GLOBALIZATION MYTHS: SOME HISTORICAL REFLECTIONS ON INTEGRATION, INDUSTRIALIZATION AND GROWTH IN THE WORLD ECONOMY

It has become popular to draw a parallel between current globalization trends and the half century of international economic integration before the First World War. Indeed, some writers suggest that current trends mark a return to this earlier period, from which they draw strong conclusions about growth prospects and convergence associated with globalization. This paper assesses this historical parallel. It accepts that many features of today´s international economy are not unique. However, it is sceptical of efforts to make a direct parallel with the earlier period. In particular, the paper shows that the period before 1913 was not one of trade liberalization, nor one of reduced expectations about the role of the State, and suggests that rapid industrial growth in some economies cannot be explained by globalization pressures. More generally, a description of this earlier period of globalization as one of rapid growth and convergence is questioned, and instead associated with uneven economic development, during which a very small group of countries were able to reinforce their domestic growth efforts through links to the international economy, while for others these same links did little to alter long-term growth prospects, and in some cases even hindered them.

GLOBALIZATION RELOADED: AN UNCTAD PERSPECTIVE

This paper rejects the characterization of globalization as an autonomous and irresistible process driven by the impersonal forces of the market and technical progress. Whether domestic or global, market forces are shaped and controlled by policy choices and the institutional frameworks in which they are made. In the absence of adequate institutional frameworks and productive capacities, rapid liberalization is as likely to lead to stagnation and unemployment as to growth and rising incomes per head. We show that the major economic forces presumed to be crucial for spreading the benefits of globalization have been less global than often presented, have proved to be much weaker than widely predicted and carry potentially damaging effects as well as benefits. Accordingly, and without denying that by the late 1970s many developing countries needed to find new ways of inserting themselves into the international economy, we argue that the new policy orientation of macroeconomic stringency, downsizing the public sector and the rapid opening of developing country markets to foreign trade and capital after the debt crisis, has failed to produce an economic environment that supports faster economic growth and strengthens productivity performance. In suggesting the outlines of a more strategic approach to economic development the emphasis is on the need for domestic investment to be mobilized as the basis for industrialization and for a gradual approach to integration with the global economy.

New perspectives on East Asian development

Conventional explanations of rapid growth in East Asia have focused on the efficient allocation of resources resulting from market-led outward-oriented strategies. This study challenges that approach. East Asian success has centred around the accumulation dynamic both because of its direct importance to the growth process and also because of its close and interdependent linkages with exports. On this basis the study considers the institutions and policies which were used to manage economic rents in support of rapid growth and to ensure a more strategic and orderly integration into the world economy. The study also examines the contribution of regional trade and investment flows to East Asian industrialisation. The potential for replicating similar strategies is considered.