The Elixir of Growth

CAMBRIDGE: Southeast Asia's financial crisis -- leapfrogging from Thailand to Malaysia to the Philippines and Indonesia -- is far more than a serious regional difficulty, as stock market sell-offs from Hong Kong to Frankfurt to New York demonstrate. Populist doubts about the wisdom of globalization are now rumbling across the Pacific and around the globe. After all, the opponents of free trade ask, if Asia's tigers can be brought to their knees by international financial markets, is any developing country safe?

In the face of such doubts, it is necessary to review what liberalization achieved in recent decades. Over the last 25 years, and especially since the collapse of communism, the world witnessed astounding economic integration, perhaps the greatest in human history. It was this process, indeed, that allowed Southeast Asians to begin dreaming of riches in the first place. Assisted by international organizations such as the International Monetary Fund and the new World Trade Organization, an unprecedented number of governments in postcommunist and developing countries alike chose to integrate their peoples into the world system by opening their economies to international trade.

Opening a once closed economy, however, is no easy option for governments. Trade liberalization exposes often ill-prepared businesses to the intense pressures of international competition, and requires a wide array of often painful reforms and risky politically decisions. And yet, even very poor countries are beginning to believe that open trade may be their ticket to prosperity. But as trade liberalization spreads to every corner of the globe vital questions arise. Will trade boost economic growth? If so, what can trade liberalization do for the cause of income equality across the world?

To continue reading, please log in or enter your email address.

Registration is quick and easy and requires only your email address. If you already have an account with us, please log in. Or subscribe now for unlimited access.

required

Log in

http://prosyn.org/qkqJD5d;
  1. An employee works at a chemical fiber weaving company VCG/Getty Images

    China in the Lead?

    For four decades, China has achieved unprecedented economic growth under a centralized, authoritarian political system, far outpacing growth in the Western liberal democracies. So, is Chinese President Xi Jinping right to double down on authoritarianism, and is the “China model” truly a viable rival to Western-style democratic capitalism?

  2. The assembly line at Ford Bill Pugliano/Getty Images

    Whither the Multilateral Trading System?

    The global economy today is dominated by three major players – China, the EU, and the US – with roughly equal trading volumes and limited incentive to fight for the rules-based global trading system. With cooperation unlikely, the world should prepare itself for the erosion of the World Trade Organization.

  3. Donald Trump Saul Loeb/Getty Images

    The Globalization of Our Discontent

    Globalization, which was supposed to benefit developed and developing countries alike, is now reviled almost everywhere, as the political backlash in Europe and the US has shown. The challenge is to minimize the risk that the backlash will intensify, and that starts by understanding – and avoiding – past mistakes.

  4. A general view of the Corn Market in the City of Manchester Christopher Furlong/Getty Images

    A Better British Story

    Despite all of the doom and gloom over the United Kingdom's impending withdrawal from the European Union, key manufacturing indicators are at their highest levels in four years, and the mood for investment may be improving. While parts of the UK are certainly weakening economically, others may finally be overcoming longstanding challenges.

  5. UK supermarket Waring Abbott/Getty Images

    The UK’s Multilateral Trade Future

    With Brexit looming, the UK has no choice but to redesign its future trading relationships. As a major producer of sophisticated components, its long-term trade strategy should focus on gaining deep and unfettered access to integrated cross-border supply chains – and that means adopting a multilateral approach.

  6. The Year Ahead 2018

    The world’s leading thinkers and policymakers examine what’s come apart in the past year, and anticipate what will define the year ahead.

    Order now