A few major points
Globalization is defined by this lecture as:
greater integration within the world economy via increased openness to international trade, capital, and labor movements; greater international flow of technology, information, knowledge and ideas.
For those who study poverty reduction, this openness leads to both growth and unequal distribution of wealth. Therefore, a state cannot just affirm the need for openness, but must also look at the domestic patterns of economic growth, ensuring that all classes and different economic sectors benefit from new economic investment. Openness alone will not guarantee a healthy economy.
Two major initiatives:
The two universally important sectors that this collection of studies found most important were a. agriculture, especially for developing states; and b. education, particularly higher education. Investments in higher education brought more returns to a country's income than even secondary education, a fact that I thought surprising.
Perverse flows of globalization:
Labor: Labor flows are perverse because skilled labor does not migrate to poor countries; instead it moves between developed countries. Furthermore, skilled labor originally residing in poor countries often moves to developed countries. Unskilled labor is generally held back by administrative obstacles or immigration policies. Therefore, labor migration has not been a force for wage equalization, as it was, say, in the United States between 1870 and 1914.
Investment: Portfolio capital flows are made largely to diversify holdings and manage investment risk rather than to provide development capital in developing states. Furthermore, foreign direct investment is dominated by intra-industry investment between already developed states (which is also risk-reducing). Instead taking an “ain't it awful” approach, however, states should groom themselves for investment knowing that their potential partners are risk adverse. The way to meet these objections is through consistent approaches to rule-of-law and business initiatives.
Wherever multinational corporations invest, they create factor mobility through investment and skilled migration flows. In the meantime, unskilled labor, and very poor countries continue to miss out on the benefits of globalization. In other words, job flight is less about a brain drain in developed countries than it is for developing ones; job flight is more about being replaced by technology than it is job arrival for poor countries; and creating good investment environments not only brings investment, but keeps valuable human capital at home.
Part 2 takes these general comments and looks at the numbers.
Thanks to The Brookings Institution and UNU for the opportunity to look at this new scholarship.
Photos: China Daily; Melbourne.metblogs; WSJ