Friday, December 3 12-2 pm
Madhavi Cherian: Economic Policymaking and the Role of the State: A Comparative Study of India and Indonesia
This paper examines the view that the turn to neoliberalism by developing countries is inevitable, due to the structural constraints in the form of fiscal and external account deficits that are inherent in the Import Substitution Industrialization (ISI) strategy adopted by late late developers. However, an analysis of the specific features of deregulation and liberalization in India and Indonesia reveals that changes in policy regime tend to be responsive to the evolving needs of the domestic bourgeoisie. The dirigiste regime generates its own internal class dynamics, which leads to demands for changes in the macroeconomic policy regime. While multilateral institutions exercise tremendous leverage due to their control over international currency, the imposition of structural reforms is limited by the class constellation in the host country. The selective nature of reforms, wherein only parts of the neoliberal policy prescriptions of the IMF and The World Bank are implemented, testifies to the importance of domestic class constellations and limitations of the multilateral institutions’ ability to impose structuralreforms. This in turn questions the idea of neoliberalism as a uniformly applicable set of policy measures that are a rational response by developing states to the shortcomings of the state led developmental paradigm.