Globalization: Markets, Instututions & Policy

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Globalization Markets, Instututions Policy

• SIPA U6355
• Professor OHalloran

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What is Globalization?

• Globalization is the Buzz-word of the 90s
• 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.

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Volume of World Trade GDP

• 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.

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Tariff Non-Tariff Barriers, 1950-86

• As tariffs have declined, Non-tariff barriers
  have steadily increased.

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Percent of Imports Covered by NTBs

• Percent of Imports covered by NTBs is increasing

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Anti-Dumping Measures

• The use of Anti-dumping measures is spreading

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Index of Capital Controls in Emerging Markets

• Limits on capital movement in developing
  countries have significantly declined.

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Total Net Capital Flows into Emerging Markets as
a of GDP

• Money is now flowing into emerging markets more
  quickly than before.

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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.

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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

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Capital Mobility Variation, 1870-1985

• Capital mobility is not new, but the sums have
  greatly increased.

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Inflows of Immigrants as a percent of population

• As costs of globalization increase, labor demands
  protection.

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Dimensions of Globalization

• Increased International Trade
• Integration of Capital Markets
• Increase in Multi-national Firms
• Expanded and Strengthened Role of International
  Organizations

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Levels of Globalization
World
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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

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Approach

• Preferences derived from economic fundamentals,
• Aggregated through political institutions,
• To produce public policy outcomes.

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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

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Peanut Example

• What are the different frameworks we might use to
  explain the persistence of peanut quotas?

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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

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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

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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.