Belt and Road Initiative vs Washington Consensus Jomo Kwame Sundaram

With the Washington Consensus from the 1980s being challenged, President Donald Trump withdrawing the United States from the Trans-Pacific Partnership (TPP), and China pursuing its Belt and Road Initiative (BRI), most notably with its own initiatives such as the multilateral Asian Infrastructure Investment Bank (AIIB), the political and economic landscape in East Asia continues to evolve. Jomo Kwame Sundaram was interviewed about likely implications for developing countries in the region and beyond. Belt and Road Initiative  What do you think of world growth prospects and China's Belt and Road Initiative? Although there are some hopeful signs here and there, there…

Promoting Privatization Jomo Kwame Sundaram

Privatization has been central to the ‘neo-liberal’ counter-revolution from the 1970s against government economic interventions associated with Roosevelt and Keynes as well as post-colonial state-led economic development. Many developing countries were forced to accept privatization policies as a condition for credit or loan support from the World Bank and other international financial institutions, especially after the fiscal and debt crises of the early 1980s. Other countries voluntarily embraced privatization, often on the pretext of fiscal and debt constraints, in their efforts to mimic new Anglo-American criteria of economic progress. Demonizing SOEs Globally, inflation was attributed to excessive government intervention, public…

Washington Rules Change, Again Jomo Kwame Sundaram

Over the last four decades, the Washington Consensus, promoting economic liberalization, globalization and privatization, reversed four decades of an earlier period of active state intervention to accelerate and stabilize more inclusive economic growth, associated with Franklin Delano Roosevelt and John Maynard Keynes. The Golden Age The US Wall Street Crash of 1929 led to the Great Depression, which in turn engendered two important policy responses in 1933 with lasting consequences for generations to come: US President Roosevelt’s New Deal and the 1933 Glass-Steagal Act. While massive spending following American entry into the Second World War was clearly decisive in ending…

Can Africa and China Learn from Each Other? Lim Mah-Hui

The following is a speech made by Dr. Lim Mah-Hui on behalf of the South Centre at a Seminar on the 18th meeting of Afreximbank Advisory Group on Trade and Export Development in Africa, High-level Roundtable 1– Can Africa learn from China?, in Beijing on July 13. The seminar was held in conjunction with the 19th General Meeting of Shareholders of African Export-Import Bank. The South Centre is thus very pleased to be invited here to take part in a meeting on this important topic -- the relationship and cooperation between Africa and China. China is a huge country that…

Explaining Global Financial Imbalances: A critique of the saving glut and reserve currency hypotheses Thomas I. Palley

This paper examines three different explanations of the global financial imbalances. It begins with the neoliberal globalisation hypothesis that explains the imbalances as the product of the model of globalisation implemented over the past thirty years. It then examines the saving glut and reserve currency hypotheses. The paper concludes by arguing that both the saving glut and reserve currency hypotheses are inconsistent with the empirical record and both provide a misleading guide for policy. global_financial_imbalances (Download the full text in PDF format) (The paper was originally published as a working paper by the Macroeconomic Policy Institute (IMK).)

How Brazil can defend against Financialization Michael Hudson

In this article, it is argued that for developing countries, privatizing the public domain and financializing the economy is akin to military defeat. To defend themselves, the BRIC countries need to isolate themselves from global debt creation. And Brazil (as well as other developing countries), needs to promote the investment of its economic surplus for raising production and living standards, so as to create a positive feedback between higher wage levels and productivity, hence higher global competitiveness. Brazil (Download the full text in PDF format)

Industrial Restructuring and Innovation Policy in Central and Eastern Europe since 1990 Rainer Kattel, Erik S. Reinert and Margit Suurna

The Central and Eastern European (CEE) countries have often been portrayed as success stories of the Washington Consensus and the Europeanization that took place following the evolution of the European Union (EU).This study critiques the effect of both these factors on the CEE countries and posits that both led to deep-rooted cognitive dissonance between policies employed for industrial restructuring and innovation in CEE and actual developments taking place in the private sectors of these countries. industrial_restructuring (Download the full text in PDF format)

The Relevance of Ragnar Nurkse and Classical Development Economics Rainer kattel, Jan Kregel, Erik S, Reinert

The Authors aim to show how the classical development economics of Ragnar Nurkse’s (1907-1957) generation epitomized the best development practices of the past 500 years. Secondly, they argue that the alleged death of the classical development economics and subsequent rise of the Washington Consensus has to do not so much with increasing modeling in economics, but much more with misunderstanding the reasons for East Asia’s success and Latin America’s demise Thirdly, they aim to indicate key areas of further research that the current development mainstream should pursue in order to re-learn how to create middle-income economies and middle-class jobs. ragnar_nurkse…

Development and Social Goals: Balancing aid and development to prevent ‘welfare colonialism’ Erik S. Reinert

The Millennium Goals are far too much biased towards palliative economics rather than structural change, towards treating the symptoms of poverty rather than its causes.  An alternative perspective for cohesive development emerging from the historical and evolutionary approach recommends increasing diversification away from the diminishing returns sectors (traditional raw materials and agriculture) into an increasing returns sector (technology intensive manufacturing) and a  creating a large division of labour and the synergies and social structures which emerge from this structure. welfare_colonialism (Download the full text in PDF format)

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