Nabe - Globalization in Historical Perspective OUR ERA IS...

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20 Business Economics • January 2002 Globalization in Historical Perspective Michael D. Bordo is Professor of Economics and Director of the Center for Monetary and Financial History at Rutgers University. He also is a Research Associate of the National Bureau of Economic Research, Cambridge, Massachusetts.He has held pre- vious academic positions at the University of South Carolina and Carleton University in Ottawa, Canada. He has been a visiting Professor at the University of California Los Angeles, Carnegie Mellon University, Princeton University and a Visiting Scholar at the IMF, Federal Reserve Banks of St. Louis and Richmond and the Federal Reserve Board of Governors. He has a B.A. degree from McGill University, a M.Sc.(Econ) from the London School of Economics, and he received his Ph.D. at the University of Chicago. Remarks prepared for the NBER session “International Economy: Globalization and Crises” at the NABE Annual Meeting, September 2001. Globalization in Historical Perspective OUR ERA IS NOT AS UNIQUE AS WE MIGHT THINK, AND CURRENT TRENDS ARE NOT IRREVERSIBLE. By Michael D. Bordo diminished, so did barriers to international migration, leading to an increasingly integrated global market for skilled labor. Integration of capital markets corresponded in time with trade and migration, with flows increasing, decreasing and increasing again. However, the charac- teristics of modern capital flows are significantly differ- ent from previous eras of globalization. In general, it appears that countries that take advantage of free move- ment of goods and services, labor and capital can thrive in the aggregate. However, sound macroeconomic policies are necessary. Although the number of individual gainers appears to outnumber losers in increased globalization, it is possibile that the losers can create a backlash that will once again cause a retreat. G lobalization has become a buzzword of the new millennium. It is viewed as the cause of many of the world’s problems as well as a panacea. The debate over globalization is manifest in public demonstrations against the World Trade Organization (WTO) in Seattle in the fall of 1999, against the Summit meetings in Quebec and Genoa this year, and against several annual meetings of the International Monetary Fund (IMF) and World Bank. It also has led to a spate of scholarly and not so scholarly books on the subject. I define globalization as the increasingly close inter- national integration of markets for goods, services and factors of production, labor and capital. Economists have long touted the advantages of free trade, open capital mar- kets, and international migration in producing an optimal allocation of the world’s resources. But while the econom- ic benefits in the long run are generally agreed upon, many fear globalization because of the changes it brings Globalization, in the sense of increased integration of international markets, has waxed and waned throughout history. Most recently, it thrived between the middle of
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Nabe - Globalization in Historical Perspective OUR ERA IS...

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