Conversations on Growth, Stability and Trade

Conversations on Growth, Stability and Trade

An Historical Perspective

Brian Snowdon

This unique volume provides a comprehensive survey of the major economic issues that have helped shape the modern world. It includes discussions of the latest research findings in macroeconomics and scrutinises some of the most important debates in economic history. The author examines the many controversies relating to the role of government in a modern economy, long-run growth and development, the spread of the Industrial Revolution, the causes and consequences of the ‘Great Depression’, the ‘Great Peacetime Inflation’, the conduct of stabilisation policy, international economic integration and globalisation.

Chapter 5: International Economic Integration in the Second Global Age

Brian Snowdon

Subjects: economics and finance, economic psychology, international economics


Only neanderthals among the economists now militate against free trade. (Bhagwati, 2000a) At the beginning of the twenty-first century, the increasingly open global economy is threatened . . . Individual nations and powerful groups within nations that believe the world economy functions unfairly and to their disadvantage, or who wish to change the system to benefit themselves to the detriment of others, are an ever present threat to the stability of the system. (Gilpin, 2000) 5.1 WHITHER INTERNATIONAL ECONOMIC INTEGRATION? The history of the twentieth century has been closely bound up with the evolution of the global economy and the economic and political prospects for the twenty-first century will depend in large part on the outcome of how the process of global integration unfolds (see Laird, 2001; Prakesh, 2001). With the collapse of communism and the Soviet Union in 1989Ð91, and with market-oriented economic reforms being adopted throughout most of the developing world, most notably in China (since 1979) and India (since 1991), the bi-polar Cold War world of the period 1945Ð90 has given way to the second age of global capitalism. During the past 50 years international trade and investment have consistently grown faster than total world GDP, reflecting an increasingly interdependent world economy. By the end of the Uruguay Round of trade negotiations in 1994, 128 countries had joined the General Agreement on Tariffs and Trade (GATT), and, by December 2000, 141 countries had acceded to the World Trade Organisation (WTO), established in January, 1995, in place of GATT...

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