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Anti-Neoliberalism as if the Poor Mattered

The decline of the Washington Consensus and the unexpected resurgence of industrial policy have taken place without considering the perspective of low- and middle-income countries. To ensure a just climate transition, we must remember that the world’s poorest economies benefited enormously from globalization.

PROVIDENCE – As neoliberalism swiftly gives way to a resurgence of industrial policy in advanced economies, the perspective of low-income countries is being ignored. As in neoliberalism’s heyday, a subtle form of intellectual imperialism is skewing the global economic debate toward the interests of major powers.

If developing countries’ perspectives were given due consideration, the debate about neoliberalism and industrial policies such as the US Inflation Reduction Act (IRA) would likely play out very differently. After all, the neoliberal Washington Consensus that took hold in the 1980s delivered tangible benefits to the world’s poorest countries. The turn away from it could be similarly beneficial if we draw the right lessons from the neoliberal era.

Neoliberals’ embrace of markets and globalization has been widely blamed for a wide range of problems, such as rising inequality, concentration of power, the decline of manufacturing, recurring financial crises, and even the rise of identity politics. But while neoliberalism’s liabilities merit serious debate, its balance sheet includes quite a few assets as well, particularly when it comes to the world’s poorest regions. As Dev Patel, Justin Sandefur, and I have argued, the era of hyper-globalization enabled developing countries to reverse a 200-year trend and catch up with their richer counterparts, resulting in the fastest reduction in poverty ever recorded.

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