Senior fellow Liliana Rojas-Suarez was quoted in a Wall Street Journal article on emerging country economies.
From the Article:
A second camp argues that emerging markets will prosper not by rejecting Western capitalism, but executing it better, perhaps finding a way to restrain its tendency toward financial excess while retaining the efficiency of markets.
"Latin America has tried many models," says Liliana Rojas-Suarez, a Peru-born economist now at the Center for Global Development, a Washington think tank. "This model"—markets, private enterprise, orthodox macroeconomic policies—"is working for them."
Ms. Rojas-Suarez points to Peru's new center-left president, Ollanta Humala, as support for the second model. She notes that, despite some of his campaign rhetoric, Mr. Humala hasn't deviated much from the previous government's course. After all, Peru's economy grew a robust 8.8% in 2010 and 2011 growth is forecast at 6.7%. "The cost for a leftist government to change what is seen, so far, as a success is just too large," she says.
Ernesto Zedillo, the former president of Mexico, now teaching at Yale University, contends that Europe has failed to see what Mexicans understand about responding to a financial crisis. "Latin America, after so many years, has learned its lessons," he says. "In the '80s, when we behaved just like the Europeans today, we were always behind the curve." In the 1990s, he says, that wasn't so.
The conclusion he drew, and repeated ever since: Markets overreact, so government policy must overreact even more. Rich countries haven't heeded that lesson, he says, bemoaning "the slowness, the parsimony, the hesitation, the political conflict we have seen in Europe and in the U.S." A third camp sees what the World Bank's Mr. Zoellick calls "ruthless pragmatism," an almost ideology-free quest for results that will borrow freely from around the world.
In this vein, Olivier Blanchard, a France-born Massachusetts Institute of Technology professor and now chief economist at the IMF, says: "If I were a young, emerging-market country, my motto would be: Go slow." He advises them to develop a modern financial system slowly, adopting innovations only as they are proven elsewhere and lowering barriers to foreign capital only gradually. And he would craft rules for labor markets with care to avoid the sclerosis plaguing some richer economies. "Institutions have a life of their own," he says.
From his travels around the globe, Mr. Zoellick concludes: "People are looking for what works. It was very important that you had a model that started to work in Japan, Korea, Taiwan and then spread to others in Southeast Asia and China."
Have emerging markets concluded that the U.S. and European models don't work? "Not yet, but they could," he says. It depends whether the U.S., Europe and Japan sort out their problems in the next several years.