Framing Development in the Third World: An Analysis of US Foreign Economic Policy during the Cold War

Abstract

This paper traces the evolution of economic development in the Third World from the end of the Second World War till 1990 to understand how the US foreign economic policy was a crucial factor in shaping developmental strategies. The methodology adopted for this paper involves the use of historical and critical analyses of relevant events and policies during the Cold War period, with a focus on outlining the trajectory of international development linked with American values and interests. The paper begins by examining the nature of the Third World independence movements and the power they expressed following the end of European imperialism. The state-led model of development which the Third World adopted after independence was a direct consequence of the imperial experience. The initial economic boom coupled with a welfare orientation during the 1950s and 60s aided by the US was primarily in response to counter the threat of communist Soviet Union. As a result of the Cold War politics, many governments in the developing world received monetary support from the West as well as autonomy in policymaking. It is argued that the 1970s was a turning point bringing a radical political and economic shift towards neoliberal policies as the global economy faced recession owing to various factors. This change in the US stance impacted the developing nations negatively as many plunged into debt crises allowing the West and the related economic instruments significant bargaining power to impose economic conditions as the Cold War, too, came to an end. The paper concludes by emphasizing that the continuous underdevelopment of developing countries owes to the enduring American influence on international development.