There is a huge literature on globalization (see, e.g., Bordo 2017). Therefore, i limit my comment on this essentially important procedure to a ceiling minimum (sect. 1). Instead I emphasis on the objections of globalization. Sect. II distinguishes 3 points of watch of this process: economic, politics economy and also moral. In sect. III i briefly comment on crude anti – globalism that the nationalistic and also utopian variety. Then I move to much more sophisticated versions of the discussions of globalizations concentrating on what ns perceive come be absence of clarity, misconceptions or outright fallacies. Sect. IV deals with trade globalization and sect. V – wi th financial globalization. In sect by means of I formulate some last observations and also recommendations.

I Globalization and also Its materials

In the most basic sense the process of globalization consists in enhancing contacts (including contracts) amongst individuals’ and organizations from various countries. In this feeling it is opposing of isolationism. Financial globalization is reflect in the cultivation integration of markets (Bordo, 2017). In each duration there is a level (state) of globalization together measured by assorted ratios, e.g. World exports to global GDP or the migrant population to the world population.

Globalization is usually divided into:

Trade globalization, i.e. Profession in material products;

Financial globalization, i.e. Operation of capital;

International migration.

One should include globalization the communication, i.e. Boosted flows of data i m sorry distinguishes modern globalization, v the development of the telegraph, and also later ICT technology, native the whole background of mankind till the 19th century. An amazing question is come what extent can this technology replace the confront to confront contacts between people from various areas (Baldwin, 2016).

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Another addition is the globalization the services, i.e. Goods the production of which cannot be be separate from your consumption. Therefore, the globalization the services needs to be contained (until recently) in various other flows:

Many services are consisted of in the items which are moved across borders;

FDI, i.e. Part of financial globalization, create firms in foreign countries which offer services for organization (e.g. Consulting or accounting) or because that consumers, e.g. McDonald’s;

Consumers that services relocate to foreign nations (international tourism);

Providers of particular services, e.g. Building and construction workers relocate to an additional country for a details time;

Modern renovations in ICT technologies enable the expansion of tele-services, by which a producer, e.g. A surgeon, performs the solutions at a distance. Therefore, ICT permits the spatial separation of production and also consumption.

Finally, it is valuable to watch which materials of globalization room most very closely related to an innovation transfer, i beg your pardon is the most necessary driver in closeup of the door the gap between the much less and much more developed countries. Huge empirical research shows that this duty is played in particular by exports and imports of manufactured products, through the immigration of skilled people and also by the FDI, together opposed come “pure” jae won flows, specifically those i beg your pardon finance increased federal government spending or the housing booms.

Therefore, in evaluating the development prospects for the respective nations one should consider not just the overall scale but additionally composition that the globalization operation they receive. However remember the the scale and composition that those flows count on the institutional systems and also policies of the receiving nations

II three Points of view on Globalization

1. Globalization is analyzed and assessed from 3 points that view:

economic;

political economy;

moral (ethical).

2. The financial analysis intends in general to explain the socio-economic outcomes, e.g. Growth, stability, poverty, (un)employment, inequalities. This is likewise its key task with recommendation to globalization. Massive economic research has presented that trade isolationism, existing in the socialist (non-market) economies and also in the distorted, quasi-statist market economies, has actually been really costly in regards to foregone financial growth and thus reduced standard of living of numerous people. (A.M. Taylor 1996, M. Wolff, 2004). One need to remember that countless professional economic experts had promoted socialism, i.e. The replacement of personal ownership by the syndicate of the state ownership, and also the instead of of the market by central planning (Balcerowicz, 1995). And it have to not be forgotten that the statist theory of import substitution was until recently a component of mainstream economics, and it was sustained by the World bank (Wolf, 2004). The existing discussion top top the economics of trade globalization additionally often suffers native the lack of clarity, not correct assessments and sometimes dorn recommendations. Ns will pertained to this issue in sec. III, IV and V.

The political economy analysis intends at explaining political outcomes by linking them come various, much less or an ext probable causes, including socio-economic outcomes. One must be really careful in drawing general conclusions from certain cases, e.g. Native the present political backlash versus trade globalization in the united state under then candidate and also now chairman Trump. I think the political outcomes are most likely more difficult to describe than 4

economic ones due to the fact that of a larger role of chance factors (including the appearance of unique individuals’) in the former situation than in the latter. Besides, even if one can convincingly attach the anti-globalist politics outcomes to income competition (and that is a big if – view later) there continues to be a straightforward question: what would be the policy recommendations?

The moral evaluation should no be puzzled with moralizing. The moral evaluation deals v the ethical standards of judging various outcomes, consisting of those that room – correct or wrongly, linked to globalization. All too often economists, and also even more, – other social scientists emphasis on the world whom castle regard as globalization’s “losers” in the occurred economies and disregard the beneficiaries that globalization in the bad countries (not to mention the winners in the emerged states). Together a emphasis is a display of nationalistic ethics.

Universal ethics considers the aftermath of globalization for all the groups in the world, and especially because that the poor. And also the gains because that the latter group from the reforms which have actually opened the method to globalization have actually been huge.

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Figure 1. The poor gained the many from trade as their intake patterns are concentrated on tradable goods, e.g. Food and also manufactured goods, and to lesser level services. 5

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Figure 2. In 1981 42% the world population lived at $1.90 (2011 USD, PPP) and also only 11% in 2013. This is in spite of the truth that world population increased throughout this time through 59%.

Finally, there is a utopian values which requirements that world be guided by altruism in their common interactions and condemns markets, consisting of the global ones, because they rely on the self-interest that the buyers and also sellers. Needless come say, that is a display of irrationality, the deep ignorance around evolutionary psychology, and history, and it is one offense against common sense.

It is exciting that the proponents of nationalistic and utopian principles share the exact same slogans. For example, they criticize the free trade in the name of “fair trade” – also though they provide various definitions to this expression.

I know an extremely well that the nationalistic values is lot stronger in politics than the global one. But this is no an debate in favor of the academics, that strengthen this bias by bashing globalization in the surname of defending globalization’s “losers” in the wealthy countries, and also who overlook its beneficiaries in the negative ones. At the minimum they have to not ~ pretend to represent a moral high ground, and they have to not it is in regarded because of this by various other people.

III crude Anti-globalism

1. Rudely anti-globalism appears in two forms:

The anti-capitalist propaganda, based upon utopian ethics and on a finish disregard the economic history and of analytical economics. That usually appears under the brand of the “left”.

The nationalistic propaganda i beg your pardon is based upon nationalistic ethics and also targets foreigners as migrants or producer of imported goods. It is commonly belonging for the “right”.

The main representatives the the crude oil anti-globalism stem from exterior mainstream economics, even though some professional economists lend credibility come this phenomenon by focusing on those who are taken into consideration the losers in the arisen world and on the inequalities ascribed to trade globalization.

2. Martin wolf (2004) has brilliantly exposed the logical and empirical fallacies of rudely anti-globalism. The key ones include:

Propositions to replace the globalized civilization with one consist of of numerous self-sufficient units;

Advocating replacing capitalism through “something nicer”;

Claiming the globalization destroys nationwide states and democracy;

Demonizing multinational corporations;

Claiming that globalization is responsible for mass destitution by promoting increased inequality within and also between nations.;

Blaming globalization because that the destruction of the environment, etc..

3. In the adhering to I will certainly deal with an ext sophisticated versions of anti-globalism (which occasionally border ~ above the crude oil form). However, ns would prefer to stress that the crude oil anti-globalism, through its false simplicity and also emotionally invited accusations, is a danger phenomenon which, because that those very reasons, enjoys massive popularity. In that, it resembles the ahead quasi-religious or nationalistic movements: communism and also fascism. Therefore, the advocates of reason and of a free order must unmask the fallacies of crude anti-globalization in the mass media. The propaganda which does not meet a solid response has tendency to win.

IV trade Globalization

1. In discussing trade globalization one should take into consideration two varieties of institutions and also policies (for short: policies): those which determine the border of a country’s openness to profession (Policy 1) and also those which affect the individuals’’ possibilities and also incentives to change to brand-new opportunities and threats, including alters that are linked to profession opening (Policy 2). Socio-economic outcomes result from miscellaneous factors. Among the analytical challenges is to isolation the impact of trade opening from the of various other factors, specifically of technical change (Autor et al, 2015) which, in turn, depends on countries’ institutional systems: over there is no a good substitute because that extensive and equal financial freedom within the structure of the ascendancy of law.

Socio-economic outcomes influence politics even though over there are countless other factors. Figure 3. Depicts these and other interactions. Ns will use it, first, to talk about the affect of globalization top top the less developed countries, and, climate on the wealthy economies.

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Figure 3. Policies, globalization, outcomes 8

2. In speaking around trade globalization one must take into consideration the demise of socialism, very first in China, and also later in the former Soviet bloc. This has actually opened the method to the industry reforms in these countries, consisting of the liberalization of trade (Figure 2.). There have the right to be little doubt that these liberal reforms to be hugely valuable to the societies in the former socialist countries. For the counterexamples look to phibìc Korea, Cuba and Venezuela.

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Figure 4.Exports the post-communist economic situations pre- and also post-transition, and also selected other exporters.

3. The boost of exports (and imports) the the post-socialist economies depended not only on your radical institutional readjust but likewise on the appearance and also spread that ICT-based technology, invented in the occurred countries. This technology has allowed a rapid breakthrough of an international value chain (R. Baldwin, 2016). This is an instance of the interaction in between radical institutional change in former socialist economic situations and modern technology stemming from the West in driving trade globalization. The largest beneficiaries on the exporting side have been, that course, China, and also in Europe, Poland. Russia has actually increased its dependence on the production and exports the oil and gas.

4. The socio-economic outcomes in negative globalizing nations depended not only on the scope of their trade opening (Policy 1), but likewise on their plan 2, which identify the extent to which resources relocate in an answer to trade liberalization. Here it is interesting to to compare China and also India (Figure 3). As one can see, the structural transition from agriculture to production (proxied by the increase of urbanization) has been much bigger in China than in India. The distinction is largely because of the fact that India has had much stronger barriers to spatial and occupational mobility: bad infrastructure, bad education, hefty subsidization that agriculture, an extremely restrictive labor laws which discourage private firms native hiring new people. (see: Kazmin, 2014, Shanmugaratnam, 2016). This is an example how poor Policy 2 borders the gains from profession globalization because that the poor.

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Figure 5.China and India urbanization has actually been much larger in China, contributing to better economic performance.

I will now move to political outcomes i beg your pardon one can attach to the opened of the economy in the poorer countries. It appears to me that there have been very couple of protests versus the outcomes of this systemic institutional change, one of two people in China or east Europe. This is in comparison to anti-globalization protests in the rich nations

5. Let me currently use Figure 3. To comment on the socio-economic outcomes and also political reaction to profession globalization in the occurred countries. In this case, plans 1 describe the trade liberalization and other market reforms in the poorer economies, and also the trade agreements concluded in between them and the wealthy economies, e.g. NAFTA. Plans 2 and also outcomes in Figure 1 refer to the developed countries.

6. What strikes me is the the well-known and academic discussions about the outcomes linked, rightly or wrongly, to trade globalization are recently dominated by the an unfavorable issues (messages), especially regarding the rise in revenue inequalities and the related topic that the globalization’s “losers”. This seems be an ext true of the united state than that Europe, whereby the an adverse news focuses more on immigration. There space two main worries related to profession globalization in the emerged economies: a) the duty of income competition and technical change in producing outcomes criticized as negative by part observers and also politicians and, much more importantly, b) the function of policies which recognize the individuals’’ adjustment. (Policy 2)

The relative role of income competition matches ICT-related technical change is subject to intensive empirical research study (see, e.g. Parilla,2017.) without going deeper into this literature I would like to note that task losses take place in the non-tradable sector, too, and, therefore, they can not be ascribed to import competition, e.g. Uber, or automation the clerical functions. And also much of the raised imports indigenous less developed countries include intra-industry trade within the expanded worldwide value chains, made possible by the ITC and IT technology, occurred in the rich nations (Baldwin, 2016). Therefore, the enhanced import competition results from the interaction of the sector reforms in the less emerged countries, especially China, and modern technology from the well-off countries. This developments, as I already mentioned, have listed enormous services to the poor people in the poorer part of the people (and to many world in the richer component of ours globe). Yet in the west the popular discussions and also the political disputes focus top top globalization’s “losers” and on the inequalities within the affluent economies.

8. However, the is no most necessary that the famous focus ~ above the “losers” and on inequalities regularly wrongly attributes these phenomena to income competition disregarding the duty of contemporary technology. What matters an ext is the the only kind of lastingly cultivation economy is a market economy with a most competition including that, based upon innovations. And also market competition always produces some winners and some losers, at least in family member sense (see: the Schumpeterian “creative destruction”). Backlash against trade globalization is, therefore, simply a manifestation of one old phenomenon – a protest versus competition. In the Middle ages when the economic situation was shackled by monopolies, competition was morally condemned. The market transformation which started in the West in the early on 19th century, has readjusted this norm: the “creative destruction” because of market competition has stopped being perceived in general as ethically reprehensible. Current attacks against import competition and globalization resemble the old morality.

9. However, the most essential observation about the negative outcomes ascribed, rightly or wrongly, to trade globalization is this: task losses concerned competition in basic (including profession globalization) count not only on the extent of opened (Policy 1) but likewise on the institutions and policies which determine the adjustment, i.e. The possibilities and incentives confronted by of the impacted individuals’ to move to various other occupations and/or to better locations (Policy 2). The intense competition, a basic determinant for long financial growth, an unified with plans that border individual adjustment, is tied to produce many an ext losers that the exact same competition coupled with a better institutional and also policy environment for individual adjustment.

There is a growing literature on the cross-country atmosphere in plans 2 (e.g. “In the lunch” Schleicher, 2017). An economically and also morally judicious conclusion is to boost policies 2 rather of bashing import competition or other forms of sector competition.

11. If the institutional environment for individual adjustment to enhanced import competition (and come competition in general) is weak, there is a cultivation pressure ~ above the part of the losers to border competition, rather than to boost policies 2. To what level this push is analyzed into policies 1 counts on the details the the politics situation and on the sort of individuals’ operating in politics. It shows up to me that the current protectionist tendencies in the US, current both amongst the Republicans and also Democrats, are due to the fact that the people who consciousness themselves as losers have had actually a strong presence in the swing states. The increased political prominence of the losers is no so usual of other autonomous countries. But, of course it is an extremely unfortunate that such a case has showed up in a nation that is internationally important and also that used to it is in a an international leader in exterior liberalization.

V gaue won Globalization

1. The number of fallacies in the discussion of jae won globalization over that regarding trade globalization, also though there are some usual elements; especially: a) blaming both globalizations because that the an adverse outcomes, which are caused, in fact, by dorn policies, and b) disregarding the services from an excellent globalization policies, i.e. Those that enable for external liberalization and the individuals’’ mediate to brand-new opportunities and also threats.

2. Gaue won globalization is often linked with the financial crises which, in turn, are blamed on market capitalism, and also especially on its jae won sector. However, the deepest crises occur in the non-market regimes, which, through necessity, display screen a heavy concentration that political power (socialism). The reasons for this are clear: rulers without outside constraints can launch and implement disastrous policies.

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Figure 6. Socialism – political power, fused v the financial power, is countless and nearly totally crowds out legal markets, e.g.

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Therefore, the most vital safeguard against the deepest crises is composed in the division of powers within the society, which contains not only the checks and also balances in ~ the state but additionally private ownership and also markets.

3. The is very superficial to blame the financial situations under capitalism ~ above the markets. Contrary to the textbook presentation, these situations are no a phenomenon which wake up regularly throughout countries and also time. Opposing is true: the incidence of financial dilemmas has been very uneven, i m sorry strongly argues that the distinctions in countries’ plans are a depths determinant of gaue won crisis (see: Selgin, Calomirs). And also such policies have been identified: they generally distort the behavior of the financial sectors by encouraging excessive lending and borrowing, i.e.. Fiscal and private credit booms. These policies encompass excessively low interest prices (due to interest rate subsidies or low main bank rates), “too large to fail policy”, taxation regulations which favor borrowing loved one to same capital, over- generous deposit insurance, etc. Miscellaneous combinations of these and other policies were likewise behind the recent an international financial crisis (GFC).

4. A financial crisis becomes an international when it contains a globally crucial economy, which nowadays is the US. However, even though the recent GFC is called “global”, its influence has been much from uniform: particular countries were impacted much much more heavily (e.g. Spain, Ireland, Greece) than others (e.g. Germany, Poland). The renowned metaphors “contagion” and also “domino effect” are misleading: countries’ vulnerabilities to exterior financial shocks differ, and this depends again on their institutions and also policies.

5. One can differentiate two species of jae won crisis, which have actually the form of the eight – bust episodes: the financial-fiscal and the fiscal-financial.

In the former case, in ~ the begin there is a real estate boom which turns into the bust, resulting in a recession i beg your pardon spills end to public finance (the deficit explodes). Example incorporate Spain, Ireland, and Britain.

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Figure 7: The dynamics that the Financial-Fiscal dilemm

In the situation of fiscal-financial crisis at the start there is a budget boom, which, when burst, spills over to the jae won sector, i.e. Affect the banks which have financed the federal government borrowing spree. The ideal example here is Greece until 2010. 15

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Figure 8: The dynamics that Fiscal- Financial dilemm

6. Also though the deeper reasons of the financial dilemmas include assorted faulty policies, one cannot deny, that the risks of miscellaneous disturbances in a financially interconnected world are greater than in a human being where nations are financially secluded from every other. However, these dangers have to be compared with the huge gains as result of financial globalization if the ideal institutions and also policies are in place.

7. Institutions in the host nations determine not only the lot of the incoming financial operation (Policy 1 in Figure 1) but likewise their composition (Policy 2).

As I listed in ar I, FDI is native the suggest of check out of economic growth the most necessary financial inflow since of its strong link to modern technology transfer. But only some nations get large amounts that FDI: those with institutions and also policies i beg your pardon respect personal property rights and create a reasonable expectation that sudden policy reversals will certainly be avoided. Very large economies like China can attract for a details time, large amounts of FDI also if these fundamentals room weak.

Some various other financial inflows, e.g. Portfolio capital, international bank lending, are much less strongly connected to the hold country’s economic growth. This is especially true if these inflows finance mortgage credit booms, or budget booms. However, one need to remember that these excesses are largely due to various combine of poor policies rather than the inflows themselves. 16

VI Concluding comments

Let me end up with some observations and recommendations:

The globalization procedure depends ~ above the policies in the corresponding countries, specifically the huge ones, and on other factors, especially on the technological change. One should focus on a policies so that are no reversals in the level of countries external opening and that their institutions permit for a far better individuals’ mediate to brand-new opportunities or threats. The globalization process may slow down if the technical readjust changes the distribution of profitable locations the economic activity in the world, or due to the fact that of the unavoidable slowdown in China.(Bordo, Eichengreen…)

In stating the outcomes ascribed to globalization one should identify the symptoms from the causes. Globalization is to frequently blamed for the results of poor policies, specifically those i m sorry hamper individuals’ adjustment to new pressures, and also those i m sorry encourage them to take too much risks.

Crude globalization, based upon the nationalistic or utopian ethics is, indeed, an extremely demagogic. However, it need to not it is in neglected due to the fact that the emotionally irrationality appeals to countless people, and also therefore, can, have actually dangerous political results

In defending the completed level the globalization one must appeal come its beneficiaries who would come to be losers, if plans turn to profession protectionism. This is specifically relevant for the US.

The european Union can and should beat the duty of the facility in defending the complimentary trade in the world. At the same time it have to resist the protectionist pressures in ~ its own solitary Market.

*I would favor to give thanks to Rafał Trzeciakowski, Kasia Szczypska and also Jan Kożuchowski because that their aid in prepare this paper.