Dani Rodrik

33 Articles

Advertising Area





Latest by Dani Rodrik


Can developing countries carry the world economy?

CAMBRIDGE: In the early days of the global financial crisis, there was some optimism that developing countries would avoid the downturn that advanced industrial countries experienced. After all, this time it was not they that had engaged in financial excess, and their economic fundamentals looked strong. But these hopes were dashed as international lending dried …

Dani Rodrik

Erdogan’s Choice

ISTANBUL: “Turkish democracy is at a turning point,” Prime Minister Recep Tayyip Erdo?an announced after winning a crucial vote in a referendum to change Turkey’s constitution. “We are sitting an important exam.” Erdo?an is right, but it is he who must pass the test. If the plebiscite victory emboldens him and his allies to step …

Dani Rodrik

Is Chinese mercantilism good or bad for poor countries?

CAMBRIDGE: China’s trade balance is on course for another bumper surplus this year. Meanwhile, concern about the health of the US recovery continues to mount. Both developments suggest that China will be under renewed pressure to nudge its currency sharply upward. The conflict with the US may well come to a head during Congressional hearings …

Dani Rodrik

The myth of authoritarian growth

CAMBRIDGE: On a recent Saturday morning, several hundred pro-democracy activists congregated in a Moscow square to protest government restrictions on freedom of assembly. They held up signs reading “31,” in reference to Article 31 of the Russian constitution, which guarantees freedom of assembly. They were promptly surrounded by policemen, who tried to break up the …

Dani Rodrik

The Market Confidence Bugaboo

CAMBRIDGE: A specter is haunting Europe — the specter of “market confidence.” It may have been fear of communism that agitated governments when Karl Marx penned the opening line of his famous manifesto in 1848, but today it is the dread that market sentiment will turn against them and drive up the spreads on their …

Dani Rodrik

Who lost Europe?

CAMBRIDGE: Financial meltdown has been averted in Europe — for now. But the future of the European Union and the fate of the eurozone still hang in the balance. If Europe doesn’t find a way to reactivate the continent’s economy soon, it will be doomed to years of gloom and endless mutual recrimination about “who …

Dani Rodrik

Greek lessons for the world economy

CAMBRIDGE: The $140 billion support package that the Greek government has finally received from its European Union partners and the International Monetary Fund gives it the breathing space needed to undertake the difficult job of putting its finances in order. The package may or may not prevent Spain and Portugal from becoming undone in a …

Dani Rodrik

The return of industrial policy

CAMBRIDGE: British Prime Minister Gordon Brown promotes it as a vehicle for creating high-skill jobs. French President Nicolas Sarkozy talks about using it to keep industrial jobs in France. The World Bank’s chief economist, Justin Lin, openly supports it to speed up structural change in developing nations. McKinsey is advising governments on how to do …

Dani Rodrik

The end of an era in Finance

CAMBRIDGE: In the world of economics and finance, revolutions occur rarely and are often detected only in hindsight. But what happened on February 19 can safely be called the end of an era in global finance. On that day, the International Monetary Fund published a policy note that reversed its long-held position on capital controls. …

Dani Rodrik

The case against international financial coordination

CAMBRIDGE: When US President Barack Obama announced in late January his intention to seek tough new rules for banks, he wasn’t expecting to make friends on Wall Street. We will henceforth prevent banks from trading on their own account and from growing too large, Obama declared. The internal battle within the Obama administration seemed to …

Dani Rodrik

Will China rule the world?

CAMBRIDGE: Thirty years ago, China had a tiny footprint on the global economy and little influence outside its borders, save for a few countries with which it had close political and military relationships. Today, the country is a remarkable economic power: the world’s manufacturing workshop, its foremost financier, a leading investor across the globe from …

Dani Rodrik

Making room for China

CAMBRIDGE: China’s undervalued currency and huge trade surplus pose great risks to the world economy. They threaten a major protectionist backlash in the United States and Europe; and they undermine the recovery in developing and emerging markets. Left unchecked, they will generate growing acrimony between China and other countries. But the solution is not nearly …

Dani Rodrik

IMF needs fresh thinking on capital controls

CAMBRIDGE: Why does the International Monetary Fund make it so hard for people like me to love it? The IMF has said and done all the right things since the crisis. It has acted as quickly as any international bureaucracy can to establish new lines of credit for battered emerging-market countries. It revamped its loan …

Dani Rodrik

The myth of rising protectionism

CAMBRIDGE: There was a dog that didn’t bark during the financial crisis: protectionism. Despite much hue and cry about it, governments have in fact imposed remarkably few trade barriers on imports. Indeed, the world economy remains as open as it was before the crisis struck. Protectionism normally thrives in times of economic peril. Confronted by …

Dani Rodrik

The Tobin tax lives again

CAMBRIDGE: Something happened in late August that I never thought I would see in my lifetime. A leading policymaker in the Anglo-American empire of finance actually came out in support of a Tobin tax – a global tax on financial transactions. The official in question was Adair Turner, the head of the United Kingdom Financial …

Dani Rodrik

Let Finance Skeptics Take Over

CAMBRIDGE: The race is on to fill the most important economic policy position in the world. United States Federal Reserve Chairman Ben Bernanke’s term ends in January, and President Barack Obama must decide before then: either re-appoint Bernanke or go with someone else – the names most often mentioned are Larry Summers and Janet Yellen …

Dani Rodrik

Mercantilism reconsidered

CAMBRIDGE: A businessman walks into a government minister’s office and says he needs help. What should the minister do? Invite him in for a cup of coffee and ask how the government can be of help? Or throw him out, on the principle that government should not be handing out favors to business? This question …

Dani Rodrik

Mercantilism Reconsidered

CAMBRIDGE: A businessman walks into a government minister’s office and says he needs help. What should the minister do? Invite him in for a cup of coffee and ask how the government can be of help? Or throw him out, on the principle that government should not be handing out favors to business? This question …

Dani Rodrik

The bumpy road Ahead

CAMBRIDGE: If stock market and interest-rate spreads are to be believed, America’s economy has seen the worst and may be on its way to a slow recovery. But the troubles for the world economy are just starting. If globalization does not get the fix it needs, economic prospects will be dim for rich and poor …

Dani Rodrik

A De-Globalized world?

CAMBRIDGE: It may take a few months or a couple of years, but one way or another the United States and other advanced economies will eventually recover from today’s crisis. The world economy, however, is unlikely to look the same. Even with the worst of the crisis over, we are likely to find ourselves in …

Dani Rodrik

An IMF we can love?

CAMBRIDGE: What a difference the crisis has made for the International Monetary Fund. It was just a few months ago that this important but unloved institution, a landmark of post-war global economic arrangements, seemed destined to irrelevance. The IMF has long been a whipping boy for both left and right – the former because of …

Dani Rodrik

Coming Soon: Capitalism 3.0

CAMBRIDGE: Capitalism is in the throes of its most severe crisis in many decades. A combination of deep recession, global economic dislocations, and effective nationalization of large swathes of the financial sector in the world’s advanced economies has deeply unsettled the balance between markets and states. Where the new balance will be struck is anybody’s …

Dani Rodrik

A Time to Experiment

CAMBRIDGE: The world economy enters 2009 with more uncertainty (and anxiety) than at any time in recent memory. Although the financial crisis appears to be contained in the United States and Europe, its full repercussions will not be clear for some time. The advanced countries are in for the worst economic downturn since the Great …

Dani Rodrik

Let developing nations rule

CAMBRIDGE: There is a silver lining for developing nations in the present crisis, for they will emerge with a much bigger say in the institutions that govern economic globalization. Once the dust settles, China, India, Brazil, South Korea, and a handful of other “emerging nations will be able to exercise greater influence over the way …

Dani Rodrik

Save the Emerging Markets

CAMBRIDGE: If the world were fair, most emerging markets would be watching the financial crisis engulfing the world’s advanced economies from the sidelines – if not entirely unaffected, not overly concerned either. For once, what has set financial markets ablaze are not their excesses, but those of Wall Street. Emerging markets’ external and fiscal positions …

Dani Rodrik

Who killed Wall Street?

CAMBRIDGE: You don’t have to break a sweat to be a finance skeptic these days. So let’s remind ourselves how compelling the logic of the financial innovation that led us to our current predicament seemed not too long ago. Who wouldn’t want credit markets to serve the cause of home ownership? So we start by …

Dani Rodrik

Is Export Led Growth Passé?

CAMBRIDGE: For five decades, developing countries that managed to develop competitive export industries have been rewarded with astonishing growth rates: Taiwan and South Korea in the 1960’s, Southeast Asian countries like Malaysia, Thailand, and Singapore in the 1970’s, China in the 1980’s, and eventually India in the 1990’s. In all these cases, and a few …

Dani Rodrik

Don't cry for Doha

Will they or won’t they? Will the world’s trade ministers eventually sign a new multilateral trade agreement that reduces agricultural subsidies and industrial tariffs, or will they walk away empty-handed? The saga has been ongoing since November 2001, when the current round of negotiations was launched in Doha, Qatar, with numerous subsequent ups and downs, …

Dani Rodrik

The death of the globalization consensus

The world economy has seen globalization collapse once already. The gold standard era – with its free capital mobility and open trade – came to an abrupt end in 1914 and could not be resuscitated after World War I. Are we about to witness a similar global economic breakdown? The question is not fanciful. Although …

Dani Rodrik

Is there a new Washington consensus?

Two and a half years ago, senior staff members of the World Bank approached the Nobel laureate Michael Spence to ask him to lead a high-powered commission on economic growth. The question at hand could not have been more important. The “Washington consensus – the infamous list of do’s and don’ts for policymakers in developing …

Dani Rodrik