Debunking the ‘Free Market Miracle’: How industrial policy enabled Chile’s export diversification

Assessing industrial policies in Chile remains a rather contentious and divisive topic. Chile has long been held up as an almost‐textbook example of the success of ‘letting the market work’, as there was a broad agreement among mainstream economists that Chile has largely succeeded in promoting strong and stable growth because it has embraced free market policies. At first glance, this may seem believable.  Afterall, Chile has one of the fastest growth rates in Latin America since its neoliberal turn in the 1970s. Despite the continuing significance of copper, it has also managed to diversify into other sectors and acquire new competitive advantages between the 1960s and 1990s. The dominant view sustains that the successful emergence of new competitive sectors in Chile’s export basket are the result of four decades of commitment to liberalization and free market policies. However, this post, which is based a recent study, shows that Chile’s export diversification was not the result of free market policies, but of carefully crafted government interventions. The idea of Chile as a ‘free-market miracle’, as first described by Milton Friedman, is therefore one of the most enduring myths associated with recent economic development history.

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The power of private philanthropy in international development

By Arun Kumar and Sally Brooks

In 1959, the Ford and Rockefeller Foundations pledged seven million US$ to establish the International Rice Research Institute (IRRI) at Los Baños in the Philippines. They planted technologies originating in the US into the Philippines landscape, along with new institutions, infrastructures, and attitudes. Yet this intervention was far from unique, nor was it spectacular relative to other philanthropic ‘missions’ from the 20th century.

How did philanthropic foundations come to wield such influence over how we think about and do development, despite being so far removed from the poor and their poverty in the Global South?

In a recent paper published in the journal Economy and Society, we suggest that metaphors – bridge, leapfrog, platform, satellite, interdigitate – are useful for thinking about the machinations of philanthropic foundations. In the Philippines, for example, the Ford and Rockefeller foundations were trying to bridge what they saw as a developmental lag. In endowing new scientific institutions such as IRRI that juxtaposed spaces of modernity and underdevelopment, they saw themselves bringing so-called third world countries into present–day modernity from elsewhere by leapfrogging historical time. In so doing, they purposively bypassed actors that might otherwise have been central: such as post–colonial governments, trade unions, and peasantry, along with their respective interests and demands, while providing platforms for other – preferred – ideas, institutions, and interests to dominate.

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Center-periphery relationships of pharmaceutical value chains

By Cristina Fróes de Borja Reis and José Paulo Guedes Pinto

It is well known that, during the 20th century, the pharmaceutical industry became extremely powerful at the international level, alongside financial, energy, technology, and manufacturing companies (Wells, 1984). The internationalization of the pharmaceutical industry only rose after the internationalization of patent protection in the Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPs Agreement) (Haakonsson, 2009). This industry is highly concentrated around a small number of very large transnational groups (65% of global sales are made by the 20 largest players – the ‘big pharma’) that operate worldwide through subsidiaries in 150 countries, on average. Revenue in the worldwide pharmaceutical market increased at a considerable rate, even during the global slump of 2008, and was estimated at an astounding USD1.143 trillion in 2017 (Statista, 2019).  Recently, we published an article  on pharmaceutical value chains, which investigates how they are embedded in an international division of labor, from a new-structuralist theoretical perspective. We ask: how global are the pharmaceuticals value chains? Are there centers and peripheries in pharmaceuticals value chains, and if so, which countries are in each pole?  

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Community Infrastructure and the Care Crises: An Evaluation of China’s COVID-19 Experience

This blog post was originally published on the India-China Institute/The New School’s Pandemic Discourses blog.

COVID-19 has exacerbated the gendered impact of care work globally, but lessons can be learned from countries like China that have relied on community organizations for solutions.

The COVID-19 pandemic has revealed a severe care crisis throughout the world. The measures to contain the infection – lockdown, social distancing, quarantine – severely disrupted activities crucial to the basic functioning of society from cooking to cleaning, childcare, elder care and more. The experience of China shows the critical role of the community in providing essential services.

Like in many other countries, women in China assume disproportionately more care responsibilities than men. With the care crisis intensified by the pandemic, women from different socioeconomic backgrounds were all significantly affected. Urban women mostly saw themselves shouldering more household chores when hiring domestic workers or seeking extra help from family members became impossible or difficult during the lockdown. As most female migrant workers are employed in the precarious informal sector, they had to endure job losses and economic hardship, in addition to extra childcare and household chores. Female healthcare professionals risked their health working on the frontline while having to bear the added mental stress of possibly carrying the virus and spreading it to family members.

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“Are we all in this together?”: Reflecting on a year of COVID-19 marketing messages

In Spring 2020 the first signs of consumer and marketing messages related to the COVID-19 (Coronavirus) pandemic emerged. Like the virus itself, such marketing spread rapidly. The words “we’re all in this together”, and representations of such a sentiment, appeared in adverts and campaigns that were intended to invoke a sense of connectedness, community, and mutual care. Brands wanted people to relate to them and to seek comfort in the form of retail purchases during this time of crisis. Hence, taglines that alluded to togetherness cropped up amid the wave of content that companies created in response to COVID-19, including the marketing of supermarket giants Asda, Lidl, Marks & Spencer (M&S), and Tesco. When noticing this I found myself thinking about the relationship between COVID-19, capitalism, and consumer culture.

Although during the COVID-19 crisis brands have worked hard to cloak their capitalist activities in claims of connectedness, community, and care, to many people it is obvious that the main purpose of such promotional work is to keep the soul-grinding cogs of commerce turning. Despite their efforts to sometimes suggest otherwise, brands are not community organisers. They are not at the core of mutual aid and community care. If anything, brands are often a component of the very structural problems that community organisers strive towards dismantling as part of liberationist work. The imagined “we” that brands brazenly construct via adverts that are meant to tug on the heart strings of individuals during the pandemic is a “we” with money to spend. Such a “we” consists of consumption, not care, and profit, not people.

Are the often overworked and underpaid employees of such brands part of the imagined universal experience that they refer to in adverts about togetherness and weathering this storm with each other? Will such brands make meaningful shifts to substantially improve the precarious work and labour conditions of their employees or will they simply stick to surface-level representations of human connection and care rather than enacting change? There is nothing new about commercial organizations with track records of mistreating and exploiting staff arrogantly making sentimental and marketed claims about the experiences of “you”, “me”, “us”, and “we”. However, this does not detract from the reality that companies being so quick to create such crass content during this ongoing crisis was jarring. Furthermore, the way that some brands have implied that everyone has been impacted by the COVID-19 pandemic in the same way is outright inaccurate.

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Understanding development in a Global Value Chain World: Comparative Advantage or Monopoly Capital Theory?

By Benjamin Selwyn and Dara Leyden

The recent period of globalisation – following the collapse of the Eastern bloc and the integration of China into the world economy – is in essence the period of global value chains (GVCs). From low to high-tech, basic consumer goods to heavy capital equipment, food to services, goods are now produced across many countries, integrated through GVCs.

The big question in development studies is whether this globalised reconfiguration of production is contributing to, or detracting from, real human development? Is it establishing a more equal, less exploitative, less poverty-ridden world? To understand these complex dynamics, scholars rely on economic theories. These theories must be relevant to the GVC-world and equipped to tackle these pertinent questions.

In 2020 the World Bank published its World Development Report Trading for Development in the Age of Global Value Chains (WDR2020, or ‘the Report’) to address these questions. It confidently proclaimed that ‘GVCs boost incomes, create better jobs and reduce poverty’ (WDR2020: 3). Given the World Bank’s promotion of neoliberal globalisation, this conclusion is unsurprising.

However, before accepting the Report’s claims at face value, we should reflect on the findings of Robert Wade (2002: 220). These annual World Bank reports serve as “both a research-based document and a political document…. the Bank’s flagship message must reflect back the ideological preference of key constituencies and not offend them too much, but the message must also be backed by empirical evidence and made to look technical”.

When globalisation is booming it may be possible for the report’s liberal bias to appear to complement its data. However, the GVC world has generated such inequalities that the dissonance between the report’s liberal bias and its own data is stretched to breaking point.

Drawing on our recently published article, this blog post uses the Report’s own data to undermine its core claims. It shows that the GVC world enhances the dominance of transnational corporations (TNCs), concentrates wealth, represses the incomes of supplier firms in developing countries, and creates many bad jobs – with deleterious outcomes for workers.

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A new Washington Consensus on the role of the state?

By Ilias Alami, Adam Dixon and Emma Mawdsley

In a recent op-ed, Martin Sandbu of the Financial Times argues that “the conversion by the IMF and World Bank to support the activist state would put Saul of Tarsus to shame.” According to him, we may be witnessing the rise of a new Washington Consensus, which embraces deficit spending (by rich countries), “temporary solidarity surtaxes” on the rich and businesses, green public investment, and other forms of government intervention. This is not only to address the short-term effects of the pandemic, but also to stimulate demand across the world economy. Sandbu finds evidence of this new consensus in the benign view that the IMF has taken on Biden’s “rescue package”, and claims that “the new Washington consensus could prove as politically powerful as the old one.” In another op-ed in October 2020,

Sandbu characterised this new consensus as follows:

“After 1945, the guiding assumption was, first, that the state knew best, then that the private sector was best. We are about to transcend both, in favour of an economic worldview based on finding ways in which government intervention can guide the private sector to perform better. In that sense, economic planning and the activist state are back.”

It is indeed striking that the IMF, the World Bank, the OECD, the G20, and other multilaterals, have adapted their discourse on the role and place of the state in development. This predates the COVID-19 pandemic. In an open access paper recently published in Antipode, we document the emergence of this new vision of the state in development and outline its key features. Since the early 2010s, these institutions have produced a remarkable wealth of material explicitly concerned with old and new forms of state ownership and intervention. Witness, for instance, this November 2020 EBRD Transition report titled The State Strikes Back, or this chapter dedicated to state-owned enterprises in the IMF 2020 Fiscal Monitor. Our analysis of such policy documents and others suggests that we are witnessing a gradual yet fundamental reorientation of official agendas and discourses about the state. This emerging vision embraces a fuller role of the state in development (than the post-Washington Consensus), including as promoter, supervisor, and owner of capital. Our analysis expounds the material context in which this vision is emerging. Two interrelated transformations are particularly important.

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The Changing Face of Imperialism: Colonialism to Contemporary Capitalism

By Sunanda Sen and Maria Cristina Marcuzzo

How is imperialism relevant today? How has it mutated over the past century? What are different theoretical and empirical angles through which we can study imperialism? These are the questions we deal with in our edited volume on The Changing Face of Imperialism (2018).

We understand imperialism as a continuing arrangement since the early years of empire-colonies to the prevailing pattern of expropriations, on part of those who wield power vis-à-vis those who are weak. The pattern of ‘old imperialism’, in the writings of Hobson, Hilferding and Lenin, were framed in the context of the imperial relations between the ruling nations and their colonies with political subjugation of the latter, captured by force or by commerce, providing the groundwork for their economic domination in the interest of the ruling nations. Forms of such arrogation varied, across regions and over time; including  the early European invasions of South America, use of slaves or indentured labour across oceans, and the draining off of surpluses from colonies by using trade and financial channels. Imperialism, however, has considerably changed its pattern since then, especially with institutional changes in the  prevailing power structure.

The essays in the volume offer a renewed interpretation, which include the alternate interpretations of imperialism and its changing pattern over space and time, incorporating the changing pattern of oppression which reflects the dynamics underlying the specific  patterns of oppression. The pattern can be characterised as ‘new imperialism’ under contemporary capitalism as distinct from its ‘old’ form under colonialism. The varied interpretations of imperialism  as in the literature do not lessen the significance of the common ground underlying the alternate positions, including the diverse pattern of expropriations under imperialism.

The volume offers fourteen chapters by renowned authors. In this blog, we organise them in the following manner: the first five of those deal with the conceptual basis of imperialism from different angles, the next three chapters deal with contemporary imperialism, and then the rest six chapters of book deal with India, colonialism and contemporary issues with imperialism.

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