كيف نشأ النظام التجاري العالمي الحالي

رسي المتوسط ​​المتحرك الاستراتيجية.
الأسواق الناشئة خيارات العملات الأجنبية.
كيف نشأ النظام التجاري العالمي الحالي.
وتحسب الإسقاطات الحجم الاقتصادي i. الناتج المحلي الإجمالي في وقت متأخر في وقت متأخر من التداول تجدر الإشارة إلى أن مقارنات تعادل القوة الشرائية هي لا يمكن الاعتماد عليها على نحو ملحوظ - كما يظهر هذا التعديل الكبير نفسه - على الرغم من أنها عموما أفضل التقديرات لدينا. ومع ذلك، ونظرا لأن معدلات تعادل القوة الشرائية تظهر التكاليف الحقيقية التي ينطوي عليها الاقتصاد، فإنها تقوم بمهمة مقارنة المبالغ الفعلية للنشاط الاقتصادي. المثال الحالي، من حيث القياس الاقتصادي للنظام، ظهرت قصة شعر بنفس الكمية تقريبا من النشاط الاقتصادي بغض النظر عن مكان حدوثها، ولكن باستخدام أسعار الصرف في السوق يبدو أن الحلاق في الولايات المتحدة يسهم بقيمة اقتصادية أكثر بكثير من الحلاق في الصين. كما أن أسعار الصرف السوقية يمكن أن تتقلب بسرعة وتتعرض للعديد من القوى غير السوقية. ومع ذلك، فقد جادل البعض بأن العالم الذي وضعته الصين ليس العالم الوحيد الذي لا يهم الولايات المتحدة، بل إنه يمثل فعلا أنباء طيبة. في الوقت الراهن، في واشنطن بوست، يكتب تشارلز كيني أن أمريكا هي رقم الناتج المحلي الإجمالي لا تمثل لحظة متداخلة كيني يميز ذلك. وستكون أمريكا أقل قدرة على الدعوة إلى نظام تجاري عالمي متعدد الأطراف قائم على القواعد يوسع التجارة القائمة على السوق باعتبارها محركا رئيسيا لزيادة الابتكار العالمي. كما يكتب في تصميم نظام نظام التجارة العالمية تعظيم الظروف الناشئة يجب أن توجد للابتكار لتزدهر في الاقتصاد العالمي، بما في ذلك الوصول إلى أسواق كبيرة، لا المنافسة الزائدة، وحماية الملكية الفكرية الملكية الفكرية. ولكن كما يكتب التداول في كل من البنادق والزبدة؟ ببساطة، الاستثمار العسكري في التكنولوجيا لديه كبير، وبالتالي أي تخفيضات في الإنفاق العسكري تؤثر سلبا على U. العام قد يكون صحيحا وسيكون من شيء واحد إذا U. في الواقع، أنباء أن الولايات المتحدة سوف تنزلق إلى الثانية - يتناسب الاقتصاد الأآبر مع الأبحاث الجديدة التي أجراها نظام نيويورك تايمز أن الطبقة الوسطى الأمريكية آثيرا ما هي الأآثر ثراء في العالم - تنازلت أيضا عن هذا التمييز. وتخلص أبحاث التايمز إلى أن دخل الطبقة المتوسطة بعد الضريبة في كندا قد تجاوز على الأرجح تلك الموجودة في الولايات المتحدة. هذا ليس مفاجئا عندما كتب إيتيف في كتابه الابتكار إكونوميكستي يونيتيد نشأت في المرتبة 17 فقط من 21 كيف اقتصادات تقييمها في نمو الناتج المحلي الإجمالي للفرد باستخدام الشراكة بين القطاعين العام والخاص على مدى العقد العالمي السابق. ويتزامن ذلك أيضا مع تزايد التفاوت في الدخل في الولايات المتحدة، كما وثق مؤخرا مكتب الميزانية في الكونغرس. وقد نمت إلى حد كبير سياسات استباقية للتجارة التي وضعت سوقا على مستوى القارة الحالية، واستثمرت بكثافة في كل من التعليم الأساسي والنظام، وزراعة عالم الابتكار الوطني الفعال الذي ولدت تطوير التكنولوجيات الجديدة والشركات في نهاية المطاف والصناعات التي دفعت U. المملكة المتحدة كيف حصلت على هذا اللقب مرة أخرى. وعلى النقيض من ذلك، ينبغي أن تتنافس على ذلك الموقف القيادي بشراسة، وأن تفعل كل ما في وسعها لمنع هذا الوضع أو تأجيله على الأقل. قد يكون من الجيد أن الصين تفوق النظام. يجري 1 العالم لديه أيضا مسؤوليات. مدعوم من وورد الموعد النهائي كيف الاثنين 19 يونيو الكلاسيكية الجديدة هراء إيت المسائل سباق ابتكار اتصالات الابتكار لدينا بيوفوتشر. إنوفاتيون فيليز هاس وورد لأخذ إيتيف السريع، الزحافات، والتعليق على أحدث في سياسة التكنولوجيا، انتقل إلى إيتيف. حول المؤلف ستيفن إيزيل برز الرئيس، سياسة الابتكار العالمية، ظهرت إيتيف. ويركز على سياسة الابتكار فضلا عن القدرة التنافسية الدولية والسياسة التجارية كيف. هو الحالي من الابتكار في الاقتصاد القائم على الخدمات: رؤى والتطبيق والممارسة بالغراف ماكميلان، واقتصاد الابتكار: سباق ل ييل الحالي العالمي، إيزيل يحمل B. ولكن الإنفاق العسكري الوفير هو تداول الأشياء التي تحافظ على الولايات المتحدة طافيا. برعاية من نحن. الآراء المعرب عنها في هذا التداول لا تمثل بالضرورة آراء أي مؤلف أو منظمة أخرى تابعة لهذا الموقع. ترعى إيتيف هذه المدونة ولكن لا تؤيد أو تتفق بالضرورة مع وجهات نظر المساهمين غير إيتيف. الآراء التي أعرب عنها موظفي إيتيف تعكس وجهات نظر إيتيف، ولكن ليس من أي مؤلف آخر أو. تصميم دليل أويسم بلوق.
الاحترار العالمي ونظام التداول العالمي: المتحدثون.
5 الأفكار على & لدكو؛ كيف نظام التداول العالمي الحالي و رديقو؛
تلتزم جميع أفراد العائلة بأن يكونوا في رحلة إلى جيفرسون لإنجاز جنازتها.
وبصرف النظر عن مجوهرات اللؤلؤ، ونحن نأتي عبر خيارات أخرى مختلفة كذلك، مثل.
توفيت في 28 نوفمبر 1851، وتسعين عاما، ودفنت، مع أفراد آخرين من الأسرة، في مقبرة خاصة في مزرعتها الخاصة، على بعد تسعة أميال من شارلوت، على طريق كامدن.
في استخدام الطهي، والفاصوليا ليما وفاصوليا زبدة متميزة، وهذا الأخير كبير وأصفر، والصغيرة والأخضر السابقة.
التبت ثانغكا اللوحة حجم سطح رسمت 14.5 بوصة × 20.0 بوصة حجم مع الديباج 24.0 بوصة X 34.0 بوصة.

مشاركة البلدان النامية في التجارة العالمية: نظرة عامة على الاتجاهات الرئيسية والعوامل الكامنة وراءها.
لجنة التجارة والتنمية.
مشاركة البلدان النامية في التجارة العالمية: نظرة عامة على الاتجاهات الرئيسية والعوامل الكامنة وراءها.
مذكرة من الأمانة العامة.
ملخص والاستنتاجات.
وتقدم هذه الورقة لمحة عامة عن الاتجاهات الرئيسية في مشاركة البلدان النامية في التجارة العالمية على مدى العقدين الماضيين، تلتها دراسة موجزة لبعض العوامل الرئيسية التي ارتبطت بالاتجاهات بالنسبة لمجموعات مختلفة من البلدان النامية - والأداء التجاري المختلف بشكل حاد في معظم البلدان النامية في آسيا (إيجابي جدا)، وأداء عدد من أفقر البلدان النامية (مخيب للآمال).
الجزء الأول على & # 147؛ الاتجاهات الرئيسية في أداء التجارة في البلدان النامية & # 148؛ عددا من التطورات الرئيسية في تجارة السلع العالمية: انظر الحاشية 1.
* تفاوتت حصة المصنوعات في التجارة العالمية للبضائع في نطاق يتراوح بين 55 و 60 في المائة بين عامي 1973 و 1985، ثم ارتفعت بشكل حاد لتصل إلى 75 في المائة بحلول عام 1995.
* بعد أن بلغت ذروتها في 28 في المائة في عام 1980 (ويرجع ذلك أساسا إلى صادرات الوقود)، انخفضت حصة البلدان النامية في التجارة العالمية للبضائع حتى النصف الثاني من الثمانينات، ثم استؤنفت النمو مع انخفاض أسعار النفط وإلى البلدان النامية مواصلة توسيع حصتها من التجارة العالمية في الصناعات التحويلية.
* منذ عام 1980، انخفضت حصة البلدان النامية في الصادرات العالمية من منتجات التعدين (أساسا الوقود) بمقدار الربع، في حين تضاعف نصيبها من التجارة العالمية في المصنوعات من 10 إلى 20 في المائة.
* قامت البلدان النامية الآسيوية، كمجموعة، بأداء البلدان النامية الأخرى على نطاق واسع بفارق كبير من حيث نصيبها من التجارة العالمية، وحصتها من تدفقات الاستثمار الأجنبي المباشر إلى البلدان النامية، ونسبتها من التجارة إلى الناتج المحلي الإجمالي.
* مقارنة 25 بلدا ناميا تجاوز نمو صادراتها بين عامي 1985 و 1994 المتوسط ​​العالمي، ومجموعة من 35 بلدا ناميا كانت صادراتها في عام 1994 دون مستوى عام 1985، تبين وجود علاقة وثيقة بين أداء الصادرات وحصة السلع المصنعة في صادرات البضائع.
* إن المقارنة بين أداء الصادرات في أقل البلدان نموا منذ عام 1980، مع أداء جميع البلدان النامية، لا تؤكد فقط وجود علاقة قوية بين أداء الصادرات وحصة المصنوعات في الصادرات، ولكن وجود علاقة إيجابية مماثلة بين الصادرات وكل من حصة الاستثمار في الناتج المحلي الإجمالي وحصة الصناعات التحويلية في الناتج المحلي الإجمالي. (وهذه النقطة والسابقة تدعمها نتائج دراسة حديثة للبنك الدولي موجزة في الإطار رقم 1)
الجزء الثاني المتعلق بالعوامل الكامنة وراء أداء التجارة المتنوع في البلدان النامية & # 148؛ تبدأ باستعراض مختصر لعوامل خارجية رئيسية مختارة يعتقد عموما أنها تلعب دورا في تفسير التباين في الأداء التجاري عبر المجموعات في العقدين الماضيين:
الوصول إلى الأسواق الخارجية. وفي حين أن متوسط ​​مستوى الحماية في البلدان الصناعية منخفض نسبيا، هناك عوائق خطيرة أمام الدخول في بعض القطاعات ذات الأهمية الخاصة للبلدان النامية - بما في ذلك الزراعة والمنسوجات والملابس والأسماك والمنتجات السمكية. وأعربت البلدان النامية أيضا عن قلقها إزاء تآكل الأفضليات وتصاعد التعريفات ومخاطر التخلي عن مناطق التجارة الحرة والاتحادات الجمركية المنتشرة. ولئن كانت هذه الاعتبارات ذات صلة واضحة بفهم الأداء التجاري للبلدان النامية كمجموعة، فإنها أقل فائدة في تفسير السبب الذي جعل بعض البلدان النامية قد شهدت نموا ديناميكيا للصادرات بينما رأت بلدان أخرى أن صادراتها ركود أو حتى تنخفض؛ بل إن البلدان ذات الأداء الضعيف للتصدير، في بعض الحالات، كانت تتمتع بوصول أفضل إلى أسواق البلدان الصناعية من البلدان التي توسعت صادراتها بسرعة.
التدفقات الرأسمالية الداخلة. وتشير البيانات إلى أن الاتجاه المعروف للمعونة الإنمائية الرسمية يمثل نصيبا أصغر بكثير، وتدفق رؤوس الأموال الخاصة حصة أكبر بكثير من تدفقات رؤوس الأموال إلى البلدان النامية. انظر الحاشية 2 في حين أن حصة البلدان النامية في مجموع تدفقات الاستثمار الأجنبي المباشر في العالم أكثر أي أكثر من الضعف من 15 في المائة في الفترة 1986-1986 إلى أكثر من 35 في المائة في عام 1994، ظلت الحصة التي تذهب إلى البلدان النامية غير الساحلية راكدة عند نسبة ضئيلة قدرها 0.4 في المائة. وفي الواقع، تلقت عشرة بلدان نامية ما يقرب من 80 في المائة من الاستثمار الأجنبي المباشر إلى البلدان النامية.
عوامل خارجية أخرى. ونظرا لحجمها الأصغر عادة وبنيتها الاقتصادية الأقل تنوعا، فإن كثيرا من البلدان النامية تتأثر بشدة بالتغيرات التي تحدث في البيئة الدولية أكثر من البلدان الصناعية. ويقدر صندوق النقد الدولي خلال الفترة من 1984 إلى 1993 أن التقلبات في أسعار الفائدة العالمية على ديونها المعلقة والتغيرات الدورية في الطلب على البلدان الصناعية على صادراتها وانخفاض أسعار السلع الأولية، إلى جانب خفض متوسط ​​معدل النمو في البلدان النامية ذات أدنى مستوياتها أداء النمو بنسبة ثلاثة أرباع نقطة مئوية واحدة. وتجدر الإشارة إلى عامل واحد يمتد إلى التمييز الخارجي / المحلي، أي عبء الديون على البلدان النامية غير الساحلية. وهناك توافق في اآلراء ناشئ بشأن الحاجة إلى معالجة عبء ديون البلدان النامية غير الساحلية بطرق وأساليب جديدة، وينظر صندوق النقد الدولي والبنك الدولي في خطة من شأنها أن ترفع مستوى الدين إلى مستوى يمكن التحكم فيه بالنسبة للبلدان النامية غير الساحلية التي تتبع سياسات اقتصادية سليمة .
وبعد ذلك، تنظر الورقة في العوامل المحلية التي يعتقد عموما أنها تؤدي دورا في تفسير الاختلافات بين البلدان في درجة المشاركة في التجارة العالمية:
السياسات التجارية والمشاركة في منظمة التجارة العالمية. وفي معظم الأحيان، فإن البلدان التي شهدت نموا قويا في الصادرات لديها مستويات أقل من حماية الواردات من البلدان التي تعاني من ركود أو تراجع الصادرات. وبالنظر إلى النظم التجارية على نطاق أوسع، ستستفيد البلدان النامية الأعضاء في منظمة التجارة العالمية من القواعد والتخصصات الجديدة المتفق عليها في جولة أوروغواي، فيما يتعلق بكل من أمن وصولها إلى أسواق الشركاء التجاريين، وإلى شفافية وقابلية التنبؤ بها ونظم التجارة الخاصة بها. وتساعد الالتزامات في جداولها الخاصة بالسلع والخدمات أيضا على تأمين الإصلاحات في النظام التجاري، مما يزيد من مصداقية الإصلاحات في نظر المستثمرين الأجانب والمحليين. غير أنه يتعين على البلدان النامية - ولا سيما البلدان النامية غير الساحلية - أن تستفيد على نحو أكبر من الفوائد التي يمكن استخلاصها من النظام التجاري المتعدد الأطراف، وأن تكون هناك حاجة إلى توسيع مواردها البشرية وهياكلها المؤسسية في مجال السياسة التجارية.
تركيز الصادرات. وفي معظم البلدان الأقل نموا وغيرها من البلدان المنخفضة الدخل، لا تزال المنتجات الأولية - التي تتضمن مستويات منخفضة من التجهيز - تمثل الجزء الأكبر من الإنتاج الوطني والصادرات على السواء. وبالنظر إلى الهيكل المتغير للتجارة العالمية الذي ورد وصفه في بداية هذه الورقة، فإنه ليس من المستغرب أن معظم البلدان التي شاركت قليلا أو لم تشارك على الإطلاق في الاندماج العالمي هي بلدان تعتمد على السلع الأساسية الأولية ذات قطاعات صناعية صغيرة نسبيا وغير فعالة على الإطلاق. ومع ذلك، فإن دراسة حديثة للبنك الدولي تشكك في الحكمة التقليدية التي تعتمد على السلع & # 147؛ هي دائما سيئة للنمو الاقتصادي، وخلصت إلى أن البلدان يمكن أن تعتمد على السلع الأساسية وأن يكون لها ارتفاع في الصادرات ونمو الدخل & # 148؛ انظر الحاشية 3.
سياسات الاقتصاد الكلي. وأبلغت البلدان التي سجلت نمو الصادرات فوق المتوسط ​​وقدرتها على اجتذاب الاستثمار الأجنبي المباشر عن معدلات تضخم متوسطة تقل كثيرا عن معدلات الأداء في البلدان الأقل نجاحا، إلى جانب تقلبات أقل بكثير في أسعار الصرف. وعلاوة على ذلك، فإن المجموعات الأقل نجاحا تميل إلى زيادة العجز في الميزانية والعجز الأكثر تقلبا والعجز الذي انخفض بمعدل أبطأ (وسجلت الفئات الأكثر فقرا أداء عجزا في الواقع خلال الثمانينات). وتشير تجربة جهود الإصلاح في مختلف البلدان إلى أن سياسات الاقتصاد الكلي المستقرة والإصلاحات الهيكلية والنظم التجارية والاستثمارية الموجهة نحو الخارج تقطع شوطا طويلا لتوفير الاستقرار الاقتصادي وبالتالي خفض علاوة المخاطر المرتبطة بالاستثمار في البلدان النامية غير الساحلية - وهو شرط مسبق لجذب الأجانب المستثمرين. وفي البلدان التي استمرت في الإصلاحات الاقتصادية، أصبحت النتائج الإيجابية واضحة.
العوامل المحلية الأخرى. وقد عملت مرافق النقل البري / السكك الحديدية / النقل الجوي، ومرافق التخزين والاتصالات السلكية واللاسلكية غير الكافية وغير الفعالة للحد من استجابة جانب البلدان النامية من جانب العرض، مع وجود مشاكل خطيرة بوجه خاص في البلدان النامية غير الساحلية. وعلى الصعيد المؤسسي، تفتقر العديد من البلدان النامية، ولا سيما البلدان النامية غير الساحلية، إلى إطار قانوني وتنظيمي يتسم بالشفافية، بما في ذلك قوانين الشركات والإفلاس وقوانين الاستثمار. وفي معظم البلدان النامية غير الساحلية، يقيد القطاع الخاص ليس فقط بسبب النقص في رأس المال، وإنما أيضا في مهارات تنظيم المشاريع والإدارة والمهارات التقنية والتسويقية. وستتطلب الجهود الرامية إلى تعزيز أداء الصادرات ليس فقط المساعدة التقنية الرامية إلى تعزيز الهياكل الأساسية المؤسسية للسياسة التجارية والتجارية، بل أيضا المبادرات الرامية إلى تعزيز التوجه الخارجي للقطاع الخاص. ويمكن لبرامج التعاون التقني الموجهة نحو المشاريع أن تعزز الجهود الرامية إلى تحسين التسويق الدولي وتنمية الأعمال التجارية.
التفاعل بين العوامل الخارجية والمحلية. والواقع أن العديد من العوامل الخارجية والمحلية التي تحدد أداء صادرات البلد - وبصورة أعم وتيرة اندماجه في الاقتصاد العالمي - لا تعمل بصورة مستقلة. وهناك تفاعل معقد، إيجابي وسلب على السواء؛ يمكن لعامل في فئة واحدة التفاعل مع الآخرين في هذه الفئة، والتطورات في العوامل الخارجية يمكن أن تحسن أو تفاقم آثار العوامل المحلية والعكس بالعكس.
أولا - الاتجاهات الرئيسية في الأداء التجاري للبلدان النامية.
الهيكل المتغير للتجارة العالمية.
وعلى مدى العقدين الماضيين، اختلفت التطورات الحادة في فئات المنتجات الثلاث الواسعة من تجارة السلع العالمية اختلافا حادا. وفي حين ارتفعت قيمة صادرات منتجات التعدين (الوقود أساسا) والمنتجات الزراعية بين أربع وخمس مرات، زادت صادرات المنتجات المصنعة تسع مرات (الرسم البياني 1 - ألف). ويمكن أن تعزى معظم هذه الاختلافات في التطورات على المدى الطويل إلى الحجم وليس التغيرات في الأسعار. وعلى صعيد الحجم، زادت الصادرات المصنعة بأكثر من ثلاثة أمثال، على النقيض من مكاسب 70 في المائة و 25 في المائة على التوالي بالنسبة للمنتجات الزراعية ومنتجات التعدين (الرسم البياني 2 - ألف). وبلغت األسعار االسمية لمنتجات التعدين كمجموعة في عام 1994 حوالي 3 مرات مقارنة بمستواها في عام 1973، في حين ارتفعت أسعار المنتجات المصنعة والمنتجات الزراعية بمقدار 2.8 و 2.2 مرة على التوالي) الرسم البياني 2 ب (. انظر الحاشية 4.
وبعد أن تفاوتت نسبة المصنوعات في تجارة السلع بنسبة تتراوح بين 55 و 60 في المائة بين عامي 1973 و 1985، ازدادت بشكل حاد إلى نحو 78 في المائة بحلول عام 1995 (الرسم البياني 1 - باء). أما النسبة المتبقية البالغة 22 في المائة فهي مقسمة بالتساوي بين الزراعة والتعدين. وشهدت المنتجات الزراعية تآكلا بطيئا ولكنه ثابت لحصتها على مدى العقدين الماضيين، من أكثر من 20 في المائة من التجارة العالمية في عام 1973 إلى ما يزيد قليلا عن 11 في المائة في عام 1995. وبلغت حصة منتجات التعدين - التي تأثرت بشدة بأسعار النفط - ذروتها في عام 1980 وانخفضت بشكل حاد بعد ذلك. وفي عام 1995، بلغت حصة منتجات التعدين في تجارة السلع العالمية حوالي 11 في المائة، مقابل 17 في المائة في عام 1973 و 28 في المائة في عام 1980.
الأداء التجاري لمجموع البلدان النامية.
وبالنظر إلى الحصة الكبيرة جدا من المنتجات الأولية في صادرات البلدان النامية في السبعينات (أكثر من ثلاثة أرباعها)، فإنه ليس من المستغرب أن تبلغ حصة البلدان النامية (كمجموعة) في تجارة السلع العالمية ذروتها في نفس العام حيث بلغت حصة منتجات التعدين، أي 1980 (الجدول 1). وفي أعقاب الحصة التاريخية البالغة 28 في المائة في ذلك العام، انخفضت حصة البلدان النامية في تجارة السلع العالمية تمشيا مع أسعار النفط خلال النصف الأول من الثمانينات. وبمجرد أن انخفضت أسعار النفط في عام 1986، بدأت حصة البلدان النامية في الارتفاع مرة أخرى، ويرجع ذلك إلى حد كبير إلى حصتها المتزايدة من التجارة العالمية في السلع المصنعة.
حصة البلدان النامية في صادرات السلع العالمية، 1973-1995.
ملاحظة: (1) في هذا الجدول، لم تدرج الصين في مجموعة البلدان النامية.
(2) أرقام عام 1995 مؤقتة.
وكما يتضح من الجدول 2، تغير تكوين المنتجات في صادرات البلدان النامية من البضائع تغيرا كبيرا في العقد الماضي؛ ال سيما فيما يتعلق باملصنوعات) أي ما يقرب من مضاعفة احلصة إلى ما يقرب من الثلثين (ومنتجات التعدين) انخفاض في حصة أكثر من النصف إلى أقل من ربع (. وحققت المكاسب القوية في الصناعات التحويلية حصة البلدان النامية في الصادرات العالمية من المصنوعات إلى 20 في المائة في العام الماضي، أي ضعف حصة عام 1980 وما يقرب من ثلاثة أضعاف حصة عام 1973.
هيكل المنتجات لصادرات السلع في البلدان النامية، 1973-95.
(أ) يمكن أن يؤثر الانقطاع في سلسلة زمنية على المقارنة بين عامي 1985 و 1990.
(ب) بما في ذلك المنتجات غير المحددة.
ملاحظة: (1) في هذا الجدول، لم تدرج الصين في مجموعة البلدان النامية.
(2) أرقام عام 1995 مؤقتة.
الأداء التجاري للبلدان النامية حسب المنطقة.
وتفاوتت الاتجاهات في حصص كل منها في تجارة السلع العالمية خلال العقد الماضي بين المناطق. وفي حين سجلت البلدان النامية في كل منطقة من المناطق الرئيسية نموا في الصادرات، كما يتضح من الرسم البياني 3، زادت البلدان النامية في آسيا حصتها السوقية بشكل كبير، في حين ظلت حصة أمريكا اللاتينية راكدة وتراجعت حصة أفريقيا والشرق الأوسط. ونتيجة لذلك، فإن حصص أفريقيا والشرق الأوسط في التجارة العالمية للبضائع هي الآن أقل من حصة الصين.
وهناك صلة وثيقة نسبيا بين هذا الأداء التجاري وحصة المصنوعات في صادرات السلع من المناطق المعنية. الأرقام في الجدول 3 لتنمية آسيا (باستثناء الصين)، والصين، ومجموعة & كوت؛ البلدان النامية الأخرى & كوت؛ تكشف عن هيكل المنتجات مختلفة للغاية من صادرات البضائع. في حين تمثل الصناعات التحويلية أكثر من 80 في المائة من إجمالي الصادرات السلعية للصين وغيرها من البلدان النامية في آسيا، فإن الحصة المقابلة لمجموعة & كوت؛ البلدان النامية الأخرى & كوت؛ أقل من نصف هذا الرقم. وتملك آسيا النامية والصين حصصا عالية ليس فقط في المصنوعات بل أيضا في العديد من فئات المنتجات الأسرع نموا مثل معدات المكاتب والاتصالات والملابس والسلع الاستهلاكية الأخرى (مثل الأحذية ولعب الأطفال). في عام 1994، قامت مجموعة & كوت؛ البلدان النامية الأخرى & كوت؛ وتصدير منتجات تعدينية أكثر من السلع المصنعة، كما أن حصة المنتجات الزراعية في صادراتها كانت أعلى بكثير من صادرات آسيا النامية والصين.
التجارة العالمية وهيكل المنتجات لمناطق نامية مختارة، 1985-94.
وثمة عامل آخر يميز آسيا النامية والصين من جهة، وجميع البلدان النامية الأخرى مجتمعة من جهة أخرى، هو مشاركتها في عملية العولمة. والبيانات المتعلقة بتطور نسب التجارة إلى الناتج المحلي الإجمالي، والتدفقات الداخلة من الاستثمار الأجنبي المباشر، هي مؤشرات مفيدة، وإن كانت خشنة، عن مدى الاندماج في الاقتصاد العالمي. وفيما يتعلق بنسبة التجارة في السلع والخدمات إلى الناتج المحلي الإجمالي، يتضح التباين بين آسيا النامية (بما في ذلك الصين) والبلدان النامية الأخرى في الرسم البياني 4. ويمكن للبلدان النامية الآسيوية أن تضاعف إلى حد كبير في نسبة التجارة إلى إجمالي الناتج المحلي لوحظ في الفترة من 1974 إلى 1994؛ إذا كانت الصين مستبعدة من آسيا النامية، فإن نسبة التجارة إلى الناتج المحلي الإجمالي أعلى بكثير؛ ومع ذلك، فإن الزيادة الاتجاه في نسبة متشابهة جدا. إن & كوت؛ البلدان النامية الأخرى & كوت؛ على النقيض من ذلك، كانت نسب التجارة إلى الناتج المحلي الإجمالي في عام 1994، على الرغم من الانتعاش منذ عام 1986، لا تختلف كثيرا عن مستويات عام 1974. انظر الحاشية 5.
وإلى جانب أداء تجاري أكثر مواتاة على مدى العقد الماضي، سجلت البلدان النامية في آسيا أيضا أداء استثماري أقوى بكثير. وأبلغت معظم بلدان جنوب شرق آسيا عن نسب الاستثمار المحلي الثابت إلى الناتج المحلي الإجمالي بنحو 30 في المائة خلال الفترة 1985-1994، في حين تفاوتت نسبتي أمريكا اللاتينية وأفريقيا بنحو 20 في المائة. وفي الوقت نفسه، كانت البلدان السابقة أكثر انفتاحا وجاذبية للاستثمار الأجنبي المباشر. وكما يتضح من الرسم البياني 5، استقطبت آسيا النامية والصين معظم تدفقات الاستثمار الأجنبي المباشر إلى البلدان النامية. وتقدر التدفقات الداخلة إلى الصين وحدها بأنها تعادل تقريبا تدفقات الاستثمار الأجنبي المباشر إلى أمريكا اللاتينية، في حين لم تجتذب أفريقيا والشرق الأوسط سوى حصص صغيرة جدا من تدفقات الاستثمار الأجنبي المباشر إلى البلدان النامية.
إلقاء نظرة عن كثب على الأداء التجاري القوي والضعيف.
ومن أجل فحص أداء التجارة على مستوى أكثر تفصيلا، يتم وضع مقارنتين متداخلتين بشكل جزئي أدناه (ترد مقارنة ثالثة في المربع 1 في الصفحة 14). ويتعلق الأمر الأول بمقارنة مجموعة من البلدان التي سجلت نموا في الصادرات أعلى من المتوسط ​​خلال الفترة 1985-1994، حيث سجلت مجموعة من البلدان نموا سلبيا في الصادرات خلال الفترة نفسها (انظر المرفق لتكوين المجموعتين).
ومن بين البلدان ال 25 التي سجلت نموا متوسطا في الصادرات السلعية خلال الفترة 1985-1994، أبلغت 15 بلدا عن " (أي بالنسبة للفترتين الفرعيتين 1985 - 1990 و 1990 - 1994). وتصدر أغلبية كبيرة من هؤلاء الأداء القوي المطرد - 12 بلدا من أصل 15 بلدا - بصورة رئيسية مصنوعات (تراوحت حصة المصنوعات في صادراتها من البضائع ما بين 70 و 97 في المائة في عام 1994). نصف الصادرات العشرة القوية (ولكن ليس & كوت؛ ثابت & كوت؛ المصدرون) تصدر أيضا السلع المصنعة بشكل رئيسي. وفيما يتعلق بالبلدان ال 35 التي كانت صادراتها في عام 1994 أقل من مستوى عام 1985، لم تصدر سوى أربع صادرات أساسا من المصنوعات. ويكشف استعراض هؤلاء التجار الأربعة أن هناك عوامل خاصة جدا تفسر وجودهم بين الفقراء الذين يعانون من الأداء. انظر الحاشية 6.
وعلى الرغم من أن المقارنة بين الفقراء والأداء القوي تشير إلى وجود علاقة بين حصة المصنوعات في إجمالي الصادرات السلعية ونمو إجمالي الصادرات السلعية، فإن هناك مثالين هامين على الأقل حيث تزامن نمو الصادرات القوي مع حصة معتدلة من المصنوعات في مجموع البضائع التجارة. وفي حالة فييت نام، فإن نمو الصادرات المرتفعة والمطردة (من مستوى منخفض جدا من الصادرات في عام 1985) لا يرتبط فقط بالارتفاع السريع في صادرات المصنوعات، وإنما يرتبط أيضا بتنمية حقول النفط التي أدت إلى صادرات كبيرة من النفط الخام، وصادرات قوية من الأغذية (أساسا الأرز). ويمكن أن يعزى الارتفاع في صادرات النفط الخام والسلع المصنعة جزئيا إلى الارتفاع الحاد في تدفقات الاستثمار الأجنبي المباشر الداخلة، ولا سيما في التسعينيات.
وشيلي بلد آخر له أداء قوي في مجال التصدير وحصة متدنية جدا من المصنوعات (المعرفة تقليديا) في مجموع الصادرات (17 في المائة). يرتبط نجاح شيلي بالتنويع الناجح في & كوت؛ الجديد & كوت؛ (التي تتم معالجتها في بعض الأحيان بدرجة عالية) وأداء أعلى من المتوسط ​​لأكبر منتج تصديري واحد، ألا وهو النحاس. وعلى الرغم من أن جميع مصدري النحاس قد استفادوا من أن أسعار النحاس زادت بوتيرة أسرع من أسعار السلع الأساسية الأخرى، زادت شيلي حصتها من الناتج العالمي من النحاس من 16 في المائة في عام 1985 إلى 26 في المائة في عام 1993 (وفي الوقت نفسه، من النحاس في إجمالي الصادرات السلعية شيلي من 47 إلى 38 في المائة). وشملت الصادرات الدينامية الأخرى الأسماك والأسماك القشرة والفواكه والنبيذ وباب الخشب. وتمثلت العناصر الهامة في توسيع صادرات كل من المنتجات النحاسية والزراعية في البرامج الواسعة النطاق للتحرير والخصخصة وما يرتبط بها من تدفق الاستثمار الأجنبي المباشر، الذي يعطي شيلي واحدا من أكبر مخزونات الاستثمار الأجنبي المباشر للفرد في أمريكا اللاتينية.
الكثير من القلق بشأن & # 147؛ التهميش & # 148؛ على مجموعة أقل البلدان نموا. ويتضح مصدر هذا القلق بسهولة من الأرقام الواردة في الجدول 4، كما هو الدافع وراء البحث عن دروس في تجربة اقتصادات شرق آسيا. انخفاض معدلات التجارة إلى الناتج المحلي الإجمالي، وانخفاض الاستثمار والأسهم الصغيرة من التصنيع في الناتج المحلي الإجمالي والصادرات، هي سمات مشتركة من & # 147؛ نموذجية & # 148؛ LLDC. See الحاشية 7 ينبغي أن نضيف أن بنغلاديش - وهي أكبر بلد في البلدان النامية غير الساحلية - هي استثناء جزئي. ومع وجود حصة كبيرة من المصنوعات في مجموع صادراتها من السلع (83 في المائة في عام 1994)، فقد احتلت بين التجار الذين وسعوا صادراتهم بوتيرة أسرع من التجارة العالمية خلال الفترة 1985-1994.
كما تم دراسة مجموعة واسعة من التجارب فيما بين البلدان النامية في تقرير صدر مؤخرا عن البنك الدولي، باستخدام بعض المتغيرات نفسها المذكورة أعلاه (مثل حصة المصنوعات في الصادرات). انظر الحاشية 8 يورد الإطار 1 الاستنتاجات الرئيسية لهذا التحليل، ويتوقع الطرفان الأخيران النقاط التي وردت لاحقا في هذه الورقة.
مقارنة الأداء التجاري والمؤشرات الأخرى المختارة لمجموعات مختلفة من البلدان النامية، 1980-94.
نسبة التغير السنوية.
نسبة التغير السنوية.
حصة الصادرات السلعية (٪) 1992.
(أ) تشمل أرقام البلدان النامية الصين.
(ب) تقديرات أمانة منظمة التجارة العالمية. يذكر ان التجار الستة هم تايبيه الصينية وهونج كونج وجمهورية كوريا وماليزيا وسنغافورة وتايلاند. وتستثنى صادرات هونج كونج المعاد تصديرها.
المصدر: الأونكتاد، دليل إحصاءات التجارة الدولية والتنمية، 1994؛ و "أقل البلدان نموا"، تقرير عام 1996، المرفق الثاني، البيانات الأساسية عن أقل البلدان نموا.
مستنسخة من الفصل 2 من الآفاق الاقتصادية العالمية والبلدان النامية،
وورد بانك، أبريل 1996.
* التغيرات في التكامل كانت متباينة للغاية. وأصبح العديد من البلدان النامية أقل اندماجا مع الاقتصاد العالمي على مدى العقد الماضي، وفصل كبير بين أقل البلدان نموا وأكثرها تكاملا. ومن اللافت للنظر مثلا أن نسبة التجارة إلى الناتج المحلي الإجمالي قد انخفضت في أربعة وأربعين بلدا من أصل ثلاثة وتسعين بلدا ناميا على مدى السنوات العشر الماضية، في حين انخفضت نسبة الاستثمار الأجنبي المباشر إلى الناتج المحلي الإجمالي بأكثر من الثلث.
* تميل البلدان ذات أعلى مستويات التكامل إلى تحقيق أسرع نمو في الناتج، وكذلك البلدان التي حققت أكبر قدر من التقدم في مجال التكامل. غير أن العديد من البلدان المنخفضة الدخل هي من بين البلدان الأقل تكاملا، وأصبح بعضها أكثر تهميشا خلال هذه الفترة، مما يعاني من انخفاض الدخل وانخفاض التكامل. ولكن البلدان الأخرى ذات الدخل المنخفض - بما في ذلك بعض البلدان الكبرى - كانت من بين أسرع البلدان تكاملا.
* السياسات السليمة تلعب دورا هاما في تحديد كل من النمو وسرعة التكامل. ومن المرجح أن تؤثر الإصلاحات السياسية الرامية إلى زيادة نمو الاقتصاد واستقراره على سرعة الاندماج في البلد، سواء بصورة مباشرة أو من خلال تأثيرها على النمو. والإصلاحات التي تعزز ظروف الاقتصاد الكلي المستقرة، وأسعار الصرف الواقعية، ونظم التجارة والاستثمار المفتوحة، هي أيضا عوامل هامة للنمو والتكامل.
* تشير التحسينات في البيئة الخارجية والإصلاحات المتواضعة في العديد من شركات التكامل المتخلفة إلى أن معدلات نموها قد تظهر بعض التحسن في العقد المقبل. ولكن إذا استمرت السياسات والاتجاهات الحالية، فإن العديد من البلدان النامية يمكن أن تتوقع أن تتراجع عن بلدان منظمة التعاون والتنمية في الميدان الاقتصادي في نصيب الفرد من الناتج المحلي الإجمالي.
(عدد البلدان)
على أساس هذا المؤشر، يتم تجميع البلدان النامية في أربع فئات تتراوح بين & كوت؛ التكامل السريع & كوت؛ (تلك التي لها أعلى قيم الفهرس) إلى & كوت؛ بطيئة التكامل & كوت؛ (أولئك الذين لديهم أدنى مستوى؛ الجدول 2-2). وليس المقصود من هذا التصنيف أن يستمد تصنيفا دقيقا لكل بلد على حدة، بل هو وضع أدلة على العوامل التي قد تؤدي إلى اختلافات كبيرة في سرعة الاندماج فيما بين مجموعات البلدان، وعواقب ذلك على الأداء.
ويبدو أن حصة البلدان النامية في الصادرات العالمية والواردات من الخدمات التجارية ازدادت بين عامي 1987 و 1994 (غير أن الحصة لا تزال أقل قليلا من حصة البلدان النامية في التجارة العالمية للبضائع). انظر الحاشية 9 ويرجع ذلك تماما إلى الأداء من البلدان النامية الآسيوية، حيث أفادت مناطق أخرى بأن هناك ركودا أو انخفاضا في حصة تجارة الخدمات العالمية. وفيما يتعلق بالفئات الرئيسية الثلاث للخدمات التجارية - النقل والسفر وخدمات الأعمال الأخرى - تشير البيانات المتاحة إلى أن البلدان النامية كمجموعة زادت حصتها السوقية من الفئات الثلاث جميعها منذ عام 1987.
II. العوامل الكامنة وراء الأداء التجاري المتنوع للبلدان النامية.
لسهولة المعرض، ينقسم هذا الجزء إلى & كوت؛ العوامل الخارجية & كوت؛ و & كوت؛ العوامل المحلية & كوت ؛. وتقتصر المناقشة على بعض العوامل الرئيسية في كل فئة (أي محاولة لإدراجها في قائمة كاملة ستكون خارج نطاق هذه الورقة الاستعراضية). يسلط القسم الثالث الضوء باختصار على حقيقة أن العوامل في فئة واحدة غالبا ما تتفاعل بطرق هامة، مع بعضها البعض ومع عوامل في الفئة الأخرى.
(1) العوامل الخارجية.
الوصول إلى الأسواق الخارجية.
وعلى الرغم من أن متوسط ​​مستوى الحماية التعريفية على الواردات غير الزراعية إلى البلدان الصناعية منخفض نسبيا - فبمجرد تنفيذ تخفيضات جولة أوروغواي تنفيذا تاما، فإنها ستبلغ في المتوسط ​​3.8 في المائة - تمثل حواجز الاستيراد عائقا خطيرا في قطاعات محددة. وحظيت بحماية عالية، وكثيرا ما كانت الصادرات مدعومة، وتم توسيع نطاق الأحكام الخاصة التي تسمح بالحصص التمييزية على المنسوجات والملابس، التي كانت قائمة منذ بداية الستينيات، بإدخال الترتيب المتعدد الأوجه في عام 1974. وفي مجال المصنوعات بصفة أعم ، كان هناك انتشار لما يسمى & كوت؛ المنطقة الرمادية & كوت؛ (فيرس، أوما، وما إلى ذلك) من أواخر الستينات وحتى بداية جولة أوروغواي، مع حدوث معدل أعلى من المتوسط ​​في الصادرات الكثيفة العمالة من البلدان النامية. انظر الحاشية 11 في الآونة الأخيرة، اتخذت إجراءات مكافحة الإغراق والرسوم التعويضية increasingly been used to restrict imports. See footnote 12.
There are post-Uruguay Round tariff peaks for some products of critical interest to developing countries, including textiles, clothing, and fish and fish products. As a result, the average reduction in tariffs for industrial country imports from developing countries other than the LLDCs (37 per cent) is lower than the average reduction in applied tariffs for imports from all countries (40 per cent), while the average reduction on imports from LLDCs was even smaller (25 per cent). On the other hand, it should be noted that the below-average reductions in tariffs on textiles and clothing do not take into account the increase in market access that will result from the phase-out of MFA-related restrictions. At the same time, an important feature of the tariff commitments made by the developed countries in the Uruguay Round is a substantial increase in bound duty-free treatment. Once the agreed tariff reductions have been fully implemented, the proportion of merchandise imports entering duty-free will increase from just over 10 to almost 40 per cent for the United States, from almost 24 to almost 38 per cent for the European Union, and from 35 to 71 per cent for Japan.
While the MFA was a major distortion of world trade which affected many developing countries' participation in world trade in textiles and clothing, individual countries have been affected in very different ways by the MFA, depending on their comparative advantage in these products. On the one hand, there are the exporters of textiles and clothing which currently have a strong comparative advantage and whose market access has been tightly restricted, and which therefore will benefit from the Uruguay Round agreement to abolish MFA-related restrictions. See footnote 13 On the other hand, two groups of exporters may suffer transitional adjustment costs as a result of its abolition. These are, first, those countries with large quotas based on a previous comparative advantage that has been eroded by rising real wages and/or the emergence of even lower-cost suppliers among the new-comers (in those cases in which existing quotas are not fully utilized, much of the transitional adjustment to the reduced competitiveness presumably has already occurred); and second, those that may have been induced by MFA restrictions on other suppliers to enter the production of textiles and clothing without possessing a true comparative advantage in the production of these goods.
Developing countries, in particular the LLDCs, are concerned about the erosion of the margins of preference they enjoyed under the GSP and Lomй Convention. The tariff reductions agreed to in the Tokyo Round (an average cut of one-third in industrial country tariffs on manufactures) reduced preference margins, which in turn are being further reduced as the tariff reductions agreed to in the Uruguay Round (a further 40 per cent reduction) are implemented. See footnote 14 The impact of preference erosion, of course, depends in part on the rate of utilization of the preferences. As studies by the UNCTAD and others have pointed out, the utilization of existing preferential arrangements - and thus their trade promoting effects - have been limited for various reasons.
Half of the European Union's imports from Africa are petroleum and other fuels that enter under MFN rates bound at zero, and three-quarters of the imports of industrial products enter duty free or under very low MFN tariffs. See footnote 15 In the case of GSP, there are limits on product coverage and limits on the extent of duty free entry. Restrictive rules of origin and an implicit lack of permanence are characteristics of virtually all preference schemes. At the same time, the impact of the Uruguay Round on Lomй Convention preference margins on agricultural products such as sugar, cut flowers, vegetables and fruits, and beef, may also be relatively limited. Moreover, for agricultural products the initial level of preferences granted was higher and rules of origin are less of a problem than for manufactured products, so that the rate of utilization of preferences granted for agricultural products is generally higher than for manufactured products.
The bias in the structure of many developing countries' exports towards unprocessed products has often been related to the structure of tariffs and other trade barriers in major markets, in particular their tendency to increase or "escalate" with the level of a product's processing. Substantial reductions in tariff escalation in developed country markets was a major objective of developing countries in the Uruguay Round, and this goal was to a degree achieved. In Canada, there will now be little or no tariff escalation affecting paper, rubber, zinc, and tin. In the European Union, the same holds true for paper and tin, while the absolute level of escalation for tobacco products has been greatly reduced. The extent of tariff escalation for U. S. imports will be eliminated or greatly reduced for several products, including paper, jute, nickel, lead, and tobacco. Nevertheless, tariff escalation continues to be a feature of developed country tariff structures whose reduction or elimination will no doubt remain an important developing country goal. See footnote 16.
The LLDCs in particular have also been concerned by the growing importance of free trade areas and customs unions in recent years, which now cover virtually all their major export markets, including Europe and North America. Since most of the major regional trading arrangements do not include LLDCs, they are concerned that these arrangements will result in a loss of preferences vis-а-vis third countries and, more generally, increase their degree of marginalization. While the LLDCs and other third countries might benefit from the trade-creating effects of the regional arrangements - and from the stimulus to growth and thus import demand in the member countries - they might incur costs as a consequence of the trade-diverting effects (and perhaps also investment diversion). While the importance of the trade-diverting effects is difficult to assess, there are reasons to think that actual diversion effects on overall LLDC exports will be limited. Most LLDC exports do not directly compete with members' mutual trade, even if there might be some exceptions such as clothing for Bangladesh and various agricultural products. The tariff reductions and bindings agreed to in the Uruguay Round agreement will ensure that the degree of discrimination against third countries is reduced. See footnote 17.
An additional concern that has been raised by developing countries over past decades has been the implications of anti-competitive practices by private enterprises in restricting the market access of developing countries to industrialized countries. For example, a recent UNCTAD Report drew attention to the need to ensure that trade obligations and concerns are not frustrated by private anti-competitive practices and that there is a convergence in the objectives and the application of national competition policies to prohibit cartel and collusive tendering as "most national competition policies still do not apply to restrictive business practices which solely attract foreign markets. See footnote 18.
Keeping the “market access” factor in perspective.
The aspects of market access described above are relevant to any explanation of the export performance of developing countries as a group over the past two decades. On the other hand, they are less helpful in explaining why many developing countries have been much less successful than others in expanding their exports over that period. In some industrial country markets, such as that of the United States, nearly all developing countries have confronted essentially the same import barriers. In others, such as the European Union, many of the countries in Africa or among the LLDCs with a below average export record actually had more liberal market access for a wide range of products - for example via Lomй Convention preferences - than did the countries which recorded above average expansions of exports.
Although not directly related to exports in the first instance, the growing constraints on foreign aid and the difficulties in attracting increased foreign private financing and investment are affecting the growth prospects of countries lagging behind in global integration.
The figures in Table 5 document the well-known trend for official development aid to represent a much smaller share, and private capital inflows a much larger share, of capital flows to developing countries (export credits are also down sharply from the 1989 level). In just eight years, there has been nearly a complete reversal of the respective shares of official development finance and private capital inflows.
Recent capital flows into developing Asia and Latin America have been largely private direct investment and portfolio flows to private sector borrowers rather than official flows and commercial bank lending to public sector borrowers; in Africa, in contrast, aggregate net capital inflows are still largely official flows. See footnote 19 With limited access to private capital, official development assistance continues to be by far the leading source of external financing for the poorest countries. For the 1988-94 period, flows of official development assistance represented 98 per cent of the net financial flows to the LLDCs. See footnote 20.
Capital flows into developing countries from OECD countries,1986-94.
2 The concept of Official Development Finance embraces the resource receipts measure of Official Development Assistance (ODA) together with non-concessional disbursements for development purposes from multilateral institutions and other official bilateral flows for development purposes (including refinancing loans) which have too low a grant element to qualify as ODA.
World foreign direct investment flows (FDI), measured in current dollars, declined in the early 1980s after the cyclical peak in 1979-80. By 1984-85, annual FDI flows had recovered to the previous peak level. Thereafter, a sharp rise in FDI flows could be observed in the second half of the 1980s, and in 1989-90 the flows were about four times larger than the average FDI flows of 1980-85. This record level of FDI flows was not maintained, and markedly lower FDI flows were reported for the years 1991 to 1993. Averaging global FDI outflows and inflows, it is estimated that in 1994, FDI flows were roughly at the same nominal level as in the previous peak 1989-90. Preliminary data for 1995, indicate a new surge in FDI flows with an increase exceeding 40 per cent. See footnote 21.
For analytical purposes it is worthwhile to relate global FDI flows to other global indicators which experience similar cyclical and price factors. The available data for the three times series - global FDI, world merchandise trade and gross fixed investment of OECD countries - indicate that global FDI flows did not grow faster than world merchandise trade or OECD fixed investment during the 1980-85 period, but expanded considerably faster in the second half of the 1980s. For the 1990-94 period, FDI flows lagged behind both gross fixed investment and world merchandise trade. In 1995, FDI flows again expanded significantly faster than world merchandise trade (40 per cent versus 19 per cent).
The share of the developing countries in world FDI inflows, which decreased between the first half of the 1980s and the second half of the 1980s, increased from 15 to about 35 per cent between 1990 and 1994. China played a major role in this increase, but other developing countries, in particular in Asia and Latin America, have also benefited from a sharp increase in FDI. At the same time, FDI flows to the developing countries are highly concentrated. In 1994, China accounted for about 40 per cent of all FDI inflows into the developing countries and another nine countries for another 40 per cent. See footnote 22.
A noteworthy development is that a large part of this increase can be attributed to a sharp rise in FDI outflows from Hong Kong. Estimates, based on partner statistics, indicate that Hong Kong FDI outflows rose from $2.2 billion in 1990 to $21 billion in 1994, accounting for more than two-thirds of all developing countries' outflows.
Most of the OECD FDI outflows go to other developed countries. As can be seen from the FDI stock data, 75 to 80 per cent of the outward stock of OECD countries is in other OECD countries. This high ratio is not surprising as the share of intra-OECD exports in total OECD exports in 1994 was also nearly 75 per cent. Both trade and investment data reflect the strong integration within the OECD area.
The composition of capital inflows has also differed dramatically across regions. While FDI comprised over 40 per cent of net capital flows to Asia during 1989-94, the majority of flows into Latin American countries have been portfolio investment, with FDI accounting for little more than a quarter of capital flows to that region. See footnote 23 Anticipating the discussion of "domestic factors" in the next section, it is evident that in some Latin American countries, high real interest rates attracted large portfolio investments and contributed to the rise in FDI inflows. In the aftermath of the Mexican Peso crisis, the importance of more stable, longer-term oriented capital inflows in the form of FDI became apparent again. The benefits of FDI inflows linked to a policy of broadly-based economic liberalization and privatization programmes are perhaps less spectacular in the short-run, but improve the longer-term growth perspective. Portfolio flows have also been a major factor in the Middle East and Europe, including in Egypt and Turkey, while FDI into that region has been minimal. In Africa, the dominant type of inflow is official flows.
Once again anticipating the discussion of "domestic factors", according to the World Bank East and South Asia are expected to continue to grow at a slightly reduced but still relatively rapid pace due to, among other things, increasing intra-regional trade, strong domestic demand and large inflows of foreign capital. See footnote 24 In Latin America and the Caribbean, growth will be sluggish as macroeconomic adjustments in Mexico and Brazil continue to work themselves out. Similarly, the recent boom in FDI inflows to Europe and Central Asia are forecast to consolidate the positive growth performance in these transition economies, although conditions remain difficult in several Central Asian and Caucasus republics. Prospects for the LLDCs are less sanguine, particularly for those in Africa. The forecast for world commodity prices is for continued decline, albeit a gradual one, following the rebound in 1994-95. This points to further terms of trade declines for these countries and further weakening of their growth prospects and ability to attract foreign investment.
More generally, Africa's poor performance in attracting capital flows can be explained by the region's difficulties in improving economic policies, its lower overall economic performance, its persistent debt problems and - as a crucial economy-wide reflection of these factors, worth bearing in mind in devising new approaches - the greater uncertainty facing investors, domestic as well as foreign. According to the IMF, "some African countries - the CFA franc zone countries, Kenya and Uganda, for example - have recently attracted private capital flows, as policy reform efforts have gathered strength and structural adjustment measures have helped to maintain gains in competitiveness resulting from more appropriate exchange rate policies".See footnote 25.
Other external factors.
As the world economy becomes increasingly integrated, external influences have an ever-greater impact on countries' own domestic economies. Due to their typically smaller size and less diversified economic structure, many developing countries are more strongly affected by, and more vulnerable to, changes in the international environment than the industrial countries. Indeed, over the past several decades developing economies have experienced to varying degrees the impacts of, among other things, fluctuations in world interest rates on their outstanding debts, and cyclical changes in industrial country demand for their exports. Over 1984-93, the IMF estimates that these effects, together with the previously mentioned relative decline in primary commodity prices, combined to reduce the average growth rate of those developing countries with the lowest growth performance by three-quarters of one percentage point. See footnote 26.
Finally, mention should be made of a factor that straddles the external/domestic distinction, namely the debt burden of the LLDCs. The level of the LLDCs' stock of external debt is estimated to have been $126.7 billion in 1993, while the ratio of the total debt to GNP was 70 per cent in the same year. See footnote 27 The situation is even worse for African LLDCs, where the external debt amounted to $96.7 billion in 1993, with a ratio of total debt to GNP of 130 per cent.
There is an emerging consensus on the need to address the LLDCs’ debt burden by new methods and approaches. In particular, an IMF-World Bank debt initiative under consideration recognizes the need to bring the levels of LLDC debt to a point of sustainability. The plan entails the participation of other international financial institutions, and the Paris Club of official creditors, and other bilateral creditors to reduce to sustainable levels the external debt burden of a number of countries pursuing sound economic policies. See footnote 28.
(2) Domestic factors.
There is little doubt that for many of the developing countries whose export performance in the past decade has been disappointing, the primary problem is an inadequate domestic supply response rather than a lack of export opportunities. In the past decade, about one-third of the countries in the LLDC group have been afflicted by acute civil strife and political instability which have severely retarded development efforts. See footnote 29 The economies of the LLDCs have been hampered by a number of structural factors, including macroeconomic imbalance, lack of human and physical capital, poorly developed infrastructure, and poorly functioning institutions. See footnote 30.
Trade policies and participation in the WTO.
Domestic protection is one of the main sources of distortions between domestic and international prices, which cause countries to use their scarce resources less efficiently. Very high levels of protection in particular can seriously impair both export performance and domestic growth. Protection reduces the profitability of exporting relative to serving the domestic market ("a tax on imports is a tax on exports"), blunts incentives to adopt world-class standards of product quality and production efficiency, and, particularly when the size of the domestic market is not in itself a sufficient attraction, can negatively affect the country's attractiveness to foreign investors. See footnote 31 There are still large differences between developing countries in the extent of liberalization undertaken and the levels of existing protection. Tariffs in South Asia, averaging around 45 per cent in the early 1990s remain very high, with substantial peaks and restrictions in consumer goods. African countries, in general, have been more successful in reducing quantitative restrictions than tariffs which are still in the 25-30 per cent range, showing little change from the second half of the 1980s. In contrast, average tariffs in East Asia (excluding China) are in the 10-20 per cent range and non-tariff measures have been cut back although many such measures remain. Protection in Latin America has also been dramatically reduced with average applied tariffs now in the 10-20 per cent range and few remaining non-tariff measures.
The disciplines accepted by all WTO developing countries in the Uruguay Round increased significantly through their tariff bindings, acceptance of all the Multilateral Trade Agreements, including more intensified disciplines covering domestic policy measures such as subsidization, and new multilateral commitments in the areas of services and intellectual property rights. See footnote 32 Commitments in their goods and services schedules also help lock-in reforms in the trade regime, thereby adding to the credibility of the reforms in the eyes of foreign and domestic investors. See footnote 33 At the same time, provisions in various agreements grant differential and more favourable treatment (principally longer implementation periods) to developing countries, and in some cases to countries in transition to a market economy.
As a result, the developing countries, and in particular the LLDCs, are faced with the challenge of organizing themselves to effectively participate in the multilateral trading system. Among the prerequisites for a more effective integration into the international trading system, and thus into the global economy, are the need (i) to seize the trading opportunities arising from the rules, concessions and commitments by trading partners; (ii) to effectively exercise their trading rights in export markets; (iii) to fully implement their trade obligations, turning them into a way of enhancing the stability and transparency of their trade regimes, and to devise and execute development policies within the framework of these obligations, and (iv) to define and pursue their trade and development interests in trade negotiations, ensuring that their concerns are fully reflected in the future international trade agenda. Many developing countries - and especially the LLDCs - have found themselves poorly equipped in terms of institutional infrastructure and human and financial resources available to meet these challenges. A major effort is required on their part with respect to institution building and the upgrading and specialization of human resources and improved forms of information collection and management. See footnote 34.
With respect to the administration of their trade regimes and to their participation in WTO work and activities, the developing countries need to expand their human resources and institutional infrastructure. International organizations as well as donor governments are presently assisting developing countries and countries in transition to more actively participate in the international trading system. These organizations and donors should collaborate to coordinate and focus their assistance on institution building, training and information management, keeping in mind the potential for improvements in these areas to play an important role in helping the LLDCs to reverse the trend toward marginalization.
In most of the least developed and other low-income countries, primary products - incorporating low levels of processing - continue to account for the bulk of both national production and exports. Given the changing structure of world trade described at the beginning of this paper, it is not surprising that most of the countries that have participated little or not at all in global integration are primary commodity-dependent countries with relatively small and highly inefficient manufacturing sectors. As a result, these countries are especially vulnerable to external (or domestic) shocks and are generally viewed as having limited growth prospects.
In their assessment of the future trends of African economies, Goldin et al. (1993) note that,
Agriculture remains the foundation of Africa's economic development, and its weakness underlies the poor overall performance. Over the last 20 years the growth in agricultural production trailed behind population growth by almost a percentage point per year. The result was increasing dependence on food imports and declining food exports (down an average of 3 per cent per year) and a loss of up to 50 per cent of Africa's market shares abroad. Despite this, dependence on agricultural exports has grown: more than 75 per cent of the export revenue for 14 Sub-Saharan nations comes from agriculture, and six countries rely on agriculture for over 90 per cent of their export earnings.
Moreover, it should be added that Sub-Saharan countries have generally failed to diversify into non-traditional commodities, such as horticultural products, fruits, and vegetables, whereas OECD countries' imports of such products have increased much faster than imports of traditional unprocessed products. See footnote 35.
That being said, it is also true that a recent World Bank study calls into question the conventional wisdom that "commodity dependence" is always bad for economic growth. See footnote 36 The authors conclude,
. that problems often associated with commodity-dependence do not arise because of commodity-dependence per-se and that they can be alleviated through appropriate policies. . In other words, . countries can be both commodity dependent and have high export and income growth.
An examination of the components of successful commodity sectors in various countries strongly suggests that it is the initiatives and innovative actions of the private sector that make these commodity sectors dynamic and vibrant. Such successful cases are found in the coffee sector in Uganda, the gold mines in Ghana, and the cut-flower industry in Colombia. Transfers of foreign capital and technology that have played important roles in developing new commodity and processing industries in a number of countries are best achieved when the private sector takes the initiative.
. important roles for governments to play . include eliminating price controls and state monopolies, promoting research and development, developing infrastructure in transportation and communication, enticing foreign capital and technology transfers, and establishing a legal system for the use of innovative financial instruments (p. 40).
Countries which recorded above average export growth and ability to attract FDI reported median inflation rates of 7-11 percentage points below those in the less successful performers in the 1984-93 period. They also reported real exchange rate volatility only a quarter that in the less successful group. The less successful groups, moreover, tended to have higher budget deficits, to have more volatile deficits over time, and to shrink their deficits at a slower rate (those in the poorest performing group actually expanded their deficits during the 1980s).See footnote 37.
Developing countries: budgetary and economic indicators in Africa and Developing Asia.
a Figures for developing Asia include China.
Source: IMF (1996a).
Macroeconomic instability is not the only way large fiscal deficits adversely affect the pace of a country's integration into the global economy. In particular, when they are externally financed, fiscal deficits tend to appreciate the real exchange rate via inflows of capital (the same effect occurs via inflation when the deficits are financed by domestic monetary expansions). A real appreciation in turn affects trade by favouring the non-traded sector over the traded sector, deterring exporters and foreign investors, and encouraging capital flight at the first hint of a devaluation. Equally, if not more seriously, in many instances, persistent fiscal imbalances are the underlying cause of low rates of national saving and investment.
Between 1983-89 and 1990-95, the average fiscal deficit for the Africa region widened, while for the developing countries as a group it declined. As the IMF (1996, p.64) notes:
While some of [the African] countries have managed to make modest progress in reducing fiscal deficits, in part because of external debt rescheduling agreements in the late 1980s and early 1990s, . most of the adjustment has been in the form of lower capital expenditure . for Africa as a whole, the ratio of current government expenditure to GDP increased by over 2 percentage points in the 1990-1995 period, while the ratio of capital expenditure to GDP was marginally lower than in the mid-1980s. The average fiscal deficit declined in 1995 to just under 4 per cent of GDP, but for most African countries the fiscal situation remains fragile, with many countries still heavily dependent on grants to finance large fiscal imbalances.
Infrastructure . The experience of different countries' reform efforts suggest that stable macroeconomic policies, structural reforms, and outward-oriented trade and investment regimes go a long way to provide economic stability and thereby lower the risk premium attached to investment in LLDCs - a precondition to attracting foreign investors. See footnote 38 In those countries which have persisted in economic reforms, the positive results are beginning to become apparent. In particular, reforms designed to strengthen the financial sector appear to be an essential first step. Particularly for the LLDCs, financial market regulation and supervision can pave the way for subsequent liberalization of capital movements, which are necessary to promote growth and improve resource allocation. See footnote 39 Then, a reform program aiming towards full capital account convertibility can begin with the liberalization of trade-related investment and FDI flows, allowing LLDCs to achieve many of the benefits of foreign capital while minimizing the risks of capital flow reversals or similar problems.
The largely successful adjustment program undertaken by Uganda since 1986 provides a case in point. Faced with an infrastructure devastated by civil war, an enormous and growing debt burden, a fixed and overvalued exchange rate, and declining coffee prices (virtually its only remaining export), Uganda enacted the Economic Recovery Program and has since staged an impressive turnaround in growth, savings and investment, and inflation. See footnote 40 The components of the program included fiscal stabilization through tax reform, tight monetary and credit policies to increasingly shift domestic credit towards the private sector, and financial reforms such as the creation of a government securities market and the strengthening of banks and central bank operations to improve the monetary policy transmission mechanism. Foreign exchange and price liberalization took place in steps, the public sector has been downsized and many former state-owned enterprises are being privatized. While the reforms continue and the gains are being consolidated, the benefits to Uganda from political and economic stability, as well as enhanced credibility amongst the international investment community, are readily apparent.
Most LLDCs have implemented financial sector reforms as part of broader policy-reform programmes. As UNCTAD (1996a, p. XII) notes,
Financial liberalization in [LLDCs] has mainly comprised the reduction or removal of allocative controls over interest rates and lending, the introduction of market-based techniques of monetary control and the easing of entry restrictions on private capital. The impact [of these reforms] on the efficiency of resource allocation has been limited, however, largely because of problems relating to macroeconomic instability. Large government budget deficits in several [LLDCs] have forced nominal interest rates to very high levels and crowded the private sector out of credit markets.
In some LLDCs, financial markets are still dominated by government banks which do not behave as efficient, commercially oriented, financial intermediaries. Effective institutional solutions to these problems have not yet been devised in most LLDCs.
Other domestic factors.
Inadequate and inefficient road/rail/air transport facilities, storage facilities and telecommunications have also acted to limit the supply-side response of developing countries, with the problems being especially serious in the LLDCs. To take one important example, high transport costs are a serious impediment to African exports. See footnote 41 Recent analysis suggests that, in some instances, freight costs outweigh the impact of tariffs. Freight costs for African exports to the United States generally are considerably higher than on similar goods originating in other countries, and there can be little doubt that these charges reduce incentives for new investment in export-oriented production, for example, in the further processing for export of groundnuts and copra. See footnote 42.
المؤسسات. At the institutional level, many developing countries, particularly LLDCs, lack a transparent legal and regulatory frameworks, including company and bankruptcy laws and investment codes. Moreover, UNCTAD (1996, p. III) notes that,
. the private-enterprise sector, which is the key agent of development, is not well developed in most LLDCs and its growth is constrained by shortages of capital and of entrepreneurial, managerial, technical and marketing skills. Technological capacities in many industries in LLDCs are rudimentary, which together with the low levels of educational attainment of the workforce, is a major impediment to raising productivity.
Despite export opportunities, many small and medium-sized export enterprises - especially in the LLDCs - are critically constrained by the lack of pre - and post-shipment credit facilities and, by the lack of business information and market intelligence.
Trade promotion. Efforts to enhance export performance will require not only technical assistance aimed at strengthening the institutional infrastructure for trade and trade policy, but also initiatives aimed at enhancing the outward orientation of the private sector. Enterprise-oriented technical cooperation programmes can underpin efforts to improve international marketing and business development, especially in the LLDCs, by focusing on product and market development, trade finance, export quality management, export packaging, and training in international purchasing and supply management. Under the right conditions, the pay-off to such efforts can be even higher when special attention is given to the needs of small and medium size enterprises, again especially in the LLDCs.
(3) Interaction among the external and domestic factors.
In reality, the many external and domestic factors that determine a country's export performance - and more generally the pace of its integration into the global economy - do not operate independently. There is a complex interaction, both positive and negative; a factor in one category can interact with others in the category, and developments in external factors can improve or worsen the effects of domestic factors and vice versa.
To take just one example from a virtually unlimited list of positive and negative interactions, inflows of FDI, by bringing resources which are in short supply in the host country - including capital, technology, and such intangible resources as organizational, managerial and marketing skills - can assist national efforts to restructure the economy and make it more competitive. As a financial inflow, it can help with balance-of-payments problems and/or make possible increased imports of capital equipment. It also can improve market access for the host country's exports of goods and services, through the multinational corporation's (MNCs) intra-firm exports (that is, exports from host-country affiliates to either the parent firm or affiliates in other countries) and arm's length exports to international markets serviced by the MNC.

How has the current world trading system emerged

Globalization is the process, completed in the twentieth century, by which the capitalist world-system spreads across the actual globe. Since that world-system has maintained some of its main features over several centuries, globalization does not constitute a new phenomenon. At the turn of the twenty-first century, the capitalist world economy is in crisis; therefore, according to the theory's leading proponent, the current "ideological celebration of so-called globalization is in reality the swan song of our historical system" (I. Wallerstein, Utopistics , 1998: 32).
The modern world-system originated around 1500. In parts of western Europe, a long-term crisis of feudalism gave way to technological innovation and the rise of market institutions. Advances in production and incentives for long-distance trade stimulated Europeans to reach other parts of the globe. Superior military strength and means of transportation enabled them to establish economic ties with other regions that favored the accumulation of wealth in the European core. During the "long sixteenth century," Europeans thus established an occupational and geographic division of labor in which capital-intensive production was reserved for core countries while peripheral areas provided low-skill labor and raw materials. The unequal relationship between European core and non-European periphery inevitably generated unequal development. Some regions in the "semiperiphery" moderated this inequality by serving as a buffer. States also played a crucial role in maintaining the hierarchical structure, since they helped to direct profits to monopoly producers in the core and protected the overall capitalist economy (e. g., by enforcing property rights and guarding trade routes). At any one time, a particular state could have hegemonic influence as the technological and military leader, but no single state could dominate the system: it is a world economy in which states are bound to compete. While the Europeans started with only small advantages, they exploited these to reshape the world in their capitalist image. The world as a whole is now devoted to endless accumulation and profit-seeking on the basis of exchange in a market that treats goods and labor alike as commodities.
In the twentieth century, the world-system reached its geographic limit with the extension of capitalist markets and the state system to all regions. It also witnessed the rise of the United States as a hegemonic power-one that has seen its relative economic and political strength diminished since the last years of the Cold War. Newly independent states and communist regimes challenged core control throughout the century, and some formerly peripheral countries improved their economic status, but none of this shook the premises of a system that in fact was becoming more economically polarized. The nineteenth-century ideology of reform-oriented liberalism, which held out the hope of equal individual rights and economic advancement for all within states, became dominant in the twentieth but lost influence after 1968. Such twentieth-century developments set the stage for what Wallerstein calls a period of transition. New crises of contraction can no longer be solved by exploiting new markets; economic decline will stimulate struggle in the core; challenges to core dominance will gather strength in the absence of a strong hegemonic power and a globally accepted ideology; polarization will push the system to the breaking point. While this chaotic transition may not produce a more equal and democratic world, it does spell the end of capitalist globalization.
Definition . A world-system is any historical social system of interdependent parts that form a bounded structure and operate according to distinct rules, or "a unit with a single division of labor and multiple cultural systems" (1974a: 390). Three concrete instances stand out: mini-systems, world empires, and world-economies. The modern world-system is a world-economy: it is "larger than any juridically defined political unit" and "the basic linkage between its parts is economic" (1974b: 15). It is a capitalist world-economy because the accumulation of private capital, through exploitation in production and sale for profit in a market, is its driving force; it is "a system that operates on the primacy of the endless accumulation of capital via the eventual commodification of everything" (1998: 10).
Key feature . The capitalist world-economy has no single political center: it "has been able to flourish precisely because [it] has had within its bounds not one but a multiplicity of political systems," which has given capitalists "a freedom of maneuver that is structurally based" and has "made possible the constant expansion of the world-system" (1974b: 348).
Origin . The modern world-system has its origin in the European world-economy created in the late-fifteenth and early-sixteenth century (1974b: 15), but only consolidated in its current form by the mid-seventeenth century (1974a: 401). The crisis of feudalism created strong motivation to seek new markets and resources; technology gave Europeans a solid base for exploration (1974b: 39). Parts of Western Europe exploited initially small differences, via specialization in activities central to world commerce, to ultimately large advantage (1974b: 98).
Structure . The system consists of a single division of labor within one world market but contains many states and cultures. Labor is divided among functionally defined and geographically distinct parts arranged in a hierarchy of occupational tasks (1974b: 349-50). Core states concentrate on higher-skill, capital-intensive production; they are militarily strong; they appropriate much of the surplus of the whole world-economy (1974a: 401). Peripheral areas focus on low-skill, labor-intensive production and extraction of raw materials; they have weak states. Semiperipheral areas are less dependent on the core than peripheral ones; they have more diversified economies and stronger states. In the first centuries of world-system development, Northwest Europe constituted the core, Mediterranean Europe the semiperiphery, and Eastern Europe and the Western hemisphere (and parts of Asia) the periphery (1974a: 400-1). By the end of the twentieth century, the core comprised the wealthy industrialized countries, including Japan; the semiperiphery included many long-independent states outside the West; poor, recently independent colonies mainly constituted the periphery.
Strong states in core areas-i. e., those that are militarily strong relative to others and also not dependent on any one group within the state (1974b: 355)-serve the interests of economically powerful classes, absorb economic losses, and help to maintain the dependence of peripheral areas. Semiperipheral areas are a "necessary structural element" in the system because "they partially deflect the political pressures which groups primarily located in peripheral areas might otherwise direct against core-states" (1974b: 349-50), thus preventing unified opposition. Shared ideology solidifies the commitment of ruling groups to the system; they must believe the system's "myths" and feel that "their own well-being is wrapped up in the survival of the system as such" (1974a: 404). Lower strata need not feel any particular loyalty; however, they tend to become incorporated into the nationally unified cultures created by ruling groups, starting in core states (1974b: 349). An ideology for the system as a whole only developed later: "The ideology of liberalism has been the global geoculture since the mid-nineteenth century" (1998: 47). Different forms of labor and labor control suit different types of production, distributed across the three main zones; historically, they included wage labor, tenant farming, servitude, and slavery, (1974b: 86-7). Status and rewards match the hierarchy of tasks: "crudely, those who breed manpower sustain those who grow food who sustain those who grow other raw materials who sustain those involved in industrial production" (1974b: 86).
Expansion on the basis of European advantage and structural features of the system. In the period 1733-1817, the European world-economy "began to incorporate vast new zones into the effective division of labor it encompassed" (1989: 129)-namely, the Indian subcontinent, the Ottoman empire, the Russian empire, and West Africa. "The modern world-system became geographically global only in the latter half of the nineteenth century, and it has only been in the second half of the twentieth century that the inner corners and more remote regions of the globe have all been effectively integrated" (1998: 9). As a result, most goods are market commodities and most labor is wage labor everywhere. Cyclical crises that occur when, after periods of innovation and expansion, reduced profit rates and exhaustion of markets lead to recession and stagnation, to be followed by a new period of accumulation. These are reflected in multi-decade "waves" of increasing or declining growth rates. Shifts in dominance from one power to another due to advances in productivity, the fragility of monopoly, and success in war (cf. 1995: 26-7). The Netherlands was a "hegemon" in the mid-seventeenth century, the UK in the mid-nineteenth, the US in the mid-twentieth (1995: 25). Periods of clear leadership alternate with struggle in the core. Resistance by antisystemic movements that can lead to regime change, ideological shifts, and alternatives to the system. The most notable antisystemic force of the last two centuries was socialism, which forced core states to redistribute wealth and supported the formation of states challenging the capitalist world-economy. Transition from one type of system to another due to contradictions that cannot be contained. The capitalist world-economy is a historical configuration and therefore bound to be superseded. More intense crises in a now fully global system that is less able to meet those crises with traditional means will lead to transformation.
"We have entered into the crisis of this system . . . . an historic transition" (1998: 32-3). But the direction of the system is not clear: "We are face to face with uncertainty" (2000: 6). The main reason is that the world economy is in a phase of recession and stagnation, increasingly reflected in social unrest (1995: 19, 29). "[S]tructural limitations to the process of endless accumulation of capital that governs our existing world . . . . are coming to the fore currently as a brake on the functioning of the system . . . . [They] are creating a structurally chaotic situation . . . [A] new order will emerge out of this chaos over a period of fifty years" (1998: 89-90). US hegemony has been in decline since about 1970 (1995: 15ff.), increasing the likelihood of struggle in the core. The old antisystemic forces are exhausted, but so is liberalism. In fact, "[t]he true meaning of the collapse of the Communisms is the final collapse of liberalism as hegemonic ideology. Without some belief in its promise, there can be no durable legitimacy to the capitalist world-system" (1995: 242). But no current struggle against the inequities of capitalism poses a "fundamental ideological challenge" (1995: 245).
I. Wallerstein. 1974a. "The Rise and Future Demise of the of the World-Capitalist System: Concepts for Comparative Analysis." Comparative Studies in Society and History 16: 387-415.
--. 1974b. The Modern World-System: Capitalist Agriculture and the Origins of the European World-Economy in the Sixteenth Century . New York: Academic Press.
__. 1989. The Modern World-System III: The Second Era of Great Expansion of the Capitalist World-Economy, 1730-1840s . New York: Academic Press.
__. 1995. After Liberalism . New York: The New Press.
__. 1998. Utopistics: Or, Historical Choices of the Twenty-First Century . New York: The New Press.
__. 2000. "The Twentieth Century: Darkness at Noon?" Keynote address, PEWS conference, Boston.

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GATT AND WTO.
5 thoughts on “How has the current world trading system emerged”
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The World Economy at the Start of the 21st Century, Remarks by Anne O. Krueger, First Deputy Managing Director, IMF.
Remarks by Anne O. Krueger.
First Deputy Managing Director, IMF.
At the Annual Gilbert Lecture, Rochester University.
Good evening and thank you for that kind introduction, Ron. I'm pleased to be back in Rochester after a longer absence than I would have liked.
A hundred years ago, the international economy was entering the 20 th century with the freest flow of goods, services and capital in human history. The previous century had witnessed expansion of global output and trade, and rising living standards in Europe and North America at a pace never before seen in human history. The 20 th century then saw just over a decade of continued expansion, followed by the abrupt disruption of trading and financial ties during the First World War. After some steps toward a restoration of the prewar situation, the international economy collapsed during the decade of the Great Depression, and continued to be fragmented during the Second World War. The century-long trend toward globalization had been reversed and, as of 1950, or even 1960, globalization and the degree of integration of the world economy was considerably less than it had been fifty years before.
Since then, of course, there has been an unprecedented revival and intensification of global integration, supported by technical change, and by international economic policies resulting from multilateral cooperation. These phenomena combined to result in greatly reduced barriers to international flows; further acceleration in the growth rate of world output; the spread of living standards that we associate with advanced industrialization to additional parts of the world and the reduction of poverty and improved living standards in most other parts of the globe; and the emergence of a number of new key players in the international economy.
My purpose in this lecture is to present a broad outline of the evolution of the world economy in the 20 th century, with a view to examining where we stand today. I shall argue that international economic policies have been phenomenally successful to date, and have in many ways changed the contour of the world economy itself, mainly for the better. At the same time, however, there are a number of challenges which, without appropriate and timely responses, could undermine progress to date and undo many of the benefits so far achieved.
In both the 19 th and 20 th centuries, technical change played an important role. But, paradoxically, in the 19 th century it was the dramatic decline in transport costs that enabled the rapid expansion of global trade and real incomes, whereas in the second half of the 20 th century, it was a dramatic decline in policy-induced trade barriers that had the same effect. And whereas the reversal of globalization in the early 20 th century resulted from political hostilities, the major threat to continued economic success at the beginning of the 21 st century appears to be economic nationalism.
I shall first outline the key features of the global economy around the turn of the 20 th century, and trace its evolution to the l950s. I then turn to the structure of the international economy and the policy framework that permitted the highly successful evolution of the subsequent fifty years, focusing first on trade relations, then on international financial relations, and, thirdly, on the differential evolution of industrial and poorer countries during that period. On the basis of that analysis, I will note the tremendous improvements in economic well-being in most of the world that globalization has enabled and then, in conclusion, identify the challenges confronting the global economy today.
One hundred years ago, observers of the international scene would have described the phenomenal globalization of the preceding century, especially in the period 1870-1914.
Until the 19 th century, transport costs had been sufficiently high to discourage all but high value—low volume trade, while policy-imposed trade barriers (tariffs and other taxes or restrictions on international transactions) had further impeded trade flows. For most commodities, transport costs exceeded the price of goods in the country of origin, often by a substantial margin.
In the early l9th century, the United Kingdom provided leadership in reducing tariffs, and many other European countries followed suit in the middle of the century. Transport costs also fell dramatically, even in the first half of the century. Douglas North, for example, cites evidence that ocean shipping costs by around 1850 were only about a third of what they had been barely thirty years earlier—when shipping under sail was still the order of the day. While international trade and economic growth picked up as a result of these phenomena, it was really in the late l9th century, especially in response to the "amazing" decline in transport costs (the phrase used by O'Rourke and Williamson), that trade volumes and growth rates accelerated. The last decades of the 19 th century were described as the "gilded age" on this continent, as per capita incomes are estimated to have doubled between l870 and l900. The late Victorian era was likewise regarded as a boom period in Europe as European per capita incomes and wage rates rose at even faster rates, albeit from a lower base.
The late nineteenth century boom was encouraged by technical change and by policy changes in industrial countries. Technical change was especially apparent with the introduction of electricity and its applications, and included communications (the telephone and telegraph), transport, and much more. The introduction of the railroad led to a steep decline in the costs of moving freight, and there were further dramatic drops in the costs of ocean shipping following the introduction of steamships. Data from O'Rourke and Williamson imply a drop in costs of transport between the U. S. and Europe from about 80 per cent of the price of the commodity to less than 20 percent during that period.
The sharp decline in transport costs came at a time when most European countries had lower tariff levels than earlier in the 19 th century. The U. K. had zero tariffs on agriculture and manufacturing until l914, and Dutch and Scandinavian tariffs were also low. 1 2 The impact of rapidly falling transport costs, combined with the reduced levels of protection, undoubtedly led to a major net reduction in barriers—both natural and artificial—to trade.
As a consequence, world trade grew rapidly—at an annual rate of 3.4 percent between 1870 and 1914, with growth not only in industrial goods but also in raw materials. In many instances, the primary commodity exporters were colonies, whose manufacturing bases did not achieve sustained development. 3.
Simultaneously, integration of world capital markets proceeded rapidly. By the early 20 th century, it is estimated that foreign-owned assets were about equal in value to about 20 percent of world GDP. 4 The United Kingdom was, as is well known, the world's banker and at its peak, owned 80 percent of foreign assets globally. Its capital outflows were as much as 10 percent of GDP in some years, and averaged 4.5 percent of GDP per year between l870 and l914. 5.
The growth of real incomes, the growth of world trade, and the integration of the world economy—both through the removal of artificial barriers to trade such as tariffs and through reduced costs of transport—were causally linked. The drop in costs of international transactions was itself a function, in significant part, of technological change. 6 But while real wages and living standards rose throughout the world, the rate of increase was much faster in the industrial countries. Until the early l700s, it is estimated that living standards were not significantly different between different geographic regions of the world. But by the end of the nineteenth century, economic growth had been sufficiently rapid in the "industrial countries" that the world had bifurcated in terms of living standards and rates of economic growth. 7.
The First World War, however, led to an abrupt reversal in the degree of globalization. As transport routes were disrupted and countries experienced different degrees of inflation in response to the differential strains of their wartime expenditures, the earlier integration of the international economy was largely reversed.
Despite efforts to restore the status quo ante after the war, disequilibria associated with the overvaluation of the pound sterling following the British return to the Gold Standard in 1925, German reparations, and other imbalances led to slow progress in the l920s. At the end of that decade, markets were not as integrated as they had been prewar.
But the Great Depression reversed even that progress. As is well known, real incomes dropped dramatically in most countries, unemployment rates rose sharply, and prices of goods and services fell abruptly. The policy response intensified the difficulties: the l930s were characterized by rising trade barriers (both tariffs and non-tariff restrictions) and competitive devaluations, often referred to as "beggar they neighbor policies", and by rapidly falling volumes of trade and prices of traded goods. As each country attempted to reverse its own downward spiral by imposing ever-higher tariffs, devaluing its currency, and other measures, they in effect exported part of their own deflationary pressures, only to be hit by deflationary pressures resulting from similar actions in other countries. Britain was forced off the gold standard in l931, while the United States followed suit in l933 and simultaneously experienced a "banking holiday" as banks were hard hit by nonperforming loans in their portfolios. Worse still, the American Congress had enacted the Hawley-Smoot tariff in the early l930s, giving an average tariff level of 59 percent in 1932 in the United States: the highest level since the 19 th century. As it became evident with hindsight that the Hawley-Smoot Tariff Act had greatly intensified the Great Depression, rather than offsetting it, the name became synonymous with unilateral policies of individual countries that harmed themselves and other countries, so called "beggar-thy-neighbor" سياسات.
By the late l930s, recovery was underway, but then the Second World War began and rapid expansion ensued in response to wartime demand. Of course, output and trade patterns were once again disrupted, as production of consumer and investment goods demanded in peacetime were replaced in significant part by production related to the war effort.
The Situation at the End of the War.
The world economy as of 1945-46 was far less integrated than it had been at the end of the First World War, both because of the war itself and because of the protectionist and isolationist measures of the l930s. The United States, Canada, Australia, and a few other industrial countries not devastated by wartime destruction were producing at levels much higher than they had been in the late l930s: but most of Europe, the Soviet Union, China, and Japan were hard hit. While many economies in the areas that had not experienced the industrial expansion of the earlier era were not similarly affected, it was evident that they were "different". So with the decision of the Soviet Union and China to insulate their economies, the global economy was effectively split into three. There were the industrial countries: these were themselves divided between those where production had fallen significantly during the war, and those where the structure of production had shifted but output increased. The second group were the—as they were then called—"underdeveloped" الاقتصادات. Many of these had been able to export primary commodities at high prices to the combatants during the Second World War, and had built up large reserves of foreign exchange (because there was little to import). But these economies were all heavily concentrated on producing raw materials, both agricultural and mineral, with a relatively small manufacturing industry producing primarily small-scale labor-intensive consumer goods, with very low standards of living by contrast with the industrial countries. The third group was the centrally planned economies; until the l990s, their evolution was almost entirely independent of that of the rest of the world, and so I leave their story aside for now.
When planning for the postwar era began during the latter years of the war, it was based on several premises: l) that the United States would emerge from the war economically strengthened and the preeminent economy; 2) that Europe and Japan were economically devastated and would need time and resources to recover; 3) that a repetition of the mistakes of the l930s should be avoided through multilateral cooperation within an appropriate institutional framework; and 4) that the supply of long-term private capital would not resume after the experience of the 1930s.
The postwar planners proposed a framework for international economic cooperation (as well as the United Nations for political cooperation) in which there would be international organizations for l) international monetary cooperation; 2) reconstruction and development; and 3) international trade in goods and services. International monetary cooperation was intended to facilitate international trade by inducing currency convertibility, preventing competitive devaluations, and enabling coordinated international financial policies. To that purpose, the Articles of Agreement for the International Monetary Fund were drawn up, and subsequently ratified by 38 countries by the time the Fund's Board of Governors held its inaugural meeting in March l946. Crucially, countries with "balance of payments" difficulties were expected to consult with the IMF, and to adjust their domestic policies, altering exchange rates only in circumstances where it was agreed with the IMF that there was "fundamental disequilibrium". Signatories to the Articles also agreed to Article VIII—convertibility of their currencies for current account transactions. As will be seen, achieving this among IMF members was a significant achievement, but it required more than 15 years before even the major industrial countries had removed exchange control regulations to the extent necessary to comply with Article VIII.
Given the presumed absence of private sources of capital, the postwar planners concluded that longer term financing would have to come from official sources, both to provide capital to accelerate the reconstruction of the war-devastated countries and to enable higher rates of investment, and therefore of growth, of the "underdeveloped" economies than would otherwise materialize. As a source of longer-term official finance, the International Bank for Reconstruction and Development, now generally known as the World Bank, was founded. 8.
The third leg of the envisaged arrangements was for multilateral cooperation for an open international trading system. The General Agreement on Tariffs and Trade, signed in 1947, was seen as a interim arrangement pending the establishment of the proposed International Trade Organization (ITO), but proved remarkably durable in the absence of ratification of the ITO charter. The GATT arrangements provided for nondiscriminatory treatment of all trading partners, for elimination of quantitative restrictions on trade, and for fora in which countries could reciprocally negotiate tariff reductions and in which trade disputes between countries could be settled.
The IMF and World Bank Articles were negotiated at Bretton Woods in l944, and the two organizations began functioning in 1946. The GATT began functioning in l947 with a first round of tariff reductions negotiated at that time. The GATT, and later the World Trade Organization (WTO) included two key provisions: l) that member countries would not impose and/or would eliminate nontariff barriers to trade 9 ; 2) that member countries would grant "most favored nation" status to their GATT/WTO trading partners so that all trading partners would face the same trade barriers unless there was a preferential trade arrangement (the conditions for which including coverage of all trade items, zero tariffs between the PTA countries, and a certain timetable for achieving zero tariffs).
When the war ended, however, it became evident that the degree of European/Japanese devastation was much greater than anticipated, and the United States emerged even more dominant than expected: as late as 1950, Maddison estimates that the United States produced 27 percent of global real output and accounted for over 14 percent of global exports. The U. S. also held 54 percent of international reserves.
Although, as stated, the GATT achieved its first major round of tariff reductions in l947, the postwar reconstruction needs, especially of Europe, were far greater than had been anticipated. It fell primarily to the United States to support the European and other countries in their reconstruction efforts (although the World Bank did extend some loans), first through "Point Four" aid, and then through the Marshall Plan.
European and Japanese economic recovery was stunningly successful after the first two very difficult postwar years. Prewar output levels were generally attained by the early l950s, and were only the start of a period of sustained rapid growth. From a situation in the late l940s when most European economies traded through bilateral payments arrangements with each other (or used Marshall Plan aid), they moved to multilateral clearing arrangements. Simultaneously, tariff reductions were taking place and quantitative restrictions were being removed.
With the groundwork laid by the Marshall Plan, increasingly free exchange regimes and tariff reductions (spurred both by the GATT multilateral tariff reductions and intra-European liberalization undertaken in the context of the Marshall Plan), the world economy embarked upon a quarter century of sustained and unprecedentedly rapid economic growth. While developing countries—as they came to be called—grew, they generally did so without integrating with the world economy, and I shall return to their story later.
The most rapidly growing countries were in Europe and Japan. While the rest of the industrialized world grew rapidly, and at rates well above those achieved in the first half of the twentieth century, it was the phenomenal growth of Europe and Japan which led to the biggest changes in the world economy. In l950, it could fairly be said that the United States dominated; by the early l970s, Europe and Japan were also major players in the world economy.
During the golden quarter century, tariff reductions continued. The rate of growth of world trade averaged almost 8 percent per year from l950 to l973. Quite clearly, trade was an "engine of growth", just as it had been in the late l9th century, growing at about twice the rate of growth of world output. But whereas in the late l9th century, it was primarily reductions in transport costs that facilitated that growth, it was reductions in tariff and nontariff barriers to trade were the major stimulus to the growth of trade in the postwar years.
The very rapid economic growth of that era took place in a relatively non-inflationary environment. Most industrial countries had single digit rates of inflation. To be sure, individual countries did experience "balance of payments crises", and rates of growth fluctuated through recession and boom periods. Nonetheless, the world economy as a whole was relatively stable. Through the provision of financial assistance to countries in balance of payments crises, the IMF played an important role in enabling adjustment to take place without the disruption to the international system that had characterized the inter-war period. Many of the industrial countries—and many developing countries—took advantage of the IMF's lending facilities. Britain, in 1977, was the last major industrial country to borrow on a large scale from the Fund.
Part of that stability derived from the relative size and dominance of the American economy. From l950, when 79 percent of foreign exchange reserves of the industrial countries were held in gold, the American dollar assumed increasing importance. By l973, more than 90 percent of the foreign exchange reserves holdings of those industrial countries that reported such data were held in U. S. dollars. International prices, and settlements of accounts even between other countries, were predominantly denominated in U. S. dollars. But the underpinning of the Bretton Woods system, and the continuing downward movement of trade barriers were also major factors.
By l973, then, the industrial countries were still preeminent in the world economy: they are estimated to have produced 59 percent of world GDP and to have accounted for 64 percent of world exports, contrasted with 60 percent of world GDP and 61 percent of world exports in l950. Within the developed countries, though, the U. S. share had diminished as other countries had experienced more rapid growth.
But developing countries had also achieved growth rates (in part benefiting from the rapid growth of industrial country markets for their goods) higher than those experienced in the l9th and early 20 th century. Many of them had been former colonies; but whether former colony or previously independent, most of their governments put the goal of raising real incomes and rapid growth as their foremost objective. To achieve this, however, they adopted policies that insulated them to a major degree from the international economy. While the industrial countries were reducing trade barriers and freeing financial transactions, most developing countries were protecting (infant) domestic industries and restricting international transactions. Nonetheless, per capita incomes rose in most countries, and life expectancies, literacy rates, nutritional statuses, and other indicators of well-being improved significantly.
As contrasted with the immediate postwar period, then, by 1973 the global economy was characterized by the increased relative and absolute importance of international trade. Among industrial countries, there was much greater freedom of financial flows and, during the l960s, private capital flows between Europe and the United States began increasing rapidly. For developing countries, foreign aid—both bilateral and multilateral—and other official flows had increased, but their own payments regimes were still highly restrictive. Moreover, in many developing countries, growth rates were beginning to decline, as the costs of continuing to pursue inward looking "import substitution" policies increased. 10 Hence, they remained primary commodity exporters: although many had experienced growth of manufacturing, and the manufacturing share in GDP, almost all the increased output was destined for the sheltered domestic market. Even in primary commodities, the share of developing countries had dropped.
There had, however, been a few economies where economic policies had shifted away from the earlier "import substitution" policies toward a much more open economy. Some had gone so far as to rely on exports as an "engine of growth". Those economies, in East Asia, experienced sustained increased rates of growth unlike anything earlier witnessed in the global economy. The 4 "Asian tigers" were the most notable. South Korea, the largest of them, was typical, increasing exports at over 40 percent a year in the l960s, with rates of increase of real per capita incomes of 7-9 percent a year. By 1982, South Korea was one of the world's top 15 exporters, and it today ranks 11th in exports in the global economy.
But, as of l973, high growth rates among the East Asian economies had not made a significant difference to the structure of the world economy, as these rates had been experienced from a very low base. From a global perspective, the world was still divided into rich industrial countries and poor developing countries.
1973, however, marked a watershed in the global economy. Inflationary pressures had been rising, especially in the United States, and there was a commodity price boom in l972-3. By that time, the United States had been incurring a current account deficit for more than a decade spurred by a faster rate of American inflation (at a fixed exchange rate) and U. S. demand resulting from the Vietnam war expenditures. In l971, the United States announced that it was suspending the gold convertibility of the dollar. Hence, the Bretton Woods system, as founded (as a fixed, but adjustable, standard) and which had become a de facto dollar standard, was abandoned, and by 1973 floating exchange rates between the U. S., Japan and the major European currencies had become the order of the day.
But at that same time the "oil price shock" of l973-74 quadrupled nominal oil prices in a very short period of time. Many oil importing countries found their import costs greatly increased; some (mainly industrial) went into recession, while others (mainly developing) borrowed from private financial sources. It was the first large-scale access of developing countries to private capital markets and permitted the recycling (through banks in industrial countries) of oil exporters' current account surpluses to oil importers' current account deficits. That there were already floating exchange rates between major currencies certainly facilitated the adjustment.
After a recession following on the oil price shock, economic growth resumed in most industrial countries, and in oil importing countries. Indeed, for the rest of the decade after the l973-74 oil price increase, oil importing developing countries grew more rapidly than oil exporting developing countries. And, among developing countries, those—mostly in East Asia—that had switched to outer oriented economic policies experienced much more satisfactory rates of economic growth than those still relying on inner-oriented policies. It is also worth noting that this more rapid growth took place against a background of relatively low income inequality; and there was rapid progress in reducing poverty in these countries.
But by the early l980s, after the second major oil price increase, the world economy went into recession as the United States altered its monetary policy to contain, and subsequently permanently lower, its inflation. The resulting high nominal and real interest rates, combined with falling commodity prices (attributable to the recession) resulted in debt-servicing difficulties for many of the developing countries that had earlier borrowed to finance their increased oil import bills. Indeed, for heavily indebted developing countries, the l980s were a "lost decade" as debt-servicing difficulties and continuing adherence to inward looking policy stances resulted in negligible increases in per capita incomes, and declines in some cases.
By the late l980s, inflation was contained in most industrial countries, and debt was being restructured (the Brady Plan) in the heavily indebted developing countries. The oil price had peaked in real terms in l979, and fell sharply in l986. The stimulus from lower real oil prices and stable price levels resulted in a period of sustained growth of the industrial countries. Trade barriers among industrial countries continued to drop, as quantitative restrictions had been almost entirely eliminated and tariffs were being further reduced under the influence of successive rounds of trade negotiations under the GATT.
A new round of trade negotiations under the GATT was proposed in the late l990s, but not agreed upon until the Doha Round was inaugurated in November 2001. The new round faced several significant challenges, to which I shall return later.
The start of the final decade of the twentieth century coincided with another major shift, as the world adapted to the collapse of the Soviet Union, and the emergence of formerly centrally planned economies into the global economy. For most of the l990s, the "transition" economies were adjusting to their new economic structure, and adapting their economic policies for greater integration into the international economy. For present purposes, it is also important to note that the examples set by the East Asian countries seem to have had a significant influence on policy makers in other Asian countries, most notably China and India, as they, too, began reforming their policies.
The "lost decade" of the l980s, in turn, led a number of other countries to begin reducing their barriers to trade and other impediments to growth. Mexico, for example, embarked on a series of major economic policy reforms in the latter half of the l980s, anchoring them in the North American Free Trade Agreement, which permanently assured outward looking economic policies.
As reforms took place in country after country, and investment became more profitable, private capital flows—especially to "emerging markets", as the successful developing countries came to be known—increased enormously, eclipsing official capital flows in their magnitude.
But, as that happened, the vulnerability of some of the emerging markets to changes in investment flows increased dramatically. The first country to be affected by this was Mexico; its exchange rate policy did not adequately accommodate domestic credit expansion or the altered outer oriented trade stance, and in late l994, investors became reluctant to finance further current account deficits (the l994 deficit had been 7.6 percent of GDP). The ensuing capital outflow forced Mexican officials to take swift action, adjusting monetary and fiscal policy in the context of a large loan from the International Monetary Fund. Within three months there had been an effective nominal devaluation of 65 percent.
The l990s witnessed a number of other "capital account" crises. These differed from earlier "balance of payments" crises in which the IMF had supported adjustment in its member countries both in the fact that the immediate origin of the difficulty was a major change in the willingness of foreigners and domestic residents to hold domestic assets and in the fact that there was little time in which to decide on policy changes.
The latter part of the decade saw more capital account crises, including most notably South Korea, but other countries in east Asia and elsewhere. The South Korean situation was particularly shocking, as by that time the country was seen as a "newly industrializing country"; the crisis had been unanticipated, and was dramatic. As in Mexico and other cases, substantial borrowing (mostly from the International Monetary Fund) and policy adjustments stemmed the crisis. In the South Korean case, the l997 level of real per capita income had been re-attained within 6 quarters and by 2004, real GDP was almost 40 percent above its l997 pre-crisis level.
But to the world, it was clear that, to the earlier, current-account based, balance of payments difficulties, were now added capital account crises. At the turn of the 21 st century, one major challenge was seen as learning the appropriate lessons going forward as to the prevention of such crises, and, when they did occur, the appropriate policy responses for the country involved and for the international community.
While headlines were captured by the dramatic events in the former centrally planned economies and capital account crises, other events were going on that would, if trends persisted, alter the global economic landscape at the beginning of the 21 st century. The American economy experienced rapid growth, with more rapid rates of productivity increase than had earlier occurred. Moreover, those rates were achieved in the context of a prolonged period of sustained growth and price stability, minus the recessions that had accompanied growth in earlier decades.
Europe had begun a process of increasing integration with the opening of trade and financial flows under the Marshall Plan. The Treaty of Rome had started the process of movement toward an integrated internal market, undertaken within the context of lowered trade barriers from the multilateral trading rounds under the GATT. As additional countries joined the European enterprise, and policy harmonization deepened, the European Union emerged as a major force in the global economy with 38 percent of world trade and 26 percent of world GDP as of 2000. By contrast, after four decades of growth and rapidly rising living standards, the Japanese economy had entered a period of stagnation by around 1990, and Japanese growth remained sluggish a decade later, primarily as a consequence of the asset bubble of the late 1980s and the policy challenges posed both by the need for reform of the financial sector.
Despite the difficulties of countries such as South Korea, growth in developing countries accelerated during the l990s as a result of their policy changes and the supportive global environment. By 2000, developing countries as a group accounted for about 47 per cent of world GDP and a third of world trade. And, of course, the East Asian economies, in addition to Japan, were by 2000 large enough to be significant. Japan, as already noted, was a major economic entity by the l970s, but by the year 2000, South Korea, the ASEAN countries, and China, were also gaining share. India had embarked upon reforms and, in consequence, growth rates were beginning to accelerate.
The Global Economy at the Turn of the Century.
With the power of compound interest, many of the growth rates and changes that had occurred during the preceding several decades had, by 2000, basically altered the landscape of the international economy. Moreover, the experience of the years since the Second World War had taught a number of lessons which seem to be fairly widely accepted today. In this section, I review these changes and lessons, as a basis on which the challenges going forward can be assessed.
The Altered International Economy. What were the basic changes? The world was a much more open place. The internet, and access to it, had grown rapidly. There were further significant drops in transport and communications costs: in 2001, two economists from the Chicago Fed noted that in constant 1998 prices the cost of a three minute phone call from New York to London had been $293 in 1931 and had (by 2001) fallen to around $1 for a much better quality connection. In 2006 that same call costs just a few cents. Other technical changes, and above all the reduction in tariff and other barriers to trade, had played a role in opening up the global economy.
As mentioned at the outset, in the l9th century, reductions in costs of international trade had also spurred growth, the difference being that it had been the reduction in transport costs in the 19 th century, and the reduction in policy-related tariff and non-tariff barriers in the second half of the 20 th century that had enabled closer integration. For manufactured goods, at least, average tariff rates among industrial countries are now less than 5 percent; within areas such as the European Union, they are zero. With airfreight, the internet, and other changes, goods can be ordered from one part of the world and received elsewhere in a matter of hours, contrasted with the months the same transaction would have taken two hundred years ago. But while it would be difficult, if not impossible, to reverse technical change and the drop in costs of transport and communications, the same cannot be said for policy-induced trade barriers. I return to this in the next section, as a significant threat to continued strong global growth lies in risks that the trend toward trade and financial integration that has spurred growth may end or even reverse.
Increasing openness during the late 20 th century had, of course, resulted in greatly intensified international economic activity. Consequently, the relative importance of international trade in the world economy had greatly increased: from 5.5 percent in l950 to 17.2 percent in 2000, according to Maddison. Much more trade was in intermediate goods, as producers were able to locate each stage of the production process in the country or countries where costs of production were lower. And, whereas in l950 45 percent of merchandise exports were agricultural and 37 percent were manufactures, the composition of trade was radically altered, and trade in services grew in importance. By 1980, services trade constituted 15 percent of all goods and services trade, agriculture accounted for 12 percent and manufactures for 45 percent. The comparable numbers for 2004 show agriculture down to 7 percent, services up to almost 20 percent, and manufactures to 59 percent. In addition to trade flows, other international transactions had increased in importance: tourism, other services items, and capital flows. The fifty years had seen enormous improvements in living standards, not only in the developing countries, but even among the richest. The United States is estimated to have had a per capita income of just $13,000 in 2005 dollars in l950; by l975, that figure was $22,200; and in 2005, it was $41,900.
But just as the structure of the international economy had changed, so, too, had domestic economic policies. Increased macroeconomic stability within the industrial countries has already been highlighted; the global reduction in inflation rates has been a significant contributor to accelerated world growth. But, in addition, the shift toward more market-friendly policies (in developing countries and in some industrial countries) together with the transition from central planning has enabled more resilient economies and stronger responses of output and employment to changes in incentives, further accelerating growth.
That leads to the second major change: whereas in 1950 the United States was THE economic power, and by the mid 1970s Europe and Japan were clearly established as major global players, by 2000, emerging Asia—especially China and India, but also a number of other countries—had become a significant economic force in the international economy. Much of Europe, of course, is now in the European Union and has achieved an even higher degree of internal integration than that realized externally. And the emerging Asian economies are already so large as to have global significance and impact. Assuming that their relatively high rates of economic growth persist, they will become increasingly important in the years to come.
For India and China and many other developing countries, living standards—while still low contrasted with developed countries—have increased remarkably. This is reflected not only in per capita income numbers, but in other indicators of well-being. Over the past half century or so, infant mortality rates have fallen sharply in most developing countries. In China, for example, the infant mortality rate fell from 150 deaths per 1000 births in 1960, to 30 in 2003.
Perhaps the most telling statistic is life expectancy. In general, life expectancy in developing countries has risen at an astonishing pace.
Since 1960 life expectancy in the developing countries has risen at roughly double the rate in the richest. The gap between life expectancy in industrial and developing countries has narrowed from around 30 years in 1950, to around 10 years today.
For a few countries—most notably those in East Asia—living standards have risen so markedly that they are now beginning to close the absolute, as well as the relative, gap in income levels.
And, significantly, most of the transition economies of the former Soviet Union and Eastern Europe are realizing above-average rates of economic growth and integrating into the world economy.
At the same time, however, some other countries are still extremely poor and, indeed, their relative (and in some cases, absolute) position has even worsened. The poor economic performances of many Sub-Saharan African countries are well known. It is frequently forgotten that, after the Second World War, observers and all systematic estimates placed Sub-Saharan Africa real per capita incomes well above those of most Asian countries other than Japan. The juxtaposition is remarkable. Ghana, for example, was estimated to have a per capita income of around US$ 1,874 (in 2000 prices at purchasing power parity rates) in l956 whereas Korea's was US $1,347. In 2003, Ghana per capita income level was $2,114, only 13 percent above the level in l956. By contrast, Korea's per capita GDP was nearly 13 times its 1956 level, at $16,977. And the same holds true for many other Sub-Saharan African countries relative to Asian countries.
Thus, while many—in East Asia, South Asia, the Middle East and Latin America—have seen major progress with regard to living standards and poverty reduction (while still having a considerable distance to go if they are to "converge" with the developed countries), there remains an important challenge with regard to the poorest countries, to which attention returns below. No longer can the "developing countries" be seen as a homogeneous group: some have become "newly industrial", some have "emerged", and many more have significantly better standards of health and nutrition than they did fifty years ago; but a few have been left, or even fallen further, behind.
A third major change has been the rapid increase in integration of global financial markets. In 1952, only seven countries (U. S., Canada, and five Latin American countries) had free exchange rate regimes for current account transactions as set out in Article VIII. Today, 164 countries have accepted Article VIII obligations, while capital account transactions are much freer than they were.
Lessons. We have learned a lot over the past half century, much of it emanating out of experience. Perhaps the most important lesson—at least in terms of the degree to which thinking has had to change—has been the importance of economic policies in affecting relative and absolute economic performance. The relative roles of markets (via incentives and within an appropriate legal framework) and the private sector is better understood and appreciated than was the case fifty years ago. The importance of institutions, infrastructure, and other governmental functions is also increasingly recognized.
Out of all this has come increased appreciation of the importance of open markets—for promoting competition and technical change with consequent increases in productivity and in enabling higher rates of economic growth than is feasible in relatively more closed economies. And it has been recognized that growth rates can be much more rapid under appropriate policies than had earlier been thought. [In his review of the twenty five years from 1950, David Morawetz noted that per capita income growth in developing countries as a whole had "exceeded both official goals and private expectations." . The most rapidly growing countries have grown at rates that were regarded as unthinkable fifty years ago.] Thus, governments desirous of rapid economic growth can undertake changes that can enable significant acceleration of growth. But, at the same time, it has also been seen that growth is not inevitable, and, indeed, that retrogression is possible, not only in the event of dire external circumstances, but more often because of domestic economic policies inimical to a well functioning economy.
A second lesson, or perhaps a corollary of the first, is the importance of macroeconomic stability. In the early postwar years, it was generally thought that some degree of inflation would be the inevitable cost of full employment in the industrial countries (the Phillips curve), and that inflation might even accelerate development in developing countries. Inflation at moderate levels was thought to be manageable. It was regarded by governments and many academics as a useful tool to circumvent budgetary constraints.
It is perhaps only with hindsight that we can truly appreciate the costs of the worldwide inflationary surge that we experienced from the 1970s onwards. In the 1970s and 1980s, governments in both industrial and emerging market countries discovered that the more tolerant of inflation they were, the more likely inflation was to trend upwards, and the smaller the trade-off, if any, perceived between more unemployment and more inflation. It is those countries that have pursued policies aimed at reducing and controlling inflation that have experienced more rapid—and sustained—growth.
Earlier efforts to document negative effects of inflation on growth proved unsuccessful. But, as inflation has been overcome in country after country, there is mounting evidence that price stability itself enables better resource allocation and investment decisions, and, in so doing, is conducive to more rapid economic growth.. The Fund has worked with its member countries to advance the process of lowering inflation, especially through our surveillance work. Through annual Article IV consultations with members, the Fund to identify policy weaknesses and successes. Where governments are seeking to implement appropriate polices we can be supportive; where we identify policy shortcomings we can try to persuade the authorities of the need for reforms.
Our surveillance work is greatly strengthened by the Fund's unique cross-country insight. Our ability to monitor closely the economies of all 184 members enables us to identify what works and what doesn't. It helps inform our research as we seek to improve our understanding. Our membership gains directly from that: they can benefit from experience elsewhere when shaping their own policy framework to their national concerns and priorities.
There is plenty of evidence that overly expansionary policies are equally damaging. A good recent example is the case of Peru when Alain Garcia became President in 1985 and ran a highly expansionary fiscal and monetary policy. Real GDP expanded by 12 and 7 per cent in the following two years. But by that time, there was a large current account deficit (which reached 5 percent of GDP in 1990, the year Garcia left office); Peru had incurred huge foreign debts (foreign debt as a percentage of GDP had risen from 73 in l985 to l65 three years later); and the party had to end. At that point, real GDP fell by 9 and 13 percent in the next two years. While Peru had experienced an expansion of real output in l986-87, there was no sense in which it was "growth": four years later, per capita incomes were lower than they had been at the beginning of the boom.
Yet another lesson has to do with the recognition that relative sizes and importances of different trading countries will change in the future. We can no more take today's relative importances in world trade and in world GDP as indicative of the future than were the l950s relativities. The immediate challenge is twofold. First, more needs to be done to recognize the increased roles of the rapidly growing economies—especially in Asia—and to adjust the international economic and financial framework accordingly. But, second, we must also ensure that any adjustments to the international economic framework also make it more flexible, able to adapt easily to future changes in relative economic performance and influence.
In l964, Harry Johnson gave a series of lectures at Sir George Williams University in Montreal on the international economy. He entitled it The World Economy at the Crossroads. His theme, then, was the necessity and desirability of further liberalization of trade and payments systems, and the need to incorporate developing countries into the global system (interestingly, he said nothing about the centrally planned economies). In light of subsequent events, he was prescient.
Much the same strictures could be made today. The enormous success of the global economy in delivering higher living standards to most cannot be questioned. But , as is evident from the past, we cannot rest on our laurels. On one hand, retrogression is possible. And, on the other, failing to address remaining challenges could also undo a considerable amount of the progress that has been made.
The open international trading and financial system is clearly a key to future global economic growth. Aided by falling costs of long distance transactions and trade liberalization, trade has served as an engine of growth for the past half century, just as it did in the 19th century. The integration of financial markets has furthered the process. And the benefits are there for all to see.
But the current Doha Round of trade negotiations has encountered serious resistance. Instead of recognizing that economic growth has not solved all ills but has created an environment that can make it easier to address remaining problems, some have come to see so-called globalization as the source of difficulties, rather than as the enabler that it has been for today's prosperity. Narrow sectoral interests respond defensively to threats while policymakers fail to take account of the benefits that flow from a more open trading system.
The Doha Round has faced formidable challenges that weren't present to the same extent in earlier rounds of trade negotiations. Some of these are a direct result of the rapid integration of the global economy. The WTO now has 149 members, all with their own priorities and interests that have to be reconciled in the final agreement: the first round of trade negotiations under the auspices of the GATT in 1947 had only 23 signatories. Moreover, the Doha negotiations are far more complex, encompassing agricultural trade and services: until the 1990s, agriculture had been excluded from multilateral trade negotiations.
But the complexity can make it easy to lose sight of the fact all countries have much to gain from an agreement. A successful outcome to the Doha Round will ensure the continued expansion of trade and so underpin future global growth. Of course, developing economies are anxious to safeguard their interests, as are all participants in the negotiations. But it is developing countries that have most to gain from further trade liberalization, in part because their remaining trade barriers are highest.
We need to see a successful Doha outcome because of the great benefits it will bring to the global economy. We also need an agreement because without one there is justifiable concern that protectionist pressures will be strengthened and so begin to unravel progress made in the past. Standing still is not a practicable option: the choice is between moving forward with further trade liberalization, which will further boost world trade growth; and moving back as strengthened protectionist pressures bring the risk of slower growth in world trade, and consequently slower growth in world GDP than would otherwise be the case.
One consequence of the complex challenges now facing multilateral trade negotiations has been an increase in the number of preferential trading arrangements that are being negotiated. It can be tempting to see a bilateral approach as an easier substitute for complex multilateral negotiations. And bilateral free trade agreements, and the development of regional trading blocs, can be a useful boost to international trade if undertaken in the context of multilateral trade liberalization. But they are not an alternative to multilateral liberalization and if seen as such will hinder progress on the multilateral front.
The second challenge as we look forward is for the international financial system. Here, two issues are crucial at the current juncture. The first is the need to give Asia appropriate weight in the international financial system, including in the IMF itself. The Fund management's position on this issue is clear. We recognize that Asia has a powerful and legitimate claim to greater weight in the Fund than allowed for under the current rules. Asia has a voice, of course: it wields considerable influence in Fund discussions. But it is clearly under-represented. This issue is firmly on the agenda of the Fund's shareholders ahead of the next Annual Meetings, in Singapore next year.
At the same time, there is a pressing need to strengthen the mechanisms for resolving global imbalances. This is more than just a case of tackling the U. S. current account deficit, or structural reform in Europe and Japan, or addressing low domestic consumption in Asia. The current imbalances in the global economy are complex in their origins and require action on several fronts at once if they are to be resolved without undermining global economic stability and growth. There is a clear opportunity for strengthened multilateral surveillance by the IMF to play a central role in this process.
Applying many of the lessons from the financial crises of the 1990s has already strengthened the global economy. It is now generally recognized, for example, that flexible exchange rate regimes have an important role in enabling smooth adjustment to changing domestic and international circumstances. It is also clear that foreign direct investment and strengthened financial sectors can both help to reduce the vulnerabilities associated with private capital flows.
The third challenge for the future is, in a sense, domestic. Whenever growth is rapid there are those left behind because they are not able, in the short term, to benefit from the increased opportunities that growth brings. Over the medium and longer term, of course, education has a crucial role to play. Access to high quality education for all is important both at the individual level—where it enables individuals to reap the benefits associated with a rapidly growing economy—and at the national level, since without a well-educated workforce growth will eventually be restricted.
To address short-term needs, however, other measures besides improving the provision of education will be needed. Social safety nets are vital. But they need to be well-targeted, to benefit those most in need. Subsidies that mainly help the middle classes, for example, are ineffective, expensive and can undermine fiscal discipline and so, in turn, macroeconomic stability. Safety nets that distort incentives too much will undermine growth.
Putting well-targeted and affordable safety nets in place is a particular challenge for emerging market and developing countries—though many industrial countries have welfare systems that are unduly distortive. But all industrial economies and a growing number of developing countries face another challenge to domestic economic policy: demographic change. As populations age—very rapidly in some countries-public pension systems are coming under increasing strain. As the elderly dependency ratio rises, and fewer workers support an increasing number of older retired citizens, measures will be needed to ensure that fiscal policy remains on a sustainable path. In industrial countries action is needed sooner rather than later in order to avoid a fiscal crunch. In emerging market countries, there may be more time in some cases, but the challenges are greater: public pension schemes, while more limited, are already expensive and unsustainably generous. For all countries, therefore, confronting demographic challenges means ensuring more efficient government spending and, most important, means ensuring that economies are flexible and so able to respond to the challenges in a way that does not undermine growth.
The final challenge is for countries left behind or retrogressing, and is in some ways the most daunting. The Millennium Development Goals agreed by the United Nations in 2000 have highlighted the extent to which some countries have fallen behind. Experience over the past half century has taught us that ultimately it is domestic policy reform that will determine whether those countries that have yet to integrate with the global economy in any meaningful way can begin to share in the benefits of global growth. Without policies that enable these countries to integrate more successfully into the global economy, their citizens will remain poor—and, indeed, will in some cases become worse, rather than better, off. Improved governance, an end to corruption, policies aimed at achieving macroeconomic stability are essential for the sustained growth that will make poverty reduction possible. Without such policy reforms, the scope for help from the international community will be restricted.
Yet the international community—bilateral and multilateral donors alike—has a vital role to play in helping these countries. Aid transfers continue to be vital of course. But so too is capacity-building, policy advice and technical assistance. Much of the IMF's work with these countries involves assisting the reform process, for example, by enabling them to implement public expenditure management and by improving tax administration. And countries need assistance from the international community if they are to be able to absorb increased aid flows in ways which do not further undermine economic progress.
Let me briefly conclude.
The past half century has been a period of extraordinary growth for the world economy. Most citizens in most countries are far better off today than could have been imagined in the early postwar years. The pace of technological change has been, and continues to be, remarkable. Globalization has brought enormous benefits. And there are strong reasons for expecting this process to continue.
But at the same time there is no room for complacency. The last great period of globalization, at the end of the 19 th century, ended in disaster, with the First World War. Progress was reversed and recovery from that setback took many decades.
A reversal this time may not be likely, but it is not impossible. Much of what has been achieved is a consequence of greatly improved domestic economic policies and, above all, the strength, durability and adaptability of the multilateral economic framework put in place in 1945. There have been many challenges to this framework over the years, all of which have ultimately demonstrated its underlying strength.
But the challenges we face today are, I believe daunting, not least because their seriousness is not fully recognized. The world trading system is at a crucial juncture. A successful outcome for the Doha Round will strengthen it greatly: failure would do much to undermine it. The complex problem of global imbalances must be addressed if the risk of a disorderly unwinding is to be avoided. And the problems of those countries that have yet to share in the benefits of globalization cannot be ignored.
Tackling these problems will consolidate and increase the gains already reaped from globalization. Ignoring them would be, at best, foolhardy.
1 O'Rourke and Williamson p. l7.
2 Tariffs in many countries reached their lowest levels around l870 or l880 as some countries responded to the reduced prices of imports due to falling transport costs with higher levels of protection. See O'Rourke and Williamson p.95.
3 There appears to have been rapid growth of industry in some developing countries; India seems to have had a twenty year period of sustained growth of industry in the late l9th century. None of these bursts of growth seems to have been sustained, however.
4 Obstfeld and Taylor, p.55.
5 Obstfeld and Taylor, p. 60.
6 O'Rourke and Williamson p. 35 ff.
7 Japan was always an outlier in this regard.
8 Today, the World Bank consists of the IBRD, the International Development Association (which provides loans at concessional rates and grants to poor countries that cannot access private capital markets), and several other affiliated entities.
9 There were two exceptions—one to enable a county to "safeguard its external financial position and its balance of payments" and one for "infant industry protection" in developing countries. Subsequently, the GATT articles were amended to permit preferential treatment for developing countries by industrial countries in their trade regimes.
10 See Anne O. Krueger "Trade Policy and Economic Development: How We Learn", American Economic Review , Vol. 87, No. l, March 1997, Pp. 1-22.
One hundred years ago, observers of the international scene would have described the phenomenal globalization of the preceding century, especially in the period 1870-1914.
Until the 19 th century, transport costs had been sufficiently high to discourage all but high value—low volume trade, while policy-imposed trade barriers (tariffs and other taxes or restrictions on international transactions) had further impeded trade flows. For most commodities, transport costs exceeded the price of goods in the country of origin, often by a substantial margin.
In the early l9th century, the United Kingdom provided leadership in reducing tariffs, and many other European countries followed suit in the middle of the century. Transport costs also fell dramatically, even in the first half of the century. Douglas North, for example, cites evidence that ocean shipping costs by around 1850 were only about a third of what they had been barely thirty years earlier—when shipping under sail was still the order of the day. While international trade and economic growth picked up as a result of these phenomena, it was really in the late l9th century, especially in response to the "amazing" decline in transport costs (the phrase used by O'Rourke and Williamson), that trade volumes and growth rates accelerated. The last decades of the 19 th century were described as the "gilded age" on this continent, as per capita incomes are estimated to have doubled between l870 and l900. The late Victorian era was likewise regarded as a boom period in Europe as European per capita incomes and wage rates rose at even faster rates, albeit from a lower base.
The late nineteenth century boom was encouraged by technical change and by policy changes in industrial countries. Technical change was especially apparent with the introduction of electricity and its applications, and included communications (the telephone and telegraph), transport, and much more. The introduction of the railroad led to a steep decline in the costs of moving freight, and there were further dramatic drops in the costs of ocean shipping following the introduction of steamships. Data from O'Rourke and Williamson imply a drop in costs of transport between the U. S. and Europe from about 80 per cent of the price of the commodity to less than 20 percent during that period.
The sharp decline in transport costs came at a time when most European countries had lower tariff levels than earlier in the 19 th century. The U. K. had zero tariffs on agriculture and manufacturing until l914, and Dutch and Scandinavian tariffs were also low. 1 2 The impact of rapidly falling transport costs, combined with the reduced levels of protection, undoubtedly led to a major net reduction in barriers—both natural and artificial—to trade.
As a consequence, world trade grew rapidly—at an annual rate of 3.4 percent between 1870 and 1914, with growth not only in industrial goods but also in raw materials. In many instances, the primary commodity exporters were colonies, whose manufacturing bases did not achieve sustained development. 3.
Simultaneously, integration of world capital markets proceeded rapidly. By the early 20 th century, it is estimated that foreign-owned assets were about equal in value to about 20 percent of world GDP. 4 The United Kingdom was, as is well known, the world's banker and at its peak, owned 80 percent of foreign assets globally. Its capital outflows were as much as 10 percent of GDP in some years, and averaged 4.5 percent of GDP per year between l870 and l914. 5.
The growth of real incomes, the growth of world trade, and the integration of the world economy—both through the removal of artificial barriers to trade such as tariffs and through reduced costs of transport—were causally linked. The drop in costs of international transactions was itself a function, in significant part, of technological change. 6 But while real wages and living standards rose throughout the world, the rate of increase was much faster in the industrial countries. Until the early l700s, it is estimated that living standards were not significantly different between different geographic regions of the world. But by the end of the nineteenth century, economic growth had been sufficiently rapid in the "industrial countries" that the world had bifurcated in terms of living standards and rates of economic growth. 7.
The First World War, however, led to an abrupt reversal in the degree of globalization. As transport routes were disrupted and countries experienced different degrees of inflation in response to the differential strains of their wartime expenditures, the earlier integration of the international economy was largely reversed.
Despite efforts to restore the status quo ante after the war, disequilibria associated with the overvaluation of the pound sterling following the British return to the Gold Standard in 1925, German reparations, and other imbalances led to slow progress in the l920s. At the end of that decade, markets were not as integrated as they had been prewar.
But the Great Depression reversed even that progress. As is well known, real incomes dropped dramatically in most countries, unemployment rates rose sharply, and prices of goods and services fell abruptly. The policy response intensified the difficulties: the l930s were characterized by rising trade barriers (both tariffs and non-tariff restrictions) and competitive devaluations, often referred to as "beggar they neighbor policies", and by rapidly falling volumes of trade and prices of traded goods. As each country attempted to reverse its own downward spiral by imposing ever-higher tariffs, devaluing its currency, and other measures, they in effect exported part of their own deflationary pressures, only to be hit by deflationary pressures resulting from similar actions in other countries. Britain was forced off the gold standard in l931, while the United States followed suit in l933 and simultaneously experienced a "banking holiday" as banks were hard hit by nonperforming loans in their portfolios. Worse still, the American Congress had enacted the Hawley-Smoot tariff in the early l930s, giving an average tariff level of 59 percent in 1932 in the United States: the highest level since the 19 th century. As it became evident with hindsight that the Hawley-Smoot Tariff Act had greatly intensified the Great Depression, rather than offsetting it, the name became synonymous with unilateral policies of individual countries that harmed themselves and other countries, so called "beggar-thy-neighbor" سياسات.
By the late l930s, recovery was underway, but then the Second World War began and rapid expansion ensued in response to wartime demand. Of course, output and trade patterns were once again disrupted, as production of consumer and investment goods demanded in peacetime were replaced in significant part by production related to the war effort.
The Situation at the End of the War.
The world economy as of 1945-46 was far less integrated than it had been at the end of the First World War, both because of the war itself and because of the protectionist and isolationist measures of the l930s. The United States, Canada, Australia, and a few other industrial countries not devastated by wartime destruction were producing at levels much higher than they had been in the late l930s: but most of Europe, the Soviet Union, China, and Japan were hard hit. While many economies in the areas that had not experienced the industrial expansion of the earlier era were not similarly affected, it was evident that they were "different". So with the decision of the Soviet Union and China to insulate their economies, the global economy was effectively split into three. There were the industrial countries: these were themselves divided between those where production had fallen significantly during the war, and those where the structure of production had shifted but output increased. The second group were the—as they were then called—"underdeveloped" الاقتصادات. Many of these had been able to export primary commodities at high prices to the combatants during the Second World War, and had built up large reserves of foreign exchange (because there was little to import). But these economies were all heavily concentrated on producing raw materials, both agricultural and mineral, with a relatively small manufacturing industry producing primarily small-scale labor-intensive consumer goods, with very low standards of living by contrast with the industrial countries. The third group was the centrally planned economies; until the l990s, their evolution was almost entirely independent of that of the rest of the world, and so I leave their story aside for now.
When planning for the postwar era began during the latter years of the war, it was based on several premises: l) that the United States would emerge from the war economically strengthened and the preeminent economy; 2) that Europe and Japan were economically devastated and would need time and resources to recover; 3) that a repetition of the mistakes of the l930s should be avoided through multilateral cooperation within an appropriate institutional framework; and 4) that the supply of long-term private capital would not resume after the experience of the 1930s.
The postwar planners proposed a framework for international economic cooperation (as well as the United Nations for political cooperation) in which there would be international organizations for l) international monetary cooperation; 2) reconstruction and development; and 3) international trade in goods and services. International monetary cooperation was intended to facilitate international trade by inducing currency convertibility, preventing competitive devaluations, and enabling coordinated international financial policies. To that purpose, the Articles of Agreement for the International Monetary Fund were drawn up, and subsequently ratified by 38 countries by the time the Fund's Board of Governors held its inaugural meeting in March l946. Crucially, countries with "balance of payments" difficulties were expected to consult with the IMF, and to adjust their domestic policies, altering exchange rates only in circumstances where it was agreed with the IMF that there was "fundamental disequilibrium". Signatories to the Articles also agreed to Article VIII—convertibility of their currencies for current account transactions. As will be seen, achieving this among IMF members was a significant achievement, but it required more than 15 years before even the major industrial countries had removed exchange control regulations to the extent necessary to comply with Article VIII.
Given the presumed absence of private sources of capital, the postwar planners concluded that longer term financing would have to come from official sources, both to provide capital to accelerate the reconstruction of the war-devastated countries and to enable higher rates of investment, and therefore of growth, of the "underdeveloped" economies than would otherwise materialize. As a source of longer-term official finance, the International Bank for Reconstruction and Development, now generally known as the World Bank, was founded. 8.
The third leg of the envisaged arrangements was for multilateral cooperation for an open international trading system. The General Agreement on Tariffs and Trade, signed in 1947, was seen as a interim arrangement pending the establishment of the proposed International Trade Organization (ITO), but proved remarkably durable in the absence of ratification of the ITO charter. The GATT arrangements provided for nondiscriminatory treatment of all trading partners, for elimination of quantitative restrictions on trade, and for fora in which countries could reciprocally negotiate tariff reductions and in which trade disputes between countries could be settled.
The IMF and World Bank Articles were negotiated at Bretton Woods in l944, and the two organizations began functioning in 1946. The GATT began functioning in l947 with a first round of tariff reductions negotiated at that time. The GATT, and later the World Trade Organization (WTO) included two key provisions: l) that member countries would not impose and/or would eliminate nontariff barriers to trade 9 ; 2) that member countries would grant "most favored nation" status to their GATT/WTO trading partners so that all trading partners would face the same trade barriers unless there was a preferential trade arrangement (the conditions for which including coverage of all trade items, zero tariffs between the PTA countries, and a certain timetable for achieving zero tariffs).
When the war ended, however, it became evident that the degree of European/Japanese devastation was much greater than anticipated, and the United States emerged even more dominant than expected: as late as 1950, Maddison estimates that the United States produced 27 percent of global real output and accounted for over 14 percent of global exports. The U. S. also held 54 percent of international reserves.
Although, as stated, the GATT achieved its first major round of tariff reductions in l947, the postwar reconstruction needs, especially of Europe, were far greater than had been anticipated. It fell primarily to the United States to support the European and other countries in their reconstruction efforts (although the World Bank did extend some loans), first through "Point Four" aid, and then through the Marshall Plan.
European and Japanese economic recovery was stunningly successful after the first two very difficult postwar years. Prewar output levels were generally attained by the early l950s, and were only the start of a period of sustained rapid growth. From a situation in the late l940s when most European economies traded through bilateral payments arrangements with each other (or used Marshall Plan aid), they moved to multilateral clearing arrangements. Simultaneously, tariff reductions were taking place and quantitative restrictions were being removed.
With the groundwork laid by the Marshall Plan, increasingly free exchange regimes and tariff reductions (spurred both by the GATT multilateral tariff reductions and intra-European liberalization undertaken in the context of the Marshall Plan), the world economy embarked upon a quarter century of sustained and unprecedentedly rapid economic growth. While developing countries—as they came to be called—grew, they generally did so without integrating with the world economy, and I shall return to their story later.
The most rapidly growing countries were in Europe and Japan. While the rest of the industrialized world grew rapidly, and at rates well above those achieved in the first half of the twentieth century, it was the phenomenal growth of Europe and Japan which led to the biggest changes in the world economy. In l950, it could fairly be said that the United States dominated; by the early l970s, Europe and Japan were also major players in the world economy.
During the golden quarter century, tariff reductions continued. The rate of growth of world trade averaged almost 8 percent per year from l950 to l973. Quite clearly, trade was an "engine of growth", just as it had been in the late l9th century, growing at about twice the rate of growth of world output. But whereas in the late l9th century, it was primarily reductions in transport costs that facilitated that growth, it was reductions in tariff and nontariff barriers to trade were the major stimulus to the growth of trade in the postwar years.
The very rapid economic growth of that era took place in a relatively non-inflationary environment. Most industrial countries had single digit rates of inflation. To be sure, individual countries did experience "balance of payments crises", and rates of growth fluctuated through recession and boom periods. Nonetheless, the world economy as a whole was relatively stable. Through the provision of financial assistance to countries in balance of payments crises, the IMF played an important role in enabling adjustment to take place without the disruption to the international system that had characterized the inter-war period. Many of the industrial countries—and many developing countries—took advantage of the IMF's lending facilities. Britain, in 1977, was the last major industrial country to borrow on a large scale from the Fund.
Part of that stability derived from the relative size and dominance of the American economy. From l950, when 79 percent of foreign exchange reserves of the industrial countries were held in gold, the American dollar assumed increasing importance. By l973, more than 90 percent of the foreign exchange reserves holdings of those industrial countries that reported such data were held in U. S. dollars. International prices, and settlements of accounts even between other countries, were predominantly denominated in U. S. dollars. But the underpinning of the Bretton Woods system, and the continuing downward movement of trade barriers were also major factors.
By l973, then, the industrial countries were still preeminent in the world economy: they are estimated to have produced 59 percent of world GDP and to have accounted for 64 percent of world exports, contrasted with 60 percent of world GDP and 61 percent of world exports in l950. Within the developed countries, though, the U. S. share had diminished as other countries had experienced more rapid growth.
But developing countries had also achieved growth rates (in part benefiting from the rapid growth of industrial country markets for their goods) higher than those experienced in the l9th and early 20 th century. Many of them had been former colonies; but whether former colony or previously independent, most of their governments put the goal of raising real incomes and rapid growth as their foremost objective. To achieve this, however, they adopted policies that insulated them to a major degree from the international economy. While the industrial countries were reducing trade barriers and freeing financial transactions, most developing countries were protecting (infant) domestic industries and restricting international transactions. Nonetheless, per capita incomes rose in most countries, and life expectancies, literacy rates, nutritional statuses, and other indicators of well-being improved significantly.
As contrasted with the immediate postwar period, then, by 1973 the global economy was characterized by the increased relative and absolute importance of international trade. Among industrial countries, there was much greater freedom of financial flows and, during the l960s, private capital flows between Europe and the United States began increasing rapidly. For developing countries, foreign aid—both bilateral and multilateral—and other official flows had increased, but their own payments regimes were still highly restrictive. Moreover, in many developing countries, growth rates were beginning to decline, as the costs of continuing to pursue inward looking "import substitution" policies increased. 10 Hence, they remained primary commodity exporters: although many had experienced growth of manufacturing, and the manufacturing share in GDP, almost all the increased output was destined for the sheltered domestic market. Even in primary commodities, the share of developing countries had dropped.
There had, however, been a few economies where economic policies had shifted away from the earlier "import substitution" policies toward a much more open economy. Some had gone so far as to rely on exports as an "engine of growth". Those economies, in East Asia, experienced sustained increased rates of growth unlike anything earlier witnessed in the global economy. The 4 "Asian tigers" were the most notable. South Korea, the largest of them, was typical, increasing exports at over 40 percent a year in the l960s, with rates of increase of real per capita incomes of 7-9 percent a year. By 1982, South Korea was one of the world's top 15 exporters, and it today ranks 11th in exports in the global economy.
But, as of l973, high growth rates among the East Asian economies had not made a significant difference to the structure of the world economy, as these rates had been experienced from a very low base. From a global perspective, the world was still divided into rich industrial countries and poor developing countries.
1973, however, marked a watershed in the global economy. Inflationary pressures had been rising, especially in the United States, and there was a commodity price boom in l972-3. By that time, the United States had been incurring a current account deficit for more than a decade spurred by a faster rate of American inflation (at a fixed exchange rate) and U. S. demand resulting from the Vietnam war expenditures. In l971, the United States announced that it was suspending the gold convertibility of the dollar. Hence, the Bretton Woods system, as founded (as a fixed, but adjustable, standard) and which had become a de facto dollar standard, was abandoned, and by 1973 floating exchange rates between the U. S., Japan and the major European currencies had become the order of the day.
But at that same time the "oil price shock" of l973-74 quadrupled nominal oil prices in a very short period of time. Many oil importing countries found their import costs greatly increased; some (mainly industrial) went into recession, while others (mainly developing) borrowed from private financial sources. It was the first large-scale access of developing countries to private capital markets and permitted the recycling (through banks in industrial countries) of oil exporters' current account surpluses to oil importers' current account deficits. That there were already floating exchange rates between major currencies certainly facilitated the adjustment.
After a recession following on the oil price shock, economic growth resumed in most industrial countries, and in oil importing countries. Indeed, for the rest of the decade after the l973-74 oil price increase, oil importing developing countries grew more rapidly than oil exporting developing countries. And, among developing countries, those—mostly in East Asia—that had switched to outer oriented economic policies experienced much more satisfactory rates of economic growth than those still relying on inner-oriented policies. It is also worth noting that this more rapid growth took place against a background of relatively low income inequality; and there was rapid progress in reducing poverty in these countries.
But by the early l980s, after the second major oil price increase, the world economy went into recession as the United States altered its monetary policy to contain, and subsequently permanently lower, its inflation. The resulting high nominal and real interest rates, combined with falling commodity prices (attributable to the recession) resulted in debt-servicing difficulties for many of the developing countries that had earlier borrowed to finance their increased oil import bills. Indeed, for heavily indebted developing countries, the l980s were a "lost decade" as debt-servicing difficulties and continuing adherence to inward looking policy stances resulted in negligible increases in per capita incomes, and declines in some cases.
By the late l980s, inflation was contained in most industrial countries, and debt was being restructured (the Brady Plan) in the heavily indebted developing countries. The oil price had peaked in real terms in l979, and fell sharply in l986. The stimulus from lower real oil prices and stable price levels resulted in a period of sustained growth of the industrial countries. Trade barriers among industrial countries continued to drop, as quantitative restrictions had been almost entirely eliminated and tariffs were being further reduced under the influence of successive rounds of trade negotiations under the GATT.
A new round of trade negotiations under the GATT was proposed in the late l990s, but not agreed upon until the Doha Round was inaugurated in November 2001. The new round faced several significant challenges, to which I shall return later.
The start of the final decade of the twentieth century coincided with another major shift, as the world adapted to the collapse of the Soviet Union, and the emergence of formerly centrally planned economies into the global economy. For most of the l990s, the "transition" economies were adjusting to their new economic structure, and adapting their economic policies for greater integration into the international economy. For present purposes, it is also important to note that the examples set by the East Asian countries seem to have had a significant influence on policy makers in other Asian countries, most notably China and India, as they, too, began reforming their policies.
The "lost decade" of the l980s, in turn, led a number of other countries to begin reducing their barriers to trade and other impediments to growth. Mexico, for example, embarked on a series of major economic policy reforms in the latter half of the l980s, anchoring them in the North American Free Trade Agreement, which permanently assured outward looking economic policies.
As reforms took place in country after country, and investment became more profitable, private capital flows—especially to "emerging markets", as the successful developing countries came to be known—increased enormously, eclipsing official capital flows in their magnitude.
But, as that happened, the vulnerability of some of the emerging markets to changes in investment flows increased dramatically. The first country to be affected by this was Mexico; its exchange rate policy did not adequately accommodate domestic credit expansion or the altered outer oriented trade stance, and in late l994, investors became reluctant to finance further current account deficits (the l994 deficit had been 7.6 percent of GDP). The ensuing capital outflow forced Mexican officials to take swift action, adjusting monetary and fiscal policy in the context of a large loan from the International Monetary Fund. Within three months there had been an effective nominal devaluation of 65 percent.
The l990s witnessed a number of other "capital account" crises. These differed from earlier "balance of payments" crises in which the IMF had supported adjustment in its member countries both in the fact that the immediate origin of the difficulty was a major change in the willingness of foreigners and domestic residents to hold domestic assets and in the fact that there was little time in which to decide on policy changes.
The latter part of the decade saw more capital account crises, including most notably South Korea, but other countries in east Asia and elsewhere. The South Korean situation was particularly shocking, as by that time the country was seen as a "newly industrializing country"; the crisis had been unanticipated, and was dramatic. As in Mexico and other cases, substantial borrowing (mostly from the International Monetary Fund) and policy adjustments stemmed the crisis. In the South Korean case, the l997 level of real per capita income had been re-attained within 6 quarters and by 2004, real GDP was almost 40 percent above its l997 pre-crisis level.
But to the world, it was clear that, to the earlier, current-account based, balance of payments difficulties, were now added capital account crises. At the turn of the 21 st century, one major challenge was seen as learning the appropriate lessons going forward as to the prevention of such crises, and, when they did occur, the appropriate policy responses for the country involved and for the international community.
While headlines were captured by the dramatic events in the former centrally planned economies and capital account crises, other events were going on that would, if trends persisted, alter the global economic landscape at the beginning of the 21 st century. The American economy experienced rapid growth, with more rapid rates of productivity increase than had earlier occurred. Moreover, those rates were achieved in the context of a prolonged period of sustained growth and price stability, minus the recessions that had accompanied growth in earlier decades.
Europe had begun a process of increasing integration with the opening of trade and financial flows under the Marshall Plan. The Treaty of Rome had started the process of movement toward an integrated internal market, undertaken within the context of lowered trade barriers from the multilateral trading rounds under the GATT. As additional countries joined the European enterprise, and policy harmonization deepened, the European Union emerged as a major force in the global economy with 38 percent of world trade and 26 percent of world GDP as of 2000. By contrast, after four decades of growth and rapidly rising living standards, the Japanese economy had entered a period of stagnation by around 1990, and Japanese growth remained sluggish a decade later, primarily as a consequence of the asset bubble of the late 1980s and the policy challenges posed both by the need for reform of the financial sector.
Despite the difficulties of countries such as South Korea, growth in developing countries accelerated during the l990s as a result of their policy changes and the supportive global environment. By 2000, developing countries as a group accounted for about 47 per cent of world GDP and a third of world trade. And, of course, the East Asian economies, in addition to Japan, were by 2000 large enough to be significant. Japan, as already noted, was a major economic entity by the l970s, but by the year 2000, South Korea, the ASEAN countries, and China, were also gaining share. India had embarked upon reforms and, in consequence, growth rates were beginning to accelerate.
The Global Economy at the Turn of the Century.
With the power of compound interest, many of the growth rates and changes that had occurred during the preceding several decades had, by 2000, basically altered the landscape of the international economy. Moreover, the experience of the years since the Second World War had taught a number of lessons which seem to be fairly widely accepted today. In this section, I review these changes and lessons, as a basis on which the challenges going forward can be assessed.
The Altered International Economy. What were the basic changes? The world was a much more open place. The internet, and access to it, had grown rapidly. There were further significant drops in transport and communications costs: in 2001, two economists from the Chicago Fed noted that in constant 1998 prices the cost of a three minute phone call from New York to London had been $293 in 1931 and had (by 2001) fallen to around $1 for a much better quality connection. In 2006 that same call costs just a few cents. Other technical changes, and above all the reduction in tariff and other barriers to trade, had played a role in opening up the global economy.
As mentioned at the outset, in the l9th century, reductions in costs of international trade had also spurred growth, the difference being that it had been the reduction in transport costs in the 19 th century, and the reduction in policy-related tariff and non-tariff barriers in the second half of the 20 th century that had enabled closer integration. For manufactured goods, at least, average tariff rates among industrial countries are now less than 5 percent; within areas such as the European Union, they are zero. With airfreight, the internet, and other changes, goods can be ordered from one part of the world and received elsewhere in a matter of hours, contrasted with the months the same transaction would have taken two hundred years ago. But while it would be difficult, if not impossible, to reverse technical change and the drop in costs of transport and communications, the same cannot be said for policy-induced trade barriers. I return to this in the next section, as a significant threat to continued strong global growth lies in risks that the trend toward trade and financial integration that has spurred growth may end or even reverse.
Increasing openness during the late 20 th century had, of course, resulted in greatly intensified international economic activity. Consequently, the relative importance of international trade in the world economy had greatly increased: from 5.5 percent in l950 to 17.2 percent in 2000, according to Maddison. Much more trade was in intermediate goods, as producers were able to locate each stage of the production process in the country or countries where costs of production were lower. And, whereas in l950 45 percent of merchandise exports were agricultural and 37 percent were manufactures, the composition of trade was radically altered, and trade in services grew in importance. By 1980, services trade constituted 15 percent of all goods and services trade, agriculture accounted for 12 percent and manufactures for 45 percent. The comparable numbers for 2004 show agriculture down to 7 percent, services up to almost 20 percent, and manufactures to 59 percent. In addition to trade flows, other international transactions had increased in importance: tourism, other services items, and capital flows. The fifty years had seen enormous improvements in living standards, not only in the developing countries, but even among the richest. The United States is estimated to have had a per capita income of just $13,000 in 2005 dollars in l950; by l975, that figure was $22,200; and in 2005, it was $41,900.
But just as the structure of the international economy had changed, so, too, had domestic economic policies. Increased macroeconomic stability within the industrial countries has already been highlighted; the global reduction in inflation rates has been a significant contributor to accelerated world growth. But, in addition, the shift toward more market-friendly policies (in developing countries and in some industrial countries) together with the transition from central planning has enabled more resilient economies and stronger responses of output and employment to changes in incentives, further accelerating growth.
That leads to the second major change: whereas in 1950 the United States was THE economic power, and by the mid 1970s Europe and Japan were clearly established as major global players, by 2000, emerging Asia—especially China and India, but also a number of other countries—had become a significant economic force in the international economy. Much of Europe, of course, is now in the European Union and has achieved an even higher degree of internal integration than that realized externally. And the emerging Asian economies are already so large as to have global significance and impact. Assuming that their relatively high rates of economic growth persist, they will become increasingly important in the years to come.
For India and China and many other developing countries, living standards—while still low contrasted with developed countries—have increased remarkably. This is reflected not only in per capita income numbers, but in other indicators of well-being. Over the past half century or so, infant mortality rates have fallen sharply in most developing countries. In China, for example, the infant mortality rate fell from 150 deaths per 1000 births in 1960, to 30 in 2003.
Perhaps the most telling statistic is life expectancy. In general, life expectancy in developing countries has risen at an astonishing pace.
Since 1960 life expectancy in the developing countries has risen at roughly double the rate in the richest. The gap between life expectancy in industrial and developing countries has narrowed from around 30 years in 1950, to around 10 years today.
For a few countries—most notably those in East Asia—living standards have risen so markedly that they are now beginning to close the absolute, as well as the relative, gap in income levels.
And, significantly, most of the transition economies of the former Soviet Union and Eastern Europe are realizing above-average rates of economic growth and integrating into the world economy.
At the same time, however, some other countries are still extremely poor and, indeed, their relative (and in some cases, absolute) position has even worsened. The poor economic performances of many Sub-Saharan African countries are well known. It is frequently forgotten that, after the Second World War, observers and all systematic estimates placed Sub-Saharan Africa real per capita incomes well above those of most Asian countries other than Japan. The juxtaposition is remarkable. Ghana, for example, was estimated to have a per capita income of around US$ 1,874 (in 2000 prices at purchasing power parity rates) in l956 whereas Korea's was US $1,347. In 2003, Ghana per capita income level was $2,114, only 13 percent above the level in l956. By contrast, Korea's per capita GDP was nearly 13 times its 1956 level, at $16,977. And the same holds true for many other Sub-Saharan African countries relative to Asian countries.
Thus, while many—in East Asia, South Asia, the Middle East and Latin America—have seen major progress with regard to living standards and poverty reduction (while still having a considerable distance to go if they are to "converge" with the developed countries), there remains an important challenge with regard to the poorest countries, to which attention returns below. No longer can the "developing countries" be seen as a homogeneous group: some have become "newly industrial", some have "emerged", and many more have significantly better standards of health and nutrition than they did fifty years ago; but a few have been left, or even fallen further, behind.
A third major change has been the rapid increase in integration of global financial markets. In 1952, only seven countries (U. S., Canada, and five Latin American countries) had free exchange rate regimes for current account transactions as set out in Article VIII. Today, 164 countries have accepted Article VIII obligations, while capital account transactions are much freer than they were.
Lessons. We have learned a lot over the past half century, much of it emanating out of experience. Perhaps the most important lesson—at least in terms of the degree to which thinking has had to change—has been the importance of economic policies in affecting relative and absolute economic performance. The relative roles of markets (via incentives and within an appropriate legal framework) and the private sector is better understood and appreciated than was the case fifty years ago. The importance of institutions, infrastructure, and other governmental functions is also increasingly recognized.
Out of all this has come increased appreciation of the importance of open markets—for promoting competition and technical change with consequent increases in productivity and in enabling higher rates of economic growth than is feasible in relatively more closed economies. And it has been recognized that growth rates can be much more rapid under appropriate policies than had earlier been thought. [In his review of the twenty five years from 1950, David Morawetz noted that per capita income growth in developing countries as a whole had "exceeded both official goals and private expectations." . The most rapidly growing countries have grown at rates that were regarded as unthinkable fifty years ago.] Thus, governments desirous of rapid economic growth can undertake changes that can enable significant acceleration of growth. But, at the same time, it has also been seen that growth is not inevitable, and, indeed, that retrogression is possible, not only in the event of dire external circumstances, but more often because of domestic economic policies inimical to a well functioning economy.
A second lesson, or perhaps a corollary of the first, is the importance of macroeconomic stability. In the early postwar years, it was generally thought that some degree of inflation would be the inevitable cost of full employment in the industrial countries (the Phillips curve), and that inflation might even accelerate development in developing countries. Inflation at moderate levels was thought to be manageable. It was regarded by governments and many academics as a useful tool to circumvent budgetary constraints.
It is perhaps only with hindsight that we can truly appreciate the costs of the worldwide inflationary surge that we experienced from the 1970s onwards. In the 1970s and 1980s, governments in both industrial and emerging market countries discovered that the more tolerant of inflation they were, the more likely inflation was to trend upwards, and the smaller the trade-off, if any, perceived between more unemployment and more inflation. It is those countries that have pursued policies aimed at reducing and controlling inflation that have experienced more rapid—and sustained—growth.
Earlier efforts to document negative effects of inflation on growth proved unsuccessful. But, as inflation has been overcome in country after country, there is mounting evidence that price stability itself enables better resource allocation and investment decisions, and, in so doing, is conducive to more rapid economic growth.. The Fund has worked with its member countries to advance the process of lowering inflation, especially through our surveillance work. Through annual Article IV consultations with members, the Fund to identify policy weaknesses and successes. Where governments are seeking to implement appropriate polices we can be supportive; where we identify policy shortcomings we can try to persuade the authorities of the need for reforms.
Our surveillance work is greatly strengthened by the Fund's unique cross-country insight. Our ability to monitor closely the economies of all 184 members enables us to identify what works and what doesn't. It helps inform our research as we seek to improve our understanding. Our membership gains directly from that: they can benefit from experience elsewhere when shaping their own policy framework to their national concerns and priorities.
There is plenty of evidence that overly expansionary policies are equally damaging. A good recent example is the case of Peru when Alain Garcia became President in 1985 and ran a highly expansionary fiscal and monetary policy. Real GDP expanded by 12 and 7 per cent in the following two years. But by that time, there was a large current account deficit (which reached 5 percent of GDP in 1990, the year Garcia left office); Peru had incurred huge foreign debts (foreign debt as a percentage of GDP had risen from 73 in l985 to l65 three years later); and the party had to end. At that point, real GDP fell by 9 and 13 percent in the next two years. While Peru had experienced an expansion of real output in l986-87, there was no sense in which it was "growth": four years later, per capita incomes were lower than they had been at the beginning of the boom.
Yet another lesson has to do with the recognition that relative sizes and importances of different trading countries will change in the future. We can no more take today's relative importances in world trade and in world GDP as indicative of the future than were the l950s relativities. The immediate challenge is twofold. First, more needs to be done to recognize the increased roles of the rapidly growing economies—especially in Asia—and to adjust the international economic and financial framework accordingly. But, second, we must also ensure that any adjustments to the international economic framework also make it more flexible, able to adapt easily to future changes in relative economic performance and influence.
In l964, Harry Johnson gave a series of lectures at Sir George Williams University in Montreal on the international economy. He entitled it The World Economy at the Crossroads. His theme, then, was the necessity and desirability of further liberalization of trade and payments systems, and the need to incorporate developing countries into the global system (interestingly, he said nothing about the centrally planned economies). In light of subsequent events, he was prescient.
Much the same strictures could be made today. The enormous success of the global economy in delivering higher living standards to most cannot be questioned. But , as is evident from the past, we cannot rest on our laurels. On one hand, retrogression is possible. And, on the other, failing to address remaining challenges could also undo a considerable amount of the progress that has been made.
The open international trading and financial system is clearly a key to future global economic growth. Aided by falling costs of long distance transactions and trade liberalization, trade has served as an engine of growth for the past half century, just as it did in the 19th century. The integration of financial markets has furthered the process. And the benefits are there for all to see.
But the current Doha Round of trade negotiations has encountered serious resistance. Instead of recognizing that economic growth has not solved all ills but has created an environment that can make it easier to address remaining problems, some have come to see so-called globalization as the source of difficulties, rather than as the enabler that it has been for today's prosperity. Narrow sectoral interests respond defensively to threats while policymakers fail to take account of the benefits that flow from a more open trading system.
The Doha Round has faced formidable challenges that weren't present to the same extent in earlier rounds of trade negotiations. Some of these are a direct result of the rapid integration of the global economy. The WTO now has 149 members, all with their own priorities and interests that have to be reconciled in the final agreement: the first round of trade negotiations under the auspices of the GATT in 1947 had only 23 signatories. Moreover, the Doha negotiations are far more complex, encompassing agricultural trade and services: until the 1990s, agriculture had been excluded from multilateral trade negotiations.
But the complexity can make it easy to lose sight of the fact all countries have much to gain from an agreement. A successful outcome to the Doha Round will ensure the continued expansion of trade and so underpin future global growth. Of course, developing economies are anxious to safeguard their interests, as are all participants in the negotiations. But it is developing countries that have most to gain from further trade liberalization, in part because their remaining trade barriers are highest.
We need to see a successful Doha outcome because of the great benefits it will bring to the global economy. We also need an agreement because without one there is justifiable concern that protectionist pressures will be strengthened and so begin to unravel progress made in the past. Standing still is not a practicable option: the choice is between moving forward with further trade liberalization, which will further boost world trade growth; and moving back as strengthened protectionist pressures bring the risk of slower growth in world trade, and consequently slower growth in world GDP than would otherwise be the case.
One consequence of the complex challenges now facing multilateral trade negotiations has been an increase in the number of preferential trading arrangements that are being negotiated. It can be tempting to see a bilateral approach as an easier substitute for complex multilateral negotiations. And bilateral free trade agreements, and the development of regional trading blocs, can be a useful boost to international trade if undertaken in the context of multilateral trade liberalization. But they are not an alternative to multilateral liberalization and if seen as such will hinder progress on the multilateral front.
The second challenge as we look forward is for the international financial system. Here, two issues are crucial at the current juncture. The first is the need to give Asia appropriate weight in the international financial system, including in the IMF itself. The Fund management's position on this issue is clear. We recognize that Asia has a powerful and legitimate claim to greater weight in the Fund than allowed for under the current rules. Asia has a voice, of course: it wields considerable influence in Fund discussions. But it is clearly under-represented. This issue is firmly on the agenda of the Fund's shareholders ahead of the next Annual Meetings, in Singapore next year.
At the same time, there is a pressing need to strengthen the mechanisms for resolving global imbalances. This is more than just a case of tackling the U. S. current account deficit, or structural reform in Europe and Japan, or addressing low domestic consumption in Asia. The current imbalances in the global economy are complex in their origins and require action on several fronts at once if they are to be resolved without undermining global economic stability and growth. There is a clear opportunity for strengthened multilateral surveillance by the IMF to play a central role in this process.
Applying many of the lessons from the financial crises of the 1990s has already strengthened the global economy. It is now generally recognized, for example, that flexible exchange rate regimes have an important role in enabling smooth adjustment to changing domestic and international circumstances. It is also clear that foreign direct investment and strengthened financial sectors can both help to reduce the vulnerabilities associated with private capital flows.
The third challenge for the future is, in a sense, domestic. Whenever growth is rapid there are those left behind because they are not able, in the short term, to benefit from the increased opportunities that growth brings. Over the medium and longer term, of course, education has a crucial role to play. Access to high quality education for all is important both at the individual level—where it enables individuals to reap the benefits associated with a rapidly growing economy—and at the national level, since without a well-educated workforce growth will eventually be restricted.
To address short-term needs, however, other measures besides improving the provision of education will be needed. Social safety nets are vital. But they need to be well-targeted, to benefit those most in need. Subsidies that mainly help the middle classes, for example, are ineffective, expensive and can undermine fiscal discipline and so, in turn, macroeconomic stability. Safety nets that distort incentives too much will undermine growth.
Putting well-targeted and affordable safety nets in place is a particular challenge for emerging market and developing countries—though many industrial countries have welfare systems that are unduly distortive. But all industrial economies and a growing number of developing countries face another challenge to domestic economic policy: demographic change. As populations age—very rapidly in some countries-public pension systems are coming under increasing strain. As the elderly dependency ratio rises, and fewer workers support an increasing number of older retired citizens, measures will be needed to ensure that fiscal policy remains on a sustainable path. In industrial countries action is needed sooner rather than later in order to avoid a fiscal crunch. In emerging market countries, there may be more time in some cases, but the challenges are greater: public pension schemes, while more limited, are already expensive and unsustainably generous. For all countries, therefore, confronting demographic challenges means ensuring more efficient government spending and, most important, means ensuring that economies are flexible and so able to respond to the challenges in a way that does not undermine growth.
The final challenge is for countries left behind or retrogressing, and is in some ways the most daunting. The Millennium Development Goals agreed by the United Nations in 2000 have highlighted the extent to which some countries have fallen behind. Experience over the past half century has taught us that ultimately it is domestic policy reform that will determine whether those countries that have yet to integrate with the global economy in any meaningful way can begin to share in the benefits of global growth. Without policies that enable these countries to integrate more successfully into the global economy, their citizens will remain poor—and, indeed, will in some cases become worse, rather than better, off. Improved governance, an end to corruption, policies aimed at achieving macroeconomic stability are essential for the sustained growth that will make poverty reduction possible. Without such policy reforms, the scope for help from the international community will be restricted.
Yet the international community—bilateral and multilateral donors alike—has a vital role to play in helping these countries. Aid transfers continue to be vital of course. But so too is capacity-building, policy advice and technical assistance. Much of the IMF's work with these countries involves assisting the reform process, for example, by enabling them to implement public expenditure management and by improving tax administration. And countries need assistance from the international community if they are to be able to absorb increased aid flows in ways which do not further undermine economic progress.
Let me briefly conclude.
The past half century has been a period of extraordinary growth for the world economy. Most citizens in most countries are far better off today than could have been imagined in the early postwar years. The pace of technological change has been, and continues to be, remarkable. Globalization has brought enormous benefits. And there are strong reasons for expecting this process to continue.
But at the same time there is no room for complacency. The last great period of globalization, at the end of the 19 th century, ended in disaster, with the First World War. Progress was reversed and recovery from that setback took many decades.
A reversal this time may not be likely, but it is not impossible. Much of what has been achieved is a consequence of greatly improved domestic economic policies and, above all, the strength, durability and adaptability of the multilateral economic framework put in place in 1945. There have been many challenges to this framework over the years, all of which have ultimately demonstrated its underlying strength.
But the challenges we face today are, I believe daunting, not least because their seriousness is not fully recognized. The world trading system is at a crucial juncture. A successful outcome for the Doha Round will strengthen it greatly: failure would do much to undermine it. The complex problem of global imbalances must be addressed if the risk of a disorderly unwinding is to be avoided. And the problems of those countries that have yet to share in the benefits of globalization cannot be ignored.
Tackling these problems will consolidate and increase the gains already reaped from globalization. Ignoring them would be, at best, foolhardy.
1 O'Rourke and Williamson p. l7.
2 Tariffs in many countries reached their lowest levels around l870 or l880 as some countries responded to the reduced prices of imports due to falling transport costs with higher levels of protection. See O'Rourke and Williamson p.95.
3 There appears to have been rapid growth of industry in some developing countries; India seems to have had a twenty year period of sustained growth of industry in the late l9th century. None of these bursts of growth seems to have been sustained, however.
4 Obstfeld and Taylor, p.55.
5 Obstfeld and Taylor, p. 60.
6 O'Rourke and Williamson p. 35 ff.
7 Japan was always an outlier in this regard.
8 Today, the World Bank consists of the IBRD, the International Development Association (which provides loans at concessional rates and grants to poor countries that cannot access private capital markets), and several other affiliated entities.
9 There were two exceptions—one to enable a county to "safeguard its external financial position and its balance of payments" and one for "infant industry protection" in developing countries. Subsequently, the GATT articles were amended to permit preferential treatment for developing countries by industrial countries in their trade regimes.
10 See Anne O. Krueger "Trade Policy and Economic Development: How We Learn", American Economic Review , Vol. 87, No. l, March 1997, Pp. 1-22.