The global environment for development has changed, so development policies should change too. This podcast looks back at predictions from 2018, and discusses what the current geopolitical situation means for future growth policy.
In 2018, the International Growth Centre (IGC) published a series of blogs titled Unorthodox Policies for Unorthodox Times. Seven years later, as global leaders gather in Davos, the authors of these blogs—Tim Dobermann and Francesco Caselli—reflect on the key trends they identified and their implications for the future of development policy. This episode of VoxDevTalks explores their predictions, the accuracy of their insights, and the new challenges shaping development strategies in 2025.
Unorthodox policies for unorthodox times: Reflecting on seven years of change
The global landscape in 2018 was undergoing seismic shifts that prompted a re-evaluation of development policies.
“Around that time, we were finding ourselves tweaking the things we were saying... as we were reacting to news and changes in the world” Francesco Caselli
Key factors included:
- Geopolitical tensions: Brexit, the election of Donald Trump, and escalating trade conflicts signalled a departure from the stable global order of the 1990s and early 2000s.
- Technological acceleration: Advances in automation raised questions about the viability of export-led growth models.
- Climate change: Growing evidence of its economic and societal impacts demanded urgent action.
This convergence of challenges warranted a rethink of standard economic policy advice, and led the Tim and Francesco to label the times as "unorthodox", requiring a fresh approach to development thinking.
Revisiting predictions on global policy in 2018
While the blogs advocated adjustments rather than a complete overhaul of development strategies, some recommendations have gained even more relevance. For example, they questioned the feasibility of the traditional export-led growth model.
“We said then that that strategy looked less promising at the time, and I think that was a right call. All those trends that we were worried about then have proven possibly even more severe than we anticipated” Francesco Caselli
Factors such as automation and trade fragmentation have made this pathway increasingly precarious for developing countries. However, fundamentals like education, institutional strength, and human capital development remain vital.
Climate change: Missed opportunities
The warnings about climate change outlined in 2018 remain painfully relevant. Despite clear evidence of its impacts, progress has been slow. The missed opportunities for action, despite advances in green technology, are particularly frustrating.
Yet, there are reasons for optimism. The cost of solar, wind, and battery technologies has declined faster than anticipated, providing a path for sustainable growth.
“The economic costs of the green transition, if we had been serious about it, would have been much, much lower than we thought they might be and so it's incredibly discouraging that hasn't happened” Francesco Caselli
Tim notes that lots of progress has been made that would minimise any potential trade off between economic growth and climate mitigation. However, geopolitical tensions risk limiting the diffusion of these innovations to the countries that need them most.
Lessons from global trade during the pandemic
The fragility of global trade, highlighted in the 2018 blogs, has been exacerbated by geopolitical fragmentation and the COVID-19 pandemic. However, the pandemic also underscored the value of trade as a form of mutual insurance.
“It should have reminded us that we're losing quite a bit from retrenching on trade.” Francesco Caselli
Additionally, the crisis expedited the adoption of digital payments and mobile money, and forced governments to build up, or improve, their social protection systems.
The role of AI in development
One of the most significant developments since 2018 has been the rapid rise of artificial intelligence (AI).
“barely a mention in 2018 and now is possibly the most important determinants of future developments globally” Francesco Caselli
AI’s implications extend beyond labour market disruptions. It offers transformative potential for improving institutional efficiency, as seen in projects using AI to address judicial backlogs in India. However, the technology also poses challenges by further reducing the advantages of low-cost labour in developing countries, making it even harder to jump on the global value chain ladder.
Policies for economic development in 2025 and beyond
Looking to the future, the podcast identified key areas for policy focus:
1. Reimagining employment and growth
“The nature of where job creation will come from will inherently be quite different. There is still a bias towards thinking that manufacturing is the most plausible sector for job creation” Tim Dobermann
The emphasis is shifting from manufacturing to services, with countries like India demonstrating the potential of service sectors for job creation. Policymakers must explore how to foster productivity and job quality in these areas.
2. Adapting to geopolitical fragmentation
"I am more worried now than I was then" Francesco Caselli
In a more fragmented world facing more frequent shocks, it is harder than ever for countries to prioritise food security, conflict prevention, and self-reliance. While these basics are foundational for any development strategy, they can no longer be taken for granted.
3. Harnessing Green Innovations
Despite political inertia, the technological advancements in green energy offer immense opportunities. Governments must take an active role in adopting and spreading these innovations to ensure sustainable growth.
Reflections on optimism and pessimism
As the conversation closed, the speakers reflected on their current outlook compared to 2018. Francesco admitted he is more worried now, given the compounding challenges of climate change, geopolitical instability, and constrained fiscal space. However, Tim remains optimistic, believing in the potential for a world free of poverty and rich in opportunity.
Conclusion: Learning from the past to shape the future
This episode of VoxDevTalks underscores the importance of revisiting past predictions to navigate current challenges. While many predictions from 2018 have come true, the escalating severity of these issues demands bold, innovative policies.