World Bank Reverses Stance, Endorses Industrial Policy Over Free-Market Absolutism
The World Bank, long considered the intellectual center of the Washington Consensus and free-market economics, has issued a new report admitting its previous opposition to industrial policy was mistaken. For decades, the institution argued that state-led efforts to shape economies were ineffective, citing the success of East Asian Tigers as proof that market-friendly policies drove growth. However, the new report concludes that government intervention, when executed correctly, is an essential component of economic success and should be part of every nation's policy toolkit. This significant reversal challenges the longstanding taboo against industrial policy in development economics. Experts, including former U.S. National Security Adviser Jake Sullivan, describe the shift as a major admission that much of the established knowledge regarding national prosperity was incorrect. The change reflects a broader global trend away from strict laissez-faire capitalism, influenced by recent geopolitical shifts and supply chain vulnerabilities exposed during the pandemic. By validating the strategies used by countries like South Korea and Taiwan in their early development stages, the World Bank is reshaping the conditions for international development financing and offering a new framework for emerging economies seeking sustainable growth.
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World Bank Reverses Stance, Endorses Industrial Policy Over Free-Market Absolutism
The World Bank, long considered the intellectual center of the Washington Consensus and free-market economics, has issued a new report admitting its previous opposition to industrial policy was mistaken. For decades, the institution argued that state-led efforts to shape economies were ineffective, citing the success of East Asian Tigers as proof that market-friendly policies drove growth. However, the new report concludes that government intervention, when executed correctly, is an essential component of economic success and should be part of every nation's policy toolkit. This significant reversal challenges the longstanding taboo against industrial policy in development economics. Experts, including former U.S. National Security Adviser Jake Sullivan, describe the shift as a major admission that much of the established knowledge regarding national prosperity was incorrect. The change reflects a broader global trend away from strict laissez-faire capitalism, influenced by recent geopolitical shifts and supply chain vulnerabilities exposed during the pandemic. By validating the strategies used by countries like South Korea and Taiwan in their early development stages, the World Bank is reshaping the conditions for international development financing and offering a new framework for emerging economies seeking sustainable growth.
The Atlantic