Do We Need New Economic Models for the Changing Times

Working Paper No. 12

Do We Need New Economic Models for the Changing Times

Author: Danny Leipziger

Publication Year: February 2019

There is little doubt that recent trends and events have gone beyond the new normal and that they have given rise to a new trajectory, one further away from the prevailing paradigm of globalization‐led growth. This is seen in new directions of economic policy in the U.S., Brexit and strains in the EU, the changing position of China in the global economy, as well as the rise of inequality and distributional concerns in advanced and even upper middle‐income countries. Hence, the question as to whether the prevailing principles that dominated mainstream economic policymaking are now passé is critically relevant. While looking ahead is a highly uncertain endeavor, it can reasonably be surmised that disruptive technologies, rising nationalism, aging, and a China‐dominant East Asia are fairly sure bets. In this new set of circumstances, Emerging Market and Developing Economies (EMDEs) will face a new set of challenges in addition to ones already confronting them.