Updated March, 2002

Introduction

The U.S. Secretary of the Treasury believes the international community can do a better job in combating global poverty. He urges greater attention be placed on helping countries to become more productive. The secretary also points out that "Countries that have been successful consistently make wise policy choices in four areas: (1) encouraging private enterprise through market oriented mechanisms; (2) recognizing the importance of good governance and a competent public administration; (3) opening economies to trade and investment; and (4) building capacity through investments in human capital and the transmission of best practice."

Alan Larson, Under Secretary for Economic, Business, and Agricultural Affairs of the Department of State says that trade liberalization can be a powerful tool in fostering development and reducing global poverty, and that free trade lowers the cost of basic necessities like food and clothing, discourages corruption, and allows democracy to develop and grow, leading to a better quality of life, especially for the poor. Larson explains that economic growth is the primary means by which countries reduce poverty and that several very recent empirical studies by World Bank economists have concluded that developing countries that have lowered trade barriers and increased trade over the past 20 years have also experienced stronger economic growth.

Their statements, as well as other contributions of experts can be found in Economic Perspectives Vol. 6, No. 3, September 2001, revised March 2002 "Addressing Global Poverty"

To have an informed opinion about the subject it is necessary to explore the historical links which have existed between trade, migration and capital flows, on the one hand, and inequality on the other. This compilation of documents provides a selection of materials not only prepared by government officials, but also by international organizations, think tanks, and academics in order to shed light on the matter.

Professor Kevin H. O'Rourke, Director of the Centre for the Economics of Globalization in his essay Globalization and Inequality: Historical Trends provides the following insights:

Remarks by President George W. Bush on Global Development delivered to the Inter-American Development Bank. Washington, D.C.
March 14, 2002.
"The needs of the developing world demand a new approach. In Monterrey, we have a tremendous opportunity to begin acting on a new vision of development. This new vision unleashes the potential of those who are poor, instead of locking them into a cycle of dependence. This new vision looks beyond arbitrary inputs from the rich, and demands tangible outcomes for the poor."

Secretary Colin L. Powell. Be Heard: An MTV Global Discussion With Colin Powell. Washington, D.C.
February 14, 2002.
"But the real solution to the problems of hunger is to solve the problem of poverty. Poor people can't buy food. So poor people need what? They need a job. And so what we work hard doing is breaking down trade barriers so that people have access to the world trading system. That's why globalism, which sometimes has a bad name, should have a good name, because it's through globalism that we have trade agreements with nations, we let their products come into our country, we sell things to those countries. What really brings dignity into the home of a poor person is wages, a salary, money that that person comes home with because of a good day's work or a good week's worth, money that that person can take to buy food, put it on the table. And when you bring that food into the home and you bring clothing into the home because of your hard work, you bring dignity back into the family, dignity back into the home."

Remarks by E. Anthony Wayne, Assistant Secretary of State for Economic and Business Affairs, to a joint meeting of the European Institute, World Affairs Council and UN Office in Washington. Washington, D.C.
March 6, 2002.
"We have a chance to dramatically reduce the number of people living in poverty, decrease the number of people suffering from hunger, reduce child and maternal mortality rates, and increase the number of children (especially girls) that receive a primary education. We look forward to working with our partners from the developed and developing world, from the public and private sectors, to make real progress in Monterrey toward achieving these goals."

Remarks by Alan Greenspan, U.S. Federal Reserve Board Chairman, at the Institute for International Economics. Washington, D.C.
October 24, 2001.
"Globalization as generally understood involves the increasing interaction of the world's peoples through their national economic systems. Of necessity, these economic systems are reasonably compatible and, in at least some important respects, market oriented. The process is particularly evident among those nations that have opened their borders to increased competition. Through its effect on economic growth, globalization has been a powerful force acting to raise standards of living. More open economies have recorded the best growth performance; in contrast, countries with inward-oriented policies have done less well. Importantly, as real incomes have risen on average, the incidence of poverty has declined."

Addressing Global Poverty. Economic Perspectives. Vol. 6, No. 3.
September 2001. (English version revised in March 2002).
Text: English | Spanish
The percentage of the world's population living in poverty has declined sharply over the last several decades. Still, as total global population has climbed, the absolute number of poor has remained unchanged at nearly 1,200 million. The issue facing policy-makers is how to provide development assistance in a way that is both cost effective and directly benefits the poor. A common theme to the articles presented in this journal is that external assistance will help alleviate poverty only in countries that have sound policies -- market-oriented mechanisms that encourage private investment, good governance, liberalized trade, and investment in human capital. Ultimately, the authors argue, poverty reduction must be driven by rising productivity, income gains, and increased economic growth.

First United Nations Decade for the Eradication of Poverty (1997-2006). Report of the Secretary-General.
July 31, 2001.
A comprehensive review containing an evaluation of progress made towards achieving the goals of the first United Nations Decade for the Eradication of Poverty (1997-2006) and the 2015 target for poverty reduction and recommendations for further action to achieve it, including the identification of resource requirements and possible sources of funding.

Globalisation and Governance. Management of Social Transformation Programmee (MOST), UNESCO.
Under "globalisation and governance", MOST has buttressed the understanding of globalisation’s many processes through a range of activities. These include books, policy and discussion papers, project information brochures and symposium reports. Networks and programmes that ensure the linkages between knowledge-producers and research-users have been established. They cover: the impact of globalisation on rural societies in the Arab world; environmental and economic coping strategies in the Northern circumpolar region; economic and social transformations connected with the international drug problem; institutional modernisation of social policies in Latin America; socio-cultural values in the framework of regional integration processes (MERCOSUR countries); sustainability and development.

Globalization and Inequality: Historical Trends by Kevin H. O’Rourke. Centre for Economic Policy Research.
May 2001.
This paper explores the historical links which have existed between trade, migration and capital flows, on the one hand, and inequality on the other. The paper distinguishes between two separate dimensions of inequality: between country inequality and within-country inequality.

Trade in the Post-Doha Global Economy. Economic Perspectives. Vol. 7, No. 1.
January 2002.
Text: English | Spanish
A new global round of trade negotiations, dubbed the "Doha Development Agenda" by trade ministers representing the member countries of the World Trade Organization, has the potential to make life better for people in more than 140 participating WTO nations, especially developing countries. The negotiations, which start in January 2002 and are scheduled to end in 2005, promise to open markets on a broad range of goods and services of crucial interest to developing countries, especially agriculture. Wealthier countries also have pledged to assist developing countries build capacity to participate in trade negotiations and implement commitments they make in these agreements. This electronic journal brings together the views of key U.S. negotiators, as well as a leading member of the U.S. Senate and an academic scholar, to discuss the major issues that will be negotiated over the next few years.

Borders, Trade and Welfare by James Anderson and Eric van Wincoop. Boston College and Federal Reserve Board-New York. Prepared for the Brookings Trade Forum 2001 on Globalization Issues and Implications”, May 10-11, 2001.
April 12, 2000.
In the era of globalization, are borders just arbitrary lines on the map? Recent evidence shows that borders inhibit huge volumes of trade. Further economic integration can very substantially increase world trade and welfare. The authors demonstrate this point with several applications, including border barriers among OECD countries, and NAFTA.

Community Control in a Global Economy: Lessons from Mexico's Economic Integration Process by Time Wise and Eliza Waters. Global Development and Environment Institute. Working Paper No. 01-03.
February 2001.
The North American Free Trade Agreement appeared to promise economic growth for Mexico and improved living conditions for its people. While the Mexican economy has recovered significantly from its post-NAFTA collapse, there is mounting evidence that many of the pre-NAFTA warnings of worsening poverty and deteriorating environmental conditions were true, if exaggerated. However one interprets the statistics, there is little doubt that the economic integration process, which began a full decade before NAFTA took effect, has created a significant restructuring of the Mexican economy, with some of the country’s most vulnerable residents facing the harshest conditions. How have those most affected by the economic integration process responded to the challenges and opportunities posed by globalization? Based on a collaborative research project between U.S. and Mexican researchers, the authors provide an overview of the existing English-language research on the subject and suggest a research agenda to assess adaptive strategies and to draw from those experiences lessons for the construction of future trade agreements.

Crises in Asia or Crisis of Globalisation? by Heribet Dieter. Institute for Development and Peace, University of Duisburg. CSGR Working Paper No. 15/98.
November 1998.
The crises in Southeast and East Asia have started a new round of debate on the benefits and disadvantages of globalization. We have to ask whether the crises in Asia were the result of failures in national economic policy or whether they were the consequence of ill-constructed global financial markets. It can be concluded that the crises were caused by a number of factors, both internal and external, but that the decisive shifts came from actors on international financial markets as well as from the IMF, whose activities fueled the crises. To avoid a repetition, a number of options are discussed, including the introduction of a currency regime between the major players in the world economy as well as unilateral measures to defend developing countries' economies against volatile international financial markets.

Globalization and Inequality: Evidence from Within China by Shang-Jin Wei and Yi Wu. National Bureau of Economic Research. NBER Working Paper No.w8611.
November 2001.
This paper presents a case study of the impact of globalization on income inequality using data across Chinese regions. The literature on cross-country studies has been criticized because differences in legal systems and other institutions across countries are difficult to control for, and the inequality data across countries may not be compatible. An in-depth case study of a particular country's experience can provide a useful complement to cross-country regressions. The authors construct a measure of urban-rural income ratio for 100 or so Chinese cities (urban areas and adjacent rural counties) over the period 1988-1993. The central finding is that cities that experience a greater degree of openness in trade also tend to demonstrate a greater decline in urban-rural income inequality. They conclude that globalization has helped to reduce, rather than increase, the urban-rural income inequality. This pattern in the data suggests that inferences based solely on China's national aggregate figures (overall openness and overall inequality) can be misleading. The negative association between openness and inequality holds up when we apply a geography-based instrumental variable approach to correct for possible endogeneity of a region's trade openness.

Localism in Thailand: A Study of Globalization and Its Discontents by Kevin Hewinson. School of Social Science, The University of New England. CSGR Working Paper No. 39/99.
September 1999.
Recent work has suggested that the discontent over perceived negative impacts arising from liberalisation and globalisation need to be more carefully considered. The critiques emanating from non-governmental organisations and social movements are considered to be amongst the most significant. This paper examines one example of such criticism - localism - that emerged during the economic crisis in Thailand. This example of localism is found to be an example of populist reaction to the changes and inequalities generated by capitalist industrialisation. The paper assesses this critique, its political strength and its potential to provide an alternative economic model for Thailand. While providing a useful moral argument regarding the impact of neoliberal globalisation, populist localism is unable to develop a sound alternative model.

Aspects of Global Economic Integration: Outlook for the Future by Martin Feldstein. National Bureau of Economic Research. Working Paper No. 7899.
September 2000.
This paper comments on five aspects of globalization: (1) the gains from international flows of goods and capital; (2) the role of foreign direct investment and reasons for its increase; (3) the preventions and management of currency crises; (4) the fluctuation of relative currency values; and (5) the segmentation of global capital market.

Can Reforming Global Institutions Help Developing Countries Share More in the Benefits from Globalization? by Andrés Solimano. The World Bank. Working Paper No. 2518.
January 2001.
The paper is organized around several sections. First, it provides an historical background on early and late 20 th century globalization episodes and other main developments of the last 100 hundred years, or so, to put the current wave of globalization in historical perspective. Then the paper reviews, briefly, main analytical views, both orthodox and heterodox, on globalization and development and examines the opportunities, tensions and dilemmas posed by globalization. Then it turns to the institutional challenge of making globalization more compatible with global stability and national development and reviews current proposals for international financial reform.

Financial Systems, Economic Growth, and Globalization by Peter L. Rousseau and Richard Sylla. National Bureau of Economic Research. Working Paper No. w8323.
June 2001.
This paper brings together two strands of the economic literature -- that on the finance-growth nexus and that on capital market integration -- and explores key issues surrounding each strand through both institutional/country histories and formal quantitative analysis. It begins with studies of the Dutch Republic, England, the U.S., France, Germany and Japan that span three centuries, detailing how in each case the emergence of a financial system jump-started economic growth. Using a cross-country panel of seventeen countries covering the 1850-1997 period, the authors uncover a robust correlation between financial factors and economic growth that is consistent with a leading role for finance, and show that these effects were strongest over the 80 years preceding the Great Depression. Next, and show t hat countries with more sophisticated financial systems engage in more trade and appear to be better integrated with other economies by identifying roles for both finance and trade in the convergence of interest rates that occurred among the Atlantic economies prior to 1914. The results suggest that the growth and increasing globalization of these economies might indeed have been "finance-led."

Globalisation and Poverty: Turning the Corner. Centre for International Economics.
October 2001.
Globalisation - in the form of increased economic integration through trade and investment - is an important reason why much progress has been made in reducing poverty and global inequality over recent decades. But it is not the only reason for this often-unrecognised progress. Good national policies, sound institutions and domestic political stability also matter.

Globalisation and Transformation: Illusions and Reality by Grzegorz W. Kolodko. OECD Development Centre. Technical Papers No. 176.
January 2001.
The author argues that globalisation has rendered the economic transformation of the former socialist countries irreversible and emphasises that the market can only function in a democratic environment. Transformation and, (why not?), development, take place in two, distinct contexts: the national and the international. The international environment is one in which market forces are increasingly driving trade and financial patterns that have less and less to do with geographical or political proximity. These flows are not subject to some kind of global government or regulatory structure, but this does not exclude forms of internationally accepted rules of the game. On the national level, the impact of globalisation can be optimised by the adoption of enlightened and rational policies. Recognising the fact that poverty remains a global problem, the author clearly places the onus on national authorities to adopt relevant and appropriate economic policies. At the same time, he recognises the inequality of power relations between the advanced capitalist countries and the poorer emerging or post-socialist ones.

Globalization and Environment by Theodore Panayotou. Center for International Development, Harvard University. Working Paper No. 53.
July 2000.
Economic globalization impacts the environment and sustainable development in a wide variety of ways and through a multitude of channels. The purpose of this paper is (a) to identify the key links between globalization and environment; (b) to identify the major issues addressed in multilateral economic agreements in trade and finance that affect environmental sustainability; and (c) to review priority policy issues affecting the environment in multilateral economic agreements and environment, thus identifying incentives implicit in trade and investment policy measures that affect environmental sustainability. The author categorizes these issues under the primary areas of globalization: trade liberalization, investment and finance, and technology diffusion, the latter including intellectual property rights.

Globalization and Redistribution: Feasible egalitarianism in a competitive world by Samuel Bowles Department of Economics, University of Massachusetts. Working Paper No. 8.
September 10, 2000.
A reduction of impediments to international flows of goods, capital and professional labor is thought to raise the economic costs of programs by the nation state (and labor unions) to redistribute income to the poor and to provide economic security. But some of the more politically and economically successful examples of such policies--for example Nordic social democracy and East Asian land reform--have occurred in small open economies which would, on the above account, provide a prohibitive environment for egalitarian interventions. The author presents a model of globalization and redistribution to answer the following question: in a liberalized world economy, what programs of egalitarian redistribution and social insurance are implementable by democratic nation states acting independently?

Globalization and the Challenge for Developing Countries by Shahid Yusuf. The World Bank.
June 2001.
The paper argues that there are several key and interrelated elements to globalization and that the future gains will derive from the degree to which countries are willing to embrace them together rather than in a sequenced fashion. It also identifies five interlinked aspects of globalization which present opportunities for developing countries and discusses appropriate policy actions.

Globalization, Globaphilia, Globaphobia by Lael Brainard. Excerpt of a Commencement Address to the Graduate School of International Relations and Pacific Studies, University of California, San Diego.
June 16, 2001.
"The fact that globalization brings great benefits to the economy overall is well established. Yet in every country, there are very real concerns that globalization causes painful job dislocations and exacerbates the gap between rich and poor. In every country, globalization puts greater burdens on domestic regulatory systems to ensure safe food, sound banks, and worker protections. In every country, there is a debate over the expanded interdependence and shared sovereignty of this global age. And in every country, the jury is out on whether globalization will undermine local cultures or encourage an environment of mutual respect in which multiculturalism thrives."

Globalization in History: A Geographical Perspective by Nicholas Crafts and Anthony J. Venables. Centre for Economic Policy Research, London School of Economics & Political Science. CEPR Discussion Paper No. 3079.
October 2001.
This paper argues that a geographical perspective is fundamental to understanding comparative economic development in the context of globalization. Central to this view is the role of agglomeration in productivity performance; size and location matter. The tools of the new economic geography are used to illuminate important episodes when the relative position of major economies radically changed: the rise of the United States at the beginning and of East Asia at the end of the 20th century. It is suggested that while lack of high quality institutions has been a major reason for falling behind geographic disadvantages also merit attention.

Globalization: Is There Anything to Fear? by Daniel Drache. Robarts Centre, York University. CSGR Working Paper No. 23/99.
February 1999.
Globalization in its many different forms is the last grand narrative of the 20th century. It evokes a universal vision of frictionless adjustment, endlessly innovative corporations, infinite progress and unlimited abundance for all through the power of the world market. The paper argues the political market for social protection--jobs and a higher standard of living--promises to be a more potent force than the most arduous tenants imposed by the dynamics of a laissez-faire globally-directed free trade regime. The question is, can governments and policy experts learn to think in a reasoned and critical way about the limits of global free trade? Or, will they continue to fear what they do not understand, engage in unnecessary risk-taking and be unable to react strategically to such complex changes in the international economy?

Globalization of the Economy by Jeffrey A. Frankel. National Bureau of Economic Research. Working Paper No. 7858.
August 2000.
Globalization of trade and finance has gone a long way over the last half-century. But it is less impressive than most non-economists think, judged either by the standard of 100 years ago or by the hypothetical standard of perfect international integration. The paper documents the extent of globalization, and some reasons for the barriers that remains. It then briefly considers the implications for economic growth and the implications for goals not measured by GDP equality and the environment. The conclusion is that globalization is not the primary obstacle to efforts to address such concerns.

Globaphobia: Confronting Fears about Open Trade by Gary Burtless, Robert Z. Lawrence, Robert E. Litan, and Robert J. Shapiro.
1998.
For much of the post-World War II period, the increasing globalization of the U.S. economy was welcomed by policymakers and by the American people. In recent years, however, a growing chorus of complaints has been lodged against globalization--which is blamed for costing American workers their jobs and lowering their wages. The authors of this book speak directly and simply to these concerns, demonstrating with easy prose and illustrations why the “globaphobes” are wrong.

International Migration and the Global Economic Order: An Overview by Andrés Solimano. The World Bank.
November 2001.
While there is consensus on the benefits of an open trade regime and relatively liberal capital movements, that consensus rarely extends to the free movement of people. Solimano examines this difference in the “freedom to become global” by looking at both standard trade theory, basically the Mundell theorem of trade and migration as substitutes, and the ensuing analytical developments and empirical evidence around the Mundell result. He then looks at this asymmetry in today’s global economic order from the perspective of freedom, individual rights, and transnational citizenship, as well as the potential of international migration to reduce global inequality.

The New Economy, Globalization and Regional Trading Agreements by Richard G. Harris. Centre for International Economic Studies. Discussion Paper No. 0109.
March 2001.
This paper examines the linkages between globalization, regional trade agreements, and the New Economy growth paradigm. Questions examined include (a) How will this economic boom which thus far has been concentrated both by sector and on particular occupations such as IT workers impact on these type of regional trade areas; (b) How does trade liberalization and regional trading agreements impact upon income distribution and pattern of New Economy activity globally? (c) Will globalization or localization tend to be promoted as the New Economy diffuses internationally; and (d) Do small open economies which have traditionally been manufacturing exports stand to gain or lose the most as the New Economy matures and diffuses?

Risk and Reward of Embracing Globalization: The Governance Factor by Shang-Jin Wei. The Brookings Institution.
September 25, 2000.
The author explains that Globalization can be good, and globalization can be bad. So which is it? Does it depend on the home country conditions, and particularly, the quality of public governance? Would globalization itself provide impetus for the home country to change its public governance? These are the questions that this paper hopes to shed some light on.

Spreading the Wealth by David Dollar and Aart Kraay. Foreign Affairs.
January/February 2002.
Antiglobalization activists are convinced that economic integration has been widening the gap between rich and poor. The best evidence, however, proves them wrong. Thanks to higher growth driven by greater openness to trade and investment, global inequality has narrowed and global poverty has been reduced.

Trade, Growth, and Poverty by David Dollar and Aart Kraay. The World Bank.
June 2001.
The authors identify a group of developing countries that are participating more in globalization, analyze their growth rates through regressions that exploit the within-country variation in trade and growth and, finally, they examine the effects of trade on the poor.

UNconventional: A Point of View: ‘Good’ Globalization by Joachim von Braun. UN Chronicle. Volume XXXVIII, Number 3, 2001.
November 2001.
Globalization of agriculture has long progressed at various frontiers. It is a mixed blessing. Carefully designed policies adapted to regional conditions are called for to foster the potential benefits for people and the ecology, and to prevent risks. These benefits, especially for the South, are large and should be tapped. Globalization means integration of inputs and outputs into global markets, global sharing of information and knowledge, and global rules governing such integration.

Why Economic Growth Trends Differ So Much Across Developing Countries. The Globalization Debate and Its Relevance to Pakistan by Peter Nunnenkamp. Kiel Institute of World Economics. Working Paper No. 1091.
January 2002.
The claim of globalization critics that the income gap to industrial countries is bound to widen for essentially all developing countries as a consequence of economic globalization is in conflict with empirical evidence. Economic performance differs tremendously across developing countries. The paper discusses several factors such as capital accumulation, openness to trade and foreign indebtedness which may explain the varying experience with globalization in regard to per capita income growth and income distribution. Economic restructuring is shown to represent an important - though frequently neglected - link between globalization and country-specific performance. Nunnenkamp concludes that national policymakers continue to have effective leverage to promote economic catching- up and poverty alleviation in the countries they govern.

WTO Report Card III: Globalization and Developing Countries by Aaron Lukas. Center for Trade Policy Studies, Cato Institute. Trade Briefing Paper No. 10.
June 20, 2000.
This paper examines the effect of trade and investment liberalization on the world’s poorer nations. According to the prevailing anti-trade line, developing countries suffer from a "race to the bottom" in abusive labor practices, environmental quality, and wages. Sweatshops and child labor, not economic opportunity, are the supposed consequences of free trade. In reality, however, the empirical experience with foreign trade and investment in the developing world has been overwhelmingly positive.

Disclaimer
This site is managed by the Public Affairs Section of the American Embassy in Mexico.
External links to other Internet sites should not be construed as an endorsement of the views contained therein.