Book Reviews 347

Trade Theory and Economic Reform: North, South and East. Essays in Honor of Bda Balassa. By J . D E MELO and A. SAPIR (eds). (Oxford, Basil Blackwell, 1991, pp. 390, E40.)

Arguably few contemporary economists can have been so influential in terms of their impact on development policy as Bela Balassa. In particular, his work on trade stategies has provided the basis for current World Bank orthodoxy in this area. Not all would agree with the universality of his recommendations on market reform and outward orientation, but his stature as one of the foremost proponents of the neoclassical position is undeniable. This volume is a festschrift in his honour and contains papers by colleagues, ex-students and friends. His own professional output has been prodigious (the list of his publications at the end of the book runs to 17 pages) and can be divided into three main areas: development policy, European trade and integration and reform in socialist economies. All three areas of interest are represented in this volume.

Not surprisingly the papers included are at different levels. The most useful are likely to be those that present the results of empirical research. For example, Dornbusch and Vogelsong report on a cross-country study on real exchange rates and purchasing power-parity. Similarly, Nishimizu and Page give their results on trends in total factor productivity growth across countries and try to link these with economic environments. Byrd and Gelb give a useful summary of research on the development of non-state industrial enterprises in China (a topic about which very little is known). However, the most compelling chapter for this reviewer is Cordon’s masterly summary of preliminary results of a World Bank research project on exchange rate policy. This is particularly helpful for its clear distinction between the alternative ‘real targets’ and ‘nominal anchor’ approaches to the exchange rate.

Several other empirical papers present the result of modelling simulations aimed at illuminating policy issues. In particular, it is worth noting that two of these provide support for arguments advanced by Balassa himself. De Melo and Holst find that in a model with increasing returns and domestic market imperfections the simple recommendation of neutral incentives between domestic and export sales appears to stand up empirically, despite its lack of precise optimality in theoretical terms. Also in a modelling exercise for Yugoslava, Adelman and others support the view that under a policy of export orientation an economy is more likely to demonstrate stability against external shocks from the world market.

At another level there are several lighter, less technical, papers that survey relatively familiar ground. Examples are Baldwin on non-tariff protection, Kindleberger on European integration in historical perspective, Malinvaud on methodology, Kornai on Hungarian reform ( where he puts forward a programme that corresponds very closely with many of Balassa’s stated positions) and Finger on GATT and trade policy. General overviews of a subject have a place in such collections, although perhaps some of these papers say little that is new.

Given the eminence of the subject of this festschrift one might have expected one or two seminal papers that generate significant debate and further research. A first reading suggests that these are not present, but nonetheless this is a useful collection, chiefly a mixture of empirical results and general overviews, that no doubt will be drawn on in the future by those working in the intellectual tradition represented so eminently by Bela Balassa.

JOHN WEISS Development and Project Planning Centre

University of Bradford

Blueprint 2: Greening the World Economy. By D A V I D PEARCE (ed.). (London, Earthscan Publications Ltd, 1991, pp. 232 E7.95, p/b.)

Blueprint 2 is a sequel to Blueprint for a Green Economy (1989). The original Blueprint had been commissioned by the United Kingdom Department of the Environment to review the implications of the concept of sustainable development for economic progress, projects and policies. In addition, it contained sections on valuing the environment, the incorporation of these values into systems of natural resource accounting, and the use of market-based incentives