It may be time for a global shift in focus to local economic planning

State action led by local governments could play an enlarged role in resource allocation as economies face newer challenges

- GORDON HANSON, DANI RODRIK & ROHAN SANDHU

We are at the dawn of a new age: the climate transition is upon us, the era of hyper-globalization is receding, middle classes worldwide are under strain and poverty reduction in developing countries faces new headwinds.

Even without the destabilizing shifts brought about by US President Donald Trump’s international trade and foreign aid policies, the world would be desperate for new solutions.

To devise them, governments must reconsider the fundamental question of who our economies and markets are meant to serve and reexamine the policies and institutions that have brought us to our current economic and political reckoning. While global cooperation and national resource mobilization will be necessary to address the challenges we now face, it is local action that offers the most promising path forward.

In the US and other advanced economies, the political backlash against globalization and multilateral institutions is rooted in the adverse effects that globalization and technological change have had on former industrial regions and middle-skill workers. Support for protectionism, hostility to immigration and openness to ideological extremism have emerged in an environment of economic distress and increasingly unequal access to opportunity. National governments’ inadequate policy responses underscore a need to address economic constraints locally through a portfolio of measures, including workforce development, support for small businesses, community reinvestment and promotion of R&D.