I'm a little baffled by this post by Krugman:
http://krugman.blogs.nytimes.com/2009/11/05/the-lost-generation/
And as Matt points out, the giant success story in the developing
world was China, where the driver was the end of Communism -- not
modern finance. Actually, it's even more absurd to give finance the
credit than Matt realizes: China has not been experiencing net
inflows of capital, partly because it has maintained capital
controls, effectively insulating itself from the whole finance
thing.
<end quote>
"China has not been experiencing net inflows of capital?" I'm totally down with the argument that China disproves rather than proves the Washington Consensus because it broke every rule in the book. But I thought this came from harnessing FDI, not excluding it. I could swear that China has been one of top destinations for FDI for years. No?
And mind you, Krugman's not talking about the last year in this post, he's talking about the last 25 years. And it's not a passing point, but one he returned the next day as a kind of gotcha.
What am I missing here?
Michael