The Trouble With Globalization: Undermined by the false narratives that have destabilized it, globalization is at risk

an article by Dani Rodrik published in The Milken Review [via 3 Quarks Daily]

Electorates around the world were told not only that globalization was inevitable, but also that it necessarily took the particular form they were witnessing. The nation-state, it was said, was the enemy of globalization, and therefore had to get out of the way. Globalization required ever-stronger global rules mandated by trade agreements, multilateral organizations and international networks of regulators. But not to worry: it would promote economic progress and political harmony, even if not for everyone right away.

None of this was quite true. There is nothing inevitable about advancing economic integration, nor about the route that globalization takes if it does move forward. And contrary to conventional wisdom, nation-states are absolutely essential to globalization because they provide the public services ranging from law enforcement to macroeconomic stabilization that are needed for open markets to thrive. By the same token, global governance is largely superfluous: proper trade, financial, monetary and regulatory policies required to sustain an open world economy do not require much coordination when governments do their jobs well.

Consider, too, the idea that nations needed to shape up to benefit from integration. This transformed globalization into an end rather than a means. The right and the left differed on the regimen needed. The right emphasized getting the investment environment right: cutting red tape, for instance, and reducing corporate taxes. The left talked about investment in skills, education and infrastructure. But in both cases, globalization was assumed to be the goal, not the route to the goal.

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Hazel’s comment
I like the style of one of the foremost economists in the world. He does not patronise his readers but at the same time makes his arguments understandable to most people.
I hope you enjoy this as much as I did.
My favourite thought on this issue is that organisations are free to spread around the world but the workers are not.

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New results on structural change during the recent growth boom in developing countries

Dani Rodrik’s weblog: Unconventional thoughts on economic development and globalization

The last two decades have been a rare period of rapid convergence for the world's developing economies. Everyone is familiar with China and India’s experience, but growth went beyond these two large economies. Many countries in Sub-Saharan Africa and Latin America had their best performance in decades, if not ever.

In a new paper, my co-authors Xinshen Diao (IFPRI) and Margaret McMillan (Tufts and IFPRI) and I examine this experience. We ask what drove this growth and how sustainable is it. Looking at recent growth through the lens of structural change proves particularly insightful.

Here is our decomposition of recent growth accelerations into the within-sector and between-sector terms. The latter term captures the growth contribution of structural change – the reallocation of labor across sectors with different labor productivities.

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