Brock Dickinson / June 7, 2013
In an era when the tribulations of Greece, Spain and Cyprus dominate our financial news, and the phrases “Made in the USA Recession” or “Eurozone Crisis” are on everyone’s lips, it’s sometimes surprising to note the significant financial discipline and high growth rates that have come to dominate much of the developing world. Once derided as “Banana Republics” or sources of the “Asian Flu” many less-developed nations have now turned the tables on the economically-challenged industrial world. This jarring juxtaposition lies at the heart of Peter Blair Henry’s new book Turnaround: Third World Lessons for First World Growth.
Henry is a noted academic, a Morehead Scholar, a Rhodes Scholar, and now the Dean of the School of Business at New York University. But once upon a time, he was also a little boy growing up in impoverished Jamaica. These dual experiences afford him a unique window into the strange parallels between the financial challenges of developing nations, and how they compare to the current challenges of developed nations. In essence, Henry argues that a series of bail-out and restructuring deals in the 1980s and 1990s have forced developing countries to be more “disciplined” and fiscally conservative, which has underpinned a surge in economic development and growth. At the same time, wealthy industrialized nations have become much less disciplined, descending into deficit and debt, and undermining their own economic opportunity as a result. Henry argues that the real lessons needed in today’s world come from the “third world” – but the first world is reluctant to listen.
Turnaround is elegantly and compellingly argued, and provides important direction for current fiscal decision-makers. It often diverts into valuable sidebars, explaining why import substitution strategies are counter-productive, or why the economic development track records of Jamaica and Barbados diverge so sharply after independence. However, most of Henry’s arguments are made at the macroeconomic level, and while there is important content here, the reader seeking specific economic development advice or direction will need to find it by reading between the lines. Still, Henry has a written a timely and insightful book that turns the tables on traditional thinking and offers fresh insight into our current economic challenges.