Thought I’d post a couple of links on globalisation. Tyler Cowen has an interesting piece on how the benefits of free trade continue to be underestimated.
More than 400 million Chinese climbed out of poverty between 1990 and 2004, according to the World Bank. India has become a rapidly growing economy, the middle class in Brazil and Mexico is flourishing, and recent successes of Ghana and Tanzania show that parts of Africa may be turning the corner as well.
Despite these enormous advances, however, there is a backlash against globalization and a widespread belief that it requires moderation. Ordinary people often question the benefits of international trade, and now many intellectuals are turning more skeptical, too. Yet the facts on the ground show that the current climate of economic doom and gloom simply isnâ€™t warranted. The classic economic recipes of trade, investment and good incentives have never been more successful in generating huge gains in human welfare.
Dani Rodrik responds on his blog with an excellent post of his own.
It is important to understand this because it provides an important clue as to why domestic and international trade are different. Domestic trade takes place within thoroughly embedded markets; there are clear rules and they apply to all transactions equally. International trade, on the other hand, is conducted in only weakly embedded markets: the rules either do not exist or apply unevenly. I believe this is the fundamental reason why their consequences are often perceived so differently.
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Filed in: Current affairs,Economics,The World