Globalization

Rajeet Guha
Dani Rodrik, a professor at Harvard, criticizes the policies that are foisted upon poor and developing countries by multilateral institutions like the World Bank, IMF and WTO. He firmly believes that free trade and globalization are not the magic pills that automatically translate into economic development. He says that most of the countries of the developed world grew prosperous behind massive protectionist policies. He says it is over a period of decades that the countries in the developed world opened up to free trade. He says that some of the fastest growing countries in the world like China and India have opened up gradually to free trade. He says that India still remains highly protected. He says that the success stories like East Asian Tigers had few international constraints and had to pay few of the modern costs of integration during their growth experience in the 1960s and 70s. At that time trade rules were few and countries did not face pressures to open their economies to capital flows. He says that these countries combined outward orientation with unorthodox policies like high tariff and non-tariff barriers, public ownership of banking and industry, export subsidies, domestic content requirement, patent and copyright infringements, and restrictions on capital flows. He argues that those countries in Africa and Latin America that have opened up their economies to free trade and globalization have stagnated. They have grown less rapidly than in the years of import substitution. He believes that domestic innovations should kick start the economy first and countries should focus more on issues like education, healthcare, industrial capacity and social cohesion rather than on integration. He believes integration is the result, not the cause, of economic development.