If you have taken BGIE, you are aware of the issues. If you have taken IMAGE or Economic Strategies of Nations, you have heard the names.
On April 23, you saw the faces. At the invitation of the Harvard International Business and Development Club, 2001 Nobel Prize Winner in Economics Joseph Stiglitz and renown Kennedy School Professor Dani Rodrik presented “Two Views on Globalization” to an oversubscribed Spangler Auditorium last Wednesday, highlighting their latest thinking on globalization and the rules that govern it.
Stiglitz, whose 2002 book “Globalization and Its Discontents” remains a best-seller, has long been critical of the architecture of the international financial system, specifically the functions of the International Monetary Fund (“IMF”) and the World Bank. Stiglitz, now a Professor at Columbia University, is no novice on these issues, having first served as the Head of President Clinton’s Council of Economic Advisors and then as the World Bank’s Chief Economist.
Among Stiglitz’ criticisms of the IMF/World Bank is the disproportionate influence that Washington and Wall Street have on their decision-making given that voting rights within the IMF/World Bank are based on the amount of funds contributed (read: the United States has all of the power), and the seemingly hypocritical and counter-intuitive policies that the IMF/World Bank impose on developing countries as conditions to receiving loan packages. Those policies include, according to Stiglitz, the urging of countries to tighten, not loosen, fiscal polices in times of an economic downturn, much to the chagrin of any Keynesian economist teaching Macroeconomics 101. In particular, Stiglitz criticized what he sees as a “one size fits all” approach of the IMF/World Bank in imposing on developing countries the now-infamous “Washington Consensus” macroeconomic policies that require liberalization of markets, privatization of industry on openness to trade and competition. Citing the many failures of developing countries that fully adopted the Washington Consensus, especially in Latin America, Stiglitz draws contrasts with the East Asian counties (know in economic circles as the “Asian Tigers” who were a part of “the Asian Miracle”) and China, countries who only selectively opened and liberalized their economies and found extraordinary success.
Rodrik, whose highly-regarded piece “Feasible Globalizations” highlights the “political trilemma” of globalization, arguing that among deep economic integration, sovereignty and democracy, a nation can only achieve two out of the three, spoke chiefly about the World Trade Organization (“WTO”) and the “unfair fair trade” regime imposed by the industrialized countries on the developing countries. According to Rodrik, in an effort to end the market distortions and unfair trade practices of rich Western nations that protect their farmers, for example, through massive subsidies, any supposedly “pro-development” policy that comes out of the WTO should be accompanied by an independent “developmental impact assessment” that measures the true impact of the policy on developing countries. Stiglitz also commented on this issue, arguing that Western countries spend more money on subsidies to cows on dairy farms than they spend on the impoverished citizens of sub-Saharan Africa.
Neither Stiglitz nor Rodrik criticized globalization per se, but instead railed against the rules by which the globalization game is being played, namely that the rich countries have achieved disproportionate gains at the expense of those countries whose needs are most dire. RC students interested in studying these issues further can cross-register into Rodrik’s highly popular classes at KSG or take IMAGE or Economic Strategies of Nations in the EC curriculum, both of which have globalization and economic development at their core.