A new theoretical framework: New Developmentalism
Luiz Carlos Bresser-Pereira
Challenge, February 4th, 2020
New Developmentalism is a theoretical framework being defined since the early 2000s searching to understand why most middle-income countries are falling behind the East Asian ones. It is a political economy and a development macroeconomics that originates from development economics and Post-Keynesian Macroeconomics. It argues that fast growth and catching up have been associated to developmentalism, not to economic liberalism. It defines the developmental state as the one that not only is engaged in industrial policy but also manages actively the five macroeconomic prices-mainly the interest and the exchange rate to keep competitive economically the companies that are technically efficient. New developmentalism is critical of fiscal indiscipline, while defends countercyclical fiscal policy, and is strongly critical of current account, arguing that growth is made at home. It has a new model of the Dutch disease from which is possible to deduce the means to neutralize it and achieve economic competitiveness.