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that it catches mice。〃 In 1991； when India's finance minister； Manmohan Singh； took
the first tentative steps to open India's economy to more foreign trade； investment；
and competition； it was a result not of some considered national debate and dialogue；
but of the fact that India's economy at that moment was so sclerotic； so unappealing
to foreign investors； that it had almost run out of foreign currency。 When Mikhail
Gorbachev started dabbling with perestroika； it was with his back up against the
Kremlin wall and with few allies in the Soviet leadership。 The same was true of
Margaret Thatcher when she took on the striking coal miners' union in 1984 and forced
reform wholesale onto the sagging British economy。
What all these leaders confronted was the irrefutable fact that more open and
competitive markets are the only sustainable vehicle for growing a nation out of
poverty； because they are the only guarantee that new ideas； technologies； and best
practices are easily flowing into your coun…
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try and that private enterprises； and even government； have the competitive incentive
and flexibility to adopt those new ideas and turn them into jobs and products。 This
is why the nonglobalizing countries； those that refused to do any reform
wholesale…North Korea； for instance… actually saw their per capita GDP growth shrink
in the 1990s； while countries that moved from a more socialist model to a globalizing
model saw their per capita GDP grow in the 1990s。 As David Dollar and Art Kray conclude
in their book Trade； Growth； and Poverty； economic growth and trade remain the best
antipoverty program in the world。
The World Bank reported that in 1990 there were roughly 375 million people in China
living in extreme poverty； on less than 1 per day。 By 2001； there were 212 million
Chinese living in extreme poverty； and by 2015； if current trends hold； there will
be only 16 million living on less than 1 a day。 In South Asia…primarily India；
Pakistan； and Bangladesh…the numbers go from 462 million in 1990 living on less than
1 a day down to 431 million by 2001 and down to 216 million in 2015。 In sub…Saharan
Africa； by contrast； where globalization has been slow to take hold； there were 227
million people living on less than 1 a day in 1990； 313 million in 2001； and an
expected 340 million by 2015。
The problem for any globalizing country lies in thinking you can stop with reform
wholesale。 In the 1990s； some countries thought that if you got your ten commandments
of reform wholesale right…thou shall privatize state…owned industries； thou shall
deregulate utilities； thou shall lower tariffs and encourage export industries；
etc。…you had a successful development strategy。 But as the world started to get
smaller and flatter…enabling China to compete everywhere with everyone on a broad
range of manufactured products； enabling India to export its brainpower everywhere；
enabling corporations to outsource any task anywhere； and enabling individuals to
compete globally as never before …reform wholesale was no longer sufficient to keep
countries on a sustainable growth path。
A deeper process of reform was required…a process I would call reform retail。
I Can Only Get It for You Retail
What if regions of the world were like the neighborhoods of a city？ What would the
world look like？ I'd describe it like this： Western Europe would be an assisted…living
facility； with an aging population lavishly attended to by Turkish nurses。 The United
States would be a gated community； with a metal detector at the front gate and a lot
of people sitting in their front yards complaining about how lazy everyone else was；
even though out back there was a small opening in the fence for Mexican labor and
other energetic immigrants who helped to make the gated community function。 Latin
America would be the fun part of town； the club district； where the workday doesn't
begin until ten p。m。 and everyone sleeps until midmorning。 It's definitely the place
to hang out； but in between the clubs； you don't see a lot of new businesses opening
up； except on the street where the Chileans live。 The landlords in this neighborhood
almost never reinvest their profits here； but keep them in a bank across town。 The
Arab street would be a dark alley where outsiders fear to tread； except for a few
side streets called Dubai； Jordan； Bahrain； Qatar； and Morocco。 The only new
businesses are gas stations； whose owners； like the elites in the Latin neighborhood；
rarely reinvest their funds in the neighborhood。 Many people on the Arab street have
their curtains closed； their shutters drawn； and signs on their front lawn that say；
〃No Trespassing。 Beware of Dog。〃 India； China； and East Asia would be 〃the other side
of the tracks。〃 Their neighborhood is a big teeming market； made up of small shops
and one…room factories； interspersed with Stanley Kaplan SAT prep schools and
engineering colleges。 Nobody ever sleeps in this neighborhood； everyone lives in
extended families； and everyone is working and saving to get to 〃the right side of
the tracks。〃 On the Chinese streets； there's no rule of law； but the roads are all
well paved；there are no potholes； and the streetlights all work。 Onthe Indian streets；
by contrast； no one ever repairs the streetlights； the roads are full of ruts； but
the police are sticklers for the rules。 You need a license to open a lemonade stand
on the Indian streets。 Luckily； the local cops can be bribed； and the successful
entrepreneurs all have their own generators to run their factories and the latest
cell phones to get
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around the fact that the local telephone poles are all down。 Africa； sadly； is that
part of town where the businesses are boarded up； life expectancy is declining； and
the only new buildings are health…care clinics。
The point here is that every region of the world has its strengths and weaknesses；
and all are in need of reform retail to some degree。 What is reform retail？ In the
simplest terms； it is more than just opening your country to foreign trade and
investment and making a few macroeco…nomic policy changes from the top。 That is reform
wholesale。 Reform retail presumes you have already done reform wholesale。 It involves
looking at four key aspects of your society…infrastructure； regulatory institutions；
education； and culture （the general way your country and leaders relate to the
world）…and upgrading each one to remove as many friction points as possible。 The idea
of reform retail is to enable the greatest number of your people to have the best
legal and institutional framework within which to innovate； start companies； and
become attractive partners for those who want to collaborate with them from elsewhere
in the world。
Many of the key elements of reform retail were best defined by the research done by
the World Bank's International Finance Corporation （IFC） and its economic analysis
team led by its chief economist； Michael Klein。 What do we learn from their work？
To begin with； you don't grow your country out of poverty by guaranteeing everyone
a job。 Eg