It does not really need a crisis to show us that our current development strategy is flawed. Even during the previous boom, the pattern of growth in both developed and developing countries had too many limitations, paradoxes and fragilities. Everyone now knows that it was unsustainable, based on speculative practices that were enabled and encouraged by financial deregulation. But it also drew rapaciously on natural resources. And it was deeply unequal. Contrary to general perception, most people in the developing world, even within the most dynamic segment of Asia, did not gain from that boom.
The financial bubble in the US attracted savings from across the world, including from the poorest developing countries, so that for at least five years the South transferred financial resources to the North. Developing country governments opened up their markets to trade and finance, gave up on monetary policy and pursued ‘correct’ policies that reduced public spending. So development projects remained incomplete and citizens were deprived of even the most essential rights.
