Globalization has brought both new opportunities and new problems for less developed countries. Taking advantage of those opportunities and, at the same time, dealing with the difficulties of globalization is a big challenge for these countries. This volume is a collection of essays, presented at the UNCTAD X in 2000, highlighting the benefits and problems of increased integration. Its major contribution is the proposal of specific policy actions for developing countries. This is an important issue. A significant body of research has been devoted to study the effects, positive and negative, of economic integration. However, not much has been done in terms of proposing policies for development in the context of globalization. This book gives a first, and I would say big, step in this direction-a major reason why this book is well worth reading.
The essays are of high quality and full of interesting details, which is not a surprise given the distinguished group of scholars that contributed. It is possible to identify three main common themes or topics: integration as a development strategy; the effects of increased integration on developing countries; and the policy actions that are needed to both overcome the difficulties associated with globalization and to benefit from the new opportunities that globalization presents. The introductory chapter, by Toye, is a brilliant presentation of these issues. This piece is not just a description of the contents of the volume. Toye nicely develops the central idea of the book and discusses how the different views on economic policy for development have converged during recent years. Throughout his analysis, Toye introduces the main findings of the different essays that feature in the book.
Let me highlight those chapters that are particularly informative (at least to me). Nayyar (Chapter 3) argues that globalization has been an uneven process which has increased inequality and made developing countries less autonomous in the formulation of policies for development. The author identifies possible policies. Some of them are well accepted: prudent macroeconomic management, correction of externalities, investment in infrastructure and human capital. Others are relatively new. He encourages countries to bargain with large multinational firms in order to improve the distribution of gains from foreign direct investment (FDI). This is a big challenge for developing countries and it would be of great relevance to study the possible effects of this policy on FDI. He also recommends that developing countries should try to influence the rules of the game so that the outcome of increased integration becomes more equitable. Changing the rules of the game would be, without doubt, an excellent result for developing countries. A problem could be feasibility. In Chapter 4, Winters describes the historical performance of trade regimes. He carefully reviews the theoretical and empirical reasons of the failure of the import substitution strategy and concludes that, although theory and evidence have not been conclusive, openness to trade is the best way to develop. He is, however, a little skeptical about regional trade agreements (RTAs) for developing countries, as they seem unlikely to increase economic growth. This is in line with many empirical studies that have found very few growth effects of RTAs. I suspect, however, that more work is needed to identify the dynamic effects of RTAs.
Amsden (Chapter 5) and Perez (Chapter 6) analyse some of the opportunities that increased integration gives to developing countries. Amsden focuses on the opportunities that the World Trade Organization (WTO) rules give to less industrialized countries in terms of protection and export subsidies. She carefully explains situations in which the WTO permits some protection and the types of subsidies that can be used: those to promote research and development, regional development, and environment. Amsden emphasizes that, although developing countries still need subsidies for some Book Reviews 705