From a Better Understanding of the Drivers of Populism to a New Political Agenda

Within the past five years populism moved from being a phenomenon (mainly) limited to Latin American countries to a wave touching more and more western countries – with cases such as the United States experiencing a veritable tsunami culminated in the election of Donald Trump. Both academics and policy-makers have come to aknowledge this phenomenon as e real threat to democracy and have accordingly been seeking to understand its causes and formulate policies to counter it.

The same has done researcher Robert Gold from the Kiel Institute for the World Economy in his last paper for the Forum New Economy.

The main policy challenge appears to be the creation of development perspectives for regions and individuals left behind in structural change. While welfare policies are important – says the author – redistribution alone will not cure the dissatisfaction brought up by uneven globalization processes and technological change, these latter being among the main reasons that fuel populism. Such policies must be accompanied by labor market policies and regional policies that enable disadvantaged regions and individuals to participate in the successes of international economic development. Ultimately, political communication plays an important role too and needs to reach out to those who are left behind.

The paper was presented in a rich session about the economics of populism at our VIII New Paradigm Workshop together with Catherine Fieschi, Thiemo Fetzer, Dalia Marin, and Thomas Ferguson. You can re-watch the session HERE.