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Is the World Bank Beginning to Understand Growth?

At first sight, the World Bank's newest report on globalization contains few surprises. It repeats the mantra that the countries that went farther down the path of globalization became the ones with the greatest success in economic growth and poverty reduction. Buried within the pages of the report, however, is a startling admission: countries that integrated into the world economy most rapidly were not necessarily those that adopted the most pro-trade policies.

Think about what this means. For the first time, the World Bank acknowledges that trade liberalization may not be an effective instrument, not only for stimulating growth, but even for integration in world markets. It is admitting, in an underhanded manner, that its repeated assertions about the benefits of globalization do not carry direct implications for how trade policy should be conducted in developing countries.

In other words, the World Bank is beginning to face up to a reality that is obvious to anyone who looks at the empirical record with an open mind. Rapid integration into global markets is a consequence, not of trade liberalization or adherence to World Trade Organization (WTO) strictures per se, but of successful growth strategies with often highly idiosyncratic characteristics.

Consider China and India, the two growth miracles of the last twenty years as well as the leading exemplars of what the World Bank calls ``globalizers.'' In both countries, the main trade reforms took place about a decade after the onset of higher growth. Moreover, trade restrictions in China and India remain among the highest in the world.