Courtesy Reuters

During the first half of the 1990s, both economic and political events in developing countries defied all expectations. Nations that most thought would not regain access to world financial markets for a generation abruptly became favorites of private investors, who plied them with capital inflows on a scale not seen since before World War I. Governments that had spent half a century pursuing statist, protectionist policies suddenly got free market religion. It was, it seemed to many observers, the dawn of a new golden age for global capitalism.

To some extent the simultaneous reversals in government policies and investor sentiment

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