Conclusion

After having made a short literature review at both the theoretical and empirical levels on the importance of policy complementarities for growth, which provided strong arguments and substantial evidence in favor of that hypothesis, I discussed in section 2.3 the implications of policy complementarities in terms of growth strategies, in tandem with the emergence of a new, more open, and more realistic policymaking paradigm.

I applied this framework to a case study—the East Asian crisis and recovery—in an analytical exercise that may be regarded as a sort of "natural experiment." Section 3.2 provided an introductory approach to the issue of (missing) policy complementarities in the most affected countries—Indonesia, Korea, Malaysia, and Thailand—paying particular attention to two key policy areas: bankruptcy systems and unemployment benefits. Thereafter, a comprehensive group of policies was used to calculate the degree of complementarity (or coherence, RC) in those four countries for different "policy sets;" also, a reform level indicator adjusted for complementarity (ARL) was developed. The study found that in those four countries, stricter policy packages (especially if implemented under a "do as much as you can" approach) are related to slower recoveries (and less immediate resilience). On the other hand, countries that have broader, more coherent policy sets in place have faster post-crisis growth (and more immediate resilience). Decreasing or low RCs seem to be related to slower recoveries, especially if one considers the broader group of policies. My analysis suggests that while improving the typical or so-called orthodox market-friendly policies is necessary, it is not sufficient to generate high sustainable growth, as these policies must be complemented with others and evolve as a whole in a coherent way.

The views expressed in this paper are the views of the authors and do not necessarily reflect the views or policies of the Asian Development Bank Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB official terms..

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