ABSTRACT
In the first part of this book we reviewed the definition of economic growth, related it to wages and to investment, and showed that it is demand-led insofar as investment depends on the existence of lucrative investment opportunities. That section also covered the core model of our developmental macroeconomics, we argued that in developing countries the existence of effective demand is not enough to stimulate investment; it is also necessary that efficient business enterprises have access to that demand, which is not automatically assured because in these countries there is a tendency to the cyclical and chronic overvaluation of the exchange rate (if the exchange rate was merely volatile and subject to misalignment, as is usually assumed, the problem of access to markets would not arise). Then we discussed extensively the causes of the overvaluation, and summarized the findings in the chapter on the close of the model. In this second part of the book we discuss policymaking.
