“Globalisation has so far provided only a Disneyesque beacon of light and a fake optimism to the poor,” declares Ash Narain Roy in a comment typical of critics of contemporary neoliberalism (1999, 118). Yet our four cases suggest – globalization notwithstanding – that it is still possible in the global periphery to attain unusually high levels of well-being for the majorities, while preserving and in some cases extending (Costa Rica, Mauritius) many earlier gains in the areas of health, education, and social protections. In three of the cases (Costa Rica, Mauritius, and Chile), it has been possible to do so while becoming vigorously competitive and attracting significant capital investments. Kerala, while hardly a magnet for foreign or even domestic Indian capital, has largely succeeded in conserving its extensive social-welfare apparatus through a particular kind of class politics that has attenuated otherwise deleterious impacts of economic liberalization. Despite the overwhelmingly negative context of the post-1980 world economy, and continuing problems with clientelism and bureaucratic inefficiencies, some countries and regions in the global south have managed to adapt in remarkable, if unheroic, ways and to live and even prosper with globalization.

This chapter aims: (1) to examine the impacts of the liberalized trade regime for social-democratic projects in developing countries; (2) to analyze how the policies of social-democratic regimes may complement the needs of capital and thus permit a viable insertion of a country in the globalized economy; and (3) to consider whether the pressures of neoliberal globalization are eroding the more egalitarian and participatory models of social democracy, moving them in the direction of Third-Way policies.