Fujimori's Peru

How can poor countries achieve economic development and surmount poverty?For many years poor countries saw state-led, import-substitution industrialization as the solution.That changed in the 1980s when debilitating economic failure forced them to seek assistance from rich countries.As a condition for assistance, the latter, acting through the international financial institutions, enjoined struggling nations to adopt freewheeling capitalism and wide open global trade, insisting that it was the only path to development.Although this view has dominated development practice since the 1980s, its efficacy is dubious.Scholars associated with the 'developmental state' school have long argued that the belief that the now developed countries 'made it' via free trade is a myth.One of these scholars, Ha-Joon Chang, a professor at Cambridge University, examines neoliberal economic canons in Bad Samaritans, noting that the set of economic policy measures prescribed for developing countries by developed ones contradict their own path to success.He stresses the irony that developed countries did not pursue such policies when they were climbing the economic ladder of success.Rather, they employed high tariffs and sectoral industrial policies, infant industry protection, export subsidies, discrimination against foreign investors, etc. -all practices to which they now object.They have thus 'rewritten their own histories to make them more consistent with how they see themselves today, rather than as they really were' (p.16).Drawing on a large body of studies and writing with force and erudition, Chang convincingly shows that Britain and the USA -the supposed homes of free tradein fact protected infant industries until such time that their industries were in a position to compete globally.Only when Britain, the first country to industrialize, had attained industrial superiority did it promote free trade.Similarly, once the USA, long the most ardent practitioner and the intellectual home of protectionism had attained absolute industrial supremacy through the nationalistic use of heavy protectionism, it too advocated free trade.Practically all developed countries, to varying degrees, sheltered infant industries from global competition until they 'caught-up' with more technologically advanced nations.Moreover, during their economic ascent, they ignored patent rights and engaged in industrial pirating and espionage, and decried as hypocritical those who, having achieved progress through protective duties and restrictions, turned around to promote free trade.Friedrich List, the German economist, gained fame for likening Britain's promotion of free trade to 'kicking away the ladder' by which it had risen to deprive others of the means of climbing up, and this sentiment resonated widely.Chang uses the rise of the newly-industrializing countries of East Asia to accentuate the myth of free trade.In contrast to the World Bank's discredited attribution of the ascendance of the East Asian NICs to orthodox, neoliberal economic policy measures

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