Can the Global Economy Be Healed?

Published: Monday, November 3, 2025 at 11:00 am

Can the Global Economy Be Healed? A New Approach to Economic Challenges

Renowned economist Dani Rodrik argues for a shift in global economic strategy, moving away from the pre-Trump era's reliance on one-size-fits-all trade rules and transnational agencies. He believes this creates an opportunity to address key domestic challenges: restoring the middle class, reducing poverty, and tackling climate change. Rodrik advocates for an "experimental" approach, emphasizing government's role in areas like worker skill upgrades, boosting low-wage worker bargaining power, and strategic industry investment.

Rodrik's perspective has evolved since his 1997 book, where he highlighted the risks of globalization. He now sees the need to redefine global commerce, particularly with the U.S. and China as key players. He is optimistic about China's renewable energy initiatives, which he believes can serve as a model for other countries. He supports targeted tariffs to protect vital industries but stresses the importance of focusing on the services sector, which employs the majority of workers.

Rodrik proposes a model that mimics the Chinese approach, involving government agencies, educational institutions, private businesses, and workers. He supports labor unions and wage boards. He also calls for a "workers' DARPA" (ARPA-W) to develop labor-friendly technologies, including those utilizing AI. He believes the services economy is the most direct route to building a large middle class in the developing world.

Rodrik's approach, which he calls a "Productivist Paradigm," focuses on government interventions to finance education, training, scientific research, and green technologies. He acknowledges challenges, including the influence of wealthy individuals and corporations, and the difficulty of international agreements. However, he remains optimistic, particularly regarding the progress of green energy, and believes that with the right policies, progress can be made in other areas as well.

BNN's Perspective: Rodrik's vision offers a compelling framework for navigating the complexities of the global economy. While his optimism may seem ambitious, his emphasis on domestic solutions and government intervention provides a valuable counterpoint to purely market-driven approaches. The success of his proposals hinges on effective policy implementation and international cooperation, which will be crucial in the years to come.

Keywords: global economy, Dani Rodrik, trade, manufacturing, services sector, middle class, poverty, climate change, China, renewable energy, industrial policy, ARPA-W, labor unions, wages, government intervention, globalization, Trump, Biden, green energy

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