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ECON371 - #10 Impact of Globalization Economic effects on...

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#10) Impact of Globalization Economic effects on developing, poor countries (forces of economic globalization) Four distinct globalization epics: <1820 – antiglobal 1820-1913 – proglobal 1914-1950 – antiglobal 1951> - progloabl Income gaps widen with or without globalization Net impact too small to determine effect Internationalization of institutions International: World Bank IMF UN Committee on Trade and Development (UNCTAD) Regional: EU NAFTA ASEAN OECD Interest Groups: Labor unions Non-government organizations Employer associations Foundations Population of multinational organizations has increased 1950-2000 Output increased 5x, but merchandise trade increased 14x+ More developing countries have become pro-globalizers Globalization has not yet included poor countries, about 2B people Globalization and inequality Country’s integration into world economy through trade should raise its level of real income Potential in real income through realization of dynamic gains through trade Critics who questioned opening up a country to trade Does international trade operate as a mechanism of international equality with gains going to advanced nations? Would a developing country’s growth better be performed through ISI as opposed to comparative advantage? Joseph Stiglitz (Globalization & Its Discontents, 2002) Criticized bad management of globalization Adverse effects on poor, environment, and international stability Has been governed in undemocratic ways Less-developed countries worse off through globalization in some cases Manifestation of western imperialism in ideas and policies
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6/22/06 Globalization (cont.) International Financial Architecture Five type of financial crises: Macroeconomic policy-induced crisis Occurs when domestic credit expansion is inconsistent with a country’s fixed exchange rate Financial panic Short-term investors pull out, etc.
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