How hospitable will the globalenvironment be for economic growth in the developing worldas we come out of the present financial crisis? The answerdepends on how well the author manage the following tension.On the one hand, global macro stability requires that weprevent external imbalances from getting too large. On theother hand, growth in poor nations requires that the worldeconomy be able to absorb a rapid increase in the supply oftradable produced in the developing world. It is possible torender these two requirements compatible, but doing sorequires greater use of explicit industrial policies indeveloping countries, which have the potential ofencouraging of modern tradable activities without spillingover into trade surpluses. The 'price' to be paidfor greater discipline on real exchange rates and externalimbalances is greater use (and permissiveness) towardsindustrial polices.
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