With the global economy teetering on the edge of a financial crisis, it is time for emerging-market and developing economies to revise their development strategies. By adopting a bottom-up approach that empowers communities, policymakers could define and achieve realistic socioeconomic and environmental goals.
HONG KONG – The world is in the midst of a global permacrisis. As interrelated shocks – the war in Ukraine, the fallout of the COVID-19 pandemic, the escalating US-China rivalry, climate change, and a looming financial meltdown – threaten to engulf the world’s great powers, it is time for emerging-market and developing economies (EMDEs) to revisit and revise their development strategies.
After the end of World War II, development economists emphasized decolonization, alternative growth models, and strengthening state mechanisms to rein in markets. But over the past four decades, the neoliberal trade framework – underpinned by the Bretton Woods institutions and the Washington Consensus – did away with many of these state capacities in favor of market-oriented growth with minimal government intervention.
The Asian financial crisis of 1997-98 shook confidence in the Washington Consensus, and the 2008 global financial crisis led some development economists to abandon it altogether. At the same time, economists have begun to look beyond GDP growth, broadening the concept of development goals to include gender equality, environmental sustainability, happiness, and diversity.
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