The dominant ideas in development economics have changed
considerably over the four decades of its existence. Similarly, the
influence of theory on policymaking has also changed, not only with new
ideas, but more importantly, with the ideological preferences of those
with power and influence, especially at the international level. During
the eighties, development economics-which has emphasised market failures
and other welfare reasons for judicious state intervention to ensure
greater equity and efficiency-was under siege from the intellectual
assault of market neo-conservatives in control of the major
international economic institutions such· as the World Bank and
International Monetary Fund, and supported by the dominant ideologies of
Thatcherism and Reaganomics at the global level. Political economy,
rejected in the seventies as an unsophisticated nineteenth century
approach appropriated by the political Left, re-emerged in the hands of
the Right as the main weapon in this assault. The collapse of the Soviet
Union and allied East European regimes and the marketisation of the
remaining economies still claiming to be in the socialist camp only
seemed to prove the worst claims of the generally politically
conservative economic liberals of the late twentieth century.
The political economy of exchange rate policy in central and east european countries - sector approach
