On Wednesday, January 10^th, GMF hosted an event centered around the World Bank's report on "Global Economic Prospects 2007: Managing the Next Wave of Globalization." Uri Dadush, director of international trade at the World Bank, discussed the meaning of the report from the view of a developed nation and global business writer at USA Today, David J. Lynch, followed with his comments on the impacts of globalization on developed countries' business, culture, and policies. GMF's Jonathan White moderated the event, and also gave a short presentation on the findings of GMF's Perspectives on Trade and Poverty Reduction Survey.

Mr. Dadush highlighted the growing importance of developing countries in the global economy over the next 25 years. Developing countries grew at 7% GDP for the third year in a row in 2006, a rate more than twice that of high income countries. This trend will continue in the years ahead, albeit at a more modest rate. He emphasized that it is not just about China and India because developing countries are achieving robust growth rates and the basic policies of the "Washington Consensus" have not hurt developing countries. Globalization will not only continue, but intensify as a result of historic drivers, such as falling transportation and communication costs, trade liberalization and complementary reforms, as well as new entrants, off-shoring of services, and surging immigration.

Mr. Dadush outlined some challenges that we will face as a result of globalization, namely increased income inequality, pressures on labor markets, and environmental change. Despite a relatively positive outlook on developing countries, there will be a widening of inequality in nearly all developing countries as returns to skilled workers will increase relative to unskilled workers. The pattern of economic growth will tend to be more capital intensive and unskilled worker jobs will face depressed wages and increased job insecurity. In addition to strengthening of global institution coordination, he recommended improving the investment climate, investing in education, and protecting workers, not jobs.

David J. Lynch provided a U.S. perspective on globalization. He stated that the 2006 congressional election results represented a big shift away from the status quo and that further progress on globalization should not be a given. There will be "great risk shift" underway that transfers risk from society onto the individual. He noted that pensions, healthcare, and saving for retirement are becoming more and more a burden on the individual, but the Democrats will try to figure out a correct response to this. We must think more creatively about how to help those that are hurt by globalization and the status quo approach is not politically sustainable. While he is doubtful it could happen, he stated that there could be a "grand bargain" that would include an extension of TPA, provisions getting tougher on China, and perhaps other modified policies on pensions, healthcare, etc., creating a comprehensive package that helps those hurt by globalization.

Podcast:
Uri Dadush, director of the International Trade Department at the World Bank, discusses the World Bank report
(More information on GMF Podcasts are available by visiting the Multimedia page)

Links:
2006 GMF Perspectives on Trade and Poverty Reduction Survey
Global Economic Prospects 2007: Managing the Next Wave of Globalization