1. Chapter 12: Globalization: International Trade and Migration Beyond Economic Growth: An Introduction to Sustainable Development By Tatyana P. Soubbotina 1

2. Overview of Chapter 12: Globalization International Trade and Migration What is globalization?  Why is it controversial? Waves of modern globalization  Three separate periods of globalization Costs and benefits of free trade  Comparative advantage increases efficiency Geography and composition of global trade  Which countries trade with each other? International migration  Who benefits from migration? 2

3. What is globalization? Globalization is the increasing interdependence of countries due to trade, foreign investment, and migration  Is globalization good or bad? What are its costs and benefits? Concerns of anti-globalization activists  Transnational corporations not interested in development, poverty, or the environment  Benefits of globalization are not shared fairly 3

4. Waves of modern globalization First modern wave between 1870 and 1914  10 percent of world’s population migrated  Wave ended with First World War Second modern wave between 1950 and 1980  Multilateral agreements on trade liberalization  Gaps between developed and developing countries widened Third modern wave continues  Lower costs of transportation, communication, & computing  Continuing liberalization of markets  Open countries (China & India) narrow gaps 4

5. Benefits and costs of free trade Free trade allows producer access to large international markets and consumer access to cheaper foreign goods  Comparative advantage leads to increases in efficiency when each country focuses on what it does best  Technological spillovers from trading partners can increase productivity Free trade carries many risks  Physical and human capital may not be easily transferred  “Infant” industries may require temporary protection Does free trade support development?  Farmers in developing countries (Brazil, China, India) are harmed by agricultural subsidies in developed countries 5

6. Geography and composition of global trade Trade is more beneficial for large countries with natural resources and good seaports International trade has grown faster than GDP (Fig. 12.1) except in Sub-Saharan Africa Developed countries mostly trade with other developed countries  Prices of primary goods (commodities) are volatile and affect the terms of trade between developed and developing countries  Developing countries are increasing their share of manufactured products (Fig. 12.2) Does trade harm low-skill workers in developed countries? 6

7. International migration International migration is currently at high levels, and US is a major destination (Table 12.1) Employment-related migration is increasing  Sending and receiving countries can benefit  “Brain drain” can hurt developing countries Suggested policy responses  Developing countries should facilitate remittances, and encourage return and entrepreneurship of migrants  Developed countries should ensure orderly migration policies  Is temporary migration better than permanent migration? 7