Economic Policies at Cross-Purposes: The United States and Developing Countries.

• Author: Canterbery, E. Ray

Ferdinand Marcos, dictator of the Philippines and husband of spendthrift Imelda, was overthrown in 1986. The United States government immediately threw its support to the newly elected Corazon Aquino as the U.S. Congress authorized $210 million of economic assistance to the Philippines. But, at the same time, U.S. quotas on imported Philippine sugar were being reduced, causing the Philippines to lose $89 million, or 42 percent of the value of the new U.S. aid. Moreover, while urging the Philippines to remove protectionist trade barriers to stimulate export growth, Philippine exports of textiles and apparel to the United States were being restricted under the Multifiber Arrangement!

Is this a scene stolen from John Kenneth Galbraith's The Triumph, a 1968 satire of State Department bureaucrats dealing with the lingering days of a dictator? No. It is only one of many vignettes of actual U.S. international economic policy regarding developing countries cited in this well-crafted book by Anne Krueger. It is no longer necessary, as Galbraith then believed, to extract full value only in fiction from the deeply solemn foreign policy experts who, abetted by classified intelligence, leap from deleterious presumption to disastrous consequence. Typically, the United States extends aid's helping hand, then offsets many, if not all, of the aid's potential benefits with its other hand(s). These conflicts intensified in the 1980s, as domestic policy reforms became more important in developing countries and U.S. trade policies became more protectionist.

Krueger calls for major restructuring in how the United States handles its economic relations with developing countries for the seemingly harmless purpose of avoiding the worst contradictions of U.S. policies, contrarieties that sometime stifle growth in the very countries the United States spends millions in foreign aid to assist. At a time when U.S. international economic policy toward developing countries is reality imitating fiction, the author believes that a more coherent set of U.S. policies could greatly increase the benefits of trade, aid, and other economic policies without any increase in government expenditures.

Following the Introduction, chapter 2 provides a brief overview of the evolution of U.S. international economic policy toward the developing countries. Chapter 3 summarizes "current understanding" of the development process, focusing on policies that are conducive to economic growth...