Cheneryetal.1953).SoIfollowedtheleadofNorwegianeconomistLeifJohansen(1960),whohadbuilt suchaprice-sensitiveinput-outputmodel.Theproblem atthetimewasthatwhilelinearinput-outputmodelscouldbesolvedbythecomputer,theintroductionofdemandandsupplycurvesmadethemnon-linear.Tosolvesuchanon-linearmodel,Johansenhad‘linearizedthem’byusingfirst-derivativesofthenon-lineardemandandsupplycurves,therebytransformingthemintolinearmodelsthatcouldbesolvedbycomputerprogrammes.Butsuchsolutions wereonlyvalidatthe‘neighbourhood’ofaparticulargeneralequilibrium,andwereonlyaveryimperfecttool to simulatepolicy experiments orgrowthpathsover time. For mythesis atPrinceton,working underthe supervisionofLarryWestphal,ShermanRobinson,and RayFair,Iuseda‘WalrasianTâtonnement’algorithmtosolveanon-linearmulti-sectorgrowthmodelwithoutlinearizingit.Afterquiteabitofsuffering,Isucceededin‘computing’growthpathsthatequatedsupply anddemand inallmarketsandat thesame timeequatedratesofreturnincluding capitalgainsacrossallsectors,therequirementforintertemporalefficiency.1Thekeytomyfinalsuccessingettingthetâtonnementalgorithmtoconvergewastoslowthespeedwithwhichpricesadjustedtoexcessdemandintheprogram.Themodelbehavedlikeamulti-sectorversionofthesingle-marketcobwebmodel:ifpricesweremadetoadjusttoorapidlytheyexploded,movingfurtherandfurtherfromequilibrium.IdevelopedthatworkfurtherattheWorldBank,culminatinginajointvolumewithJaimedeMeloand Sherman Robinson(Dervisetal.1982).
TheseacademicfoundationsstronglyinfluencedthepolicyadviceIgaveformanyyearsattheWorldBank.Itriedtoconvincemycounterpartsthatpricesandincentiveswereimportant.Butcombinedwith‘mainstream’advicewhichwasroutineinthelate1980sand1990s,Iemphasizedtheneedtoretainplanningasatoolofpublicpolicyandalwaysaddedanoteofcautionregardingthestabilityofmarketsdrivenbytotallyfreepriceadjustmentmechanisms.Indicativeplanningwasneededbecausemarketsandprivateactorsneededthe‘publicgood’ofmulti-sectorsimulationsoflong-terminteractionsbetweensectors,aswellasinteractionsbetweenthenationaleconomyand therestof theworld.Price fluctuations,particularlyincapital markets, could beextremeandleadtoagreatdealofundesirable‘cobweb-like’volatility,causinginter-temporallywastefulinvestments.Thesimulationsshouldnotbeinterpretedasaprescriptivegrowthpath;instead,theyprovideillustrationsofinteractions,whichweredifficulttointernalizeattheenterpriseorsectorlevel alone. Theyshouldinform policy aswellasprivateinvestors.
Thisapproachofusingmarketswithouttrustingthem,relyingonprivateinitiativewhileworryingabouttherightincentivesignals,andlookingforward,bytryingtosimulatealternativegrowthpaths,permeatedmypolicyadviceattheWorldBankaswellasthepoliciesIlaterimplementedinTurkey.
IappliedthemasdivisionchiefoftheglobalIndustrialPolicyandTradeDivisionattheWorldBank, advising gradual ratherthansudden tradeliberalization,inorder to avoidexcessivesuddenshiftsinimmediateprices,whilesignalling medium-term changesintheincentivestructure.Iwasinfavourofannouncingthepathofatariffsettodeclineover,say,fiveyearsfrom40percentto5percent,ratherthanmovingitto5percentrightaway.Andasageneralequilibriumpractitioner,Iwasawarethatgradualismwasneedednotonlytoavoidsuddenanddestructivedisruptionsinproduction,butalsoforfiscalreasons.TheapproachofmyadvicetotheEasternEuropeancountriesafter1990wasinthesamespirit.Itwasofcourseimportanttodistinguishthe needto overcomehyper-inflation,for example inPoland,whichneededa‘sudden macroeconomicshock’ascorrectlyarguedbyLeszcekBalcerociwz,2fromthespeedofprivatizationandmicroeconomicpricereforms,whereIadvocatedgradualism.
Ineconomicswecannotconductcounterfactualexperiments.Idobelieve,however,thattheadviceonspeedofliberalizationandprivatizationgiven,inparticular,toRussia,byotherpolicyadvisers(whenattheWorldBank,IwassolelyresponsibleforCentralEuropeandtheBalkans)helpedleadtoasizableoutputlossintheearly1990sthatwastotallyunnecessary.Italsoledtowhathasbeen,withoutadoubt,thegreatestsemi-legal‘hold-up’inhistory.GDPcollapsedinRussiabycloseto50percentbetween1991and1996.Thecollapsecameaboutasincentiveswerechangedalmostovernightandthestronglyprotectedeconomywasverysuddenlyopenedtoimportswithoutanylong-termvisionavailabletoguideandencourageexistingandnewproducers.Theeconomywassimplyallowedtocollapse.Atthesametime,theall-outprivatizationprocess,withoutanyprivatesectorreadytobuyandmanagehugeamountsofvaluableprivateassets,literallyhandedRussia’sindustrialandnaturalresourcesovertoagroupofnew‘insiders’whobecamebillionaireoligarchs,manywhiletheywerestillbelowtheageof
40.Intheprocess,substantialcapitalflighttookplace,withinvestmentsflowingintoEuropeanandAmericanrealestate,ratherthanintothecreationofproductiveeconomicassetsinRussia.IhavenodoubtthatthecurrentweaknessesofRussiandemocracyandtheforceofpopulismthere,arerooted,tosomeextentatleast,intheexpropriationoftheRussianpeoplethattookplaceunderthecoverofmarketreformsandprivatization.Muchofsuchexcesswasfortunatelyavoided inCentralEurope.
Ingeneral,Idonotbelievethattherearegoodeconomicargumentsforlargesuddenpricechangesand/orwholesaleprivatizationin afire-housesaleatmosphere,particularlywhenthereisnotmuchofanationalprivatesector.Thisdoesnotmeanthattheinstitutionalandlegalframeworkshouldnotberapidlychangedincertaincircumstances,onlythattherehastobealong-termperspectiveandthatimplementationshouldproceedcautiouslyoncethedirectionisset.Financialsectorreformsinanacutecrisissituationmay beanexception,asIwillnoteinthethirdsection ofthispaper,butevenat such atime,onehas tobecarefulthatthedestructivepartofcreativedestructioniskeptundercontrol.TheseviewsIheldasa policyadviser were stronglygroundedinthetypeofacademicworkIhaddoneandwasdoing.TheWorldBankwasaquitedecentralizedinstitution.However,defacto,ifnotbydesign,thetypeofpolicyadvicegivenvariedandtherewastremendousfreedomofactionavailableforthosewhowantedtouseit.IfoundthisalmostacademicfreedomagainattheUNDPwhenIlatermovedtotheUnitedNations’(UN)headquartersinNewYork.ManydifferentperspectivesthrivedattheUNDP,whichIfoundvaluable,althoughitmadethejoboftheUN’sResidentCoordinatorsinthefield,whomI‘tried’tomanageonbehalfoftheSecretary-General,evenmoredifficult.Intheendtheseremarkablemenandwomen,sometimesriskingtheirlivestryingtoaccomplishtheirmission,adaptedthemanyinputstheyreceivedtolocalcircumstances,usingtheirownjudgment.Thebestofthemwereoutstandingintheircourageandcommitment.
3 Internationalismandpolicy-making:somevirtuesofinternationalinstitutions
IhaveavividmemoryofmyfirstmissionasaWorldBankeconomisttoanAfricancountryinthemid1980s.Itwasatradeandindustrialpolicymission,andthecountryhadatiny,super-protected,andveryinefficientmanufacturingsector.Thereweretwoforeign-ownedassemblyplants‘producing’averysmallnumberofcarsandsellingthematnolessthanthreetimestheworldpriceonthedomesticmarket,underhugeeffectiveprotection.Therewasverylittleemploymentintheseassemblyplants,nolearningbydoingthatcouldintheforeseeablefutureleadtosignificantlygreaterdomesticcontent.Largeprofitsperunitassembledwerebeingsenttothehomecountriesoftheautomobilefirms.Aspartofthestructuralreformloanconditionality,Iinsistedthattheseassemblyplantslosetheirexcessiveprotectionquitequickly.Thepotentialvirtuesofgradualismwereabsentinthiscase,astherewasnoconceivablewayproductivitycouldbeimproved—giventhemini-scaleofwhatelsewhereweremuchlargerscaleproductionunits—aswellastheabsenceoflinkagesorskillsthatcouldhaveledtosignificantlearningandlinkagestootheractivities.Assoonasthedraftloanagreementwascommunicatedtoourcounterparts,mostoftheminfactnotAfricans,butEuropeansfromtheoldcolonialpowerdetachedtothegovernmentofthecountry,Ihadthetwoambassadorsofthe‘homecountries’oftheforeignfirms,inmyhotel.AttheverytimewhentheexecutivedirectorsofthesetwocountriesontheBoardoftheWorldBankwerearguingforquicktradeliberalizationindevelopingcountriesingeneral,thesetwoambassadorswerearguingvehementlythattheloweringofprotectionforthesetwoassemblyplantswouldleadtothedownfallofthewholeeconomy!Fortunately,IfeltnocompulsiontolistentothemandpolitelyremindedthemthattheWorldBankwasinterestedinthedevelopmentofthecountryandnotintherepatriatedprofitsof theforeignfirms.
Such situationsarosedozensof timesduring myprofessional life at theWorldBank.On anotheroccasion,forexample,Iargued,againstthepositionofmajorshareholdergovernments,forthemaintenanceofasmallacross-the-boardimporttariffinaNorthAfricancountry,whichbadlyneededthefiscalrevenuefromthetaxthatwasnotverydistortive.ItwasinterestingandrewardingthatIwasalwaysabletomaintainmypolicyadvice,evenwhenpowerfulnationalinterestsdisagreed.Imaynotalwayshavebeen right—it would bepresumptuoustoclaimthat—butIneverhadtogiveinandchangemypositionbecauseoftheinterestofeventhelargestshareholdergovernment.Thereweretimeswhenmydepartmentcouldnotlendtoaparticularcountry,becauseoflackofpoliticalsupportattheboard,butIneverhadmyprofessionaladviceconstrained by politicalpower.Iconsiderthis,whenitisthecase,ahugely positiveaspectoftheroleofinternationalfinancial institutions(IFIs).
ThereisanotherillustrationofthesamepointthatIcansharefrommytimeasMinisterofEconomicAffairsinTurkey,thistimenotin,butnegotiatingwiththeIFIs.Turkeyin2001-02neededlargeamountsofbridgefinancingtoovercomeanacuteliquiditycrisiswhichsome,atthebeginning,sawasasolvencycrisis.Theprivatelenderswerewithdrawingandtheexchangeratehadcollapsedinearly2001.TherewassomedebateinthegovernmentonwhetherornotweshouldaskkeyalliesintheG7forbi-lateralloans,inlieuof,orinadditiontoInternationalMonetaryFund(IMF)(andWorldBank)financing.ThiswasatimewhenthechronicCyprusproblemwasatacriticalstage,whennegotiationsformembershipoftheEuropeanUnion(EU)couldpotentiallytakeapositiveturn,and,perhapsmostimportantly,whenthesecondIraqwarwaslooming.IknewverywellthattheamountoflendingtheIMFmighteventuallyagreetoprovidewouldindeeddependon thepositionofthemajorshareholders,notjuston therecommendationofIMFstaff.Itwasveryimportant,therefore,toexplainTurkey’sreformprogrammetotheseshareholdersdirectly,inthecontextoftheirfriendlyrelationswithTurkey.MyfirstvisitwastoRome,tovisitMarioDraghi,thendirectoroftheTreasuryinItaly,whichwaschairing the G7 at thetime,whoofferedsupport atthe IMFboardand gavemegood policyadvice. Still,althoughIabsolutelydidnot wanttomix up the economicandfinancial negotiationprocesswithforeignpolicyandmilitarymatters, thesewereinthebackground.Icouldnotavoidthat.However,Ididnotwantthem,directlyorindirectly,aspartofloanconditionality.Ididofcoursemeetwithnon-economicofficialsinsomecountries,Istressedourcountries’friendship, butwhennon-economicmatterscameup,Isaidsimplythatthesewerenotwithinmyremit.Iopted,therefore,fornotaskingforanyparallelbi-lateralfinancing.PracticallyallofthefinancingweobtainedcamefromtheIMF(alittlefromtheWorldBank),andnoforeignpolicytopiceverbecamepartofourprogrammeofnegotiations withtheIMF.Importantly for this paper,neitherIMFstaffnormanagementeverbroughtupthetopiceither:wewere,onbothsides,entirelyfocusedonthemeritsoftheeconomicprogramme.Weagreedonaloteasily,wedisagreedonkeymatters,butfinallyresolvedthembycompromise,3everythingremainingintherealmofeconomicpolicyandinstitutions.
Theseexamples,amongmany,reflect thefactthateconomistsininternationalinstitutionsacquireacertainimpartialityandloyaltytomultilateralism,whichisa‘globalpublicgood’fortheinternationalcommunity.Ofcoursetheyretaintheirnationality,theirloyaltytotheirhomecountry,andofcoursetheymayattimeswanttopleasepowerfulshareholdergovernments.Nonetheless,agoodnumberoftheseinternationaleconomistsandcivilservantsacquireanidentitywhichmakesthem,tosomeextent,internationalcitizens.Itisneveranall-or-nothingaffair,thereisacontinuumand identities areoftenconflicted.Butifthereis aglobalpublicgoodargumentforinternationalco-operationonsuchmattersasclimate,financialstability,trade,macroeconomicspillovers,aswellasthetransferofknowledgeandexperience,thestaffofinternationalinstitutionsareverymuchpartofprovidingtheseglobalpublicgoods.Myprofessionallife,bothasanationalpolicymaker,andaseconomist/managerattheWorldBankandlaterattheUNDP,hasallowedmetowitnessinnumerableexamplesofhowtheinternationalismofglobalinstitutionscanhelpindividualnationsaswellastheglobalpublicinterest.
4 Onpoliticaleconomy,communicationsstrategy,andeconomicreforms
On25February2001,whenthephonerangwithPrimeMinisterBulentEcevitdirectlyontheline, asking metocomeback toTurkeytohelphisgovernment managetheveryseriousfinancialcrisisthathadresultedinthecollapseoftheexchangerateandinthesoaringofovernightinterestratestoabove1,000percent,Iwas,inveryshortorder,enthusiastic,worried,andthenpanicked.Ifeltenthusiastic,becausethiscouldbeaonce-in-a-lifetimechancetohelpmyhomecountryinaverysubstantialway.ThistimeIwouldbeapolicymaker,notjustanadviser.Iquicklybecameworried,however,whenheaskedmetocomeimmediatelyandwhenIrealizedthatthiswouldmeandroppingeverything,retiringearlyfromtheWorldBank,andbeginninganewlife.Inaddition,IfeltpanickedwhenIalsorealizedthatIhadtotakefullresponsibilityfortryingtomanagethecrisis:thiswasnotaboutadvising,butaboutleadingthechargeinthemiddleoftheworstcrisisthecountryhad experienced sincethelate1950s.
Afterarrangingfor myflighttoAnkara,Icalledfourorfive friendswhohadactuallybeeninthepositionofmanagingafinancialcrisisintheirhomecountry.Inretrospect,thebestadvicecamefromGuillermoOrtiz,whohadbeenTreasurySecretaryofMexicoduringthedevastating1994
‘Tequila’crisis.IhadcometoknowhimverywellwhenhehadbecomeanexecutivedirectoroftheIMF inWashington. ‘Kemal’,Guillermosaid,in words Irememberwell:
youwillbetemptedtospendalotoftimeinyouroffice,goingindepthoverthefiguresandtryingtofine-tunetheeconomicanalysis.Whileyouhavetodosomeofthat,youshouldneverforgetthatbeingaministerresponsibleforcrisismanagementandareformprogrammeisabovealla‘political’job.Youmustbeoutthere,convincingpublicopinionthattheprogrammeiswelldesignedandwillwork.YoumustbeonTV,inthepress,talkingtounions,students,business,academics,governmentandoppositionpoliticiansallthetime,andalloverthecountry.
Guillermo’swascrucialadvice,whichIheeded,andIbelievetheactivismwithregardtopublicopinionwascrucial tothe successoftheTurkish programmeof2001-02(Dervis2005).Contrarytomanyother cases,Ihadpublicopinionsupportofwellover50percent inthepollsduringthemostdifficultmonths,andthishelpedgeneratearemarkableincreaseinconfidenceaftertheofficialapprovalofIMFfinancing.Thiswascombinedwithfallinginterestrates,arecoveryoftheexchangerate,andthen,atthebeginningof2002,positivegrowth,endingupaveraging7.6percentfor2002asawhole,comparedtominus7.4percentin2001.Thispersonalexperienceabouttheimportanceofcommunicatingwhilereformingbringsupacontroversialpolicyissuearoundthispoint,whichhasrecentlybeenbroughtintofocusbythedebateaboutausterityinEurope.Therearethosewhoarguethatpositiveexpectationsaboutfuturestabilitytriggeredbyafiscaladjustmentprogrammecanmorethancompensateforthecontractionaryeffectsoffiscalretrenchmentand actuallylead toalmostsimultaneousmacroeconomicexpansionbrought about byareturnofconfidence,leadingtolowerinterestratesandimproved‘animalspirits’ofinvestorsandconsumers.Inoppositiontothisargument,therearethosewhoarguethatsuch‘confidenceeffects’alwaysremainmarginalwhencomparedtothe‘real’impactoffiscalausterity.TheIMFhasrecentlydonequantitativeworkthattendstosupportthislatterposition,contrarytotheearlierworkofAlesinaandotherssupportingthethesisof‘expansionaryausterity’viaconfidenceeffects(seeAlesinaandArdagna1998;BlanchardandLeigh2013;Guajardoetal.2011).
IhavethoughtalotaboutthisissueinlightofmyownexperienceinTurkeyaswellastheEuropeanausteritydebateinwhichIhavebeenclosertothe‘southernview’.IthinkthatGermany,theIMF,andtheEUinstitutionsimposedanunnecessarilyrestrictivefiscalframework,notonlyonthecrisiscountries,butalsoontheeurozoneasawhole,andGermanyonitself!Asissooftenthecase,however,inmattersofeconomicpolicy,thereisneithercertaintynora‘one-size-fits-all’prescription.
ItistruethatinTurkey we setandachieveda verylargeprimarysurplus of 5.5percentofGDPforthecrucialimmediatepost-crisisyearof2002—andachieveda7.6percentgrowthrateforthatsameyear!Restorationofconfidencewasessentialtothissuccess.Butconfidencewasrestoredandindeednewlyestablished,notbyfiscalpolicyalone,butbyasetofveryimportantstructuralreforms,rangingfromathoroughclean-upofthebankingsystemtoanewpublicprocurementlaw,anewcompetitionauthorityaswellasnewenergy,telecommunications,civilaviationandagriculturalpolicies.
Allthesepoliciesaimedatagradualbutclearanddeterminedefforttochangethenatureoftheeconomyfroma rent-seekingcronycapitalistsystem to atruly competitivesocialmarketeconomy.Thefactthat,atthattime,TurkeywasbecomingaseriouscandidatetojointheEU helpedenormously,foritreinforcedthesenseofdirectionforalleconomicactors.4Moreover,Turkeydidneedtobringdownitsinflationratefromaround50-60percentto10percentorless,tofunctionasamodernEuropeaneconomy.Wethereforedidneeda‘fiscalshock’in2001-02.Thecontinuationofinflationabove50percentwasincompatiblewiththerestorationofmacroeconomicstabilityandlong-terminvestment.Thepoliciesoffiscalretrenchment,initiallargedevaluation,largeIMFbridgefinancing,abondswap(wherewesuccessfullybetonarecoveryoftheexchangerateandthereforeswappedextremelyhighyieldTurkishliradenominatedtreasurybondsforUSdollaroreurodenominatedbonds,anadmittedlyriskymove),andatransformationalsetofstructuralreformswereapackage. Onepiece ofthat packagewouldnothaveworked withouttheothers.What theveryactivistcommunications policyaddedwasearlypoliticalsupportforwhatwasasoundandcarefullydesignedandbalancedpackage.Thatearlysupportcreatedavirtuouscirclewherearelativelyearlyreturnofconfidencepreventedsocialunrestandallowedthestructuralreformstobeenactedandthengraduallyimplementedalmostwithoutdisruptionorseriousopposition.Thishappenedinademocraticatmospherewithfreecollectivebargainingdeterminingwagerates,ratherthanundemocraticconditionalityimposedfromoutside.Itisentirelypossible,Iwouldsayevenlikely,thatwithouttheearlyemphasisoncommunicationsandexplanationoftheprogramme,aswellastheparticularcloserelationshipwiththelabourunionsandthemedium-scalebusinesssectorthatImanagedtoestablishbyspendingalotoftimewiththem,thewholereformpackage,includingthefiscaltargets,wouldhavecollapsedattheverystart,leadingtomassive socialunrestandanevendeeper, andcertainlylongerlasting,crisis.
Itisalsotruethat,asanewcomer,nobodyheldmeresponsiblefortheonsetofthecrisis.And,asaveteranoftheIFIs,Ihadanetworkoffriendsintheseinstitutionsandinothercountries,whomIcouldcall,earlyinthemorningifnecessary,toaskforquickadviceontechnicalortacticalpoints,andwithwhomIhadlong-establishedrelationshipsoftrust.FinallyImustaddthatTurkeyhasstrongbureaucratsandIhadsuperblyqualifiedcollaborators.Iwasabletoproposethe appointmentofmyclosestallies totheprimeministerpersonally,includingthoseoftheCentralBankgovernor,theunder-secretaryoftheTreasury,andtheheadoftheBankingSupervisionAgency.
Thereisabsolutelynodoubtinmymindthatconfidence-buildingiscrucialforaneconomiccrisismanagementprogramme,particularlywherethereisafunctioningdemocracy.Itcangreatlyaccelerateandmagnifysuccess.Itshould,ofcourse,includeconfidence-buildingwithforeigncreditorsand the BrettonWoodsInstitutions.Confidence-building is nota magictrick, however,thatonecanpulloutofahat,whenaprogrammeitselfisill-designed.TotaketheoriginalprogrammedesignedforGreecein2009-10asanexample,noamountofgoodcommunicationcouldhavemadeitsucceed.Therewasnoradicalstrengtheningofthecapitalofbanks,therewasaninadequateinitialamountofforeignfinancing,andtherewasaninappropriatesingle-mindedfocusonwageandpensioncutsratherthananemphasisontheoligopolisticnatureofmanyproductmarkets.Therewasanexcessiveemphasisonfiscalretrenchmentascomparedtorealstructuralreformsandfairnessinthedistributionoftheadjustmentburden.Inthatcontext,nocommunicationsstrategycouldhaveworked,particularlyasitwastheoldpoliticalestablishmentthathadledGreeceintothehugemess.Atthetimeofwritingtheselines,inDecember 2015,Greece,havinglostmorethanaquarterofitsGDPinsixyears,isstilltryingtoovercometheterribleconsequencesofthecrisisthatstartedin2009.Atthestartof2016,anewleaderisfacingthe huge challengeofrepairingthe mistakesofthe past. Hehassuperbcommunicationsskills.I dohopethathe willbeabletodeploythem,withEuropeansupport,tobackarealisticgrowthandreformprogrammethatcansucceed.Structuralreforms—includingtheradicaltransformationofthe‘clientelist’publicadministration—areneeded,justasinthecaseofTurkeyin2001.Thisismoreimportantthanaoneortwopercentagepointdifferenceinthe primarysurplustargetpromisedfor thefuture.Itisalsobetterforconfidence-buildingtosetrealistictargetsandachievethem,thantosetveryambitioustargetsandmissthem.
5 Conclusion
Economicpolicyadviceandstrategiesforadjustmentandreformarederivedfromtheacademictrainingandtheconcretelifeexperiencesofthoseinvolved.Recentexperiencehasshownthateconomicsremainsfarfromanexactscience.Thebestmindshavemadehugepolicyadviceorpolicydesignmistakes.Modestyandcautionisclearlyrequired.5
Nonetheless,intherealworld,actualdecisionshavetobemadeinrealtime.Moreover,theyalwayshavetobemadeinapoliticalsettingandwithmanyinterestgroupscompetingtoobtainresultsfavourabletothem.Thereisnodoubtinmymindthattheinternationaleconomicinstitutionscanprovideaninvaluablepublicgood,complementingthelegitimatepoliticalcontextsatnationallevels,with bothglobalexperienceandaninternationalistspiritthatcanhelpsolve the prisoner’s dilemma typechallengesoftenembeddedinissues ofeconomic co-operationsuchasmacroeconomicspilloversorclimateprotection.Whentheopinionsofthosewithinternationalexperienceandadegreeof‘globalcivics’canbeconsideredalongsidethoseofpurelynationaldecisionmakers,withintheinevitableandlegitimateframeworkofnationaldemocraticpoliticalcompetition,betterinformedoutcomescanbeexpected.DaniRodrik’s(2012)twenty-first-centurytrilemmabetweendemocracy,globalization,andthenation-stateisnoteasytoresolve.Totheextentthattheglobalorganizationofeconomicactivityisdesirableandirreversible,however,globalinstitutionsandaspiritofglobalcivicsmustcomplementbothprivatemarketsandpurelynationaldecision-making.
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