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Recent Experience and Policy Implications focused on lessons from the development experiences of Latin America and Asia over the past 20 years. There was general agreement among the panellists that macroeconomic conditions and development strategies in Asia had generally been more conducive to rapid and sustained growth and successful integration into the globalizing world economy than those in Latin America. Policies in Asia had led to high rates of domestic fixed investment in the most dynamic industries, sustained growth and employment creation. By contrast, adherence to the policy prescriptions of the Washington Consensus in most Latin American countries had led to high domestic interest rates, discouraged fixed investment, and increased dependence on inflows of foreign capital, resulting in increased vulnerability to external shocks and macroeconomic instability.
There was broad agreement among the panellists that these experiences showed that reliance on the market mechanism does not lead to enough capital accumulation to achieve faster growth of output and productivity, employment creation, structural change and poverty reduction. The state has an important role to play in the development process and in influencing the level and allocation of fixed investment. Appropriate rules and regulations were also considered important to enhance capital accumulation and to simplify procedures for the creation of small and medium-sized enterprises. However, the space for policies in support of development and successful integration into the world economy had been shrinking, not only through WTO agreements and conditions attached to support by the international financial institutions, but also through closer integration into the international financial system. It was therefore essential that developing countries use the existing policy space more effectively, but it might also be necessary to expand this policy space by revising the existing rules of the international trading and financial systems and reshaping the process of globalization.