This book, together with Shaw's, puts forth the idea that subsidized interest rates do not help in economic development, mainly because they bias the economy towards choosing not the most rentable projects, but the best political positioned. At the time it was published, this was absolutely in contradiction with development economics. Even today it is not widely accepted by policy-makers. It is essential reading in the literature of financial liberalization, as perhaps its seminal work.

This book gives insight knowledge about the monetary and fiscal policy making in the developing countries. First ten chapters of the book desribes the expereince of Far Eastern and Latin American countries' financial reforms during the 1960-80s. Especially, it would be interesting to read about the reasons of Japanese as well as Korean miraculous growth during the above mentioned period. Besides, last three chapters explain the case of transitional countries of ex-socialist economies. In his last chapters, the author compares the Russian big bang effect with Chinese gradual reforms. He also points out on the importance of fiscal as well as the liberation policies in those transional countries. Since it is based on the development models of many countries in the world,in brief, I think, the book would be very useful for the policymakers in almost all developing countries.

This book takes the opposite position of Jeffrey Sachs' big bang theory of economic reform. Instead of a big bang, McKinnon suggests a particular order to economic liberalization in order to maintain some stability during the transition process. He uses many examples to show that, for example, fiscal stability should come first, which is a lesson that has proven itself current with Argentina's and Turkey's cases in the early 2000s. This is a book that, though has a strong economics foundation, leaves something to be desired in terms of rigour of economic analysis. Instead, it was written I think particularly for the usage of policy-makers who may not be familiar with technical economic jargon.

Although this book is put out by a respected academic press it is ultimately, a polemical, not a scientific, work. The authors ignore copious evidence (statistical and otherwise) which would undercut their case. Indeed, the original econometric evidence that is presented to support their position is fundamentally flawed.