The history of development economics, since its inception, has been one of fads and intellectual bubbles. For decades, the U.S. government and international financial institutions have glommed on to a singular recipe for economic development, convinced that their latest, greatest idea would work. These have included the “Big Push” of massive public and private goods investments back in the 1960s and the neoliberal Washington Consensus that dominated post-Cold War thinking.
The terms used to describe the poorer countries of the world have also changed, from the Third World to emerging markets to the global south. But the faith among development economists that One Economics Recipe Will Rule Them All has persisted.
In the post-neoliberal moment of 2025, perhaps some epistemic humility is called for in the economics profession. There is now an elite consensus that the neoliberal model of economic development was far too cookie-cutter in its approach—but not much agreement on what comes next.
Perhaps then, the moment has come to return to a more contextual, country-specific approach. Harvard University economist Dani Rodrik has been a longtime fan of this concept, blasting development “big think,” arguing in 2007, “The best-designed policies are always contingent on local conditions, making use of preexisting advantages and seeking to overcome domestic constraints. That is why successful reforms often do not travel well.”
Rodrik has advocated for a return to the ideas of Albert O. Hirschman, one of the founders of development economics and the author of The Strategy of Economic Development, published in 1958. While Hirschman is celebrated for his myriad contributions to the social sciences, his ideas about development economics fell out of favor decades ago. Just before the 2008 financial crisis, Rodrik suggested that this was a mistake: “Hirschman looks less and less the maverick that he fancied himself to be. Conventional wisdom may finally be catching up with him.”
That assessment may have been premature in 2007, but in 2025, it seems trenchant. Hirschman was a big believer in eclecticism in development projects—an idea that resonates with recent social science trends acknowledging the role of complexity. Is it time for a Hirschmanesque approach to economic development? There are reasons to be optimistic —and also reasons to be skeptical.
While Hirschman has been celebrated in the public sphere, the economics profession holds a somewhat more muted view. As one critical assessment noted in 2022, Hirschman has long been “the noneconomists’ favorite economist. … He was not a model builder in a profession of model building. He was not a statistician in a world where numbers mattered.” It is not a coincidence that Hirschman’s most widely cited works are not about development economics. His most famous book, Exit, Voice, and Loyalty, is a brilliant exegesis of how nonmarket tactics can pressure large organizations.
More than 30 years ago, economist Paul Krugman provided an intellectual epitaph to Hirschman’s legacy in development economics, explaining that “while I am a great admirer of The Strategy of Economic Development, I do not think that it was helpful to development economics.” Even more intellectually supportive assessments acknowledge, as the University of Denver’s Ilene Grabel did in 2018, that “Hirschman flouted what would become central norms in the social sciences.” Multiple scholars have noted that there is no such thing as a Hirschmanesque school of thought in development economics.
Nonetheless, there are valid reasons for asking whether another look at Hirschman’s approach to economic development is warranted. In his work, he rejected the universalism of the neoliberal consensus—an approach that suggested a radically reduced state role and a prioritization of letting global markets guide resource allocation. He also spurned the grand designs of the Big Push school, which advocated an extremely balanced, finely calibrated surge of investment across every major economic sector.
His approach toward economic development rested on a few key tenets. The first was that, like economist Friedrich von Hayek, Hirschman posited that information was always partial and all policymaking interventions had unanticipated effects. In other words, Hirschman was leery of sweeping policy interventions because he believed it was impossible to anticipate every second-order and third-order effect.
Second, in contrast to the Big Push approach that stressed a precise sequencing of external investments, Hirschman embraced the notion that growth was always unbalanced and that there was no a priori proper sequence for underdeveloped nations to become developed. He believed that development would apply pressure on forward and backward linkages and the bottlenecks in those linkages would create sufficient pressure for additional policy reforms.
Hirschman embraced strategic focus by policymakers on sectoral targets of opportunity and localism and eclecticism in their approaches to development. These are concepts that successors such as Rodrik have been advocating in this century as well. As the intellectual sheen of neoliberalism has worn off and even developed great powers embrace industrial policies, maybe Hirschman really is the answer for 2025.
Except—and with Hirschman, there is always an “except”—it is impossible for anyone who writes a book with the title A Propensity to Self-Subversion to be full-throated in support of any singular development approach. Hirschman was sufficiently dialectical in his approach, with a bevy of feedback loops and recursive processes, such that any singular development approach always runs into new geoeconomic dangers.
The highlights of Hirschman’s oeuvre offer a cautionary warning against believing that even an eclectic approach to economic development will be terribly successful.
Hirschman’s first book—National Power and the Structure of Foreign Trade (1945)—has become newly relevant again. Generalizing from Nazi Germany’s strategy of inculcating asymmetric dependence in Eastern European countries during the Great Depression, Hirschman stressed the conscious creation of “conditions which make the interruption of trade of much graver concern to its trading partners than to itself.” In other words, Hirschman warned that smaller and less developed economies could be vulnerable to asymmetric dependence from a larger economy. One way this could happen was through the “exclusive complementarity” of global production chains. Another mechanism was that expanded trade would lead to the creation of a “commercial fifth column” of interest groups inculcated within the targeted countries that would have a vested interest in not alienating the trade partner.
In thinking through the precise methods through which states could enhance their national power through foreign trade, Hirschman concluded that the larger economy’s pursuit of national power did not necessarily sacrifice the pursuit of national plenty. For smaller and weaker economies, however, the dangers of asymmetric dependence were very real.
Many of these ideas are now considered vogue again, as discussions of economic statecraft, weaponized interdependence, and geoeconomics dominate the study of global political economy. The implications for economic development, however, are underappreciated. While Hirschman was far from being a devout free-trader, he did believe that trade was a vital ingredient for fostering rapid economic growth.
Unfortunately, the international system is shifting to a structure in which the largest markets are perfectly willing to use their economic power to establish market dominance and pressure smaller countries into making policy concessions. China has been doing this for decades in promoting its positions on Taiwan and human rights. Beijing’s dominance in green technology and the processing of critical minerals implies that any country aspiring to economic growth must manage its dependence on China.
Meanwhile, the first months of Donald Trump’s second term have been an exercise in the president trying to use U.S. economic leverage to extract a variety of economic and political concessions from allied countries. Some countries, such as Brazil, have demonstrated sufficient economic strength to resist. Others, however, have had little choice but to fashion a framework bargain with the Trump administration. For these countries, their reliance on the United States as a security and economic partner has undermined their bargaining position.
This cautionary tale of weaponized interdependence will make export-oriented growth strategies—or even strategies that require strategic inputs—far less viable for the near future. As Hirschman warned, geopolitics can trump market economics, narrowing the pathway to economic development.
At the same time, the intellectual shift away from economic openness has undermined noneconomic motivations for relying on global markets. Hirschman’s The Passions and the Interests (1977) challenged sociologist Max Weber’s well-known assertion that capitalism emerged out of a Calvinistic search for salvation. Hirschman noted that key thinkers viewed capitalism as a means through which violent tendencies in man and society could be tamed through the expansion of commercial activity. In other words, Hirschman argued that prior to Adam Smith, many philosophers believed that trade would tame man’s passions and let him focus on his material interests.
This belief has persisted long after Smith as well. International relations thinkers including Immanuel Kant, Norman Angell, Joseph S. Nye Jr., and Francis Fukuyama have argued that complex economic interdependence could act as a brake on conflict escalation. International relations scholarship has been supportive of this position. Nor has this been a purely intellectual argument: Policymakers including Cordell Hull, Jacques Delors, and Bill Clinton believed in the commercial peace as well.
But for many, the post-Cold War era represents a falsification of this worldview. Despite the depth of the Sino-American economic relationship, tensions between the two countries rose as China’s power increased. The European Union consciously pursued a strategy of engaging with Russia as a means of pacifying it: Ask Georgia and Ukraine how well that has worked out.
The decline of faith in the commercial peace has serious implications for economic development. During the neoliberal era, economic policy and foreign policy were symbiotic; embracing an open economy could make an economy safer and more prosperous. In 2025, that symbiosis seems to have collapsed. Unfortunately, the confident, optimistic claims of Montesquieu or James Steuart recounted by Hirschman in The Passions and the Interests have not been borne out. A world of increasing autarky is one that limits development choices for all policymakers.
Wrestling with Hirschman’s ideas is always a struggle to find insight from occasionally contradictory sets of ideas. It is understandable why some have turned to Hirschman as neoliberalism’s fortunes have faded. As a scholar who resolutely believed that paradigms were a hindrance to understanding, Hirschman would have approved of a more heterogeneous policy environment for economic development.
While the current moment might fit with Hirschman’s embrace of eclecticism, it lacks an essential Hirschmanesque ingredient: optimism about what can be achieved. Unfortunately, the belief that weaponized dependence is pervasive puts severe constraints on economic development strategies. In other words, Hirschman’s entire corpus of work offers a warning about the constraints on his recipe for economic development.