Can the Doha Round survive a standstill state for long?
CUTS-TradeForum
From: CUTS International
Can the Doha Round survive a standstill state for long?
In a mysterious move, the United States has recently blocked a forward movement on duty-free/quota-free market access commitment to least developed countries. It was agreed in at the Hong Kong Ministerial Conference of the WTO members in 2005 and is a significant element of the Doha Development Agenda.
“Let me start by admitting forthrightly that this (DFQF market access to LDCs) is a difficult issue for the United States,” US Ambassador to the WTO Michael Punke said at a recently held informal heads of delegations meeting of the WTO members.
It is also strange to note that the US is reportedly highlighting demands from some countries to link preferential access to LDCs with progress on an agreement on trade facilitation. Progress on negotiations on trade facilitation is reportedly withheld because many WTO members have called for an outcome first on the LDC package and elimination of trade-distorting elements in agriculture export competition.
These disturbing developments on which progress has been achieved after years of hard work may not only question the virtues of the multilateral trading system but may also affect other important functions of the World Trade Organisation. Poor countries and their people continue to suffer.
From: Peter Chase, US Chamber of Commerce Europe Office, Brussels
All:
As a new participant in your forum, a quick kudos to all on the quality of the comments, and a few short thoughts they stimulated (I've not read the book, but certainly shall):
-- "globalization" is a process driven by transportation and communications technologies. these have always brought communities increasingly into contact with one another, from the tribes and villages of old to the nations of today. it is neither "good" nor "bad," per se, although it may affect individuals' welfare. in this sense, one cannot "maximize" or "optimize" globalization -- the process will continue, although eventually with diminishing marginal returns (what's the marginal benefit of twitter? of twitter 2.0?).
-- that process takes place in the context of the rules created by governments for their communities, but those governing bodies cannot stop the process, try as they might; when i went to immediate post-cultural revolution China in 1980, curiosity about the world was immense and the general knowledge not all that bad (i suspect many in even the most repressive societies of today have found ways to register their computers as being outside their country through proxies or VPN connections, thereby allowing them access to all information);
-- our view of the impacts of globalization is tainted by our mental construct of measuring such impacts based on national boundaries; we tend to forget that (a) those boundaries are essentially artificial (that is, created by man and subject to change), and (b) even within those national boundaries, "globalization" (in the sense of technology bringing communities into contact) has, is and will take place in a way that has deleterious effects on some (as my old boss, then Senator Bill Bradley used to say, in the US, the textile industry of the northeast was undermined first by new mills in the south before imports became a factor; this process continues today with some areas winning from new high-tech industries and some losing);
-- "globalization" in its current usage refers primarily to the way in which modern transport and communications technologies brought billions of new participants into the global economy that we once thought of as being defined by the United States, Canada, "Old" Europe, and Japan. Not surprisingly, that tectonic shift has had an immense impact on those original OECD economies, with a huge amount of personal suffering for many. But our governments can no more isolate our public from this than, in the end, Russia, China, India or even North Korea could or can permanently isolate their publics from the process.
-- This goes as well to immigration, as raised by M. Hindley and jean-Pierre's wonderful story about his mother -- with the transport technologies available (including feet), people will get around immigration rules; the stricter they are, the more they are likely to fail;
-- in a purely "global" context -- that is, measuring welfare for all humanity (if not the environment!) without regard to national GDP, globalization has clearly brought net benefits; just ask the millions of Chinese brought out of poverty in the last 20 years;
-- the key challenge of national governments now is to manage the change globalization brings, trying to maximize the benefits and minimize the costs ... even as the boundaries that define the remit of those governments have eroded significantly; this is the main reason why the Lutweiler "Wisemen's Group" (on which Bradley served) that led to the Uruguay Round focused on the need for domestic programs that help adversely affected individuals to adapt to the change;
-- "capitalism," which is ultimately a system of economic governance based on the observation and theory of individual human interactions, will "succeed" because it assumes (the technology-driven reality of) increasing contacts among individuals, AND because it believes in the need for rules to regulate these interactions such that might and wealth do not per se make right (laws and rules always favor the less-powerful);
-- internationally-agreed rules -- including through the WTO -- are an essential part of addressing this challenge; the TBT and SPS agreements, and their call for basing rules on science, are a truly important attempt to accomplish this;
-- this rules-based system works best when motivated by democratic governments -- which does not mean governments that reflect merely the fears of those that will be "harmed" by the change that globalization brings, but governments whose leaders convince their publics that they must adapt to it (which is a reality) and then help them do so (Clinton's mantra of "compete, don't retreat" was the right one, but this implies as well taxes to support adjustment programs);
-- where governments do not lead/reflect their people (but are oriented toward the benefit of themselves and their associates), we should use the international rules we've created (luckily, by democratic governments) and the technologies that bring us closer together to promote ("incentivize," a horrid word not recognized by my spell check) more democratic systems and adherence to those rules.
-- in this sense, i agree completely with Jean-Pierre that China will increasingly "democratize" (as did Taiwan, where I grew up) and that bringing it into the WTO was absolutely the right thing to do ... although few forecast in 2001 that the Chinese government's mercantilist bent would create such an export juggernaut (at the expense of its citizens' welfare) that it would doom the Doha negotiations as emerging countries refused to open their doors more to Chinese imports.
Hm. Longer than the "brief" thoughts I had intended to give. But hope they contribute to the general debate.
Best,
Peter
From: Michael Hindley, Former President of the European Parliamentary Friends of Hong Kong
Dear Jean-Pierre
Agree with your sentiments but when the Indian government suggested “free movement of labour” on the pre-Marrakesh agenda, the big powers blocked it.
Europe exported its unemployment at the end of the 19 century, Sweden lost 10% of its population, and there was huge movements of the politically discontented and discriminated – Argentina is built on British capital and disillusioned Garibaldista labour, read Conrad’s entertaining fictional account in “Nostromo”. The British ran East Africa by importing Indian skilled and unskilled labour.
Earlier discussions here about what stimulates the economy overlooked how much of the world has been stimulated by political refugees – the Huguenots in England, the English pilgrims to the nascent US, the Jews almost everywhere, the East African Asians to the UK, the Shanghai entrepreneurs to Hong Kong. I am not advocating war, pogroms and turmoil; but making it easier for the restless and frustrated anywhere and everywhere is economically stimulating and personally enriching.
If we want, as you and I do, globalisation BY CONSENT, then we have to begin discussing the great taboo of liberalising labour movement. And I don’t just mean high skilled Indians being flown into the USA on short-term contracts. As an Indian friend of mine always points out, in an age of austerity and reduction of government budgets the idea of an Indian or Chinese contractor bidding for the extension of the M25 London orbital motorway makes a lot of sense.
Cheers
Michael Hindley
From: Jean-Pierre Lehmann, Professor of International Political Economy, IMD
I remember a dinner in Delhi a few years ago. It was hosted by Pradeep Mehta, there was his wife, David Luke (a Sierra Leonean) from UNDP, an Indian senior civil servant (whose name unfortunately I have forgotten) and one or two other persons. Somehow we got into a huge argument (can’t remember what it was about!) and other guests at the restaurant looked at us wondering if we would come to blows. Most of the argument was coming from and being directed at the senior civil servant (SCS). At one point the SCS looked at his watch, realised he was late, got up, excused himself and added with a huge smile “rarely have I had such an enjoyable evening”! The argumentative Indian, long may he live! One of the reasons I am a democracy fundamentalist is that I find it much more stimulating and enriching to argue from time to time than to agree all the time!
Ultimately I strongly believe that all humans should enjoy the benefits of democracy. As many have said (e.g. Amartya Sen), democracy per se is not enough; poverty, disease, discrimination prevent people from enjoying the fruits of democracy. In her quite fascinating book on China (Smoke and Mirrors) the young Indian journalist and former Beijing correspondent Pallavi Aiyar, who was often questioned on which was better to be Chinese or Indian, writes that born into the middle class she would much prefer to be Indian (as she is), but born into poverty it is probably better (in terms of mobility and income prospects) to be Chinese.
I agree with Rodrik on the superiority and importance of democracy, but I part company with him in his suggestion that non-democratic societies, China in particular, should be subject to discriminatory treatment. I believe (and I do not think it is naïve) that eventually China will evolve towards a democratic society and indeed it is doing so as we write even if the road may appear bumpy and full of abrupt turns. I think there will be a politically pluralist China in my lifetime (and there is not a hell of a lot of time left!) Getting China into the WTO was absolutely the right thing to do and it should continue to have the status of full and equal membership. Discriminating against China would be counter-productive and risk causing a nationalist backlash.
So this is one of the points on which I disagree with Rodrik. But I do think he is absolutely right to raise the China issue. The Italian Oxford economist Andrea Boltho published an article back in 1994 (unfortunately I do not have the source with me here) that was perhaps one of the most prescient on the rise of China and where he made the point that China would be a devastatingly competitive power in the world economy, but that the effects would be felt especially in developing countries. Leaving aside all the shenanigans of the Doha doldrums, it is legitimate to ask the question whether in fact a “Development” Round was ever feasible with China in a free trade environment? I do not claim to have the answer to that question, but it is a vitally important one to pose. There should be no taboos.
The area which Rodrik forcefully addresses and where I think there should also be a good deal more intelligent and informed discussion is in respect to immigration. There are issues of economics and equity. Re the latter, when “we” (the West) were growing rapidly demographically, we made the world our oyster. Both surplus and entrepreneurial populations were able to migrate to the new world, to our colonies and seek fame and fortune with virtually no hindrance other than disease. Yet now we deny the same right to inhabitants of demographically growing developing economies through all sorts of discriminatory measures. The rich countries who got rich on the back of the poor (either countries or indigenous populations, e.g. the Amerindians and slaves), must be more humane and accommodating in extending an open welcome to immigrants. Besides, as Rodrik, correctly points out: we all benefit. My 101 year old mother living in Paris who is quite sound has been looked after for years by a Bolivian woman who has never succeeded in getting her papers: so she is an illegal immigrant. If she were to be deported, she would lose, my mother would lose (big time!), my sister and I would lose, and no one would win as the “indigenous” French (whatever that means) don’t do these jobs.
The “paradox” however of The Globalization Paradox is that while Rodrik forcefully argues in favour of the democratisation of globalisation – and intuitively I agree with him – at least as things currently stand the democratisation of immigration would almost certainly result in less rather than more. People do not necessarily always behave according to what may be in their best economic interests. Probably the most vivid case of economic loss arising from highly restrictive immigration policies is Japan. Because of demographics, aging, but also due to a national spirit of anomie, Japan would benefit immensely from immigration from the rest of Asia (or elsewhere). This applies not only to low level jobs, but imagine if Japan had some sort of equivalent to a “Silicon Valley” hub to which Philippinos, Pakistani, Vietnamese, etc., etc., entrepreneurs would flock! What a boost that would be. Indeed the costs of xenophobia are being now played through the Olympus affair, whereby the hostile resistance to a British CEO (Woodford) is costing not only the corporation dear, but also all of corporate Japan. The last thing I would wish to suggest is that the issue should be brushed under the carpet. But I note it is as one of the quite stimulating “contradictions” in the book. Certainly the debate on immigration has not had the currency it deserves.
On the issue of trade policy and development that Grant raises, while this is a subject that has been addressed in numerous articles, books and theses (I did my doctoral thesis on Japan’s industrialisation in the mid/late 19th century), there is still a lot and a lot of room for continued research, investigation and discussion. Where I do fully agree with Grant is that trade policy per se is hardly sufficient for anything. In the case of Japan and the East Asian tigers clearly, inter alia, education was crucial. In my thesis I argued that one of the exceptional strengths of the Meiji architects was to understand the critical importance of technology transfer, something that alluded some of the other would-be modernisers of the time – e.g. Thailand, Turkey and Argentina. Japan did not gain sovereign rights to determine its own tariff levels until 1899, but the economic road to industrialisation and growth had been well embarked upon above. Afterwards of course Japan did practice protectionist policies to nurture infant industries and national champions.
On the book over all I might apply and adapt the Chinese official consensus on Mao – 70% right and 30% wrong (how on earth does one come up with such numbers???) – and say that I agree quite a lot with at least 70% of the book and have doubts about 30% but look forward to them being debated.
Two themes in my view are especially important in the book and which are picked up in different ways by Matthes, Ravi, Kwame Owino, Rolf and Grant.
1) States and markets. Having been teaching in a business school for the last 15 years I have been immensely frustrated by the narrow mindless Thatcher-Reaganite views expressed by middle and senior executives (MBAs are more intelligent, though of course they too become middle and senior executives in due course) in respect to markets versus states. Governments are useless, markets and business know best, da, da, da. The evidence that market fundamentalism was causing a good deal of damage was there to see well before the “Lehman crisis”. Indeed in his 2002 Globalization and its Discontents Stiglitz raised the alarm which was generally ignored.
2) Hyper-globalisation, as Rodrik calls is, has been a far too excessively elitist project. I fully agree with Ravi that the biggest mistake we could make at the moment is to inject the world’s people with more hyper-globalisation as if stuffing a Strasbourg Goose.
A few other miscellaneous points.
I have had the pleasure to meet with and listen to Pankaj Ghemawat, but I have not yet read his book (it’s on the “to read” shelf). But I agree with the point that globalisation is in reality far less intrusive than is often assumed. I am writing from a remote rather backward corner of France (the Vendée) where the ordinary citizen is hardly affected by globalisation as most economic activity is of the non-tradable nature. I went to see a mechanic’s shop earlier to get a piece of our tractor fixed, the place had a definitely 50s sense about it, the same tools that would have been there then are there now, the mechanic went to a catalogue (not a computer) to see if he had the part we needed, and as I remarked to my wife upon leaving, at least he does not have to worry about Chinese competition. Two niche areas where the Vendée has successfully globalised: duck (i.e. not goose) foie gras, in which it is a world leader and which a Belgian entrepreneur friend of mine sells in very profitable batches to, among other places, the restaurant and hotel market in Seoul; and there is a SME that makes small yachts sold throughout the world … while of course the Vendée Globe boat race has gained global fame. These are examples of highly beneficial outcomes of globalisation, but I am not sure the ordinary French (or Vendée) citizen would see it that way. What is true economically is also true politically. The French presidential campaign is taking off and so far there is very little reference to global issues or, surprisingly, to European issues. The globe remains indeed a parochial lot!
Still the globe is a very different place from what it was. There is the issue of the global commons, as Rodrik recognises, and whether it includes, as he argues, climate change, but not trade is a matter for discussion. I would like to think that some form of global governance should be possible aimed at enhancing global welfare. I admit however that the evidence currently would seem to put this more in the pie-in-the-sky category. The example of “Europe” is interesting even if (to some of us) depressing. When push comes to shove it is clear that hardly any national of an EU member states seems to be thinking of “Europe” but rather of perceived national interests. As a life-long Europhile I admit I now wonder whether “Europe” might not have been a dream too far. Certainly the lessons from Europe at the moment – things may of course change – is that the idea of global governance should be treated with great caution and that ultimately perceived elitist projects may fail.
I fully agree with Ravi that we need to rethink and redefine globalisation. Above all we have to try somehow to construct a more humane form of globalisation and ipso facto capitalism. The current circumstance of global capitalism was brilliantly, in my view, summed up in the 29 December editorial of the FT entitled “Capitalism is dead, long live capitalism”.
“More relevant is asking how far the resurgent capitalism that emerged in the 1980s, under the leadership of Ronald Reagan in the US and Margaret Thatcher in the UK, now needs to be reformed. The answer is that it must be, for it has proved not just unstable, but, in important respects, unjust. The result has not only been a devastating crisis, but also a sense that the achievement of extraordinary wealth may not reflect exceptional merit. In societies that rely on consent, this is politically corrosive.”
In Switzerland (normally a calm place that of course is one of the main beneficiaries of globalisation) the New Year begins with the news that the wife of the chairman of the Swiss National Bank made a very quick 60k bucks on a currency transaction between Swiss francs and US dollars. She and her husband, Philipp Hildebrand have argued that she did nothing illegal. Perhaps not. Is it unethical? Not sure. But it is unjust. She, already a very wealthy person, can make the equivalent of more than the annual salary of a huge number of the world’s population by a very simple and quick transaction. She got wealthier, for sure. But what is the benefit to society? What wealth has been created? And also what special skills due to years of study and/or hard work were required to make this gain? (Nota Bene: apparently the money was donated to charity …… but this was after the revelations!)
I am convinced that a great deal of the problems arising from globalisation in recent decades is that our elites stink, combining unconsciousness with incompetence.
So globalisation needs to be redefined and re-oriented, it needs to be humanised, and Rodrik is probably correct to say that we need to pay much more attention to the realities of the dynamics of the nation state. At the same time, as Rolf states: “globalization will always be incomplete and selective”.
So we need to work on it to make it more complete and more inclusive. To that end, I think Rodrik’s book is important. I also think the role that CUTS is playing in providing this platform and allowing it to stray well beyond the rational limits of discussing the DDA (!!!) is much to be celebrated.
For those of you who have managed to reach the end, apologies for being so long-winded!
Jean-Pierre
From: Bright Simons, Director, IMANI-Ghana
Dani Rodrik's question regarding whether there is an optimal point below and above which globalisation begins to generate diminishing results is an empirical one masquerading as a philosophical one. Since Rodrik has not provided for us any clear pointers as to how such an empirical exercise might proceed, my humble view is that his thesis, fascinating as it is, remains ultimately unsatisfying for the pragmatically minded.
Bright Simons
From: Michael Hindley, Former President of the European Parliamentary Friends of Hong Kong
For those who like animal stories, a relevant one is the cat and the fox. The fox asks the cat to teach him all his tricks and the cat says he will teach the fox all his tricks but one. At the end of the tutelage they go out together and a pack of hounds spy them and give chase. The fox and cat try everything that cat has taught him but still the hounds persist, finally cornered the cat shins up a tree, but the fox doesn’t know how to escape the hounds in a tight corner, the one thing the can withheld. Perhaps we need some cat economists to get us out of the mess.
In addition, I am one of those who constantly bemoans the lack of economic HISTORY among many commentators, pundits and academics on trade issues.
Nice weekend everyone
Michael Hindley
Trade Adviser to the European Economic and Social Committee
From: Dr. Matthes Buhbe, Director, Friedrich Ebert Stiftung, Geneva Office
Jean-Pierre gives me the occasion to join in, since I recently read Rodrik’s “Globalization Paradox” with considerable intellectual pleasure.
Dani Rodrik’s thought provoking book is a bitter pill for free trade enthusiasts. He centers his critique as regards maximalist globalization on an observation which is more philosophic than economic:
There are economists who think like a hedgehog and those who resemble the fox. Quoting from Isaiah Berlin: “The fox knows many things, the hedgehog knows one big thing.” Economists like Keynes, Stiglitz and Rodrik are foxes, while Ricardo, Hayek, Friedman, Stanley Fisher or Robert Lucas are hedgehogs.
He then gives abundant examples of economic history, showing that rising powers are more or less protectionist in relation to the leading economy of their time (including the US in the nineteenth century vis-à-vis the UK) and that leading economies are not at all hedgehogs in policy. He also gives interesting empirical information to underline the position quoted by Jean-Pierre. He explains very well, why for him markets are a beneficial instrument if accompanied by democratically defined rules, while “hyper-globalization” is lacking such rules and has to be slowed down.
For many of us disturbing should be Dani Rodrik’s more concrete conclusions for his policy of “democracy first”. Since nation states will prevail over the vision of a global state for the foreseeable future, there is no other choice but re-nationalization of global economic governance. For the sake of the national interest, domestic legislation should allow to slow down globalization and should not exclude “to break WTO-rules” (Rodrik, German edition, page 326). According to him, nation states have no right to impose their rules on others and at the same time, globalization principles have no right to impose themselves on national legislations.
Even more concretely, one democratic great power (which one he doesn’t name) should have the right to punish a rising power under conditions of semi-market policy dictatorship (again no mentioning who that might be) even if this breaks WTO-rules. On the other hand this democratic power has no right to impose democracy on the rising power.
Can we agree? I don’t think so.
Matthes
From: Ravi Chaudhry, Chairman, CeNext Consulting & Investment Ltd, New Delhi
My compliments, Jean-Pierre, for raising a most fundamental and provocative question, as always.
What is the purpose of globalization? The traditional business school definition has been that globalization enables corporations to seek capital where it is cheapest, produce or outsource where it is most cost-effective and sell where it is most profitable. This has been perceived as an essential component in improving a corporation profitability. The governments while negotiating trade and investment agreements tend to promote this purpose and a cozy business-politics nexus tends to become cozier.
On this premise, I agree with Dani Rodrik that the worst thing we could do for the legitimate cause of globalization right now is to push it any further.
The questions that are being debated in WTO dialogue must be different. The focus needs to shift from corporations to citizens, from the global elite to average global Joses. Essentially, this calls for re-defining the purpose of globalization.
May I venture to suggest that globalization should be pursued as the mechanism to optimize sustainable welfare and progress of all citizens in each country, in a fair and transparent manner, aimed at enabling each country to realize its full growth potential, based not only on known natural and human resources, but also all dormant resources.
Then, and then only, with conscience as the sole guide, we may see the beginning of genuine all-round development in the ostensible Development Round.
Ravi
From: Kwame Owino, Institute of Economic Affairs, Nairobi, Kenya
Jean-Pierre,
Apart from Dani Rodrik's, I read one other profoundly informative book on a related subject, World 3.0: Global prosperity and How To Achieve It, by Pankaj Ghemawat last year. In my view, Ghemawat takes the correct view that using proper metrics, it is simply incorrect to state that Globalization has reached its zenith or is even close. Indeed, the book shows that across some sensible economic and social factors, the degree of cross-border activity is often in the region of (10-15%) and so "World is Flat" arguments and public perception of world integration are far ahead of the reality. Pankaj states that this state of affairs suggests that the arguments that there is either too much or too little integration are based on episodes that do not reflect the whole. I find it implausible therefore that all these gains have been appropriated.
Coming now to Rodrik, it is indubitable that the Globalization Paradox is replete with powerful arguments underlining why it may be naive to expect perfect solutions from globalization. That said, thinking about the fact that Rodrik does not guide readers to the decision about measuring adequate doses of globalization. My view was that he too assumes a surfeit of globalization.
So you guess that my view is that Pankaj's assessment is more persuasive because the book states that there are gains yet to be derived from increased global integration because of global risks that demand global cooperation.
I suggest that you read the two books one after the other. Like Dani, Pankaj argues that governments and markets are not substitutes.
Kwame Owino
From: Rolf J. Langhammer, Vice-President, Kiel Institute for the World Economy, Germany
Rodrik’s questions while doubtlessly valid, yet suggest an overly static view on globalization and the free flow of factors, goods and services. In fact, globalization by its nature is highly dynamic and should be understood as a process in which trends and cycles cannot be ex ante distinguished from each other. We cannot simply fix a state of globalization which might be optimal for both allocative and distributive targets. And we will not know ex ante whether the optimum is the maximum given the permanent shocks and changes continuously shifting the frontiers of globalization (not necessarily forward at any moment). At the same time, we will never have a completely free flow of factors, good and services, and we will not know what this is in daily life. Thus, as a rule, globalization will always be incomplete and selective. Instead, we might have freer flows compared to historical evidence, for instance, as a result of technologically rooted lower transaction costs. But even measuring the difference between todays and yesterday’s levels of trade barriers is difficult because of the extremely heterogeneous nature of such barriers, old and new ones.
As a result, we will not know nor can we assess whether and if so, when additional globalization will have positive net benefits for all people or whether such benefits are permanently and unchangeably (even not with compensation payments) unequally distributed between groups, countries, individuals. Given different time preference rates between poorer and richer people or countries, it will also matter when gains will be collected from globalization and not only that they exist in principle.
The “free trade fundamentalist” is a scapegoat compared to the “non-discrimination proponent” who has good arguments on his/her side when it comes to governance issues. Instead of spending endless time in search of the holy grail of fixing the state at which a maximum or optimum of globalization is achieved, we should continuously try to identify all elements of inter-personal, inter-sectoral and inter-country discrimination in flows of factors, goods and services, embark for removing such elements and compensate losers by winners. The world of exchanging factors, goods and services must not be free of barriers, but no one should be less favourably treated than others.
Rolf J. Langhammer
From: Grant Aldonas, Senior Advisor (Non-resident), Centre for Strategic and International Studies
Jean-Pierre – Dani's ideas are always thought provoking and always worth discussing. I have read the book. My own sense, having just completed some work on the measurement of economic integration, is that what he describes is largely an artifact of how we measure trade liberalization.
The models normally used imply a static analysis. They are not easily adapted to take into account the dynamics of economic integration (e.g., the various feedback loops that tend to amplify its effects). I used to joke with the OECD economists that, in light of globalization, we had finally learned how to measure the static effect of a tariff change right when it no longer mattered!
In that sense, Dani's piece is a bit like his arguments against the Washington Consensus. (Having lived here for 30 years and having never actually seen a consensus on anything, I never liked the term to be honest. The principles John Williamson included in his original description of the consensus were always a matter of significant debate and dispute.)
But, Dani argued that the countries that grew fastest (I.e., the Asian Tigers) had all adopted heterodox trade policies that violated the consensus. While obviously true, it also didn't reveal very much. The correlation was just as strong between the countries that grew fastest and the ones least dependent on the World Bank and foreign aid, for example.
But, the real rebuttal lay elsewhere – the Asian economies had, in fact, exposed their economies far more to trade than Rodrik's argument allowed. More importantly, they had embraced basic institutions that allowed markets to operate and do what they do best (I.e., private property; enforcement of contracts; rules that added certaintly and allowed the allocation of risk, etc.).
That is precisely why you are right about encouraging a discussion of Dani's thoughts. It would be useful to pull them apart in a constructive way to discuss and espand upon. If we are convinced Dani is right, we would be having a very different debate about the role of the WTO and the need for a different emphasis, at a minimum, in terms of international economic governance.
Grant Aldonas
From: Jean-Pierre Lehmann, Professor of International Political Economy, IMD
In the context of the WTO debate, it would be interesting to know the views of members of the CUTS forum who have read Dani Rodrik’s The Globalization Paradox. In this book and quoting from Steven Pearlstein’s review in the Washington Post, Professor Rodrik addressed the following questions, among others:
“What if most of the benefits of the free flow of goods and capital across borders have already been realized, and that any gains from additional globalization will be outweighed by the additional costs in terms of unemployment, reduced wages, lost pensions and depopulated communities. What if global markets, to be widely beneficial, require the kind of global governance structure that does not yet exist and that most people would oppose? What if it turns out that the countries to have benefited most from free-market globalization are not those that have embraced it wholeheartedly, but those that have adopted parts of it selectively?”
Quoting from this review: “Dani Rodrik demonstrates that those questions are more than hypothetical - that they describe the world as it really is rather than as it exists in economic theory or in the imagination of free trade fundamentalists.”
This review is available at: http://www.washingtonpost.com/entertainment/books/dani-rodriks-the-globalization-paradox/2011/02/22/ABU2SAR_story.html
I have almost finished it and have found it refreshingly challenging, not to say I agree. Certainly his ideas are worth discussing.
Jean-Pierre Lehmann