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Unformatted text preview: I S S U E 0 2 / 0 8 M A Y 2 0 0 8 Other Resources IMF World Economic Outlook presents economic analysis at the global level, in major county groups, and in many individual countries, reviewing global macroeconomic developments, forecasting growth, and citing risks. IMF Global Financial Stability Report provides an assessment of global financial markets, highlighting current potential risks to financial market stability. Globalization, Financial Mar- kets, and Fiscal Policy (IMF Policy Paper) describes how fiscal policy can contribute to realizing the benefits of two important and ongoing developments: globalization and financial deepening. These resources are available online at www.imf.org. Globalization: A Brief Overview By IMF Staff A perennial challenge facing all of the worlds countries, regardless of their level of economic development, is achieving financial stability, economic growth, and higher living standards. There are many different paths that can be taken to achieve these objectives, and every coun- trys path will be different given the distinctive nature of national economies and political systems. The ingredients contributing to Chinas high growth rate over the past two decades have, for example, been very different from those that have contributed to high growth in countries as varied as Malaysia and Malta. Yet, based on experiences throughout the world, several basic principles seem to underpin greater prosperity. These include investment (particularly foreign direct investment), the spread of technology, strong institutions, sound macroeco- nomic policies, an educated workforce, and the existence of a market economy. Furthermore, a common denominator which appears to link nearly all high- growth countries together is their participation in, and integration with, the global economy. There is substantial evidence, from countries of different sizes and different regions, that as countries globalize their citizens benefit, in the form of access to a wider variety of goods and services, lower prices, more and better-paying jobs, improved health, and higher overall living standards. It is probably no mere coincidence that over the past 20 years, as a number of countries have become more open to global economic forces, the percentage of the developing world living in extreme povertydefined as living on less than $1 per dayhas been cut in half. As much as has been achieved in connection with globalization, there is much more to be done. Regional disparities persist: while poverty fell in East and South Asia, it actually rose in sub-Saharan Africa. The UNs Human Develop- ment Report notes there are still around 1 billion people surviving on less than $1 per daywith 2.6 billion living on less than $2 per day. Proponents of global- ization argue that this is not because of too much globalization, but rather too little. And the biggest threat to continuing to raise living standards throughout the world is not that globalization will succeed but that it will fail. It is the people the world is not that globalization will succeed but that it will fail....
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- Winter '10