This paper summarizes some of the basic concepts underlying the call for a new development agenda. 1 Two intersecting themes in the literature on this subject should be emphasized at the outset. The first is the call for a new balance between the market and the public interest. This should not be viewed as running counter to the operation of the market, as actions that ensure an adequate supply of public goods, help to complete markets, assist non-competitive markets to function properly, exploit positive and avoid negative externalities, or ensure an equitable distribution of the benefits of development can serve as powerful mechanisms for enhancing market development through a variety of economic, social and political channels. An assertive public policy approach of this sort will be, if correctly applied, more market friendly than the alternative approaches that tended to predominate during the first wave of reforms. The second theme is that, rather than being restricted to State actions, the concept of public policy should be understood as any organized form of action that pursues objectives of collective interest. This definition of public policy is in keeping with an awareness of the need to open up opportunities for participation by civil society and to work to overcome a crisis of the State that affects the developing world and, indeed, the world at large. It thus aims at correcting both market failures and government failures and, more generally, at building and rebuilding institutions (or, in the terminology of the new institutional literature, institutions and organizations). This is unquestionably one of the most complex tasks awaiting the developing and transition economies. Moreover, it is the most pressing task –yet at the same time one that has so far received insufficient attention– in the process of building a better international order.
