Imagining recovery, while a pandemic rumbles on, is an ominous task. But governments around the world have been forced to contend with this challenge. Several African, Asian and Latin American economies were in precarious financial positions before the pandemic hit. Fluctuations in global commodity prices in recent years and mounting trade deficits had already forced several African countries to request the International Monetary Fund (IMF) for a range of support mechanisms including credit facilities. Debt was already reaching alarming levels. The pandemic made economic dependencies more salient, with Zambia plunging towards becoming Africa’s first pandemic-related private debt default.
The recent thrust of research championing possible convergence (often based on questionable and selective use of data) between ‘developed’ and ‘developing’ countries ignores the vast range of economic trajectories of former colonies. In slapdash cross-country economic studies, a strategic use of averages and unreliable categorisation is often used to draw generalisations about large-scale change. Sweeping claims made about a rising ‘developing’ world often fail to isolate China’s rise. There is rarely any acknowledgment that most countries’ economies remain undiversified and deeply dependent on foreign actors. The data used to make the case for convergence often relies on GDP and human development indicators, rarely mentioning let alone measuring the structural transformation of economies. Structural transformation remains one of the essential facets of economies that have ‘caught up’ historically. Whether countries can retain fiscal space after this crisis will inevitably depend on the nature of structural transformation and how that has shaped national growth and dependency within the global economy.
Bradford deLong has recently argued that neoliberalism provides a way for former colonies to close the gaps with their erstwhile colonial masters. But this argument ignores the fact that several economic policies of colonial times were explicitly laissez-faire in nature.
The recognition of the dangers of allowing finance a free hand in the economy has led to a rethink of the soundness of neoliberalism as an economic and policy doctrine, from no less an organisation such as the IMF. Dani Rodrik has attacked the theoretical foundations of neoliberalism itself, judging that its insistence on allowing for unhindered market activity is bad economics itself, for economic models that make a theoretical case for markets cannot be easily transplanted into the real world in the way that advocates of neoliberalism believe.
Yet this is not to say that the concept is dead and buried. As Harvey (2007) points out, neoliberalism is a political economic process that ostensibly seeks to organise society and economies around the principle of free market activity, while primarily attempting to shift the balance of power towards dominant economic classes that control capital. Seen in this light, neoliberalism is still a powerful force shaping political and economic changes in much of the world today.
Bradford deLong’s blog post, first published in 1998 and re-published now shows that the term “neoliberalism” still carries intellectual currency. His is a curious argument; neoliberalism provides the only suitable path for countries of the developing world to close the gap with their former colonial powers. Access to the latest goods and technology allows developing economies – with low levels of productivity – to boost productivity and output growth, and consequently incomes. The reason the State should stay away from the economic sphere in the developing world is because democratic institutions have not been established yet, and hence the political sphere is vulnerable to capture by elites.Read More »
This new working paper attempts to address some of the main problems of the European Union today. The main thesis is that the Weltanschauung and the economic narrative on which the European project has been based have changed radically since the inception of the European Project, from one conducive to convergence and cohesion to another which is conducive to divergence and, in the last instance – I shall argue – to a form of internal colonialism towards the economic periphery.
The field of Science and Technology employs the term sociotechnical imaginary about the collective narratives and visions of social futures and of the common good. I shall argue that the European Union has moved away from the sociotechnical imaginary, or narrative, that dominated after World War II. I shall argue that this post WW II Marshall Plan Narrative (MPN) gave way to an equilibrium-based Neo-Classical Economics Narrative with an added innovation rhetoric, which I shall argue is based on a fairly shallow understanding of innovation (which I shall call NC+I).Read More »
Any discussion of inequality includes an implicit normative or ethical comparison of distributions; a certain distribution of some good, or of gains in that good, is acceptable or not acceptable, is better or worse, is improving or stagnating. If discussions of inequality also inevitably involve rankings and comparisons of different distributions, then how inequality is defined and measuredwill affect theserankings and comparisons. The choice of measurement of inequality is therefore not value neutral.Read More »
Developed countries often lecture developing and emerging countries on the appropriate policies and institutions necessary for economic success. This is done either bilaterally or through multilateral organizations such as the World Bank, IMF, OECD or European Union. Cambridge economist Ha-Joon Chang exposed the hypocrisy of this approach in his provocative 2002 book Kicking Away the Ladder: Development Strategy in Historical Perspective. Chang suggests that when today’s rich countries were themselves developing, they used practices opposite to what they preach today, including industrial policies, high tariffs and infant industry protection. Therefore their current advice to poorer countries amounts to ‘kicking away the ladder’ of development.
A lesser-known but equally disturbing process has occurred in the realm of economic statistics, in particular national income accounts. The EU and OECD often criticize the national accounts of developing countries, and a recent example is a claim made in a blog by Robert Barro: “There are suspicions that China’s reported growth rates in recent decades have been boosted by manipulation of the national-accounts data.” While no statistical system is beyond doubt, the biggest manipulations of data in history, in fact, have benefited (and were supported by) rich countries.Read More »
During the summer I wrote a piece on the rise of emerging markets since World War II for the Delma Institute, a consulting firm based in the UAE. The piece is designed to be read on the web as an interactive (apparently that is what all the hip kids are doing nowadays). This blog post is a shameless plug to get you to read it. Below I pick a few juicy items from it to wet your appetite.
But first, who should read the full piece? It will make for perfect holiday reading if:
You want to take extended bathroom breaks to escape your family and need some reading.
You want a big picture overview – for yourself or your undergraduate students – of global economic development since WWII.
You haven’t been on your computer enough during the last quarter.
The piece essentially tries to answer two questions: Have emerging markets ‘risen’? And will their ‘rise’ become more widespread? It does so by painting a picture of the major changes in the global economy since World War II, focusing on: 1. Increasing global economic integration and the spread of capital; 2. The rise of emerging Asia (and China in particular); and 3. The fall of communism. Read More »