One Economics, Many Recipes: Globalization, Institutions, and Economic Growth

One Economics, Many Recipes: Globalization, Institutions, and Economic Growth

One Economics, Many Recipes: Globalization, Institutions, and Economic Growth

One Economics, Many Recipes: Globalization, Institutions, and Economic Growth

Synopsis

In One Economics, Many Recipes, leading economist Dani Rodrik argues that neither globalizers nor antiglobalizers have got it right. While economic globalization can be a boon for countries that are trying to dig out of poverty, success usually requires following policies that are tailored to local economic and political realities rather than obeying the dictates of the international globalization establishment. A definitive statement of Rodrik's original and influential perspective on economic growth and globalization, One Economics, Many Recipes shows how successful countries craft their own unique strategies--and what other countries can learn from them.

To most proglobalizers, globalization is a source of economic salvation for developing nations, and to fully benefit from it nations must follow a universal set of rules designed by organizations such as the World Bank, the International Monetary Fund, and the World Trade Organization and enforced by international investors and capital markets. But to most antiglobalizers, such global rules spell nothing but trouble, and the more poor nations shield themselves from them, the better off they are. Rodrik rejects the simplifications of both sides, showing that poor countries get rich not by copying what Washington technocrats preach or what others have done, but by overcoming their own highly specific constraints. And, far from conflicting with economic science, this is exactly what good economics teaches.

Excerpt

On a visit to a small Latin American country a few years back, my colleagues and I paid a courtesy visit to the minister of finance. the minister had prepared a detailed PowerPoint presentation on his economy’s recent progress, and as his aide projected one slide after another on the screen, he listed all the reforms that they had undertaken. Trade barriers had been removed, price controls had been lifted, and all public enterprises had been privatized. Fiscal policy was tight, public debt levels low, and inflation nonexistent. Labor markets were as flexible as they come. There were no exchange or capital controls, and the economy was open to foreign investments of all kind. “We have done all the first-generation reforms, all the second-generation reforms, and are now embarking on thirdgeneration reforms,” he said proudly.

Indeed the country and its finance minister had been excellent students of the teaching on development policy emanating from international financial institutions and North American academics. and if there were justice in the world in matters of this kind, the country in question would have been handsomely rewarded with rapid growth and poverty reduction. Alas, not so. the economy was scarcely growing, private investment remained depressed, and largely as a consequence, poverty and inequality were on the rise. What had gone wrong?

Meanwhile, there were a number of other countries—mostly but not exclusively in Asia—that were undergoing more rapid economic development than could have been predicted by even the most optimistic economists. China has grown at rates that strain credulity, and India’s performance, while not as stellar, has confounded those who thought that this country could never progress beyond its “Hindu” rate of economic growth of 3 percent. Clearly, globalization held huge rewards for those who knew how to reap them. What was it that these countries were doing right?

The primacy of economic growth

These are some of the greatest economic puzzles of our time, and they are the questions around which the chapters in the book revolve.

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