social conflict - Globalisation Social Conflict and...

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Globalisation, Social Conflict and Economic Growth Dani Rodrik 1. Introduction L ET me begin with a confession: until about a month ago, when I began to prepare for this lecture, I had not read any of Raul Prebisch’s writings. I was of course familiar with many of Prebisch’s ideas – his intellectual leadership at ECLA and UNCTAD, the so-called Prebisch-Singer thesis on the deterioration of the terms of trade for primary products, and his advocacy of import protection as a way of speeding up industrialisation. But like most development economists of my generation, I knew Prebisch second hand and mostly as a label associated with a particular type of development strategy. It is no secret that this development strategy – import substituting industrial- isation (ISI) – has now been out of favour for a while. By the late 1970s, neoclassical economists were pretty unanimous in their condemnation of the ISI strategy. And about a decade later, policy makers all over the developing world had converged on the same verdict. Prebisch’s name has become tainted by association with an apparently failed development strategy. Today’s conventional wisdom reverses the logic of Prebisch’s argument: those developing countries that took Prebisch’s advice and withdrew from the world economy, the new consensus goes, eventually floundered, while those that embraced trade prospered beyond expectations. Anyone who has read Prebisch more closely – and I am now happy to include myself in this company – would object that the usual characterisation of Prebisch as an advocate of protection ignores a lot of subtleties. Prebisch did not favour indiscriminate protection. He anticipated his later critics by recognising that trade protection on its own would not lead to increased productivity in manufactures, and might even result in the opposite. 1 ß Blackwell Publishers Ltd 1998, 108 Cowley Road, Oxford OX4 1JF, UK and 350 Main Street, Malden, MA 02148, USA. 143 DANI RODRIK is professor of international political economy at the John F. Kennedy School of Government, Harvard University. This is the revised version of the Prebisch Lecture delivered at UNCTAD,Geneva, on 24 October, 1997. The author is grateful to Secretary General Rubens Ricupero for the invitation and for useful comments on the lecture, and to David Greenaway for his suggestions. 1 He wrote: ‘But protection by itself does not increase productivity. On the contrary, if excessive, it tends to weaken the incentive to produce’ (Prebisch, 1959, p.259).
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But my difficulty with the conventional wisdom, as just stated, goes beyond the details. I believe the development community has internalised the wrong lessons from the experience of countries that adopted the ISI strategy in Latin America and elsewhere. The correct interpretation, I think, goes something like this.
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