As Hernando De Soto wistfully puts it in his classic, The Mystery of Capital, “there is one game in town”. Of course, that game is mimicking the market institutions in the prosperous west.
But, the tragedy is that the recommended menu for these developing countries often bears little resemblance to the set of policies that guided countries of the west to its prosperity or the policies they are implementing to sustain their prosperity. Cambridge University economist, Ha-Joon Chang, has assembled evidence to prove that the Now Developed Countries of the west embarked upon the opposite of the ‘free market’ policies which they prescribe for developing countries. Their periods of growth were marked by infant industry protection, expansionary public expenditure, and massive government intervention to correct market failures. But they asked those aspiring to development to do the opposite. Just as George Fredrich List, the father of economic nationalism, put it, nation that attain development through dirigisme economics turn back and remove the ladder and others to follow free market economics.
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