Table Of ContentAID, TRADE
AND
DEVELOPMENT
50 Years of Globalization
Constantine Michalopoulos
Aid, Trade and Development
‘This is a very well written book, technically sound, and a great source of mate-
rial for anyone who wants to understand the factors that have shaped much of
international economics for the past half a century. More tellingly, Michalopoulos
writes with passion on developments that he knows very well and cares deeply
about.’
—K.Y. Amoako, President of the African Center for Economic
Transformation, Ghana
‘It is salutary in these unsettled days to recall Frederic Bastiat’s warning of
175 years ago: when goods cannot cross borders, armies do. Constantine
Michalopoulos’ review and analysis of the realities of globalization over the
past half century is perfectly timed to counteract the resurgence of know-
nothingism, intolerance and isolationism. With his unique combination of
extensive research experience and personal participation in a leading capacity
in the major international events in aid and trade, Constantine Michalopoulos
is one of just a handful of persons who could possibly have attempted to write
such a book. And he has succeeded in full. Thoroughly documented, insight-
ful, interesting, lucid, Aid, Trade and Development is a major contribution to
the debate on the great and delicate issues facing the world economy in the
years to come.’
—Salvatore Schiavo-Campo, former Senior Adviser at the Asian
Development Bank, the Philippines
‘This book makes a unique contribution in documenting an important chapter
of the history of development cooperation.’
—Heidemarie Wieczorek-Zeul, former Federal Minister of Economic
Cooperation and Development, Germany
‘This book is a fascinating history of 50 years of the most salient and interesting
issues concerning aid, trade and development as seen from a seasoned practitio-
ner’s viewpoint. Over these years Michalopoulos played important roles in two
key organizations—USAID and the World Bank—and is able to bring this story
to life with many examples drawn from his personal experience. He is clearly
very comfortable with the many complexities of his subject matter but he writes
in terms that the lay reader will easily be able to grasp. In short, I highly
recommend this book for anyone who wishes to understand the many stages of
global development we have experienced in recent decades and how they may
shape the future.’
—Alexander Shakow, former Senior Official at USAID and
Deputy Secretary of the World Bank, USA
‘In a broad sweep of the modern economic history underpinning aid, trade, and
development, Michalopoulos manages to capture the most salient trends and
does so in a thorough, perceptive, and compelling fashion. This is a great read
for those following globalization and for those wanting to know more. A tour de
force!’
—Danny Leipziger, George Washington University, USA
‘Michalopoulos’ chapter on the Greek crisis is very elegant and well written,
covering the ground comprehensively and fairly.’
—George Papaconstantinou, former Greek Finance Minister and
author of Game Over: The Inside Story of the Greek Crisis
Constantine Michalopoulos
Aid, Trade and
Development
50 Years of Globalization
Constantine Michalopoulos
School of Advanced International Studies
Johns Hopkins University
Washington DC, USA
ISBN 978-3-319-65860-5 ISBN 978-3-319-65861-2 (eBook)
https://doi.org/10.1007/978-3-319-65861-2
Library of Congress Control Number: 2017955211
© The Editor(s) (if applicable) and The Author(s) 2017
This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether
the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of
illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and trans-
mission or information storage and retrieval, electronic adaptation, computer software, or by similar or
dissimilar methodology now known or hereafter developed.
The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication
does not imply, even in the absence of a specific statement, that such names are exempt from the relevant
protective laws and regulations and therefore free for general use.
The publisher, the authors and the editors are safe to assume that the advice and information in this book
are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or
the editors give a warranty, express or implied, with respect to the material contained herein or for any
errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional
claims in published maps and institutional affiliations.
Cover illustration: Miro Kovacevic / Alamy Stock Vector
Printed on acid-free paper
This Palgrave Macmillan imprint is published by Springer Nature
The registered company is Springer International Publishing AG
The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland
To Development professionals in public service working tirelessly for
a better tomorrow
Preface
The idea about writing this book first came to me about a decade ago. At
that time I had written Migration Chronicles, a semi-autobiographical
volume, and a number of my friends had said: ‘Nice book, but what did
you actually do in those jobs you had?’ So, I thought that at some point
I would write something which focused on the various development pol-
icy issues involving aid, trade and development with which I grappled in
various positions with US AID, the World Bank and WTO.
I was lucky that one way or another I was involved in a small way in
policy making on the major issues of the period from the late 1960s to
the early twenty-first century: addressing the impact of the OPEC oil
price rise in the early 1970s, the development of a basic human needs aid
strategy in the late 1970s, the debt crisis, the ‘Washington Consensus’
and ‘Adjustment with a Human Face’ of the 1980s, the collapse of the
Soviet Union and the birth of the WTO in the 1990s; and later in the
decade 2000–2010 with continued involvement on these issues as a con-
sultant. I also had kept a lot of notes, letters and other material from all
these years. So, in the fall of 2015 when, after 50 years, I basically fin-
ished my professional career teaching a course on International Trade and
Development at the School of Advanced International Studies (SAIS) of
Johns Hopkins University, I thought I may take up the idea of writing a
book detailing my professional experience.
vii
viii Preface
Very soon it became clear that the material I had collected plus my
own publications would not do justice to the complex issues that I had to
address. Much more research was needed. Palgrave Macmillan was gra-
cious enough to offer me a contract in the summer of 2016. Laura Pacey,
Commissioning Editor, has been extremely supportive from the very
beginning and I am grateful for her help and guidance. But as I started to
write, the world around me started to change: Brexit, the result of the US
elections, the rise of populism, protectionism and anti-globalization
required that my work focus more explicitly on the forces of globalization
and its impact on those left behind. The result is this volume.
It would never have been done without the help of a large number of
friends and former colleagues and especially Eveline Herfkens, my long-
time partner in life and in work, to all of whom I express my deep gratitude.
I am also grateful to three economists who taught me a lot as their student:
Alan Batchelder, my first economics professor, Albert O. Hirschman and
Peter B. Kenen.
Many friends and colleagues influenced my thinking about aspects of
aid, trade and development, but were not involved in the writing of this
book. I mention in particular Peter Allgeier, Misha Belkindas, Philip
Birnbaum, Esperanza Duran, James Hanson, Bernard Hoekman, Paul
Isenman, Keith Jay, Anne Krueger, John Mellor, Lorenzo Perez, Riordan
Roett, Sylvia Saborio and Ernie Stern. There were tens of others who also
helped me over the years and who should forgive me for not mentioning
them explicitly for lack of space.
Special thanks are reserved for a group who devoted a lot of effort,
some to provide material, others to correct my mistakes, add perspectives,
and actually change my views by reading and commenting on one or
several chapters or the whole of this book. These include Masood Ahmed,
K.Y. Amoako, Michael Crosswell, John Eriksson, Ruth Jacoby, Hilde
Johnson, Danny Leipziger, Ira Lieberman, James Michel, John Nellis,
Donal Donovan, George Papaconstantinou, Salvatore Schiavo- campo,
Alexander Shakow, Clare Short, David Tarr, George Tavlas, and
Heidemarie Wieczorek-Zeul.
I am grateful to Gordon Bodnar, Morris W. Offit Professor of
International Finance and Kelley Kornell, Associate Director of the Master
of International Economics and Finance Program (MIEF) at Johns
Prefac e ix
Hopkins SAIS for their support and financial assistance for this project.
The volume could not have been done without the contributions of
Zhangrui Wang (MIEF’17), who did an excellent job in developing all the
statistical work and tables for the volume as well as provided invaluable
assistance with the references. Thanks are also due to Regina Monticone
for helping with translation of materials from German.
I reserve my greatest thanks to Eveline Herfkens, who read and com-
mented on the whole book; contributed her own valuable experience,
speeches, publications and other materials that were critical to develop-
ing the story about aid and development in the two decades 1990–2010,
which she and her soul mates in the Utstein group had a hand in making;
and forgave my temporary dereliction of some of my household duties
during the period of writing another book.
Thanks are also due to the IMF for permitting me to reproduce certain
passages of my article ‘World Bank Programs for Adjustment and Growth’
in Vittorio Corbo, Morris Goldstein and Mohsin Khan Growth Oriented
Adjustment Programs; to the World Bank for letting me reproduce Table 1.8
from Global Economic Prospects 2002; and to FAO, UN and the World
Bank for letting me reproduce a table that they prepared which was pub-
lished as Table 2.7 in the World Bank’s 1988 Report on Adjustment Lending:
Ten Years of Experience. All remaining errors are my responsibility.
Constantine Michalopoulos
Contents
1 Aid, Trade and Development: 50 Years of Globalization 1
2 Growth Constraints, Aid Targets and Basic Needs 9
3 Export Pessimism and the Neoclassical Revival 35
4 Debt and Adjustment: Muddling Through 53
5 The Collapse of Planning and the Troubled Transition 91
6 The Birth of the WTO 127
7 The Many Faces of Globalization 165
8 Millennium Aid, Trade and Development 207
xi
