The alleviation of poverty has become a seemingly sacred goal for the international community. How should policymakers weigh moral considerations such as human rights in their judgments about economic policies that increase wealth in poor countries?

I do not think most poor countries in the world face a real tradeoff between improving human rights and improving the material condition of the poor. On the one hand, improving human rights does not necessarily cost any money; it is just a function of treating individuals with the dignity that they require and enforcing certain universal standards like freedom of speech and freedom of association. On the other hand, economic policy is fundamentally about improving the material conditions of the poor, once again something that does not at all conflict with enforcement of human rights.

Many globalization proponents point to the economic success of China, India, and South Korea as evidence in favor of the trade liberalization rules set by the International Monetary Fund (IMF) and Washington Consensus. Do you draw the same conclusion?

Anyone who has looked at the evidence would argue that none of the three countries liberalized its trade in the early stages of economic growth. So it is very difficult to argue that economic growth in those countries was spurred by trade liberalization. In all three countries, trade liberalization followed rapid economic growth rather than preceded it. South Korea did not seriously liberalize its trade regime until the 1980s; India did not seriously liberalize its trade regime until the 1990s, about 15 years after growth had picked up; and China did not seriously improve its trade regime until the 1990s, about 15 to 20 years after its growth rate had started to pick up significantly. This does not mean these countries did not do things such as promote foreign investment, as in China, or promote exports, as in South Korea. But these were not at all the standard trade liberalization policies that multinational institutions promote.

What do you think is principally wrong with the current approach toward globalization of the IMF-Washington Consensus, particularly regarding the poorest developing nations?

I do not think anybody seriously believes in the Washington Consensus anymore. Now there is much greater appreciation for policies and economic strategies that are context specific, grounded in the realities of individual countries, whereas by the Washington Consensus, countries are given a list of 10 to 15 general things that countries ought to be doing as best as they can. So, I think that particular misperception is largely in the process of being corrected.

I also think that one consequence of the Washington Consensus was a glorification of integration of markets as an objective in itself. However, what we have found out is that we need to focus on economic growth over integration. Countries that grow integrate into the world economy, but countries that try to integrate into the world economy at all costs do not necessarily always get growth.

To what extent do you think such context-specific economic policies are being employed or advocated today? Are “home-grown” policies now the dominant approach toward economic growth strategies?

I think we are in a period of more or less muddling through. A lot of countries and international and financial institutions are groping for a different way of doing business. There is a lot of paying lip service to the idea that there ought to be different strokes for different folks. But in practice, when you look at the operational work that is done, say, at the World Bank or IMF with respect to different countries, you find the vast majority of economists practically replicating the same old habit of working from an accepted blueprint. So the picture is varied. There are some countries in the world where there are political leaders with sufficient self-confidence and political commitment that they are developing their own vision of how to develop. However, that is not happening in other countries. The main issue in economic growth today is not necessarily that views are changing that much in Washington but to what extent countries are taking their own futures into their own hands.

Why do you think it has been so easy, in a sense, for countries to take the blueprint approach toward growth?

It is for a number of reasons. One is that often political leaders are simply interested in the financial aid that comes along with asking for World Bank advice. They are not fundamentally interested in changing the way the economy is run. The World Bank will not simply give them money, and therefore the financial aid will only come entangled in some type of program. But if the country is not interested in investigating what the right program for itself is, then the World Bank will have to do it for that country, inevitably turning into a cookie-cutter kind of approach. So the difference in what approach different countries take is really due to the type of leadership, the commitment, and the capacity of different countries. It would be nice if we lived in a world where countries were run by accountable political leaders who were really interested in economic growth, but that is not the reality.

Given these serious financial opportunity costs associated with the World Trade Organization (WTO), World Bank, and IMF policies, how should developing countries strike a balance between domestic development and integration?

Developing countries have to have a good strategic sense of what their economic policies ought to be. Economic development is a goal in and of itself. Economic integration is, at best, an instrument that could help achieve that goal. What I observe is that countries with credible accessible developmental growth strategies also happen to be countries that have not integrated into the world economy. The objective of integration in and of itself is not one that necessarily will bring growth and development.

You touched upon this already, but how important do you think foreign aid is in combating global poverty? Columbia University economist Jeffrey Sachs, for example, considers foreign aid essential.

I think foreign aid can be useful for countries that are doing the right things for themselves. But I do not approach the problems of economic development with respect to whether there are enough financial resources coming from outside. Nor do I think that the availability of foreign aid is the primary obstacle to economic development in poor countries. Recent economic history suggests that the countries that develop and grow are countries that have not necessarily relied on a lot of foreign aid. This is really a question of priorities and perspectives: whether we think what countries need is first and foremost foreign aid or first and foremost a better appreciation of their own problems and how to solve them at home.