Myra Imran Rafiq
21U00016
Group 5
Word count: 447/500
The financial crisis of 2008 was an eye-opening event that reshaped global perceptions pertaining
to economic growth and macroeconomic stability worldwide. Chapter 17, by Dani Rodrik sets the
playing field of this discussion by positing that the context of growth strategies is different as it is
now contingent on the level of development of economies. He builds his argument by stating how
notions akin to convergence, and the attainment of growth potential is often overlooked in growth
strategies. This leads to the idea of convergence being a driving force behind the institution of
“right” policies across the developing world since the process is dependent on structural
transformation entirely. Hence, Rodrik argues for an eventual financial deglobalization since it
manages exchange rates, which in turn aids different economies to pursue competitive trade
policies. Hence, Rodrik brings into attention that global interdependence may be exacerbating
instability, calling for vigilance over economies.
Chapter 18 examines a pivotal shift from convergence to replicability of the Chinese, and broader
growth models pertaining to South Asia. Andrew Sheng highlights that growth strategies have
gradually shifted towards the adoption of those strategies which “work” in practice. While Sheng
advocates for the Asian growth model to be a pinnacle of success, he does maintain the need for
countering information asymmetry, fragmentation, and warns of an over-reliance on resourceintensive consumption which he deems as “unsustainable.” Expanding on Sheng’s ideas, Michael
Spence offers a similar observation where he posits that post 2008, nations have started embarking
on a new growth path: prioritizing the environment. This can be achieved via immense focus on
urban planning, and different energy consumption patterns which act as precursors to equitable
growth prospects.
Hence, after analyzing all three chapters, it becomes evident that there are several challenges post
2008 crisis which need to be catered to effectively. First, as Rodrik pointed out, there is a need for
structural transformation; this equates to strengthening weak, or corrupt institutions in efforts to
bolster growth objectives. Second, there needs to be an emphasis on deglobalization. Albeit the
world is heavily intertwined in terms of supply chains, trade, and macroeconomic stability
indicators, there has to be a balance. Built in adjustment mechanisms need to be given precedence
in efforts to protect from external shocks. Third, realizing that resources are scarce, sustainable
practices are encouraged; this includes transitioning towards renewable forms of energy, investing
in low-emission transportation, and optimizing urban-rural density
In essence, post 2008 there has been a major shift in perceptions relating to macroeconomic
stability. Hence, there is a need for global coordination efforts to transition from inequity, and onesided policymaking ventures towards sustainable practices which give precedence to better
economic indicators, and improve global development.