Globalisasi

a primarily economic phenomenon, involving the increasing interaction, or integration, of national economic systems through the growth in international trade, investment and capital flows Anthony Giddens, defines globalisation as a decoupling of space and time, emphasising that with instantaneous communications, knowledge and culture can be shared around the world simultaneously worldwide drive toward a globalised economic system dominated by supranational corporate trade and banking institutions that are not accountable to democratic processes or national governments globalization is simply the logic of the market playing out. Globalization equals marketization. And the market takes on a life of its own, beyond the control of any nation

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.

http://www.globalpolicy.org/globaliz/define/2004/04heldinterview.htm

Inescapably Side by Side An Interview with David Held Mikkel Thorup & Mads P. Sørensen* Polity February 2004 There is a line in your work going from work on democratic theory to a preoccupation with the reconfiguration of democracy in a global age. We’ll come to your solution of a cosmopolitan democracy in a minute, but first the foremost challenge to our present concepts of democracy and politics: globalization. It is a highly contested concept. How do you understand it? DH: Globalization is a highly contested concept, actually like all concepts in the social sciences whether you take power, democracy or globalization. In the social sciences you have contested ideas and theories. It is the nature of social debate. So there is nothing particularly controversial, it seems to me, about concepts that are contested. But in the case of globalization, it is contested for at least two or three very powerful reasons. One is that globalization is not new; if you think of the spread of European empires across the world during the last five hundred years then most people’s experience of global interconnectedness is an experience of colonization and exploitation. So the reasons why parts of the world don’t rejoice over increased global interconnectedness are quite understandable. Secondly, globalization has been associated in the last thirty years with the mean-spirited neoliberal project which is reinforced by the conditionality programs of the IMF and the World Bank for developing countries. The result has been that many of the developing countries have been required to lower their tariff barriers more rapidly than developed countries, and that asymmetries of market access and double standards in trade rules have not been addressed. And history tells us that the developed world created economic growth behind protective walls and barriers and, yet, we are requiring of the most vulnerable economies that they lower their barriers and compete on an equal basis. Not surprisingly, they find this unconvincing and hypocritical. And, of course, the third reason globalization is contested, is that it has been associated with increasing global inequality and, some have claimed, with increasing global poverty.

You first of all asked me how I understood globalization. Well, for me, globalization is not a very difficult thing to understand and I place it at the opposite end of a spectrum from the local. So you have social activity that is organized locally, nationally, supraregionally and globally. It is a continuous space and to talk of globalization is simply to talk about the way in which aspects of human activity, such as communications, trade or finance, are increasingly embedded on an intercontinental or interregional basis. In my book Global Transformations I try to set up a rigorous framework for mapping these processes and I use four criteria: the extensity of these processes which stretch across space, the intensity of the processes, the velocity of them and the impact of their activities. And this it seems to me is fairly straightforward. For example, you can measure the way in which over the last 150 years increasing numbers of countries have been trading with increasing numbers of countries, involving an increasing proportion of their GDP and an increasingly rapid movement of goods and services. So there is a measure of globalization. Or take communications. You probably know that when the British prime minister in the middle of the nineteenth century wanted to communicate with a commander in India, it could take two years for an exchange of letters if he was unlucky. Today we know when to expect an answer to an electronic question. It is practically instantaneous. So it is possible to measure the way in which the world has become increasingly interconnected and enmeshed. But it is important not to confuse this fact with the fact that it is also socially disorganized and unjust. My view is that globalization has created more wealth and opportunity in the world in which we are inescapably side by side. But that does not mean the world is more integrated or more just. Is globalization beyond control? Is this where your distinction between hyperglobalists, sceptics and your own position as transformationalist come in? As different approaches to the nature and impact of globalization? DH: Well, that distinction helps understand the debate a little. There are those people, the hyperglobalists, who argue that globalization increasingly hollows out the state, hollows out citizenship both at the level of global market forces and at the level of regional blocs like the EU, and that this has circumscribed the range of choices of states; states become conveyer belts between citizens and global market forces. The result is, let us call it, ‘redistributive repression’ at the national level. Then there are those, the sceptics, who say that this misunderstands the importance of institutions; that the hyperglobalist view is wrong because political institutions still matter, political institutions can broker tradeoffs, politics still counts, democratic mandates still matter. And finally there are those, the transformationalists, who argue, that for better or worse, the position in the middle is the right one. That to some extent is my view. That is to say, I think there have been major spatial shifts in trade, financial flows, environmental challenges and so on. You can’t compare the environmental challenges of four or five hundred years ago to today. You did get onerous interregional environmental shocks with colonization. You know the western world didn’t conquer North America, for example, just because it had superior technology. It conquered it because it brought

bacteria and all manner of diseases which had a catastrophic impact on the immune systems of the indigenous peoples. So that is a serious environmental shock, but the extensity, intensity and velocity is not the same as global warming. However I think that whilst there has been a massive global shift over the last fifty years or so, and we can reasonably talk of that as globalization, I don’t think that there has been a simple hollowing out of states. I think politics has become more complicated and multidimensional. So we live with an increasingly multilayered politics. There has not just been economic globalization; there has been, in part, political globalization; that is, the growth of politics across cities, regions, supranational regions, international organizations, alongside the development of a global civil society. So globalization is not beyond control? It is just beyond national control? DH: I think that globalization creates global systemic challenges to our humanity, to our global commons and to our rulebooks which can’t be dealt with by single nation-states acting alone. In that sense I think we no longer live in what I call ‘national communities of fate’. I use the phrase ‘overlapping communities of fate’, where the fates of nations are increasingly intertwined with one another. And that is true in economics; it is true in communications, in the environment and so on. There is a huge number of challenges, from deforestation, fisheries depletion and global warming to how we write e-commerce rules, tax rules, financial rules, trade rules and so on. And none of these issues can be dealt with alone by single nation-states. I’ll just give you two very poignant examples. The failure to come to agreement in Cancún; if this failure remains in the long term it means that the asymmetries, rules and double standards of the world trading system, which penalize the world poorest countries in particular will not be addressed. This is not an issue which can be resolved by a single nation-state acting alone. And, of course, other, urgent issues, like the spread of AIDS and other pandemics, are not issues that can be dealt with by Subafrican countries acting alone. It requires a global response. Zombie state? We should be so lucky! We’ll get back to the nature of these responses. But to return to the question of the nation-state what do you think of Ulrich Beck’s concept of the nation-state as a zombie category. Should we understand the nation-state as a zombie? DH: Well, it follows from what I’ve said that we probably shouldn’t. I don’t think that many of the categories thought of as zombie categories are zombie categories: class, race, ethnicity, gender remain powerful stratifying forces in the world and so is the state. If you look at the distributive consequences of global economic integration for the people around the world, both inside nation-states and outside nation-states, then you must conclude that states still matter. And if you look at the distributional outcomes of welfare states across Europe, you see that in the last thirty years, despite increased geopoliticaleconomic integration, there are very different welfare state regimes.

There is nothing in my work that says that nation-states are zombie categories. All the work we have done empirically in the social sciences on the impact of globalization, on economic growth, on inequality within nation-states, on inequality between nation-states, all shows that national politics still count; that effective state management is still better than ineffective state management; that intelligent leadership still makes a difference; and that countries that have strong national traditions, social compacts or social contracts, can still protect themselves from some of the worst consequences of rapid economic liberalization. States can, in their space, still make a big difference to dampen inequality, to empower citizens through education and learning, to increase the competiveness of their economy while also ameliorating the worst consequences of exposure to the world economic market. And this is true not just for advanced countries but for many developing countries as well. We live in a world where politics is now multilevel and multilayered. I talk of this as the reconfiguration of political power. So states are not just players on the level of other players. They actually have a supreme status still… DH: They still have a distinctive capacity to make and break rule systems with coercive consequences. We don’t need to go much further than the response to 9/11 and Iraq . Underlying these is a very serious issue which is that, with the end of the cold war and the end of the competition between the world’s two superpowers, we have the emergence of one hegemonic state which has the capacity to turn its back on the political globalization of the last fifty years, to turn its back on the growth of a rule-based multilateral system. It has the ability to resist cooperation on vital matters. What are the consequences of this? The consequences are not just a crisis of multilateralism, and the weakening of the UN after Iraq , but the failure of trade talks at Doha ; the failure to address issues of global warming, and the failure to make progress on the moral standards of the international community: the Millennium Goals. If you take these things together, the one thing you must conclude is that states still matter. The big question is how we are going to deal with the biggest rogue state of all in the modern world! How do you create a multilateral world political system that can deal with the asymmetries of power posed by the United States? Zombie state? We should be so lucky! If it is not the case, as a great deal of the globalization debate maintains, that the nation-state is being hollowed out as the most important container of our lives, what are then the principal dangers coming from globalization; welfare and democracy as the most pressing? DH: I don’t say that the nation-state remains the only precious container. I maintain that it is one of the important containers. If you look at Europe today, a citizen of Glasgow can vote in the city elections as a citizen of the city; he or she can vote in the Scottish election as a citizen of Scotland; he or she can vote in the UK elections as a citizen of the UK; he or she can vote in the European elections as a citizen of Europe and, if that is not enough, he or she can engage in any number of INGOs campaigning on issues like the environment, human rights and so on. This is a world of multilevel politics and of multilayered citizenship-already in some part at least.

The idea that cosmopolitan citizenship is a myth of the future trumped up and imagined by political theorists distant and remote from the world is erroneous. We already live in a world of multilevel power and multilayered citizenship. It is fragile. It is subject to the uncertainties of politics. So my first point is that states still matter but not only and exclusively. Moreover, in the post world war period, we have entrenched cosmopolitan values in international institutions which have given genuine expression to the delimitations of sovereignty on a national basis. There has been a dramatic shift on the international stage from sovereignty as effective power, which was the basis of, and justification of, the state order, to sovereignty as legitimate authority - authority defined in relation to, and as circumscribed by, democratic values and human rights. However fragile that achievement is, it is embedded in international legal arrangements from the UN Charter to the ICC. This is a most important set of legal trajectories that splice together cosmopolitan values and principles with the state order and the state system, and place limits, in principle, on the legitimate nature of power. Now this system is ‘in play’ and once more subject to dispute as a result of 9/11 and the war in Iraq . This is a very challenging moment where the legacy of cosmopolitan values and principles, which have been enshrined in our multilateral and more progressive institutions, is subject to threat as a result of the neo-liberal and unilateral politics of the Bush administration. Neo-liberalism remains a principal danger DH: The whole tenor of the last thirty years has been set by the neo-liberal agenda: simply opening up your borders is good for you, and the nature and scope of states should be restricted to a minimum. The evidence says that this needs heavy qualification. What does it show? It shows that broadly speaking economic globalization has been good for high income countries, pretty good for middle income countries, and pretty terrible for low income countries. What else does it show? It shows that liberalizing trade barriers is generally good for the world’s poorest countries; and that rapidly liberalizing capital is generally disastrous for the economic prosperity, inequality and the life chances of the poor. And what we know also is that states that build their capacity to manage their national economies, build up infrastructure, build human capital and manage elements of investment-strategies - these sorts of states can make a difference. Now, where do we see the most successful results of such programs today? We often see them in the very economies that were held up for a long time as models of neo-liberal values such as South Korea. The most successful economies of the Far East from South Korea to Taiwan, from India to China, have managed liberalization very carefully. They have decreased their trade barriers only once economic growth has taken off and they have managed capital flows tightly. So, the lessons of this are that good state management matters that states still have the capacity to make a difference, that they need to resist the narrow neo-liberal model of globalization which says that if you open up

your markets all will be fine. We need a different agenda at the global level to the one that we have. Cosmopolitanism. Let us talk about that different agenda and your concept of and program for cosmopolitan democracy. First of all, why cosmopolitan? Why not global or universal? What is there more in that concept of cosmopolitanism? DH: Well lots of things. First of all when Machiavelli, Hobbes and Locke defended the idea of the modern state, they didn’t defend anything they thought would be there the next day. It took over two hundred years to reconstitute Europe into a modern system of states. Now, I am a champion of cosmopolitan ideas but I don’t think you can create a cosmopolitan democracy in a decade or two. Secondly, why cosmopolitan? Because I take cosmopolitan to be the defense of the set of principles that articulate the equal moral status of each human being; the reciprocal extension of this principle to all; the concept of personal autonomy and responsibility; the principle of consent and the management of collective differences through democracy, and so on. The cosmopolitan world view is consistent with democracy, but it departs from democracy in one particular sense; it argues that whereas the history of liberal democracy is associated with a single political form - the territorial nation-state - today we need to cash these principles in at different levels: locally, nationally, regionally, globally. So cosmopolitanism is not interested in, let us say, a single conception of top-down authority in a single bordered space; rather, it is concerned with the renaissance of legitimate authority and legitimate power at multiple levels. It is about the diffusion of public power to those who are critically affected by issues and processes locally, and also about the extension of public power to higher levels where in order to be inclusive you have to accept larger constituencies and political communities because issues like world debt, global warming, the instability of the world financial system are global in scope. These matters can’t be resolved locally. To be inclusive about them you need to go global. So I take cosmopolitanism to be a way of specifying a democratic multilayered, multilevel system of authority marked by multilayered, multilevel citizenship, enshrined by and defending the equal worth and dignity of each human being. There is no clear connection between my books on cosmopolitan democracy and my books on globalization – that is, until my new book, The Global Covenant: The Social Democratic Alternative to the Washington Consensus. The question I have tried to address in this book is: how can we make political progress towards a more cosmopolitan, integrated and just order? And my new book tries to do that by confronting the failures of existing international politics: that is, the reaction to 9/11 and the war against Iraq. In my view, these efforts aimed to impose a unilateral political will on an increasingly interconnected and complex world and the result is failure.

It is failure in Afghanistan. What is Afghanistan today? It is essentially Kabul at the cost of a billion dollars a month. What is Iraq today? It is divided already into three zones; and the Americans are seeking the quickest exit option they can with precious little dignity. Iraq will be weakened and undermined as a result, and may well contribute to more instability in the Middle East. These adventures have not made any systematic effort to address the crucial sources of instability in the Middle East which feed global terrorism: the problems of the Palestinian-Israeli conflict. Moreover, we have made no attempt to better connect issues of economic globalization with wider issues of poverty reduction and so on. The existing prescriptions do not work. So my view is that it is the existing agenda which needs defense, not the cosmopolitan one. The existing agenda is failing. We are not without principles, alternatives, and policies. I actually think the steps we need to take are not very big. Whether we take them is another matter. Politics is about choices DH: I don’t argue that all aspects of the Washington consensus and policies are wrong. You can’t simply say that being committed to balanced budgets, the market determination of interest rates and so on is simply ideological. The problem with the Washington consensus, it seems to me, is that it represents too narrow a set of economic doctrines. These are doctrines which don’t address the challenges of development adequately. The Washington consensus is a pernicious set of doctrines on its own. But if you say that what we need is sensible macroeconomic management in the context of sustained investment in the human infrastructure and social capital of the world’s poorest countries; the sequencing of global market integration and not simply wild liberalization; phasing in of trade liberalization but not capital market liberalization; the reform of international aspects of economic institutions and so on, then we can put together a conception of what is needed in economic and political terms. Can the resources be found to invest in development? People often say: ‘Well, we spend so much money on the UN and it is such a waste’. And I say: What is the UN budget? I’ll tell you what it is. It is $1.25 billion + a lot of peacekeeping. Do you know what UCLA budget is? It is more than twice that amount, and that is just one university in California. Do you know what the Americans spend on confectionary (expenditure on chocolate and bubble gum)? It is $27 billion in 1997figures, and it is more now. Do you know what the US alcohol expenditure is? $73 billion. Do you know how much Americans spend on cars a year? It is over $600 billion. The issue is not about resources. It is about choices. And this is not to let the Europeans off the hook. In Europe we spend $150 billion a year on cigarettes and alcohol. In US and Europe we spend $17 billion a year on pet food. And how much do we need to make a difference to the basic education, health and welfare of the world’s poorest people? We need $30-40 billion a year. The removal of the EU’s subsidies on agriculture and other related products alone would release $300 billion dollars a year! This is astonishing. It is enormous. So it is not that we do not have the

money. It is just that we don’t allocate it in certain ways. And that is a choice – a tragic choice. So I ask my students to consider that we went to war – we the government, not me, not you, some went to war … Denmark too … DH: We went to war after 9/11 because, very seriously, 3.000 people died in the United States. Now, this was a crime against the United States and it was a crime against humanity. This was a very serious criminal act, but, as I point out, to them, every day over 30,000 children die of poverty related diseases which are preventable and could be eradicated. What does this tell us about our priorities? So my view is that politics is about choices. We need to be clear about what those choices are. We need to be clearer about the principles we need to make choices, and we need to be optimistic whilst recognizing that this is a very delicate historical moment. Not because the state is a zombie category but because the state is alive and well and threatening to undermine many of the collective achievements of the post-world war period. The cosmopolitan agenda still seems like a rather ambitious and radical agenda. How is it compatible with the current distribution of wealth and power? And maybe more to the point: Is it compatible with the present liberal-capitalist system? DH: On the question of the current distribution of wealth and power, it is clear that if you take these ideas seriously you will find, as you do find, huge resistances on the part of the world’s most powerful players to such notions. But what I am saying, in the first instance, is that to make a very big cosmopolitan difference you don’t need a very big amount of non-cosmopolitan money. Huge shifts in resource allocations are not required. What is required is rethinking some aspects of our priorities, and the policies that relate to them. I don’t think this is beyond us. Secondly, I think it is in the interest of the world’s largest companies to find a stable basis for world economic and political development. What do big companies want? They want stable regimes, stable markets so they can get a return on their investments. What they don’t want is a world undone by terrorism, global struggles, conflicts and instabilities. Just think of the number of consumers available in India, China, and eventually, in parts of Africa! I think that large-scale, knowledgeable corporations have an interest in solving global problems. Some corporations are at the forefront of searches for new solutions. Just as there are differences between a rogue state and an accountable state, there are differences between a rogue company and a responsible company - and the difference matters. The difference is not utopia but it still matters, and companies today such as Shell and BP, that five-six years ago were badly stung by protest, have learned some of

the lessons. The (now ex-)head of Shell says he has learned more from Amnesty International in the last few years than he has ever learned from managing consultants. Now, there is a problem of course. Clearly, companies do not want to take on great social costs by themselves. But, if all players have to play by the same rules then you can accept an increase in costs. So I think companies can be embedded in rule based systems that push their activity in socially responsible directions. In other words, what I’m saying, which I suppose is a bit controversial, is that I do not think that a cosmopolitan multilevel political order oriented towards redistribution and poverty reduction, oriented towards democracy and social justice, is necessarily in itself incompatible with liberal capitalism. So what does that mean? It means that there is either a solution to some of these problems creating a social market economy at the regional or global level by introducing things like a global compact with teeth - new ways that circumscribe the operations of commercial services and production - or it is not going to happen. Is it going to happen? It is not going to happen by itself. We have to find a new politics to make it happen. And in that sense, it seems to me, cosmopolitanism is the way forward. Will it happen tomorrow? No. Will it happen in thirty-forty-fifty years time? I have no idea. Ought it to? Definitely. Is it worth fighting for? Yes. Are you optimistic? DH: I am optimistic in the long term because I think that some of the most important problems that we face, from health and disease to global warming, can’t simply be sorted by individual nation-states anymore. And I think, as Habermas once put it, ‘humans are unable not to learn’. On the other hand you have to say, of course, that this is a moment of very intense political conflict: the neoconservative agenda in the United States is very clear cut and wishes to accept no constraints on American power; and it is a formidable challenge to the cosmopolitan set of ideas. Unfortunately, Blair has played into their hands. What a tragic irony! One last question. Where does the EU fit in the cosmopolitan project? DH: In the last thirty or forty years regionalization and globalization have been largely compatible with each other. That is because most regional blocs have been agents of globalization; they have been mechanisms which have aided the globalization process; they have helped nation-states adjust to a more integrated international economic system. Having said that, the EU has pioneered remarkable changes in the context of Europe’s history. It wasn’t China or Africa or Latin America that nearly destroyed humanity twice in the twentieth century. It was Europe. Europe has been a very dangerous place for European citizens and for the wider world. And in that sense, the development of EU after the Second World War has been one of astonishing significance in winning peace, delimiting national sovereignty, locking Germany and France into the European system, and in providing a mechanism to sue states for the entrenchment of rights if they violate fundamental human liberties. This, in But today, just as there is a strong reaction to neo-

liberal globalization, there is a strong reaction to a Brussels-led European project which appears to many people as globalization does; that is, as a hollowing out the power of their countries and weakening the position of their citizens. So just as there has been a reaction to globalization there has been a reaction to the European project. I think it’s pretty serious because Brussels politicians have, in many ways, been trying to create a concept of Europe from the top down and in general European citizens have not been prepared to go as fast as them, and in the same direction. There are some optimistic signs. I mean most European countries are much more proEurope than Britain or Denmark. And the European currency has been accepted right across Europe fairly uncontroversially. This is a remarkable matter. It is far reaching in its integrative implications. I suppose the question is: will the European project succeed in embedding democracy further and winning the hearts and minds of the people, and I don’t know the answer to that question. I think people have to learn that the solutions to the problems that affect them as individuals or as groups today can no longer be found just at the national level. They need to learn to separate out political nationalism from cultural nationalism and, whilst they need to nurture everything that makes them distinct culturally, they need to learn to separate this from those institutional developments that are the basis of us learning to live together in an interconnected and integrated way. And that means a remarkable capacity to separate identities and operate at different levels; to accept that citizenship is now not just a national thing but a local, national, supra-regional and global thing. It means the capacity to learn that different issues have to be dealt with at different levels; that politics needs to be separated, in part, from the nation-state; that we need to defend, as Habermas says, not just civic nationalism but civic constitutionalism and we need to see that the principles of civic constitutionalism are rightly embedded at these different levels and not just any more at the level of the nation-state. Will we get that far? Nobody knows the answer to that question. I am an optimist but at this time in history you have to go with Hegel, who said in The Philosophy of Right, that the owl of Minerva flies at dusk. About the Authors: Mikkel Thorup, Ph.D.-student, Department for the history of ideas, University of Aarhus , Denmark Mads P. Sørensen, Lecturer, Department for the history of ideas, University of Aarhus , Denmark

http://www.globalpolicy.org/globaliz/define/2004/10review.htm

The Miracles of Globalization: A Review of Why Globalization Works By Arvind Panagariya Foreign Affairs September/October 2004 By the early 1980s, a number of distinguished economists had amassed compelling evidence that outward-oriented trade policies were far more likely than protectionism to lead to economic growth. The evidence was contained in two multi-country research projects-one at the Organization for Economic Cooperation and Development (OECD), led by Ian Little and others, and the other at the National Bureau of Economic Research, directed by Jagdish Bhagwati and Anne Krueger-and in a series of studies at the World Bank. When developing countries, convinced by these findings, began to embrace outwardoriented policies, pro-free trade economists believed they had scored a decisive victory over protectionists and turned their attention to other problems related to development. But the protectionists were not so easily defeated. Over the next few decades, they regrouped, building a new case for protectionism based on examples of countries that had apparently opened up but had failed to grow rapidly or had suffered financial crises. They also forged new alliances with certain nongovernmental organizations (NGOS) dedicated to preserving the environment and improving labor standards. By the late 1990s, the protectionists-now rechristened "anti-globalizers" to reflect the expanded scope of their agenda-seemed to have recovered some of their lost ground. Their newfound vocalism made headlines during the World Trade Organization (WTO) ministerial meeting in Seattle in 1999. Today, however, advocates of globalization are gaining the upper hand again. Bhagwati's strikingly successful defense of open markets in his recent book In Defense of Globalization has been bolstered by another influential pro-globalization voice, that of Martin Wolf of the Financial Times. Wolf's weekly columns have already established him as one of the world's most respected economic journalists. Now his ambitious new book, Why Globalization Works, offers a patient and persuasive refutation of many of the arguments most frequently marshaled by critics of trade liberalization. STRAW MEN Wolf's book ranges over many topics, including, in Part III, the rise and fall of what may be called the period of "first globalization" that flourished from 1870 to 1914. But the

book's most important contents are in Part IV, in which Wolf examines and dismisses current critiques of free trade, of the role of multinational corporations in the global economy, and of capital mobility. Since this is the part of the book that will invite the most attention from pro-and anti-globalization advocates alike, it deserves particularly close scrutiny. To those who complain that increased openness to trade during the 1980s and 1990s has failed to deliver faster growth, Wolf points to the contrary experiences of China and India. Both countries witnessed significant jumps in their growth rates as they opened up their economies to international trade and foreign investment. As Wolf points out, "Never before have so many people-or so large a proportion of the world's population-enjoyed such large rises in their standards of living." Wolf argues that although trade openness alone may not always lead to sustained growth, the former is necessary for the latter. In my own research, I have found that growth "miracles"-countries that grew at rates of three percent per capita or more on a sustained basis between 1961 and 1999-almost always experienced rapid growth in trade. Moreover, there are few examples of highly protected countries that managed to grow rapidly on a sustained basis without lowering their level of protection. Symmetrically, countries that had stagnant or declining per capita incomes-what I call growth "debacles"-were characterized by dismal trade performance. Wolf is correct, therefore, in asserting that the empirical evidence refutes the claim made by critics of globalization that trade openness wreaks havoc on economies. Although the data show that openness to trade is not sufficient for growth, this is readily explicable by proponents of free trade such as Wolf. Trade is enabling, but if other obstacles remain in place, it may not lead to results. Thus, for instance, Indian economists working on the OECD project in the 1960s correctly identified that India's stifling industrial licensing system would nullify any benefits from opening up trade. More generally, if trade is embraced but there are no transport facilities, or if potential trading partners have closed their markets, de facto autarky will continue. Wolf also argues that the ability of trade to improve growth may be undermined by poor governance: "Poor performers have corrupt, predatory or brutal governments or, sometimes even worse, no government at all, but rather civil war among competing warlords." But this is not an argument against opening to trade. Indeed, Wolf could have made his defense of trade even stronger by posing the question, Is a poorly run country better off pursuing outward-rather than inward-looking policies? More often than not, the answer would be yes. Wolf also could have challenged the frequent assertion that Latin America-which has tried neoliberal reforms, including trade liberalization, with disappointing resultsundermines his arguments for globalization. The fact remains that much of South America has borrowed too much and has therefore been particularly vulnerable to financial crises. This, in turn, has made it difficult for many countries in the region to reap gains from trade liberalization. Chile is a rare counterexample: it has managed to

grow at more than 5 percent for nearly two decades largely because it has reduced its trade barriers to OECD levels while limiting its foreign borrowing to prudent levels and maintaining macroeconomic stability. BEYOND POPULISM Admirers of Wolf's pro-globalization arguments in the Financial Times will be surprised by his endorsement of the notion that rich countries practice "hypocrisy" and "double standards" in setting trade barriers and framing rules at the WTO. He does not make a convincing case for these charges and, at times, too readily embraces populist arguments without necessary qualification. Wolf chides rich countries for imposing higher barriers on imports from poor countries than on imports from other rich countries. He notes, for example, that the United States imposed an average 14 percent duty on imports from Bangladesh in 2001, compared with 1 percent on imports from France. But a simple comparison between the two countries' average duty levels is misleading, because the products they export are different. Under WTO rules, trade concessions have to be given to all members simultaneously. Because developing countries kept themselves aloof from the negotiating process until the Uruguay Round, which did not begin until 1986, developed countries unsurprisingly concentrated their initial liberalization efforts on the products they traded most intensively with one another. When developing countries did finally join the negotiations, they were successful in getting developed countries to agree to end their extensive import quotas on textiles and clothing by January 1, 2005. Again, because developing countries did not participate in early negotiations and therefore were not subject to any liberalizing commitments, they are now saddled with higher tariff barriers on industrial products than are developed countries. This fact is tacitly acknowledged by Wolf in his discussion of the benefits of trade liberalization in the current Doha Round of trade talks: he notes that developing countries will gain more from their own liberalization than from any other kind. On agricultural subsidies, Wolf makes a stronger case. Developed countries do indeed massively subsidize their agricultural exports, whereas developing countries do not. Unfortunately, however, Wolf undermines the point by buying in to rhetoric-popularized by the World Bank leadership and by Oxfam-such as the assertion that the European Union provided $913 for each of its cows in 2000 but only $8 for each person in subSaharan Africa. The economic argument lurking behind this comparison is nonsense. The truly meaningful comparison is between the damage EU subsidies do to sub-Saharan Africa by reducing the prices of its exports (damage that amounts to a tiny fraction of the total subsidies going to EU men, cows, land, and exports) and the grants disbursed by developed countries to the region. (It is important to remember, moreover, that not all aid takes the form of grants: the World Bank, for example, gives loans at concessional terms, rather than grants.)

Wolf also fails to point out the flaws behind the assumption that lifting rich countries' agricultural subsidies would help poor countries. NGOS are right to point out that reducing subsidies on cotton would indeed benefit poor countries, because the latter are unambiguous net exporters of cotton goods. But that does not mean that removing agricultural subsidies is always in poor countries' interest. As many as 45 of the world's 49 least developed countries (LDCS) are net importers of food and 33 are net importers of agricultural products, according to the economists Alberto Valdes and Alex McCalla. The removal of tariffs and subsidies would hurt, rather than help, these countries, because such a move would raise the prices they pay for their imports. The counterargument-that these countries would still benefit because as prices rise they would become net agricultural exporters-is not persuasive. Very few net importers are likely to make this switch. And those countries that do are unlikely to offset the losses they accrued as importers-unless they become large net agricultural exporters. Even those LDCS that are net exporters of agricultural goods could find themselves worse off. With the temporary exceptions of rice, sugar, and bananas (which are slated to end during 2006-9), the EU's Everything But Arms (EBA) initiative gives these countries duty-and quota-free access to the EU market. This means the LDCS sell their exports to the EU at its internal prices. Given that the removal of the EU tariffs and subsidies would lower these internal prices, developing countries participating in the EBA initiative would also lower their export earnings. Overall, the benefits from removing protective measures would accrue less to poor countries than to rich ones, which enjoy the greatest comparative advantage in agricultural products. Without proper appreciation of this fact, policymakers will fail to design appropriate compensation and adjustment mechanisms to ease the pain of agricultural liberalization in poor countries. By the same token, countries that are promised huge benefits but end up hurt could become badly disillusioned about free trade, which, in turn, could complicate further global liberalization. WRONGLY CONVICTED Multinational corporations are yet another favorite punching-bag for critics of globalization. Such companies, the argument goes, exploit poor workers abroad and impoverish workers at home by moving capital overseas. Wolf debunks both myths eloquently and decisively. The first charge, commonly made by NGOS and student organizations in the United States, is easiest to dismiss. If multinational jobs are so exploitative, why do workers in Bangalore, and even in predominantly Marxist Kolkata (Calcutta), line up to take them? The answer, as Wolf painstakingly documents, is that multinationals pay their workers more and treat them better than do local companies. Among other data, he cites a study of 20,000 plants in Indonesia showing that the average wage paid to workers in foreignowned plants in 1996 was 50 percent higher than in private domestic plants. Even after controlling for education levels, plant size, and other relevant variables, wages paid by multinational companies were 12 percent higher for blue-collar workers and 27 percent

higher for white-collar workers. According to surveys by the International Labor Organization, moreover, allegations that foreign-owned plants in "sweatshop industries" (such as footwear and apparel) pay lower wages and provide inferior working conditions also turn out to be false. Another prominent concern about free trade is that capital flows within multinational corporations have the effect of lowering wages in rich countries. Anti-globalization advocates also argue that the ability of such firms to move operations abroad reduces the bargaining power of workers in unionized industries. Yet in 2001, the amount of outward foreign investment from the United States was virtually equal to the inward flows, according to figures cited by Wolf. Net capital outflows, in other words, were negligible. (CNN's Lou Dobbs, who concentrates on firms that are outsourcing jobs but fails to discuss foreign firms that are in-sourcing jobs, should take note.) If anything, increased volumes of capital flows (both ways) may help labor productivity-and hence real wagesbecause they stimulate technological improvements. As for the second criticism, it must also be remembered that corporations in the United States have always had the option of moving to another U.S. state. It is not clear how much extra leverage they gain by threatening to move abroad rather than within the country, especially when the bulk of the investment flowing from the United States goes to other rich countries, not poor ones. Few economists and policymakers will disagree with Wolf's incisive criticism of the antiglobalizers' position on trade and multinationals. But his views on short-term capital mobility are much more controversial. Some of the most respected economists today, such as the Nobel laureate James Tobin, Bhagwati, and New York Times columnist Paul Krugman, have written against full capital mobility, particularly when it is pursued with the kind of haste witnessed prior to the Asian financial crisis in 1997-98 under International Monetary Fund and U.S. Treasury guidance. In his columns in the Financial Times in the late 1990s, Wolf generally agreed with these economists. But in Why Globalization Works, he moves away from their position. Although he recognizes that full capital convertibility can easily lead to crises, he comes out in favor of convertibility, even though there is no evidence that such conditions contribute positively to growth. Citing another Nobel laureate, economist Friedrich Hayek, he argues that if free choice is valuable in its own right, people should be given the right to hold their savings wherever in the world they choose. He characterizes the 1960s exchange restrictions in the United Kingdom, for example, as a "predatory policy" that ended up destroying a sizable proportion of that country's middle-class savings. For Wolf, a well-run financial system, of which he considers currency convertibility to be a key part, is critical. Controls are costly and ineffective, and they force otherwise lawabiding citizens into corrupt arrangements. He also sees full convertibility as a vehicle for speeding the reform of the financial sector. But Wolf's case is far from persuasive. A large number of countries-including several Latin American countries during the 1960s and early 1970s, eastern Asian countries

during the 1960s through the 1980s, and China and India during the 1980s and 1990shave grown rapidly on a sustained basis without convertibility. Many countries that have embraced convertibility, on the other hand, have experienced devastating financial crises, such as Brazil, Indonesia, Mexico, and Thailand. Despite this quibble, however, Wolf's book offers a series of highly effective rejoinders to the main criticisms marshaled by opponents of globalization. For those of us concerned with one of the most far-reaching issues of our time, this elegant and passionate defense of trade liberalization is essential reading