The Next Big Development Challenge
New strategies for reviving growth in emerging markets will have to be indigenous, rather than coming from Western institutions. But where will such strategies come from, and who will provide the intellectual leadership?
CAMBRIDGE – We have suddenly arrived at a tricky stage in global economic development. Emerging markets are losing their dynamism, after a remarkable three-decade-long run during which they caught up rapidly with advanced economies. Moreover, rekindling this vigor requires a new economic strategy. But where will such a model come from, and who will provide the intellectual leadership?
The latest economic forecasts from the International Monetary Fund and the World Bank are sobering, pointing to protracted slowdowns across the board in China, India, Sub-Saharan Africa, and Latin America. Of course, alarmism about the “end of growth” might be as overblown as past hype about emerging markets’ unstoppable rise. But policymakers in developing countries are genuinely concerned and are grappling with how to revive flagging dynamism.
In the past, governments had a ready intellectual solution: the so-called Washington Consensus, a term coined by John Williamson of the Peterson Institute for International Economics, which advocated a broad strategy of macroeconomic stabilization, privatization, deregulation, and globalization.