National States and Global Markets: Is There a Prima Facie Case for Neoliberal Policies in the Developing World?

Abstract

Abstract One disagreement that divides students of globalization and national development is the influence of international capitalism on economic growth and human welfare in developing countries. Another is the role of national states in harnessing global markets to serve broad-based human welfare. Those in the “neoliberal” camp view international capitalism as an unalloyed benefit that spurs economic growth, but consider strong, interventionist states counterproductive and repressive. Critics of globalization view international markets with skepticism, but champion the need for strong redistributionist governments in spreading both wealth and welfare. Using a maximal sample of LDCs (N=131) over the longest time period possible (1960–2007), we employ pooled time-series analysis with country fixed effects to determine whether a prima facie case can be made for either perspective. Regressing both economic growth and changes in infant mortality, our results broadly justify a “neoliberal” perspective in the contemporary development of LDCs, but some forms of government spending also contribute to prosperity and human welfare (i.e., education and the military), which tempers our conclusions.