Global rules and markets : constraints over policy autonomy in developing countries

This paper examines in an integrated manner the multiple dimensions of what has come to be called the “policy space” or “policy autonomy” of developing countries, i.e. their ability to calibrate national policies to local conditions and needs (especially with respect to their development objectives and capacity to foster conditions for steady quality employment growth) in relation to global economic rules and practices. After a brief discussion of the concept of policy autonomy, the paper focuses on the sources of the constraints, the rationale for multilateral rules as a global collective action, the nature of existing multilateral disciplines and their relative impact on policy space in developed and developing countries. This is followed by a discussion of the constraints exerted by multilateral rules and practices on development policy in four key areas: industrial tariffs, industrial subsidies, investment and technology policies. The paper then concentrates on macroeconomic policies and examines the extent to which they are circumscribed by influences associated with external financing, both private and official.