In the wake of the 1997-98 financial crises in emerging economies, many prominent thinkers focused their energies on what went wrong, how it could have been prevented, and what reform measures are required for the future. Some studies focused on the financial markets for the emerging economies in question, while others examined the larger shortcomings of the international financial system. The Project on Development, Trade, and International Finance has sought to look at the problem from both levels: to investigate the problems in the world economy that led to the crises, and to propose policy options designed to make financial markets work better in developing countries.
This report seeks to focus policy attention on measures to encourage the evolution of an international financial architecture that supports middle-class-oriented development in emerging economies. It presents a series of ideas and policy recommendations to enhance the effectiveness, security, and flexibility of the international financial system and greatly strengthen the system’s ability to meet long-term credit needs in emerging countries.