Table of Contents

Globalization and Economic Development

Globalization and Economic Development

Essays in Honour of J. George Waardenburg

Edited by Servaas Storm and C. W.M. Naastepad

Globalization is widely regarded as a means not only of ensuring efficiency and growth, but also of achieving equity and development for those countries operating in the global economy. The book argues that this perception of globalization as the road to development has lost its lustre. The experience of the 1990s belied expectation of the gains, such as faster growth and reduced poverty, which could be achieved through closer integration in the world economy.

Chapter 3: Cart before the horse: National versus international integration

J. Mohan Rao

Subjects: development studies, development economics, economics and finance, development economics, post-keynesian economics


J. Mohan Rao 1. INTRODUCTION International flows of goods and of finance capital have doubtless increased sharply over the last few decades. Non-traditional manufacturing exports from the newly industrializing countries (NICs) of Asia to the developed world have scaled new heights. Some have heralded a new era of globalization marked by rapidly growing world trade and capital movements. Others argue, however, that the world economy is actually less integrated today than it was in the late nineteenth century (see for example Rodrik, 1998). But such comparisons invite further scrutiny. It is true that labour movements, in the form of mass migrations from the old world to the new, were substantially higher during the nineteenth century than they are today. Similarly, net capital outflow relative to gross national product was much higher in the UK prior to World War I than at any time since. But a large share of these labour and capital flows was restricted to the same group of countries which today account for the lion’s share of goods flows. The significance of capital and labour movements in such a comparison cannot be considered apart from trade flows. Economies may be ‘integrated’ by goods flows even in the absence of any factor movements. Turning to trade volumes relative to national incomes, measured openness in the US and in Europe peaked before World War I, fell sharply between the wars and trended upward after World War II. By this measure, the advanced economies of the world are...

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