Why does capital formation often fail to occur in developing countries? This work explores the political incentives that either foster growth or steal nations' growth prospects. It examines the frontier between risk and uncertainty, analyzing the forces driving development in both developed and undeveloped regions.

Comparing China to India, Latin America to East Asia, and contemporary to historical cases, he offers lessons that can help the World Bank and the International Monetary Fund to tackle the political incentives that are the source of poor governance in developing nations.

Tables and Figures ix

PART I: Analytical Perspectives 1


CHAPTER ONE: Risk, Uncertainty, and Social Progress 3
CHAPTER TWO: Social Foundations of Policy Credibility 17
CHAPTER THREE: Politics and Economic Structure: The Economic Logic of Autocracy 35
CHAPTER FOUR: An Amazing Economy of Information: The Financial System 48


PART II: Regional and National Complexity 57


CHAPTER FIVE: Closing the Social Productivity Gap in East Asia 59
CHAPTER SIX: The Price of Exclusion: Latin America's Explosive Debt 89
CHAPTER SEVEN: Why Not India?New Century, New Country 114
CHAPTER EIGHT: Pakistan on the Edge 157
CHAPTER NINE: China's Capitalist Dream: Between Hierarchy and Market 187


PART III: Conclusion 219


CHAPTER TEN: Mobilizing the State as Public Risk Manager 221
CONCLUSION: Uncertainty, Competition, and Collusion in Early Capital

Accumulation 246
Acknowledgments 249
Appendix 1 Data Sources 251
Appendix 2 Variables 252
Notes 253
References 307
Index 327