Eight strategies for development in comparison

The article provides a broad-based overview on competing development strategies and the economic performance of developing countries, mainly since the year 2000. Four traditional mainstream development strategies are discussed (Washington Consensus, neo-liberalism, "good governance" and MDGs) and three long-debated key strategic issues are reconsidered (inward or outward development with export-led growth, industrialisation or growth with predominant primary goods exports, foreign-aid-based development). A heterodox approach to development with a focus on macroeconomic policies and structural change is added and discussed in more detail. Implicitly, this lays the groundwork for a macroeconomic theory of development. The rough empirical comparison finds that countries and areas with strong emphasis on macroeconomic policies, mainly in Asia, have performed unambiguously better than the mainstream approaches since 1980. From successful Asian countries, it can be learnt that a long-run continuous growth and development performance with more resilience against adverse shocks is key. Almost all larger middle-income countries have embarked on industrialisation, thereby strategies based upon primary commodities or high current account deficits are unlikely to be successful in the long run. A stronger role of a package of six macroeconomic policies is advised, particularly for the larger economies. Size matters in this respect. Smaller countries depend stronger on market niches and idiosyncratic strategies. The global economic order, due to liberalisation of trade and finance, including the prevailing global currency system, sets harsh constraints for policy space towards implementing national strategies.