Introduction: Liberalization Investment and Global Markets

Abstract

The extension of free trade throughout the world and greater integration of capital markets during the 1990s were thought to herald the truly ‘global economy’ anticipated by Keynes and his colleagues at Bretton Woods 50 years before. Official opinion held — and still holds — that this dynamic global economy should particularly benefit poor countries: by embracing the principles of liberal capitalism and establishing efficient production structures, developing countries can and will reap the economic benefits of rapid export growth and massive foreign investment. The previous decade had also seen the replacement of the post-war model of economic development (which had focused on issues of agrarian transformation, state-led industrialization and income redistribution) by a new paradigm often referred to as the ‘Washington Consensus’ that favoured trade liberalization, fiscal stabilization, structural adjustment, and sale of public assets.

I would like to thank the MacArthur Foundation for support to the research program at the Finance and Trade Policy Research Centre on which this book is based.