Class Notes (839,081)
Canada (511,183)
Economics (472)
ECON 255 (24)
Lecture 5

W5 Globalism's Discontent.docx

3 Pages

Course Code
ECON 255
Ashok Kotwal

This preview shows page 1. Sign up to view the full 3 pages of the document.
Week 5 Reading 6 – Globalism’s Discontent? By Joseph Stieglitz − Globalization is perceived differently in different parts of the world − East Asia: a good exemplar of globalization  they managed to accept globalization by managing an equal distribution of benefits − Stiglitz asserts that: the problem is not with globalization; but with how it is managed − How the international institution such as IMF messed up: the belief of market fundamentalism  which means bad economics and bad policies  this policy doesn’t even work for developed countries and IMF pushed this on the developing countries Beneficial Globalization − East Asia: their growth is largely based on export  they export to the global market and at the same time, they are able to close the technology gap  Government Intervention: plays a key role in this. Contrary to US’ approach which has a minimal government approach − East Asia’s Financial Crisis in 1997: main factor – rapid liberalization of financial and capital market The Darker Side of Globalization − Liberalization of financial and capital market: the growth in East Asia has attracted foreign investors to invest in East Asia  the rapid amount of the money pouring into the East Asian countries only cause the market to be more speculative  when it does, it becomes sensitive to what the investors feel (investors’ confidence)  so, when investors pull their money out, the economy naturally collapses − IMF: said that the collapse was due to the bad policies but it was then refuted when the countries which has confidence in also collapse  New form of the old colonial mentality: we run the capital markets, so, we know what’s best. You just follow what we ask you to Lessons of Crisis − Major crises pertaining capital flows are related to external factors which originate outside of the country − Capital Liberalization  So far, it doesn’t promote growth  Stieglitz asks: How can it promote growth when money can flow in and out overnight  also, the loan regulation to different countries and from different countries are termed differently  The capital movement from outside into East Asian countries was too much to handle by them  the East Asian wasn’t ready to face the volatility of capital market The Costs of Volatility − Capital Liberalization  This process is usually accompanied by market volatility  the volatility is the variable that impedes growth and increase poverty.  Market volatility: because it is risky, market investors demand risk premium  this risk premium has a higher-than-normal profits  Ma
More Less
Unlock Document

Only page 1 are available for preview. Some parts have been intentionally blurred.

Unlock Document
You're Reading a Preview

Unlock to view full version

Unlock Document

Log In


Join OneClass

Access over 10 million pages of study
documents for 1.3 million courses.

Sign up

Join to view


By registering, I agree to the Terms and Privacy Policies
Already have an account?
Just a few more details

So we can recommend you notes for your school.

Reset Password

Please enter below the email address you registered with and we will send you a link to reset your password.

Add your courses

Get notes from the top students in your class.