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Finance & Development A QUARTERLY PUBLICATION OF THE INTERNATIONAL MONETARY FUND
June 2006 • Volume 43 • Number 2
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Finance & Development is published quarterly in English, Arabic, Chinese, French, Russian, and Spanish by the International Monetary Fund. English edition ISSN 0015-1947
Laura Wallace
EDITOR-IN-CHIEF
Camilla Andersen
Jeremy Clift
Christine Ebrahim-zadeh
SENIOR EDITORS
Elisa Diehl
Ina Kota
ASSISTANT EDITORS
Luisa Menjivar
CREATIVE DIRECTOR
Lai Oy Louie
ART EDITOR
Lijun Li
Kelley McCollum
EDITORIAL ASSISTANTS
Raghuram Rajan
CONTRIBUTING EDITOR
Graham Hacche
SENIOR ADVISOR
ADVISORS TO THE EDITOR
Francesco Caramazza
Adrienne Cheasty
Alfredo Cuevas
Domenico Fanizza
Andrew Feltenstein
Paul Hilbers
Adnan Mazarei
Eswar Prasad
Thomas Richardson
Jerald Schiff
Arvind Subramanian
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FEATURES
ASIA RISING
Asia’s Winds of Change
After recovering from the 1997–98 crisis, Asia is now facing the challenges of globalization
David Burton, Wanda Tseng, and Kenneth Kang
Deepening Financial Ties
Asia’s quest for closer regional and global financial integration is under way
Agnès Belaisch and Alessandro Zanello
The Art of Reform
Applying lessons from Suntze to Asia’s financial markets
Andrew Sheng
Japan’s Back!
After its lost decade, Japan’s economy is set on a recovery path
Daniel Citrin and Alexander Wolfson
Point of View: Creating a Globally Connected Asian Community
How the rise of China and India is paving the way for an integrated Asia
Raymond Lim
Asia’s Investment Puzzle
Despite the recovery in Asia, lingering uncertainty appears to be holding back investment
Charles Kramer
What Happened?
Why East Asia surged ahead of Latin America and some lessons for economic policy
Anthony Elson
ALSO IN THIS ISUE
Adding Depth
Africa can achieve even higher growth through financial sector reform
Anne-Marie Gulde and Catherine Pattillo
EU: From Monetary to Financial Union
Overcoming the remaining hurdles to financial integration in Europe
Wim Fonteyne
DEPARTMENTS
In Brief
News from international agencies
Aid must be better targeted for MDGs
Mind your data
Oil prices give new chance for bioenergy
People in Economics
Economist as Crusader
Arvind Subramanian interviews economist Paul Krugman
Picture This
Asia’s Role in the World Economy
Back to Basics
Demystifying Hedge Funds
Angel Ubide
Book Reviews
Economic Origins of Dictatorship and Democracy, Daron Acemoglu and James A. Robinson
Give Us Your Best and Brightest, Devesh Kapur and John McHale
Global Governance of Financial Systems, Kern Alexander, John Eatwell, and Rahul Dhumale
Rethinking Pension Reform, Franco Modigliani and Arun Muralidhar
Country Focus: ASEAN-4
(Indonesia, Malaysia, Philippines, and Thailand)
Straight Talk
Crabs in a Bucket
Why constituencies are as important as constitutions in battling underdevelopment
Raghuram Rajan
Illustration: cover, p. 8, and p. 28 Joel Nakamura; p. 37, Massoud Etemadi.
Photography: p. 3, Joel Nito/AFP/Getty Images; p. 5, Dan Deitch; pp. 14-15, Liu Liqun/ChinaStock; p. 16, Kyodo/Landov; p. 20, Corbis and Keren Su/Corbis; p. 25, Franck Robichon/EPA/Landov; p. 32, David Mendelsohn/Masterfile; p. 44, Padraic Hughes/IMF Photo Unit; pp. 51-54, and p. 56, IMF Photo Unit.
