Policymakers in the developing world are grappling with new dilemmas
created by openness to trade and capital flows. What role, if any,
remains for the state in promoting industrialization? Does openness
worsen inequality, and if so, what can be done about it? What is the
best way to handle turbulence from the world economy, especially the
fickleness of international capital flows? In this study, Dani Rodrik
argues that successful integration into the world economy requires a
complementary set of policies and institutions at home. Policymakers
must reinforce their external strategy of liberalization with an
internal strategy that gives the state substantial responsibility in
building physical and human capital and mediating social conflicts.