As if being labeled dismal were not sufficient insult, Vito Tanzi now tells us that economics has a dark side. Despite the deceptive title, I found the book enlightening. Tanzi is director of the Department of Fiscal Affairs of the International Monetary Fund (IMF), a position he has held for two decades. During his tenure, he has witnessed numerous IMF and World Bank policies go awry. To his credit, he has kept abreast of academic writings and has himself contributed to the literature. His latest book is largely a compilation of his writings in which he has striven to reconcile "text-book" economics with policy implementation in developing countries. Over the years, Tanzi has found that the policy lessons expounded in economics textbooks consistently fail when applied to the institutionally different developing world, the results ranging from disappointing to disastrous. This failure is the "dark side of economics."

Tanzi highlights the failures of past development policies, and indeed his insights might be used as ammunition to fight funding of the IMF and the World Bank, but I find it heartening that a senior IMF staffer has learned a great deal from failed policies. Furthermore, Tanzi is generally on target as to what should be done. The weakness of the book is that it tells us little about how to implement the recommended policies. Perhaps Tanzi has more faith than I do in the ability of the IMF and the World Bank to enforce structural changes. My belief is that structural changes generally are impossible in the absence of political reforms. What development economics needs is a marriage of the insights Tanzi and others have generated and the insights of the political scientists and economists practicing the new institutional economics.