The Paradox of finance- driven GlobalizaTion

Over the past thirty years, many developing countries have experienced spurts of economic growth followed by collapses. In the process, some have fallen further behind the advanced economies, while only a few have enjoyed sustained economic growth. This policy brief explores the reasons for these diverse outcomes. It suggests that the countries with the strongest performance are those that have rejected the dominant economic wisdom of trusting their growth prospects to financial markets, and instead have pursued innovative and heterodox policies, tailored to local conditions. This has allowed them to shift resources to activities that are increasingly productive. Meanwhile, many developing countries that have embraced finance-driven globalization (FDG) have seen their ability to achieve this structural transformation greatly reduced.