by Here are the figures from the World Bank for the two relevant periods by region:Average Per Capita GDP Growth Rates 1960–2010 Region | 1960–1980 | 1980–2010 sub-Saharan Africa | 2.0% | 0.2% Latin America and the Caribbean | 3.1% | 0.8% Middle East and North Africa | 2.5% | 1.3% East Asia and Pacific | 5.3% | 7% Developed Nations | 3.2% | 1.8% (cited in Chang 2015: 25–26). Note carefully: in every region except East Asia per capita GDP growth rates slumped under neoliberalism.There is one exception: East Asia. Was neoliberalism pursued here? Well, to some extent in Japan, South Korea and Taiwan from the 1990s (think East Asian financial crisis and the Japanese lost decade), but not in China, which is where the really spectacular growth occurred in the 1980 to 2010 period.Also note well: Japan, South Korea and Taiwan from the 1950s to the 1970s pursued (and to some extent into the 1990s) massive anti-free market, state-directed industrial policies combined with access to Western markets. They industrialised and were very successful.China from the 1980s has been following a similar playbook with a mixed economy and state-directed industrial policy and neo-mercantilism. The success of China is not – repeat not – because of neoliberalism (see here). Nor was the success of Japan, South Korea and Taiwan, before the 1990s.But we’ve known all this for years.
Topics:
Lord Keynes considers the following as important: average per capita, GDP growth rates, Neoliberalism, Post-WWII Bretton Woods system
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Average Per Capita GDP Growth Rates 1960–2010Note carefully: in every region except East Asia per capita GDP growth rates slumped under neoliberalism.
Region | 1960–1980 | 1980–2010
sub-Saharan Africa | 2.0% | 0.2%
Latin America and the Caribbean | 3.1% | 0.8%
Middle East and North Africa | 2.5% | 1.3%
East Asia and Pacific | 5.3% | 7%
Developed Nations | 3.2% | 1.8%
(cited in Chang 2015: 25–26).
There is one exception: East Asia. Was neoliberalism pursued here? Well, to some extent in Japan, South Korea and Taiwan from the 1990s (think East Asian financial crisis and the Japanese lost decade), but not in China, which is where the really spectacular growth occurred in the 1980 to 2010 period.
Also note well: Japan, South Korea and Taiwan from the 1950s to the 1970s pursued (and to some extent into the 1990s) massive anti-free market, state-directed industrial policies combined with access to Western markets. They industrialised and were very successful.
China from the 1980s has been following a similar playbook with a mixed economy and state-directed industrial policy and neo-mercantilism. The success of China is not – repeat not – because of neoliberalism (see here). Nor was the success of Japan, South Korea and Taiwan, before the 1990s.
But we’ve known all this for years.
The late Angus Maddison was widely recognized as a leading scholar on the history of rates of economic growth. In 1995, Maddison published a study called Monitoring the World Economy 1820–1992 (OECD Development Centre, Paris, 1995), the first authoritative study on the effects of globalization and neoliberalism on growth rates in the developing and developed world, as compared with the Bretton Woods era.
Maddison compared growth rates both in terms of real GDP and real per capita GDP in seven major regions of the world from 1950 to 1973 with those in the early era of globalization (1974–1992). He found that there were significant declines in the average annual growth rates in six of the seven areas: in fact, the average annual rate of growth of world GDP was only half of what it had been under Bretton Woods. That is, world economic growth was about 50% lower than in the Bretton Woods era.
The only region that showed an increase was East Asia, precisely the region dominated by the protectionist state-led model of industrialization, led by Japan, South Korea, Taiwan, and (from the early 1990s) China.
Maddison’s study can be supplemented by the following research:
Mark Weisbrot, Dean Baker, Egor Kraev, and Judy Chen. 2001. Scorecard on Globalization 1980–2000: 20 Years of Diminished Progress, Centre for Economic Policy Research (CEPR)Weisbrot et al. (2001) and Chang (2015) confirm the findings of Maddison. The era of globalization was a disaster for much of the Third World.
http://cepr.net/publications/reports/the-scorecard-on-globalization-1980-2000-20-years-of-diminished-progressChang, Ha-Joon. 2015. “The Failure of Neoliberalism and the Future of Capitalism,” in Satoshi Fujii, Beyond Global Capitalism. Springer, Tokyo. 19–34.
Of course, even neoliberalism delivers some poverty reduction because per capita GDP growth was still positive, and it is correct that global poverty has fallen over the last 20 years: but the overwhelming number of such people are in China and East Asia, and above all in China where the government largely rejects the orthodox policy prescriptions of neoliberalism.
So which system was better for the Third World: (1) the Bretton Woods era of import substitution industrialisation that gave a space for economic nationalism or (2) neoliberalism?
The answer is (1). The system also avoided the endless economic crises and instabilities of neoliberalism as well.
We live in interesting times, however. Even the IMF is starting to admit – even if in coy and embarrassed terms – that neoliberalism has failed.
BIBLIOGRAPHY
Chang, Ha-Joon. 2015. “The Failure of Neoliberalism and the Future of Capitalism,” in Satoshi Fujii, Beyond Global Capitalism. Springer, Tokyo. 19–34.
Weisbrot, Mark, Baker, Dean, Kraev, Egor and Judy Chen. 2001. Scorecard on Globalization 1980–2000: 20 Years of Diminished Progress, Centre for Economic Policy Research (CEPR)
http://cepr.net/publications/reports/the-scorecard-on-globalization-1980-2000-20-years-of-diminished-progress