Growth is a beseiged deity. An increasing number of economists and policy- makers are becoming convinced that it is imprudent for a country to devote all its efforts toward maximizing the rates of overall growth-and wait for the benefits to trickle down to all sections of the population. Trickle- downism is thus on the wane. Developing countries are now being warned that rapid growth is liable to take too long to alleviate the miseries of the poor, and that for long periods rapid growth may indeed worsen the lot of large numbers-hence they should launch "direct attacks" on poverty.
Only a few years ago pundits were sure that the United States was losing to Asia and Europe and had to emulate their more state- directed economies to remain competitive. Now the conventional wisdom is that America is number one and that the rest of the world should adopt its more laissez-faire approach. In fact, neither caricature is right. Asia was booming and now it is slumping, but it will be back. Europe's underlying ossification will persist. But most important, while the U.S. economy is in a period of robust growth, nothing fundamental has changed. Its long-run growth rate has not accelerated, productivity has not risen, and the structural unemployment rate has fallen by one percentage point at most. Come the next recession, all this triumphalism will seem silly.
Asia's economies are in trouble, as a contagion of plunging currencies and economic instability has taken hold on the continent. But the miracle is not necessarily over. Asia's leaders must move beyond economic liberalization and address the deep-seated problems of the other Asia-not the rich, booming Asia, but the poor, rural, ignored one. To keep the miracle going, the entire population must be brought into the action. That will mean making difficult choices, like investing in agricultural productivity, education, and social services, but the region's leaders can't afford not to.