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Development Economics and Structuralist Macroeconomics

Development Economics and Structuralist Macroeconomics

Essays in Honor of Lance Taylor

Edited by Amitava Krishna Dutt

Lance Taylor is widely considered to be one of the pre-eminent development economists in the world and is known for his work on development planning, macroeconomics of development, stabilization policy, and the global economy. He has also been the major force behind structuralist economics, which is seen by many to be a major alternative to orthodox development economics and policy prescriptions. The essays in this volume, written by well-known scholars in their own right, make contributions to each of these areas while honoring the contributions made by Lance Taylor.

Chapter 20: Institutional challenges of globalization and the developing countries

Andrés Solimano

Subjects: development studies, development economics, economics and finance, development economics


Andrés Solimano INTRODUCTION Globalization has become both a household term and an important historical phenomenon. The geopolitics of globalization has several precedents: the end of the cold war, the collapse of communism and a reconfiguration in the balance of power towards Western countries and capitalism. The economics of globalization suggests that increased global economic interdependence can be a powerful engine for wealth creation and prosperity. On the other side however, globalization also tends to be associated with frequent financial crisis and volatility and its benefits are unevenly distributed across countries and regions. In view of these elements, globalization poses an important challenge to the existing institutional matrix, created in the mid-1940s, composed of the United Nations, the Bretton Woods Institutions (BWIs) and the World Trade Organization (successor of GATT) and other institutions. In turn, at national level globalization tends to reduce the degree of effective autonomy for national governments to pursue their own development goals of growth, stability and social equity. A main challenge of public policy in the era of globalization is the seizing of the opportunities it opens while at the same time managing the tensions and problems it poses, particularly for developing countries. This requires, among other things, addressing the adequacy of the institutional framework (or governance structure), accompanying globalization, a main subject of this chapter. The chapter is organized around several sections. First, it provides an historical background on early and late twentieth century globalization episodes and other main developments of the...

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