globalization: markets, instututions & policy sipa u6355 professor o’halloran
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Globalization: Markets, Instututions & Policy
SIPA U6355
Professor O’Halloran
What is Globalization?
Globalization is the Buzz-word of the 90’s– Refers to anything from the globalization of
weather and global warming to currency crises and contagion.
Definition– The increased movement of goods, services and
capital across national borders.
Volume of World Trade & GDP
100
500
900
1300
1700
Year
World GDP
World Trade
Key: Volume of Trade is 16 times what it use to be in 1950, while total output is only 5 1/2 times as big.
Tariff & Non-Tariff Barriers, 1950-86
As tariffs have declined, Non-tariff barriers have steadily increased.
0
1
2
3
4
5
6
7
8
1950 1953 1956 1959 1962 1965 1968 1971 1974 1977 1980 1983
Year
Tariff s
NTBs
Percent of Imports Covered by NTBs
0 10 20 30 40 50 60 70 80
Al l Countr ies
E U
Belgium
Denmar k
Fr ance
Ger many
Ir eland
Italy
Nether lands
UK
Finland
J apan
Nor way
Switzer land
United States
Percent
1966
1986
Percent of Imports covered by NTBs is increasing
Anti-Dumping Measures
The use of Anti-dumping measures is spreading…
New Actions Measures in ForceSouth Africa 30 31Argentina 23 30EU 23 153United States 21 311India 20 15Austrial 17 47Brazil 17 24Korea 13 14Indonesia 8 naIsrael 6 naCanada 5 96Pure 5 4New Zealand 4 27Chile 3 0Mexico 3 95Venezuela 3 3Malaysia 2 naColombia 1 7Guatemala 1 naThailand 1 1Japan 0 3Singapore 0 2Turkey 0 37Total 206 900
Anti-Trade: Summary of Anti-Dumping Actions, 1996
Index of Capital Controls in Emerging Markets
Limits on capital movement in developing countries have significantly declined.
0.56
0.58
0.6
0.62
0.64
0.66
0.68
1982 1984 1986 1988 1990 1992 1994 1996
Total Net Capital Flows into Emerging Markets as a % of GDP
Money is now flowing into emerging markets more quickly than before.
-0.5
0
0.5
1
1.5
2
2.5
3
3.5
1982 1983 1984 1985 1986 1987 1988 1989 1990 1991 1992 1993 1994 1995 1996
Gross Product of Foreign Affiliates, as a percent of GDP
Today 3/5ths of FDI goes to wealthy countries 2/5ths to developing, but composition has changed.
0 2 4 6 8 10 12
Latin America andthe Caribbean
Asia*
Africa
Western Europe
North America
Central and EasternEurope
1994
1982
*Excluding Japan
Who am I?
“There should be lunatic asylums for nations as well as individuals,” one investor wrote in the The Morning Post of London, denouncing the defaulting country as “a nation with whom no contracts can be made.”
Quoted in the New York Times September 20, 1998
Capital Mobility & Variation, 1870-1985
Capital mobility is not new, but the sums have greatly increased.
0
1
2
3
4
5
6
18
70
18
80
18
90
19
00
19
10
19
20
19
30
19
40
19
50
19
60
19
70
19
80
0
0.05
0.1
0.15
0.2
0.25
0.3
0.35
0.4
0.45
Capital Mobility
Variance
Inflows of Immigrants as a percent of population
As costs of globalization increase, labor demands protection.
0
0.2
0.4
0.6
0.8
1
1.2
1.4
1985 1990 1995
Germany
Australia
Canada
Sweden
BritainFrance
J apan
United States
Belgium
Dimensions of Globalization
Increased International Trade
Integration of Capital Markets
Increase in Multi-national Firms
Expanded and Strengthened Role of International Organizations
Levels of Globalization
World
National Governments
Firms
Normative Issues of Globalization
Fairness and Equity Issues– Redistribution and Compensation
National Sovereignty– Cultural Values– Role of International bodies (IMF, World Bank,
WTO) in dictating national policies Different Social Regulations
– Environmental Issues– Health and Safety Standards
Approach
Preferences derived from economic fundamentals,
Aggregated through political institutions,
To produce public policy outcomes.
Preferences Institutions Policies
Step 1 Step 2 Step 3
Outline
How firms and governments respond to the pressures and opportunities of globalization.
Analyze the relevant political institutions.
Finally, we will look at how these elements combine to produce policy.
Goal: Develop analytical tools
Peanut Example
What are the different frameworks we might use to explain the persistence of peanut quotas?
Mechanics
Course Materials– In Bookstore – On reserve at Meyer
Requirements– Class Participation (40%)
Prepare Case before Class
– Final Group Project (60%) Approve Topic with Instructor 5 minute Presentation on October 14th Final Project due December 9th
Levels of Globalization International
– The structure and scope of international organizations
National Governments– The demands placed on national governments
Industries– The structure of industries and sectors – number of competitors– prices
Firms– The allocation of production and mar
What is Globalization?
Levels– International
– National Governments
– Industries
– Firms
– Telecommunications
Dimensions– International Trade
– Integration of Capital Markets
– Expanded role of international organizations
– Increase in Multi-national Firms
Point: This has lead to more complexities and more difficult for firms and governments to respond to changing environment.
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