Future of the World Economy: What we think we know 1.Collapse of USSR and communism 2.East Asian strategy success 3.Great Recession begins an argument: 1.Liberal Capitalism vs. State Capitalism 4.Info-Tech revolution 5.US -- not declining; US system -- not declining 6.Regionalism 1.NAFTA - FTAA 2.EUEU 3.APECAPEC

Globalization Pro Affordable food Interdependence means less war Free trade equals more wealth Communications is easier (business and cultural understanding) Social media (Arab uprising) Con More access to lethal technologies Terrorist communications enabled Media focus on bad news affects outlook Communications/computer vulnerability Social media (viciousness) Labor mobility means lower wages Loss of labor in wealthy countries

Pro Reduces nationalism Reduced xenophobia More rapid spread of technology Easier travel Con Increased nationalistic appeals (migration) Spread of disease Environmental degradation

Pro Balance of power as powerful nations become equal NGO influence grows Human rights improvements Increase in international humanitarian efforts Creates democracy: economic freedom leads to calls for political freedom More competition, cheaper products Women’s equality

Con Gap between rich and poor grows Loss of culture; homogenization (cultural imperialism) Outsourcing of jobs from industrialized nations Technology replaces manpower: jobs disappear Brain drain: immigration from poor to rich nations by best educated Environmental damage (Climate change) Labor standards: race to the bottom Crappy jobs

Growth Rates/Inequality Wealth upper income middle income poor Time

Two Theories About Globalization 1.Bottom Billion Thesis (Paul Collier) 2.Next Convergence (Michael Spence) a : 15%-85% b : 85% catching up

Questions Alternatives to globalization? How would you stop globalization, if you wanted to, without restricting people’s freedom? Is the answer this: building a better globalization? Smart vs. Dumb globalization – Environment – Labor rights – health