Economic Challenges in the Twenty‑First Century 345Detractors of economic liberalism, including many economic radicals and some
working within the UN development community, point to a dif er ent set of indicators
to argue that the gap between rich and poor is actually increasing and that more radi-
cal change is needed. The changes that the de pen dency school of radical po liti cal econ-
omy has advocated include more regulation of MNCs, improved means of technology
transfer, better terms of trade through commodity pricing, more debt relief, and radical
restructuring of international financial institutions. Only debt relief and restructuring
of the financial institutions actually remain subjects of discussion.
Meanwhile, during the 1980s and early 1990s, the East Asian “tigers”— South
Korea, Singapore, and Taiwan— saw the results of a statist approach to development.
States actually supported key industries through subsidies to enhance their international
competitiveness. With internationally strong industries, economic wealth would accrue.
More recently, a variation on this thinking has been labeled the Beijing Consen-
sus, pointing to China’s rapid, state- driven growth as a model for development and an
alternative to economic liberalism. While there is no precise definition, the Beijing Con-
sensus implies experimentation with policies that may be compatible with a state’s
po liti cal structure and cultural experience. Using cap i tal ist tools— the stock market
and professional man ag ers— state capitalism and state enterprises invest capital in their
own markets and abroad. At the same time, private companies are permitted to func-
tion. This approach had been viewed quite favorably since China continued to have
high growth rates—as much as 9.5 percent annually— and had apparent success in
weathering the global financial crisis. In the emerging markets of China, Rus sia, and
Brazil, 80 percent, 62 percent, and 38 percent, respectively, of the value of the stock
market is held by state enterprises. As The Economist reports, “The invisible hand of the
market is giving way to the vis i ble, and often authoritarian, hand of state capital-
ism.”^20 But, by 2015, China’s economic slowdown, its rapidly increasing debt load from
$7 trillion in 2007 to $28 trillion in 2014, its oversold real estate market, and un regu-
la ted banking have led critics to question the sustainability of that model. Further proof
came in 2015 with the stunning stock market declines, not only in China itself but
also in New York, Frankfort, Tokyo, Singapore, and beyond. Although China accounts
for only 15 percent of global output, the country has contributed up to half of recent
global growth— hence, markets worldwide respond to China’s economic prob lems.
crises of economic globalization
International crises like those connected with the Chinese decline have been a recur-
rent feature of the global economic system, ranging from the 1982 Mexican debt crisis
to the Asian financial crisis (1997–99). The booms and busts of international petro-
leum markets have been particularly volatile. As a key commodity necessary for eco-
nomic growth in the industrial era, a major driver of economic success for the