Synopses & Reviews
The future prosperity of the global economy depends on economic growth in emerging markets, yet no one can agree on how best to help these emerging economies grow. On one side are subscribers to the so-called Washington Consensus, whose market-driven tenets are pushed by the trinity of the U.S. Treasury, the IMF, and the World Bank. Its proponents believe that trade liberalization, low inflation, privatization, and other policies driven by the demands of free markets will bring the same benefits to developing economies as they did to industrialized nations. On the other side are those who accuse the former of forcing a neoliberal,” neocolonial” agenda down the throats of third-world governments, making them adopt policies that hurt the poor and are generally not in the economic interest of anyone except the banks. They believe that developing nations require alternate economic models that will protect them from the ravages of globalization. For the last several decades, it appeared that the Washington Consensus had won out, and its tenets became all but common sense until wealthy, highly developed nations began experiencing the sort of financial crises that previously characterized banana republics. Now, the question of sound economic policies is once again up in the air, and with the global economy constantly teetering on the brink, the stakes are higher than ever.
This debate has occurred primarily in Washington and other political capitals worldwide, with little reference to the citizens of those countries actually affected by these policies. But how do we find out what they think? Luckily, there is a mechanism for gauging their aggregated response already in place: the markets. In Turnaround, Peter Henry looks at how stock markets reflect collective wisdom in emerging economies when new reforms are announced. The market is particularly valuable because its prognostications rise above entrenched ideologies and give some idea of what the economic outcome will be. If the intended participants view a policy as a potentially value-creating proposition, the markets will reflect that; likewise, if they view it as value-destroying, their lack of confidence will manifest itself. Although this is an imperfect approach, Henry argues that it is the best way to make tough decisions with limited amounts of information, because unlike other indicators, the effects of a policy can be assessed immediately and with a minimum of external complicating factors. After examining emerging economies on a case-by-case basis, trusting in the market to show him the way, Henry concludes that globalization is the last best hope of the worlds poor. From taming inflation in Latin America to the catch up” economy of a rapidly growing China to the wealth disparity between Barbados and the authors native Jamaica, Henry shows how listening to the markets will lead to greater global prosperity.
Turnaround straddles the developed and developing world. It reaches conclusions that run counter to a growing sense among many Americans that globalization has hurt the U.S. economy more than it has helped, especially for the middle class....[Henry's] strongest pitch may be a sort of technocratic optimism: the resounding belief that if developing countries can reverse a cycle of poverty and economic dysfunction and begin to grow rapidly, then the United States can, too.” Jim Tankersley, Washington Post
Turnaround weaves together a medley of history and data....Henry's interpretation of data can be illuminating.” USA Today
A thoughtful...book about the worlds financial ills....It is not an easy sale these days for governments to reduce spending, increase their revenues, and devalue currencies, but judging from Henry's very reasoned arguments and expansive case histories, it might be the only solution.” Booklist
Henry...show[s] how developing nations sometimes exhibit or are coerced into greater economic realism than G-8 countries....[T]his readable volume...contains enough insight into global affairs and international economics to attract readers beyond universities and think tanks.” Publishers Weekly
A concise and controversial statement of what needs to be overcome if the world economy is to return to the path of growth and stability.” Kirkus Reviews
Thirty years ago, China seemed hopelessly mired in poverty, Mexico triggered the Third World Debt Crisis, and Brazil suffered under hyperinflation. Since then, these and other developing countries have turned themselves around, while First World nations, battered by crises, depend more than ever on sustained growth in emerging markets.
In Turnaround, economist Peter Blair Henry argues that the secret to emerging countries success (and ours) is discipline sustained commitment to a pragmatic growth strategy. With the global economy teetering on the brink, the stakes are higher than ever. And because stakes are so high for all nations, we need less polarization and more focus on facts to answer the fundamental question: which policy reforms, implemented under what circumstances, actually increase economic efficiency? Pushing past the tired debates, Henry shows that the stock markets forecasts of policy impact provide an important complement to traditional measures.
Through examples ranging from the drastic income disparity between Barbados and his native Jamaica to the catch up” economics of China and the taming of inflation in Latin America, Henry shows that in much of the emerging world the policy pendulum now swings toward prudence and self-control. With similar discipline and a dash of humility, he concludes, the First World may yet recover and create long-term prosperity for all its citizens.
Bold, rational, and forward-looking, Turnaround offers vital lessons for developed and developing nations in search of stability and growth.
About the Author
Peter Blair Henry is the Dean of the Stern School of Business at NYU. Before taking this position in January 2010, he was the Konosuke Matsushita Professor of International Economics at Stanford, where he was a faculty scholar, the Associate Director of the Center for Global Business and the Economy at Stanford's business school, and a Senior Fellow at the Stanford Institute for Economic Policy Research. He served as a member of the Obama transition team and is a member of the Presidents Commission on White House Fellowships. He is also a board member at the National Bureau of Economic Research, a member of the Board of Directors of Kraft Foods, a nonresident Senior Fellow at the Brookings Institution, and a member of the Council on Foreign Relations. He was a National Fellow at the Hoover Institution and a Rhodes Scholar. While receiving his Ph.D in economics at MIT, he served as an economic advisor to the Governors of the Bank of Jamaica (his native country) and the Eastern Caribbean Central Bank.