## Café Economics — Nurture, Then Prosper

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**Canonical URL:** [Café Economics — Nurture, Then Prosper](https://www.imf.org/-/media/files/publications/fandd/article/2026/09/caf-economics.pdf)

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### Background and biography
- Ha-Joon Chang was born in 1963 when South Korea’s life expectancy was 53.
- He earned a PhD at the University of Cambridge and taught there for “30-plus years” before moving to SOAS University of London in 2022.
- Author of 17 books translated into 46 languages and sold over 3 million copies globally.
- Latest book: Edible Economics: A Hungry Economist Explains the World.

### Observations from South Korea’s transformation
- Korea transitioned from an economy exporting rice, fish, and vegetables to producing cars, ships, and steel within Chang’s early lifetime.
- The country’s development combined rapid economic growth with political repression under a military dictatorship.
- Early economic education Chang encountered emphasized neo-classical general equilibrium theory; he and peers turned to “alternative economics” inspired by Marx, Hirschman, Kuznets, and early development economists.

### Industrial policy, infant-industry protection, and historical practice
- Industrial policy was common throughout most of capitalism’s history; it became taboo mainly between 1980 and 2020.
- Two IMF economists published a notable working paper in 2019 titled “The Return of the Policy That Shall Not Be Named.”
- Chang’s core position: developing countries need a period of protectionism and nurturing for infant industries (tariffs, subsidies, infrastructure, banking development, patent systems).
- Alexander Hamilton’s 1791 report on manufactures is cited as an historical precedent advocating tariffs, subsidies, infrastructure, banking and bond-market development, and patents—described as “history’s first ever economic development plan.”
- Successful economies historically used protection:
  - The US was “the world’s most protected economy” for nearly a hundred years.
  - Korea and several other East Asian economies used heavy tariff protection to provide initial breathing space for new industries to invest and raise productivity; protection worked best where recipients of state support were disciplined.
- Recent resurgence of industrial policy:
  - Motivated by deindustrialization in rich countries and the perceived need to stay ahead of China.
  - Chang warns that much new industrial policy (especially in the US) is poorly designed and characterizes it as “the geriatric version of infant industry protection.”
- Example of state-funded technological development: many iPhone technologies originated from US government–funded research (semiconductor funded by the US Navy; computer and internet developed by the Pentagon).

### Trade, capitalism, and managed trade
- Chang rejects the notion that free trade is always best; he supports “managed trade” as a preferable form for development.
- Trade is essential to economic development, but needs to be combined with protection for nascent industries and support for building export capabilities.
- Policy toolset for developing exporters included heavy subsidies to earn foreign exchange needed for importing machines and technologies.

### Role of economic literacy and democracy
- In modern, market-oriented societies where public policies are made or filtered by economists, ordinary citizens need at least some economics to make meaningful political choices.
- “Everyone must know at least some economics to sustain a healthy democracy.”

### Views on capitalism and policy choices
- There are multiple forms of capitalism; historical examples show high taxation and regulatory systems can coexist with capitalist economies (example cited: top US income tax rate was 91 percent between the late 1940s and mid-1960s).
- Chang paraphrases Churchill: capitalism is the worst system except for all the others; there is no credible alternative, but capitalism can be made more efficient, humane, and sustainable.

### Recipe for sustainable development (policy and normative priorities)
- Sustainability should include:
  - Environmental sustainability.
  - An economic dimension that avoids exploitative labor practices, precarious jobs, or rapidly rising inequality.
  - Political sustainability and social consensus supported by mass economic literacy.
- Policies implied by the interview:
  - Use targeted protection (tariffs, subsidies) to nurture infant industries.
  - Invest in infrastructure, banking systems, bond markets, and patent systems.
  - Build export capabilities through subsidized exporters to secure foreign exchange for technology imports.
  - Design industrial policy carefully to avoid the pitfalls of poorly targeted “geriatric” measures.

### Key figures and exact numeric references from the interview
- Birth year: 1963.
- Life expectancy at his birth: 53.
- Taught at Cambridge for “30-plus years.”
- Number of books authored: 17.
- Number of languages those books were translated into: 46 languages.
- Copies sold globally: over 3 million copies.
- Period when industrial policy became taboo: 1980 and 2020 (phrase used: “between 1980 and 2020”).
- Notable working paper year: 2019 (“The Return of the Policy That Shall Not Be Named”).
- Top US income tax rate between the late 1940s and mid-1960s: 91 percent.
- The US was protected “for nearly a hundred years” (phrase used in the interview).

*This interview has been edited for length and clarity. Visit www.imf.org/podcasts to hear the full interview.*

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_Source: https://www.imf.org/-/media/files/publications/fandd/article/2026/09/caf-economics.pdf_