Wednesday, January 31, 2007

The many faces of globalization

NY Times has an interesting profile of Dani Rodrik, a Turkish born economist who pushes alternative theories on globalization.

I gotta be honest, I haven't read any of Rodrik's work but he does seem intriguing based on this profile.

In fact, I'm not sure what he's saying is all that different from a lot of other economists, that ultimately global trade is good for populations as a whole. But where he seems to take the discussion one step farther is admitting that while global trade is good on the whole, it is not good for everyone and he highlights that there are individuals (if not entire industries) who suffer as a result of it.

Rodrik seems to posit that rather than going after trade as a single minded goal, go after it with a two pronged approach; with the second prong being a thoughtful series of policies on how to assist those who are inevitably harmed by trade.

Seems like a pretty sound strategy to me. Again, I haven’t read anything else by Rodrik so I’m just going off of what’s on the profile. However, I think I am more pro-trade than he is. If I read Rodrik correctly (based on this profile), he is much more cautious about free trade and would probably advocate keeping certain barriers up (or even returning some barriers) while certain industries improve and can become globally competitive.

I see the logic here, but I’m not sure I could support it. Wouldn’t increased global competition encourage slow industries to improve? I guess he would counter that a certain amount of protection would help these industries grow and strengthen, but unfettered competition would wipe them out before they’ve had a chance to establish themselves.

I dunno, I still can’t really buy it. But I applaud that he is able to thoughtfully point out the challenges of globalization and even when doing so, does not dismiss globalization outright.

As usual, there is a lively debate on Mankiw’s blog about this story.

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