Share This Article:

The Globalization-Deglobalization Policy Conundrum

Abstract Full-Text HTML Download Download as PDF (Size:219KB) PP. 373-383
DOI: 10.4236/me.2012.34048    5,139 Downloads   8,248 Views   Citations

ABSTRACT

The dynamic process of economic globalization and deglobalization has been occurring in “waves” over the past 250 years. Diffusion models reveal how globalization policies occupy the policy-centre stage when the global economy is booming and is cast on the back-burner when the global economy nose-dives into a slump. According to the diffusion models, when the global economy is booming the nodes that establish crucial linkages in the economy exceed the social optimum generating negative externalities thereby eroding social welfare in such a context policy intervention is justified to reduce the linkages that facilitate the spread of negative shocks or contagion that reduce the capacity for risk- sharing. The globalization-deglobalization policy conundrum also resurfaces in relation to trade flows, cross-border capital mobility, current account sustainability and technology diffusion. The latter has exacerbate the “digital divide” that has accompanied the revolutionary changes in information and communication technology (ICT) revolution by overcoming the “tyranny of distance”. The recurrent global financial crises and speculative attacks on the currency peg have ignited the debate for reshaping the international financial architecture in order to reduce the vulnerability of the domestic economy to the disruptive effects of the global financial crises.

Conflicts of Interest

The authors declare no conflicts of interest.

Cite this paper

N. Karunaratne, "The Globalization-Deglobalization Policy Conundrum," Modern Economy, Vol. 3 No. 4, 2012, pp. 373-383. doi: 10.4236/me.2012.34048.

References

[1] K. A. O’Rourke and J. G. Williamson, “Globalization and History: The Evolution of the Nineteenth-Century Atlantic Economy,” Cambridge University Press, Cambridge, 1999.
[2] D. Dollar, “Globalization, Inequality and Poverty since 1980,” World Bank, Washington DC, 2001.
[3] A. Shah, “Poverty Facts and Stats,” Global Issues, 2008.
[4] D. Salvatore, “Growth and Poverty in a Globalizing World,” Journal of Policy Modeling, Vol. 26, No. 4, 2004, pp. 543- 551. doi:10.1016/j.jpolmod.2004.04.009
[5] D. R. Appleyard, A. J. Field and S. J. Cobb, “International Economics,” McGraw-Hill, New York, 2006.
[6] S. Pattnaik, “The Global Financial Stability Financial Architecture Fails Again: Sub-Prime Crisis Lessons for Policymakers,” Asia Pacific Economic Literature, Vol. 23, No. 1, 2009, pp. 21-47. doi:10.1111/j.1467-8411.2009.01221.x
[7] L. R. Klein, “Measurement of Shift in the World’s Canter of Economic Gravity,” Journal of Policy Modelling, Vol. 31, No. 4, 2009, pp. 489-492. doi:10.1016/j.jpolmod.2009.05.005
[8] M. Gallegati, B. Greenwald, G. R. Matteo and J. E. Stiglitz, “The Asymmetric Effects of Diffusion Process: Risk Sharing and Contagion,” Global Economy Journal, Vol. 8, No. 3, 2008, pp. 1-20. doi:10.2202/1524-5861.1365
[9] P. Mizen, “The Credit Crunch of 2007-2008: A Discussion of the Background, Market Reaction, and Policy Responses,” Federal Reserve Bank of St. Louis Review, Vol. 90, No. 5, 2008, pp. 531-568.
[10] G. Milesi-Ferrati and A. Razin, “Current Account Sustainability Report,” Princeton University, Princeton, 1966.
[11] J. Pitchford, “Australia’s Foreign Debt: Myth and Reality,” Allen and Unwin, Sydney, 1990.
[12] W. M. Corden, “Economic Policy, Exchange Rates and the International System,” University of Chicago Press, Chicago, 1994.
[13] N. D. Karunaratne, “The Sustainability of Australia’s Current Account Deficits—A Reappraisal after the Global Financial Crisis,” Journal of Policy Modeling, Vol. 32, No. 1, 2007, pp. 81-97. doi:10.1016/j.jpolmod.2009.10.002
[14] M. Obstfeld, J. Shambaugh and A. Taylor, “The Trilemma in History: Tradeoffs among Exchange Rates, Monetary Policies, and Capital Mobility,” The Review of Economics and Statistics, Vol. 87, No. 3, 2005, pp. 423-438. doi:10.1162/0034653054638300
[15] T. W. Swan, “Economic Growth and Capital Accumulation,” Economic Record, Vol. 32, No. 2, 1956, pp. 334- 361. doi:10.1111/j.1475-4932.1956.tb00434.x
[16] R. M. Solow, “A Contribution to the Theory of Economic Growth,” Quarterly Journal of Economics, Vol. 70, No. 1, 1956, pp. 65-94. doi:10.2307/1884513
[17] P. Krugman, “The Myth of Asia’s Miracle,” Foreign Affairs, Vol. 73, No. 6, 1994.
[18] A. W. Young, “The Tyranny of Numbers Confronting the Statistical Realities of the East Asian Growth Experience,” Quarterly Journal of Economics, Vol. 101, No. 3, 1995, pp. 641-680. doi:10.2307/2946695
[19] E. Phelps, “The Golden Rule of Accumulation: A Fable for Growth Men,” American Economic Review, Vol. 51, 1996, pp. 638-643.
[20] R. J. Barro and X. Sala-I-Martin, “Convergence Across States and Regions,” Brookings Papers on Economic Activity, Vol. 1991, No. 1, 1991, pp. 107-182. doi:10.2307/2534639
[21] H. Markovitz, “Portfolio Selection,” Journal of Finance, Vol. 7, No. 3, 1952, pp. 77-92.
[22] M. Feldstein and C. Horioka, “Domestic Saving and International Capital Flows,” Economic Journal, Vol. 90, No. 358, 1980, pp. 314-329. doi:10.2307/2231790
[23] P. Krugman and M. Obstfeld, “International Economics: Theory and Policy,” Pearson Addison-Wesley, Boston, 2009.
[24] OECD, “Understanding the Digital Divide,” OECD, Paris, 2009, pp. 1-32.
[25] J. Tinbergen, “Shaping the World Economy,” Twentieth Century Fund, New York, 1992.
[26] P. Pyhonen, “A Tentative Model for the Volume of Trade between Countries,” Welwirtschafliches Archive, Vol. 90, 1963, pp. 93-99.
[27] B. Battersby and R. Ewing, “International Trade Performance: The Gravity of Australia’s Remoteness,” Treasury Working Paper, Australia, 2005, pp. 1-20.
[28] D. T. Coe, A. Subramaniam and N. T. Taminsa, “The Missing Globalization Puzzle,” IMF Working Paper 02/171, The International Monetary Fund, Washington DC, 2002.
[29] K. S. Rogoff, A. M. Husain, A. Mody, R. Brooks and N. Omes, “Evolution and Performance of Exchange Rate Regimes,” The International Monetary Fund, Washington DC, 2004.
[30] J. Diamond, “Guns, Germs and Steel: The Fate of Human Societies,” Norton, New York, 1997.
[31] D. Acemoglu and J. Robinson, “The Colonial Origins of Comparative Development: An Empirical Interpretation,” American Economic Review, Vol. 94, No. 5, 2001, pp. 1369-1321. doi:10.1257/aer.91.5.1369
[32] P. R. Lane and G. R. Miesi-Ferreti, “The External Wealth of Nations Mark II: Revised and Extended Estimates of Foreign Assets and Liabilities, 1970-2004,” Journal of International Economics, Vol. 73, No. 2, 2007, pp. 223-225. doi:10.1016/j.jinteco.2007.02.003

  
comments powered by Disqus

Copyright © 2019 by authors and Scientific Research Publishing Inc.

Creative Commons License

This work and the related PDF file are licensed under a Creative Commons Attribution 4.0 International License.