Lecture 17 Globalization

Globalization: The Main Economic Dimensions 1.Trade in Goods and Services 2.Financial Flows 3.Internationalization of Production 4.Harmonization of Economic Institutions

Debates over Globalization: Does globalization eliminate sovereignty over crucial issues such as labor rights, environment? Does globalization remove the flexibility that poor countries need to achieve economic growth (“special and differential treatment”)? Does globalization give excessive powers to the rich countries to set the rule of the game? Does globalization lead to widening inequalities, within countries and between countries? Will globalization, by itself, prove sufficient to spread the benefits of economic development?

Increase in Global (MNC) Production > Increase in Foreign Direct Investment > Increase in Capital Flows > Increase in Trade Flows > Increase in World GNP

Growth in Membership of International Organizations IMF: Initially 29 members, now 183 members WB: Initially 38 members, now 183 members GATT/WTO: 23 countries in first trade round, now 142 members

Export Processing Zones

Foreign Direct Investment (FDI), $US millions