On Wed, 27 Mar 2002, Seth Ackerman wrote:
> What about China? Putting aside its innumerable flaws, doesn't China
> have stringent controls on international financial linkages AND make use
> of plentiful FDI capital from the industrial core
Yes, but China has something that puts them in the drivers seat: a market so huge and so coveted that investors are begging to put money in it. So they can treat them worse than in other countries without being subjected to a capital strike. They have escaped the golden hand-cuffs.
India, the one other country that shares this advantage, seems to be using it in the opposite way, as a base for ISI, which at least theoretically has a qualitatively better chance when your middle class market alone is the size of the EU.
This is why I think of them as "gigantic exceptions" to the laws of development: their key advantage is what has allowed them both to follow development paths as different from the Washington consensus as Korea's was, and it is not replicable by any other developing country. But it's certainly good for the world's poor that so many of them are located there.
Michael