Some Final Notes

The global economy has witnessed the failure of simplistic liberal policy packages. Now, a new paradigm seems to have emerged and will be developed in the coming years. While it is true that it is not yet known what the standard policymaking approach of the coming decades will look like, it will almost surely be more knowledge demanding, value country specificities much more, and require a more systemic approach to national economies. Will the theory of second-best be at the heart of such a paradigm? If so, governments and multilateral institutions will have to include the concept of complementarity as an input in their policy decisions and advice.

When starting a reform strategy that, in its initial stages, deliberately results in a reduction of economic coherence, countries incur a risk. As such, this could be measured and included in the decision-making process. It can be rational to bear that risk for some or even many years, as resources are scarce and policy measures imply costs (including those associated with the production of economic expertise, which the international community should contribute to alleviating). To systematically ignore that risk, however, could result in deep and long-lasting fragilities.

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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