Development Strategy and Management of the Market Economy

Around the world, the 1990s have seen greater attention being given to the role of markets as an instrument of economic development. Responding to new thinking and changed economic circumstances, governments' perceptions of their own role in the management of their economies have shifted. As a result, many have withdrawn from direct involvement in certain sectors of the economy and have reduced their control and intervention in others. The reorinetation has been most dramatic in the former centrally planned economies, but governments in developing countries, as well as in advanced countries where markets are already pre-eminent, have profoundly reconsidered their development role and the means of fulfilling it. In this process, it has been recognised that, left entirely to their own devices, markets may be either inadequate or inappropariate for a country's overall economic and social development. Government has a vital role to play even in facilitating the effective functioning of markets-to ensure the necessary infrastructure is in place, to sustain macroeconomic stability, to provide a framework for effective interaction with the international economy. It also has a responsibility to correct the market's inclinations in certain directions, in particular to provide a fuller perspective on the future, to give direction in critical sectors and, importantly, to fulfil these roles complementing the contribution of the markets. In this era of transition and experimentation in economic management, the Department of Economic and Social Information and Policy Analysis of the united Natuions convened a group of economists to distil their thinking and experience on the changing role of government in the developing process. The first volume in this two volume set contains the views of the memebers of the group on critical dimensions of the management of market economies. The second volume contains some of the companion papers that we prepared as acompliment to the work of the group.Table of ContentIntroduction; PART I: MICROFOUNDATIONS OF ECONOMIC POLICY; 1. Promoting an effective market economomy in a changing world: economic institutions and macroeconomic policies; 2. Positive feedback mechanisms in economic development: a review of recent contributions; PART II: HUMAN RESOURCES; 3. Human capital accumulation and development strategy; 4. Some thoughts on 'equitable development'; PART III: INSTITUTIONS; 5. The role of institutions in economic development; 6. Planning: between mitigation market failures and government; 7. The role of the state in post-chaos situations; PART IV: FINANCE; 8. Financial sector development policy: the importance of reputational capital and governance; 9. Public policy towards international capital flows