Section II · Ideas That Built the World
Ha-Joon Chang
Development, Institutions, and the Myth of Free Markets
To understand Ha-Joon Chang, you have to begin with a challenge to conventional wisdom: what if the rules wealthy countries promote today are not the rules they used to become wealthy?
In modern economic discourse, developing countries are often encouraged to adopt free markets, reduce state intervention, and integrate into global trade. These prescriptions are presented as neutral, universal principles for growth.
Chang argues that this narrative is historically misleading.
At the center of his worldview is a defining claim:
Economic development has always depended on active state intervention and strategic protection.
Drawing on historical analysis, Chang shows that many of today’s advanced economies — including the United States and the United Kingdom — used tariffs, subsidies, and industrial policy during their periods of development. Only after achieving economic strength did they begin advocating for free trade and deregulation globally.
He describes this as “kicking away the ladder.”
From this perspective, economic systems are not governed by fixed laws.
They are shaped by policy choices, institutions, and power dynamics.
Markets, Chang argues, are not naturally occurring phenomena — they are constructed and regulated. The question is not whether the state should intervene, but how and for whom.
This reframes development economics.
Rather than assuming that openness and minimal regulation lead to growth, Chang emphasizes the role of governments in building domestic industries, investing in capabilities, and sequencing integration into the global economy.
Supporters see Chang as a corrective to orthodox economic policy.
They argue that he provides a more historically grounded understanding of development, highlighting the importance of institutional capacity and strategic decision-making. His work has influenced debates on industrial policy, trade, and economic sovereignty.
From this perspective, Chang expands the analysis of economic systems to include history, power, and the role of the state in shaping markets.
Critics, however, raise important concerns.
They argue that while state intervention can support development, it can also lead to inefficiency, corruption, or political capture. Not all governments have the capacity or accountability to implement effective industrial policy.
Critics also question whether past development strategies can be replicated in today’s globalized economy, where supply chains, capital flows, and technological dynamics differ significantly.
A deeper tension lies in the balance between state and market.
How much intervention is necessary to support development, and when does it become counterproductive? And how can countries design institutions that promote growth without entrenching new forms of power concentration?
Ha-Joon Chang did not invent development policy. But he reframed the conversation — arguing that economic success is not the result of passive adherence to market principles, but of deliberate, context-specific strategies shaped by history and power.
His legacy raises enduring questions: Who sets the rules of the global economy — and whose interests do they serve? Can developing countries chart independent paths to growth in a system shaped by existing powers? And what role should the state play in building the conditions for long-term prosperity?