Globalization reloaded : an UNCTAD perspective

This paper rejects the characterization of globalization as an autonomous and irresistible process driven by the impersonal forces of the market and technical progress. Whether domestic or global, market forces are shaped and controlled by policy choices and the institutional frameworks in which they are made. In the absence of adequate institutional frameworks and productive capacities, rapid liberalization is as likely to lead to stagnation and unemployment as to growth and rising incomes per head. We show that the major economic forces presumed to be crucial for spreading the benefits of globalization have been less global than often presented, have proved to be much weaker than widely predicted and carry potentially damaging effects as well as benefits. Accordingly, and without denying that by the late 1970s many developing countries needed to find new ways of inserting themselves into the international economy, we argue that the new policy orientation of macroeconomic stringency, downsizing the public sector and the rapid opening of developing country markets to foreign trade and capital after the debt crisis, has failed to produce an economic environment that supports faster economic growth and strengthens productivity performance. In suggesting the outlines of a more strategic approach to economic development the emphasis is on the need for domestic investment to be mobilized as the basis for industrialization and for a gradual approach to integration with the global economy.