Two-Track Growth

Two-Track Growth

 

Washington Post Tuesday, April 18, 2000

 

THE MEETINGS of the World Bank and International Monetary Fund, now mercifully concluded, took place against a

background of two contrasting trends in the developing world. On the positive side, the emerging markets that succumbed in

1997 and '98 to financial crises have recovered far more quickly than expected, thanks at least partly to IMF bailouts. South

Korea is growing at an annual rate of 13 percent; Thailand and Indonesia are growing at around 6 percent, Russia at nearly 9

percent, and Brazil at 3 percent or so. But this success is balanced by worrisome news from countries too poor to aspire to a

financial crisis--notably those in Africa. There, growth crawls at around 2 percent annually; AIDS is driving life expectancy

downward; and a disastrous famine looms in Ethiopia.

 

This divided picture should be kept in mind when assessing the meetings' outcome. There was much discussion, for example, of ways to prevent future financial crises. The delegates agreed that countries should provide more information to investors, that they should manage their debts more cautiously and that they should shore up their banks. There was also vague talk about formalizing the ad hoc procedures for bailouts. But however worthy, this debate seems less pressing than it did a year ago. Whatever the inadequacies of the existing system, it has been proved capable of financial rescue missions that work.

 

The same cannot be said for measures to assist the very poorest countries. The final communique included fine words about the need for poor countries to gain better access to rich countries' markets. But protectionists in the rich world are expert at

suffocating the kind of trade that would benefit poor countries most powerfully, such as trade in agriculture and textiles. Equally, the meetings devoted considerable time to Third World debt relief, emphasizing the good news that every G7 country has agreed in principle to cancel the obligations of the poorest nations. But the governments have yet to come up with all the money necessary to do this, and congressional foot-dragging has ensured that the United States lags badly.

 

2000 The Washington Post Company