“What are the consequences from moving away from nation-based economics
toward, a more globalized one?”
Literature Review:
Summary:
Summary:
In his 2000 Committee for Development
Policy Paper “Economic Globalization:
Trends, Risks and Risk Prevention”, Che Kiang University Department of
Management Dean and Professor and University of Peking Professor and Ph.D.
Director Gao Shangquan begins by stating his premise: that economic
globalization “reflects the continuing
expansion and mutual integration of market frontiers and is an irreversible
trend for the economic development in the whole world”.
Professor Shangquan then lists two “enormous risks” posed by the
globalization process. The first is that economic globalization has expanded
the gap between what Shangquan refers to as “the North and the South”, with fewer than 20 countries benefitting
from economic globalization and 80% of capital flowing among the United States
and Western European and Eastern Asian countries [Page 4]. Second, Shangquan
writes that a “self-fulfilling mechanism”
that he calls the “sheep-flocking effect”
of international financial markets under open economic conditions strengthens
developing countries’ risk of being “concussed”
by “unfavorable external factors” of
monetary crisis and the “concussion”
suffered by developing countries by “weakening
their capacity of macroeconomic control and regulation” [Page 5].
Shangquan goes on to recommend three
measures to be taken to prevent and “dissolve”
the risks of economic globalization to developing countries.
The first is the establishment of an
organization for global economic regulation that can play the role of “final lender” all over the world,
providing “floating financial relief and
support” to restore the confidence of international investors and a
regulatory system strengthening the “monitoring
and supervision” over financial institutions [Page 6].
The second is a guarantee of growth
sharing, making the benefits of the progress of globalization available to
every country [Page 7].
The third is strengthening of government
functions of protecting intellectual property rights, ensuring legal
fulfillment of contracts, and providing infrastructure; a major government role
in establishing incentive and constraining mechanisms in line with corporate
governance so as to improve efficiency; and a focus of government efforts on stimulating
rapid scientific, technological and educational development and increasing
investment in developing human capital [Page 8].
In his January 2015 paper, European
Council on Foreign Relations and Foreign Policy Center Founder and Director
Mark Leonard presents “Seven
Challenges to Globalization” from Carnegie Endowment for International
Peace Moscow Center Director Demitri Trenin, Kyoto University Graduate School
of Management Adjunct Professor Takashi Mitachi, United States Alternate
Executive Director to the International Monetary Fund and New America
Foundation Global Strategic Finance Initiative co-Founder and Director Douglas Rediker,
Princeton University Department of Economics Visiting Assistant Professor and
Paris Institute of Political Studies Professor of Economics Sergei Guriev, New
York University Professor Ian Bremmer and Council on Foreign Relation Maurice
Greenberg Center for Geoeconomic Studies Director Michael Levi.
In his June 4, 2010 paper “Issues, Lessons and Future Challenges”
for the Brookings Institution, Australian National University John Crawford
School of Public Policy Center for Applied Macroeconomic Analysis Professor of
Economics, Australian Center for Economic Research on Health Director and Frank
Lowy Institute for International Policy Professorial Fellow Warwick McKibbin
summarizes the four questions and six themes [Page 2] of a conference convened
in Sydney Australia on March 18, 2010 by Australian National University, the
Brookings Institution and the Lowly Institute for International Policy.
The first has to do with the nature of
infrastructure: the main characteristics of infrastructure that make it special
to a country’s economy and the salient features that distinguish it from other
factors of production.
The second has to do with the returns to
infrastructure investment. McKibbin argues that transport infrastructure in
particular facilitates agglomeration economies and helps to realize the returns
to agglomeration; helps to create new markets and reduces costs to access
markets; and spurs innovation and facilitates the dissemination of knowledge;
leading to an increase in living standards and having a disproportionate effect
on the incomes and welfare of the poor [Page 3]. He argues that transport
infrastructure contributes significantly to the economic efficiency of an
economy by lowering prices, reducing the cost of private production, raising
productivity, reducing transport costs and lowering inventories [Page 4].
The third has to do with how
infrastructure should be provided and the role of the private sector [Page 5].
The fourth has to do with infrastructure
in developing countries and whether infrastructure provision should be affected
by the stage of a country’s economic development. McKibbin argues that
developing countries are particularly aware of their infrastructure needs and
that infrastructure helps alleviate poverty and provides an environment in
which the poor can grow their way out of poverty: infrastructure investment
providing access to energy, clean water and transport may mean the difference
between life and death for low-income countries [Page 11].
1.
Bhatia,
Karan and Bremmer, Ian, et al. “Geo-Economics:
Seven Challenges to Globalization”. World Economic Forum Global Agenda
Council. January 2015: http://www3.weforum.org/docs/WEF_Geo-economics_7_Challenges_Globalization_2015_report.pdf
2.
Henckel,
Timo and McKibbin, Warwick. “The
Economics of Infrastructure in a Globalized World: Issues, Lessons and Future
Challenges”. Brookings Institution. June 4, 2010: https://www.brookings.edu/wp-content/uploads/2016/06/0604_infrastructure_economics_mckibbin.pdf
3.
Shangquan,
Gao. “Economic Globalization: Trends,
Risks and Risk Prevention”. United Nations Department of Economic and
Social Affairs Development Policy and Analysis Division Committee for
Development Policy. 2000: http://www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp2000_1.pdf
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