Globalization, Growth and Inclusiveness

With the failure of the Doha Round, faith in the global system has been shaken. Economic nationalism is on the rise. Job losses are conveniently blamed on globalization, spurring calls for protection. What is missing from this discourse is the rising income inequality in the world's most open market (the U.S.) as well as rising income disparities among developing countries. Both trends should worry potential globalizers.

What should be done about these threats to an open trade and investment regime? At the national level, there are best practice public policies aimed at protecting people and not their jobs. This can be done in a way that incentivizes effort but does not create unfairness so dramatic that public support for globalization erodes. Dramatic inequality is politically inconsistent with openness. At the same time, NGOs should publicize anti-competitive actions taken in the name of narrow national economic interests. In parallel, countries that have benefitted from manufactures export access need to refrain from erecting new barriers in services. What is called for is a new global compact with more equitable rules. The net benefits of globalization are positive for most countries; however, domestic policies need to handle negative distributional effects if these global gains are to materialize.