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GLOBAL RULES AND MARKETS: CONSTRAINTS OVER POLICY AUTONOMY IN DEVELOPING COUNTRIES ∗ Yilmaz Akyüz March 2007, Geneva A. Introduction Recent years have seen a rapid opening up and integration of developing countries into the world economy to a degree unprecedented in modern history. This has no doubt brought benefits in several areas, particularly through international trade and investment, even though their incidence varied among and within countries. But it is also true that rapid liberalization and integration have also caused dislocations in the developing world, particularly among the poor and unprivileged. While these challenges have placed growing demand on policy makers and called for greater flexibility in the policy-making process, many of the traditional instruments of development and macroeconomic policy have become ineffective or simply unavailable because of proliferation of international rules, obligations and practices. Consequently questions have been raised about whether such constraints over national economic policy are compatible with development, including the capacity to foster conditions for steady quality employment growth. This paper deals with this issue. The following section sets the scene. After a brief discussion of the concept of policy autonomy it focuses on the sources of the constraints, the rationale for multilateral rules as a global collective action, the nature of existing multilateral disciplines and their relative impact on policy space in developed and developing countries. This is foll