Development economics fell into disrepute in the West, especially in the USA, with the rise of neo-liberalism from the late seventies.

The eighties began with Carter appointee US Federal Reserve chief Paul Volcker’s sharp reversal of developing country growth of the seventies, with the UN promise of a New International Economic Order. The Reagan-Thatcher decade began with the debt crises of Latin America, Africa, Eastern Europe, Korea and the Philippines, enabling the post-Bretton Woods International Monetary Fund (IMF) to take over macroeconomic policy with its stabilization policies and the World Bank to require indebted governments to abandon development policies in favour of economic liberalization through structural adjustment policies.

Meanwhile, however, the protests at Seattle and since have continued to remind the world that all is not well with liberalization, with its international manifestation in the form of globalization. It is therefore useful to begin reconsidering development economics by the issues exacerbated by the current phase of globalization. Economic globalization poses serious challenges to the developing world, so much so that many in the South now think of globalization as inimical to development.

Since one size does not necessarily fit all, there is no universal formula for desirable national level reforms to cope with globalization. The big challenge for economic policy and regulation then is really at the international level. The governance of international organizations -- such as the Bretton Woods institutions and the WTO -- has to be fundamentally reformed in favour of equitable and sustained development, rather than assuming that liberalization and globalization will somehow miraculously achieve this objective.