Why are the Critics so Convinced that Globalization is Bad for the Poor?

Proponents of globalization often conclude that its critics are ignorant or self-motivated. In doing so, they have missed a valuable opportunity to discover both how best to communicate the benefits of globalization, and how to improve on the current model of globalization. This paper examines the values, beliefs and facts that lead critics to the view that globalization is bad for the poor. We find that critics of globalization tend to be concerned about non-monetary as well as monetary dimensions of poverty, and more concerned about the total number of poor than the incidence of poverty. In regard to inequality, critics tend to refer more to changes in absolute inequality, and income polarization, rather than the inequality measures preferred by economists. It is particularly important to them that no group of poor people is made worse off by globalization. Finally, we argue that the perceived concentration of political and economic power that accompanies globalization causes many people to presume that globalization is bad for the poor, and the continued ambiguities in the empirical findings mean that this presumption can be readily supported with evidence.

Foreign Firms: Powerful or Persecuted?

International economists often refer to multinational enterprises and foreign firms interchangeably, yet one of the enduring divisions in the globalization debate is whether international law should be strengthened to protect foreign firms from predatory host governments, or rather strengthened to protect host governments from powerful multi- national firms. We contribute to this debate conceptually by distinguishing between foreign firms and multinational firms. We then use firm level data on government-firm relations from eighty countries to contribute empirical evidence on the debate. We find that multinational firms (both foreign and local) are indeed relatively influential over government, and find no evidence that foreign firms (multinational or otherwise) suffer significant disadvantages in terms of self-reported influence. --Multinational Firms,Foreign Firms,Political Economy,Government

Powerful Multinational or Persecuted Foreigners: ‘Foreignness’ and Influence over Government

One of the enduring themes of the globalization debate is whether international law should be strengthened to protect foreign firm from discriminatory host governments, or rather strengthened to protect host governments from powerful multinational firms. This paper uses firm-level data from the World Business Environment Survey (WBES) to lend some empirical evidence to the debate. In doing so it contributes to academic understanding of what a `foreign firm' is, and challenges the notion that institutional superiority makes OECD governments less prone to anti-foreign bias. Although the terms `foreign firm' and `multinational subsidiary' are often used interchangeably, in the WBES data the managers of only about half of the firms with more than ten percent foreign ownership view themselves as part of a multinational. This distinction between multinational and non-multinational foreign firms was important in regression analysis of self-reported influence over government. In non- OECD countries - where we find no evidence of anti-foreign bias - multinationals appear significantly more influential than other firms. Meanwhile, in OECD countries, foreign non-multinationals do appear at a disadvantage in terms of influence relative to domestic firms, but this `liability of foreignness' does not appear to extend to foreign-multinational affiliates.Multinational Firms, Foreign Firms, Political Economy, Government

Firm Characteristics and Influence on Government Rule-Making: theory and evidence

An adversarial game is used to model the amount of influence a firm has over a government regulator, and its equilibrium level of regulation, as a function of firm fundamentals. The effective influence of a firm is identified as comprising both intrinsic and exerted components; where the latter involves distorting regulation via a transfer to the regulator. Understanding the source of a firm's high influence is found to be important for -among other things - predicting whether it faces higher or lower regulatory constraint than other firms. Data from the World Business Environment Survey provides strong evidence in support of model hypotheses across a wide range of government agents, countries, and regulatory areas. Of particular relevance to public debate, large firms are found to be more likely to be influential, but also more likely to experience regulatory constraint than smaller firms.Political Economy; Regulation; Influence

Against Balancing: Revisiting the Use/Regulation Distinction To Reform Liability and Compensation Under Investment Treaties

Investment treaties generate mutual benefits for host states and foreign investors to the extent that they discipline opportunistic conduct by host states. Investment treaties do not necessarily generate mutual benefits insofar as they constrain states’ ability to respond to new information or to change their policy priorities. In a companion paper, we use the tools of law and economics to formalize and clarify the relationship between problems of opportunism on the one hand, and new information and shifts in policy priorities on the other. On this basis, we develop a proposal to reform the legal principles that govern liability and compensation under investment treaties that is narrowly targeted to solving the problem of host state opportunism. In this paper, we situate our proposal in relation to existing academic debates, explore its implications in practice and consider additional policy arguments for our proposal beyond the criterion of Pareto improvement deployed in our companion paper. In particular, we show that our proposal develops a line of scholarship which posits that a court or tribunal should distinguish government use of private property from government regulation of private property, with only the former requiring compensation. We argue that our proposal resolves many practical challenges with previous attempts to develop a workable jurisprudence based on the use/regulation distinction and show how our proposal could be operationalized in practice. We further argue that there are strong political economy and democratic arguments for preferring our proposal to the status quo

Bilateral Investment Treaties and Foreign Direct Investment: Correlation versus Causation

The rapid and concurrent increase in both foreign investment and government efforts to attract foreign investment at the end of last century makes the question of causality between the two both interesting and challenging. I take up this question for the case of the nearly 2,500 bilateral investment treaties (BITs) that have been signed since 1980. Using data on bilateral investment outflows from OECD countries, I test whether BITs stimulate investment in twenty eight low- and middle-income countries. In contrast to previous studies that have found a strong effect from BIT participation, I explicitly model and empirically account for the endogeneity of BIT adoption. I also test for a signaling effect from BITs. I find that the initially strong correlation between BITs and investment flows is not robust controlling for selection into BIT participation. Furthermore, I find no evidence for the claim that BITs signal a safe investment climate. My results show the importance of accounting for the endogeneity of adoption when assessing the benefits of investment liberalization policies

Compensation for Indirect Expropriation in International Investment Agreements: Implications of National Treatment and Rights to Invest

International investment agreements allow investors to bring compensation claims when their investments are hurt by new regulations. This requirement that host governments compensate for indirect expropriation helps solve post-investment moral hazard problems such as hold-ups, thereby helping to prevent inefficient over-regulation and encouraging foreign investment. However, when the social or environmental harm of a project is uncertain pre-investment, compensation requirements can interact with National Treatment clauses in a manner that reduces host government welfare and makes them less likely to admit investment. A police powers carveout from the definition of compensable expropriation can be Pareto-improving and increase foreign investment.Institute on Global Conflict and Cooperation for financial support

Bilateral Investment Treaties and Foreign Direct Investment: Correlation versus Causation

The rapid and concurrent increase in both foreign investment and government efforts to attract foreign investment at the end of last century makes the question of causality between the two both interesting and challenging. I take up this question for the case of the nearly 2,500 bilateral investment treaties (BITs) that have been signed since 1980. Using data on bilateral investment outflows from OECD countries, I test whether BITs stimulate investment in twenty eight low- and middle-income countries. In contrast to previous studies that have found a strong effect from BIT participation, I explicitly model and empirically account for the endogeneity of BIT adoption. I also test for a signaling effect from BITs. I find that the initially strong correlation between BITs and investment flows is not robust controlling for selection into BIT participation. Furthermore, I find no evidence for the claim that BITs signal a safe investment climate. My results show the importance of accounting for the endogeneity of adoption when assessing the benefits of investment liberalization policies

¿Innovan las innovaciones? Un análisis de Conectar Igualdad y Aprender Conectados

The debate about the impact and the actions expected in the school in the face of the transformations generated by digital technologies, is a "common place" for "specialized" journalists, pedagogues, teachers and researchers. From there, publications, discourses and public policy are generated to achieve educational innovation. However, innovation can mean different things, depending on the perspective (s) proposed and / or analyzed. This article presents an analysis of the Connect Equality Program (PCI) and its heir the Connected Learning Program (PAC). Three aspects are considered, their content in both programs and the possible impact they have on public policies of innovation in education. For the analysis we will use contributions from the CTS thinking, betting on your account for this type of studies.El debate sobre el impacto y las acciones esperadas en la escuela frente a las transformaciones generadas por las tecnologías digitales, es un “lugar común” para periodistas “especializados”, pedagogos, docentes e investigadores. De allí se generan publicaciones, discursos y política pública para alcanzar la innovación educativa. Sin embargo, innovación puede significar cosas diferentes, según desde la(s) perspectiva(s) que se la proponga y/o analice. El presente artículo presenta un análisis del Programa Conectar Igualdad (PCI) y su heredero el Programa Aprender Conectados (PAC). Se consideran tres aspectos, su encuadre en ambos programas y el posible impacto limitante que tienen en las políticas públicas de innovación en educación. Para el análisis nos valdremos de aportes del pensamiento CTS, apostando a dar cuenta de su relevancia para este tipo de estudios.O debate sobre o impacto e as ações esperadas na escola diante das transformações geradas pelas tecnologias digitais é um “local comum” para jornalistas, pedagogos, professores e pesquisadores “especializados”. A partir daí, publicações, discursos e políticas públicas são geradas para alcançar a inovação educacional. No entanto, inovação pode significar coisas diferentes, dependendo da (s) perspectiva (s) proposta (s) e / ou analisada. Este artigo apresenta uma análise do Connect Equality Program (PCI) e seu herdeiro, o Learn Connected Program (PAC). Três aspectos são considerados: o enquadramento nos dois programas e o possível impacto limitador que eles têm nas políticas públicas de inovação na educação. Para a análise, utilizaremos contribuições do pensamento CTS, apostando em perceber sua relevância para esse tipo de estudo

Globalization and poverty: what is the evidence?

This chapter reviews the evidence on the linkages between globalization and poverty, drawing on the collected works of Jagdish Bhagwati and the results of an National Bureau of Economic Research (NBER) project directed by Ann Harrison, Globalization and Poverty. We focus on two measures of global¬ization: trade integration (measured using tariffs or trade flows), and international capital flows. Many economists have used the Heckscher-Ohlin framework in international trade to argue that the unskilled or the poor in countries with a comparative advantage in unskilled labor are most likely to gain from trade reform. Our first conclusion is that such a simple interpretation of general equilibrium trade models is likely to be misleading. Second, the evidence discussed suggests that the poor are more likely to share in the gains from glob¬alization when there are complementary policies in place. Such complementary policies include programs to promote human capital development, infrastructure development, credit and technical assistance to farmers, and macroeconomic sta¬bility. Third, we find that trade and foreign investment reforms have produced benefits for the poor, particularly those in exporting sectors or sectors which receive foreign investment. Fourth, financial crises are very costly to the poor. Finally, the collected evidence suggests that globalization produces both winners and losers among the poor. The fact that some poor individuals are made worse off by trade or financial integration suggests the need for carefully targeted safety nets. We emphasize the heterogeneity of results across different countries and set¬tings, but also present cross-country evidence which suggests that the path from globalization to poverty reduction via the growth effects of trade reforms is likely to be important