The Political Economy of National Development: A Research Agenda after Neoliberal Reform

From the mid-1940s, strategies and policies of state-directed development empowered the state to transform a set of relationships among labor and domestic and international capital to reorder priorities of production and investment within national boundaries. Associated theories of national development, including dependency theory, made critical interventions in how we understood states, markets and the international economy in the context of late development. From the early 1980s, however, domestic reformers and international institutions dismantled state-directed development in response to profound shocks to the international economy of the previous decade, through processes of neoliberal reform in most developing countries. With the demise of state-directed development, convergent understandings of the political economy of national development were repudiated; there is no consensus on the meaning of national development today. Rather, three research agendas have arisen, 1) focusing on the provision of public and social goods to individuals and communities, 2) analyzing firm-level “upgrading” relationships both within and across borders, and 3) exploring the capacities of states to execute industrial policy or enhance their domestic governance. These three agendas highlight vital aspects of the dilemmas of development, but they do not provide an integrated perspective of the political economy of national development. This article proposes revisiting and updating Cardoso and Faletto’s “historical-structural analysis,” which can incorporate the interactions among domestic governments, firms and other economic actors, international agencies, multinationals and global structures and institutions. It updates this approach by exploring the ways in which neoliberal reform has disarticulated capital, labor and the state apparatus domestically, while incorporating institutional change to the structures of international trade and investment. Revised historical-structural analysis can thus represent a crucial framework for understanding the possibilities of particular national growth models, and the barriers to these trajectories from domestic and international sources.