5 ideas
Rich nations climbed to prosperity using tariffs, subsidies, and state direction. Once on top, they preach free trade and use trade rules and aid conditions to deny those same tools to poor countries. The rules they promote describe the policies of countries that are already developed, not the path by which they developed.
Young industries in poor countries cannot survive direct competition with mature foreign producers, just as a child cannot compete in the labor market. Temporary, conditional tariffs and subsidies shelter them while they build capabilities. The protection is withdrawn once they can compete, and that is how they eventually get there.
South Korea's government protected and financed firms entering industries where the country had no comparative advantage. Samsung's electronics venture was subsidized by its other businesses for over a decade, and Nokia's electronics arm was subsidized for seventeen years before turning a profit. By textbook comparative-advantage logic these bets looked irrational, yet the firms became world leaders.
Nations once called lazy or undisciplined, such as Japan and Germany in the nineteenth century, were praised as industrious after they industrialized. Chang argues that culture both influences development and is shaped by it, and that traits attributed to fixed national character change with economic structure. Culture therefore should not be treated as an unchangeable barrier to development.
Developing countries grew faster from the 1960s to 1970s, under import substitution and state intervention, than they did during the 1980s to 2000s under liberalization and privatization, with Latin America and Africa stagnating. The policy package sold as the route to growth coincided with slower growth. Rising inequality and financial crises came with it.