studies. Both are vertical approaches, but Fine rightly argues that in global commodity chain analysisthe ‘concern is less with consumption as such than with the prospects of Third World producers’ (p.120) and that it totally neglects cultural aspects.

It seems to me that the book is not apt for lay readers, as the language is fairly specialist. Somebackground knowledge on Marx’s political economy as well as on postmodernist sociology andmainstream economics is a prerequisite for getting a grasp of the book. Although the reader ispromised on the back cover that the book is written in ‘readily digestible prose’, The World ofConsumption does not make easy reading. This is due to the multiplicity of concepts from variousdisciplines, the high level of abstraction and the bulk of citations. A pro of the book is that it containsa wealth of references to relevant literature for scholars of consumption (the reference list containsno less than 40 pages!). Also, it provides those who believed that the ‘system of provision’ approachwas not sufficiently developed after reading the first edition, with an opportunity to give it a new trywith this updated edition. Unfortunately, to make space for the highly sophisticated discussion on theappropriate way to tackle consumption, the illuminating case studies on clothing and food from thefirst edition have been almost completely sacrificed. Consequently, for those scholars who areinterested in applying the system of provision approach to a particular commodity, the first editionremains essential reading.

REFERENCES

Hansen KT. 2000. Salaula: The World of Secondhand Clothing and Zambia. The University of

Chicago Press: Chicago.

James J. 2000. Consumption, Globalization and Development. Macmillan: Basingstoke, St. Martin’s

Press: New York.LUUK VAN KEMPEN

Center and Department of EconomicsTilburg University, The Netherlands

Published online in Wiley InterScience(www.interscience.wiley.com). DOI: 10.1002/jid.1048

Economic Policy and Manufacturing Performance in Developing Countries edited by

OLIVER MORRISSEY and MICHAEL TRIBE (Edward Elgar: Cheltenham, 2001, pp.

xiþ 225, £55 h/bk).

This collection broadly addresses the effects on developing country manufacturing performance ofchanging economic policies. One of the effects of liberalising prices, trade and foreign exchange isthe opening up of domestic manufacturing to foreign competition. The objective of this volume is toexamine the experience of a wide range of countries and in so doing identify policies which arecountry specific, as opposed to the ‘one size fits all’ policies which constitute the basic liberalisationframework.

There is a continuing debate about the likely effects of liberalization on domestic manufacturing.In the short run there is every reason to believe that manufacturing growth will slow down or becomenegative. As domestic firms lose their protected markets, and pent-up demand for imported goods ofsuperior technology is released, many domestic industries engaged in the same markets are likely tosuffer unless they raise productivity, adopt competitive technologies or enter into joint ventures thuspotentially ensuring their survival. There is little expectation of export growth in the short runbecause, by and large, domestic firms have produced for protected home markets. However, withexport promotion and favourable exchange rates, there is a belief that competitive manufacturingwill increase exports. This volume gives credence to both optimists, who believe that greatercompetition does increase domestic productivity and manufacturing growth, and pessimists whobelieve that domestic firms cannot survive without transitional protection.

There are of course other reasons why liberalization may have differential effects. Larger firmsmay do better than smaller ones, the financial infrastructure of some countries may allow for greater

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credit availability as compared with others where this may not be the case. Even when there isinvestment as a result of changes in policy, it is unlikely that there will be immediate effects. Thesetime lags, identified in this volume by Acheampong and Tribe for Ghana and Arun and Nixson forIndia, effectively mean that the immediate effects of policy changes are likely to be negative beforethey become positive, if they ever do. Where these immediate effects are positive, this may havemore to do with increases in the use of spare capacity than any productivity increases, asAcheampong and Tribe show for Ghana.

As Mainga shows on the basis of Zambian evidence, there are issues of technical and managerialcapacity that may obstruct manufacturing growth. His contribution emphasizes the importance of thetransfer of ‘capabilities’ along with the technological transfer. Without this transfer, the price effectsof adjustment policies are unlikely to have positive effects on manufacturing performance. This is anissue of long standing in policies to promote manufacturing in developing countries. The lack ofeffective managerial and technical training with appropriate incentive structures has itself resulted inindustrial stagnation under the ISI model. It is therefore hardly surprising if liberalization does notalways deliver the goods. Entrepreneurial freedom there may be, but parallel capabilities are notlikely to exist and require policies to promote them. It is good to see a rigorous discussion of thisissue with some systematic empirical support.

Infrastructure quality, as Acheampong and Tribe suggest for Ghana and Rudaheranwa tests forUganda, is an important determinant of success. In the Ugandan case, its landlocked positionrequires that, for export competitiveness, its transport infrastructure is good and well maintained.Once again it is good to see some attempt to estimate the negative relationship between transportinfrastructure and competitiveness.

An important aspect of the liberalization story is that manufacturing exports under foreigncompetition have access to larger markets and can therefore grow relatively quickly. Thoburn’saccount of Indonesia’s rapid growth of manufacturing exports emphasizes its speed, whilerecognizing that its character is typical of the type of manufacturing development that countriessuch as Indonesia have experienced as part of the process of industrial relocation under globalization.What is interesting here is the degree to which prior import substitution policies formed the basis ofsubsequent export orientation. The success of the liberalization model as far as manufacturing isconcerned, may have much more to do with the characteristics of prior import substitution, than withthe liberalization per se.

There is a significant contrast between Indonesia’s experience with liberalization and the limitedsuccess of the land-locked Uganda and Nepal (Sharma and Morrissey). Any success of these land-locked states depends both on better infrastructure and on branching out, as did Indonesia, from thebasic processing industries to more technologically advanced activities such as electronics. There isalso a contrast with India’s manufacturing experience after reforms, documented by Arun andNixson. Here is a country with a strong domestic manufacturing capacity and a significantindigenous technological base, yet one which is finding the process of opening to internationalcompetition a slow one, perhaps because of the long connection between industry and the state. Thesuccess of the reforms in India as far as manufacturing is concerned may turn on the degree to whichIndian firms see advantages to becoming internationally competitive and then use joint ventures asthe vehicle for this transition.

Three chapters of this book are concerned with small, micro, enterprise. The traditional emphasiswas on large scale manufacturing production as the way forward. But there is a substantial market forcheap basic consumption goods produced by small workshops or micro-enterprises which could formthe basis for accumulation and for the development of larger enterprises that could become sufficientlycompetitive in price and quality to generate exports. The late Ian Livingstone’s typically detailed andperceptive account of the problems of micro-enterprise in Cambodia, draws attention to the need forcredit support to such enterprises and once again emphasizes the importance of good transportinfrastructure. In the absence of large-scale manufacturing possibilities in the short term, promotingmicro-enterprise is a way of getting the industrialization process moving either as an individual orgroup activity which absorbs unemployed labour. Of course, as Middleton shows for Ecuador,liberalizing reforms can result in the decline of the small scale commodity production of basiccommodities, though it can increase the potential for the small scale production of producer goods. Asboth his study and that of Migdad, Jallilian and Weiss for the Gaza strip show, the small scale sectorexperiences a large number of start-ups and closures which must increase credit risk. But even in thevery special case of the Gaza strip, the main determinants of success found elsewhere apply.

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This volume does allow, through its diversity, some assessment of the effect of policy differenceswhich suggest the importance of country specific approaches. However the reader may be forgivenfor thinking that despite these differences, there are many common factors across countries whichdetermine manufacturing success, though they may not be part of the neo-liberal model. What isclear from this extremely informative volume, is that in manufacturing as in other aspects ofeconomic development, getting prices right is only a relatively small part of the big picture.

PETER LAWRENCEEconomics DepartmentKeele University, UK

Published online in Wiley InterScience(www.interscience.wiley.com). DOI: 10.1002/jid.1049

Evaluation of Prolonged Use of IMF Resources by IMF INDEPENDENT EVALUATION

OFFICE (International Monetary Fund: Washington, DC, 2002, 330pp).1

This is the first report issued by the IMF’s new Internal Evaluation Office (available at the Fund’sweb site, www.imf.org.). It addresses the phenomenon of frequent borrowing from the IMF, a topicthat is both appropriate and timely. This topic has been raised in a number of recent studies of theIMF, including those of the International Financial Advisory (‘Meltzer’) Commission and theCouncil on Foreign Relations. Future reports from the IEO, which reports directly to the ExecutiveBoard, will deal with the IMF’s role in Argentina and evaluate the Poverty Reduction and GrowthFacility.

There are two main sections to the Report. First, an overview of the causes and consequences offrequent borrowing is presented. This is followed by case studies of the experiences of Pakistan, thePhilippines and Senegal, which have all borrowed extensively, as well as briefer accounts of howMorocco and Jamaica ‘graduated’ from prolonged usage. A postscript contains a reply to the Reportby the Fund’s own staff, followed by a counter-reply by the IEO, and a final round of comments bythe Executive Board.

The Report defines a prolonged user as a country that has been under IMF arrangements for atleast seven years out of any ten. Under this criterion, 44 member countries met the definition duringthe period of 1971–2000. The list of prolonged users ranges from Argentina to Zambia, withcountries from all areas and levels of income.

Several factors are cited as contributing to the reliance of these countries on the IMF. The Reportpoints to an evolution in IMF policies with respect to prolonged use, which came about as the focusof Fund programs was expanded from lending for the purpose of external sector stabilization toinclude lending to foster growth and ease the transformation to market economies. The new lendingprograms, particularly the concessionary programs, have longer time horizons (three years) than thestandard stand-by arrangement (12 to 18 months). However, the Report points out that ‘the ExecutiveBoard consistently stressed that the purpose of these successive extensions was not to provide asource of continuous financing for individual countries, but rather to maintain the IMF’s ability torespond to members’ needs as they arose’ (p. 42, italics in original). Despite this intent, countrieshave been able to repeatedly enroll in new programs, even though in many cases their governmentsdid not comply with the conditionality of previous programs.

The Report alludes to the role of another factor that governs lending: political considerations. Theauthors admit that politics was an important factor in lending, for example to Pakistan, but do notexplain what these considerations were. However, it is clear that the US, the largest stakeholder inthe IMF, has strategic interests for pressing for a continuation of lending to Pakistan, while Francetakes a strong interest in the treatment of its former colonies in Africa.

The fight over the role of politics in IMF decisions was fought at the inception of the IMF by itsintellectual progenitors, John Maynard Keynes, who chaired the British delegation to Bretton

1While the Journal does not normally review ‘official’ reports of this type, this first report of IEO was deemedof sufficient general relevance for a review (Editor).

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