah. It's remarkable and depressing. Manufacturing wages 16% less in real terms than in 1994, and economy-wide labor productivity up at 30% more than in 1994. Not what I'd hoped to see. Employment in the formal sector has grown by a fifth since 1994, but the labor force has grown even faster.
Consider, however, a Mexico that did *not* have access to the U.S. market. Given the rate of increase of Mexico's labor force, what would the labor market look like if exports *had not* risen from $61 billion in 1994 to $150 billion in 2000?
>
>And, what to do about this tendency of financial markets to throw
>whole regions of the world into panic and depression? It's not like
>they've done so much to finance development on the upside, either.
This is Jagdish Bhagwati's position: In the late nineteenth century you could finance development by borrowing in London. But in the early twenty-first century you finance American development by shipping your elite's financial wealth to invest in New York (and shipping your engineers to San Jose). Thus you get the brain drain, the capital drain, *and* large-scale financial crises too...
It's surely the case that international capital mobility looks less like a good thing at the end of the 1990s than it did at the beginning, and that Maynard Keynes and Harry White at Bretton Woods look smarter. But I'm not (yet) ready to tip back to the *finans clausum* point of view...
Brad DeLong