The New Global Economy and Developing Countries

Policy-makers in the developing world are grappling with new dilemmas created by openness to trade and capital flows. What role, if any, remains for the state in promoting industrialization/ Does openness worsen inequality and, if so, what can be done about it? What is the best way to handle turbulence from the world economy, especially the fickleness of international capital flows? In this work, the author argues that successful integration into the world economy requires a complementary set of policies and institutions at home. Policy-makers must reinforce their external strategy of liberalization with an internal strategy that gives the state substantial responsibility in building physical and human capital and mediating social conflicts.

Author Biography

Dani Rodrik is Rafiq Hariri Professor of International Political Economy at the John F. Kennedy School of Government at Harvard University.