Chapter 3: Globalization, that Versatile Villain
It is no longer safe to assert that trade’s impact on income distribution in wealthy countries is fairly minor. There is a good case that it is big, and getting bigger. I’m not endorsing protectionism, but free-traders need better answers to the anxieties of globalization’s losers. Paul Krugman, 2007a Since 2001 the pay of the typical worker in the United States has been stuck, with real wages growing less than half as fast as productivity. By contrast, the executive types gathering for the World Economic Forum in Davos enjoyed a Beckhamesque bonanza. The Economist, 2007b 1. GLOBALIZATION: A PERNICIOUS, MARGINALIZING AND MALEVOLENT FORCE? The contemporary phase of globalization has produced enormous aggregate benefits for the global economy as well as for several individual national economies. Convergence of income is one of its benign outcomes. Because of the great potential for economic growth and development, most economists have tended to be fervent supporters of globalism and globalization (Chapter 2).1 However, globalization is Janus-faced. One glance in the rear-view mirror is enough to persuade us that if globalization created opportunities for accelerating growth and development over the preceding three decades, it also became the root cause of serious economic and social challenges in many economies, both developing and industrial.2 Milanovic (2003) presented a detailed account of the malignant aspects of historic globalization, which makes it look like a nauseatingly exploitative phenomenon. Winners and losers from globalization exist at both macro- and microeconomic levels. In the equation of tangible gains and losses...
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