Liberalization and Globalization are feared by the developing countries, as the Trojan Horses of the developed countries. Elucidate. (2000)
A Trojan Horse is a gift that conceals an invasion. The metaphor captures a fear voiced across the developing world in the 1990s: that liberalisation and globalisation, offered as positive-sum integration, carry inside them instruments that open Southern economies to Northern capital while closing the routes by which the North itself industrialised. The fear is not of openness as such, but of openness on terms the South did not write.
The gift and what it concealed
- Asymmetric liberalisation. Capital, manufactures and patents move freely, while unskilled labour and Southern farm goods face visas, subsidies and quotas. Dani Rodrik (The Globalization Paradox, 2011) notes that freeing labour mobility would yield gains far larger than further trade opening, yet it is the market the North keeps closed. The GATT long exempted agriculture and textiles, where the South competed.
- Conditionality. After the 1982 debt crisis, structural adjustment made devaluation, privatisation and trade opening the price of credit. John Williamson named this package the Washington Consensus (1989). Joseph Stiglitz (Globalization and Its Discontents, 2002) argued that premature capital-account opening turned the 1997–98 Asian crisis into a collapse.
- Kicking away the ladder. Ha-Joon Chang (2002), reviving Friedrich List, shows that Britain, the United States and later Korea climbed with tariffs, subsidies and, in places, lax patent rules. The WTO’s TRIMs, TRIPS and subsidy disciplines now deny these tools to latecomers, shrinking their policy space.
- Corporate entry with legal armour. About 2,200 bilateral investment treaties with investor–state arbitration let firms challenge health, mining and environmental regulation, producing regulatory chill.
- New agendas as protection. The South read the 1996 push for a WTO social clause on labour standards, and reads the EU’s Carbon Border Adjustment Mechanism, definitive from 1 January 2026, as protectionism in moral dress.
- Dependency revisited. For Andre Gunder Frank and Immanuel Wallerstein, integration deepens the periphery’s subordination; Rodrik’s finding of premature deindustrialisation gives the fear a modern measure.
The Indian experience
India liberalised in 1991 under IMF conditions, exactly the supplication the fear anticipated. Farmers’ protests against the Dunkel Draft voiced it. Yet India sequenced its opening: capital-account caution after the Tarapore Committee (1997), Section 3(d) of the Patents Act (2005) against evergreening, the G-33 fight for public stockholding, and exit from RCEP (2019) over Chinese import surges.
Why the fear is only half the truth
- Jagdish Bhagwati (In Defense of Globalization, 2004) and Arvind Panagariya credit openness with growth that cut poverty; East Asia and India’s services boom happened through integration.
- Outcomes turned on state capacity: states that chose what to open and when, like China and Korea, gained; those opening on external instruction often did not.
- Amartya Sen locates the problem in unfair distribution of gains, not in globalisation itself.
- The metaphor has now inverted. The United States tariffed India at 50% from August 2025 to February 2026 and runs industrial policy, while the South defends the rules: BRICS’s New Delhi Declaration (September 2026) criticised unilateral tariffs, and S. Jaishankar told a UN Global South meeting that month that the South’s right to industrialise must not be denied.
Conclusion
The Trojan Horse fear was well founded about the terms of 1990s globalisation, namely asymmetric rules, conditionality and lost policy space, but wrong if it implied that integration itself was the enemy. The lesson is calibrated integration with retained policy space, which the North’s own turn to industrial policy now concedes.