Nowadays, developing countries all around the world face a great amount of disillusionment. Development as proposed by the IMF and the WTO has not had the positive effect it was supposed to have. In fact, the policies preached by these international actors have in times exacerbated economic problems leading to recessions. Countries, that have achieved higher economic growth throughout the years, have achieved this, not by following the dictates of the Washington Consensus exactly, but rather by applying them in an unorthodox fashion. Nevertheless in recent years globalization has become a replacement for a sound development strategy. In his article Trading in Illusions, Dani Rodrik (2001) argues against the line of thinking promoted by these international organizations and proposes that development programs should be locally designed taking into account pressing social issues. This essay will use Rodrik’s article and numerous examples as reference to explain that the policies of liberalization do not magically solve a country’s economic problems. I will provide further examples to support Rodrik’s claim that globalization is not a development strategy. After an evaluation of these arguments, I will conclude in accordance with Rodrik's statement that in order “to be effective, development strategies need to be tailored to prevailing domestic institutional strengths” (Rodrik, 2001: 62).
Liberalization of Trade and Capital
One of the main issues with the policies of liberalization encouraged by the IMF and the WTO is that they only take the foreign investors’ sentiments into account. “Forget the slum dwellers or campesinos who live amidst crime and poverty throughout the developing world. Just mention "investor sentiment" or "competitiveness in world markets" and policymakers will come to attention in a hurry” (Rodrik 2001: 55). Money, which could otherwise be spent on education or public health care, has to be used to make investors feel confident about...
References: Dieter, H. (2006). The Decline of the IMF: Is it reversible? Should it be reversed? Global Governance, 12, 343 - 349.
Rodrik, D. (2001). Trading in Illusions. Foreign Policy, 123, 54 -62.
Stiglitz, J. E. (2002). Globalization and its discontents. London [u.a.]: Penguin Books.
Please join StudyMode to read the full document