Globalization, Growth and Inequality

The intensity of trade across countries in goods, capital, labor and knowledge has reached a new momentum in the past few decades and the world is now closer to a truly global economy than ever before. ¹ Globalization ‘can be seen every where’ ² and is the outcome of a complex historical process that evolved unevenly across time and space. It stepped up during the nineteenth century owing to significant technological breakthroughs in transport and communications and the increasing specialization of economic activity associated with industrialization. World War I caused disruption to trade at the global level, while the international mone tary system that had evolved during the previous half-century under the gold standard broke down. Globalization receded in the decades that followed, owing to governments’ inability to restore previous flows and the enforcement of autarchic policies in Europe, the Americas and other parts of the world. After 1950, growth in international trade, capital flows and migrations resumed and then expanded rapidly under the new institutional regime established at the Bretton Woods conference, with increasing numbers of countries and regions entering the global markets. However, there is still a long way to go, particularly in the case of inter national labor markets, which remain less global than the rest of the international economy, ³ and also the persistence of ‘institutional discontinuities’ between countries. ⁴