This lecture examines the colonial origins and enduring impact of international economic law and institutions, technical barriers to trade (TBTs), and dollar hegemony as instruments of external restriction on economic development. Drawing on Andrés Arauz’s policymaking experience at the Secretaría Nacional de Planificación y Desarrollo (Senplades) and the Ministerio Coordinador de la Política Económica (MCPE) in Ecuador, his doctoral research at the Universidad Nacional Autónoma de México (UNAM), and his reports for the Center for Economic and Policy Research (CEPR), the lecture highlights how these mechanisms perpetuate structural dependency and limit policy autonomy in the Global South.

Due to the WTO and a “spaghetti bowl” of free-trade agreements, tariffs have lost importance as trade barriers. They have evolved into sophisticated technical and technological barriers that protect industries in former colonial powers while restricting industrialization in developing economies. Global trade rules enforce asymmetries that undermine strategic industrial policies, particularly in dollarized economies. Research at UNAM on monetary sovereignty further reveals how dollar hegemony, understood as a U.S. banks-centered global financial system, constraints fiscal and trade policies by imposing liquidity shortages and external vulnerabilities. Studies at CEPR on financial flows illustrate how this system reinforces capital dependency, amplifying economic shocks in periphery nations.

Through historical and empirical analysis, this lecture traces how these colonial heirs continue to shape the global economic order. It concludes by exploring strategies for overcoming external constraints by effectively reclaiming policy space for development, including regional monetary arrangements and explicit industrial policy.

Sponsored by: Munk-Darling Lecture Fund in International Relations and the Walter Krause (Econ ‘38) Economics Lecture Fund