A Structuralist and Institutionalist developmental assessment of and reaction to New Developmentalism

Carlos Aguiar de Medeiros
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Carlos Aguiar de Medeiros: Economic Institute of UFRJ, Rio de Janeiro, Brazil

Review of Keynesian Economics, 2020, vol. 8, issue 2, 147-167

Abstract: This paper provides a critical assessment of the New Developmental view summarized in Bresser-Pereira (2016). It is argued that although New Developmentalism correctly observes that Classical Developmentalism underestimated and insufficiently considered the role of demand as a motor of growth (this critique also applies to modern Schumpeterian views), New Developmentalism theoretically reduces or explains changes in quantities (in particular external demand) to the price mechanism (in particular the exchange rate). It is argued that the New Developmental narrative of comparative development underestimates the role of industrial policy and domestic demand in increasing productivity. Instead, New Developmentalism makes the real exchange rate the main lever for investment, structural change, and productivity growth. At the same time, New Developmentalism's description of some development trajectories is actually (though it is unacknowledged) closer to Classical Developmentalism, modern Institutionalism, and Schumpeterian thinking. Those intellectual traditions argue that development and structural change require strategic policies which go far beyond managing macroeconomic prices.

Keywords: Developmentalism; economic growth; economic policies; exchange rate; income distribution; East Asian countries; Latin American countries (search for similar items in EconPapers)
JEL-codes: O1 O11 O14 O24 O25 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (5)

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Persistent link: https://EconPapers.repec.org/RePEc:elg:rokejn:v:8:y:2020:i:2:p147-167

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