Economic growth is essential for reducing poverty, and a well‐functioning private sector is the only way to increase economic growth. Yet international institutions such as the World Bank and the International Monetary Fund recommend sophisticated policies to improve the business environment that governments in poor countries cannot successfully implement. The result is often a worsening of private sector performance.
In this book, Robert E. Anderson, a development consultant and former World Bank economist, recommends a different approach. Instead of adopting policies that are common in rich countries, Anderson suggests that policymakers take into account the institutional weaknesses typical of developing countries — corruption, deficient rule of law, cronyism, and so on. Simpler, market‐oriented policies are more suitable to poor countries’ institutional environments and more likely to produce growth and keep the private and public sectors honest.
Anderson recommends sometimes counterintuitive policy solutions for a number of areas—banking, privatization, corporate governance, bankruptcy, and competition. For instance, he argues that “rich countries were once poor countries” and that “examples from the past in rich countries may be more appropriate for poor countries today.”