Will new trade policies leave the developing world behind?

Second, US policymakers aim to make up for decades of neglecting domestic economic, social, and environmental priorities by focusing on policies that promote resilience, dependable supply chains, good jobs, and a clean-energy transition. The US seems happy to pursue these objectives on its own, even if its actions could adversely a ect other countries.

The best example of this is the In ation Reduction Act, the Biden administration’s landmark climate-transition legislation. Many governments in Europe and elsewhere have been outraged by the $370 billion clean-energy subsidies included in the IRA, which favor US-based producers. Pascal Lamy, the former head of the WTO, recently called on developing countries to join the European Union in forming a “North-South” coalition without the US, to “create a disadvantage for [the Americans] that would make them change their position.”

To be sure, Europe has its own brand of unilateralism, albeit a softer one than America’s. The

EU’s Carbon Border Adjustment Mechanism (CBAM), which aims to maintain high carbon prices within the bloc by imposing duties on carbon-intensive imports such as steel and aluminum, is meant to placate European rms that would otherwise nd themselves at a competitive disadvantage. But it also makes it harder for developing countries such as India, Egypt, and Mozambique to access European markets.

So, developing countries have plenty to worry about. As the US and Europe attempt to isolate China and craft policies in support of their new domestic agendas, they are unlikely to have poorer economies’ interests in mind. For small lower-income countries, multilateralism remains the only safeguard against the solipsism of great powers. But developing countries would do well to recognize that these unilateral policies are driven by legitimate concerns and are often aimed at meeting global needs. Climate change, for example, is clearly an existential threat to human- ity. If US and European policies accelerate the green transition, poorer countries will bene t, too. Instead of condemning these policies, lowerand middle-income countries should seek transfers andnancing that would enable them to follow suit. For example, they should demand that European countries channel CBAM revenues to developing-country exporters to support these rms’ investment in greener technologies. More broadly, developing countries must remember that their economic prospects are determined rst and foremost by their own policies. Short of a 1930s-style worldwide plunge into protectionism, they will likely not lose access to Western markets. Moreover, export-oriented countries such as South Korea and Taiwan engineered their growth miracles during the 1960s and 1970s, when developed countries were far more protectionist than they are now or likely to be in the foreseeable future.

It is also true that the export-oriented industrialization

By Dani Rodrik

model has run out of steam for reasons that have little to do with the Global North’s protectionist policies. Because today’s manufacturing technologies are so skill- and capital-intensive, it is di cult for latecomers to mimic the success of East Asian tigers (I call this phenomenon “premature de-industrialization”). Future development models would have to rely on service industries and small and medium-size enterprises, rather than on industrial exports, to build a thriving middle class.

Developed countries’ renewed focus on building resilient, equitable domestic economies could also bene t the global economy. Cohesive societies are far more likely to support openness to international trade and investment than those roiled by the inegalitarian forces of hyper-globalization. As many studies have shown, disappearing jobs and regional economic decline can often engender ethno-nationalist politics.

In a 2019 “letter to the next generation,” Christine