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Globalization and Inequality: Historical Trends

  • Economics
  • Political Science


C:\MYFILES\abcde\finalpaper.PDF Globalization and Inequality: Historical Trends by Kevin H. O’Rourke Trinity College Dublin, CEPR and NBER Revised version of a paper presented at the Annual World Bank Conference on Development Economics, 1-2 May, 2001. Parts of the paper draw on Findlay and O’Rourke (2001) and O’Rourke and Williamson (1999). I am grateful to my co-authors for permission to draw on our joint work. I am also grateful to Don Davis, Tim Hatton, Richard Kohl, Philip Lane, Gregor Noll, Alan Taylor, Jeff Williamson, and two anonymous referees for helpful comments and useful conversations about these and related matters. The usual disclaimer applies. 1 In so doing it is following in the footsteps of Lindert and Williamson (2001). 1 Introduction Does globalization lead to the world becoming a more equal place, or does it lead to the rich getting richer and the poor getting poorer? This question has assumed ever-greater importance with the emergence of the WTO as a force for trade liberalization throughout the world, with Europe moving towards increased economic integration, with the collapse of communism and the opening up of previously autarkic economies, and with renewed speculation regarding the formation of a pan-American free trade area. The question is increasingly being raised by opponents of globalization, but public debate on the issue can be frustratingly confused. Protestors are often vague about what globalization is, and fail to recognize that globalization has different dimensions, which may have different effects on inequality. Most seriously, they often define ‘globalization’ as encompassing many different phenomena, some of which have little or nothing to do with globalization as economists would define it (Rodrik 2000). Globalization as economists define it encompasses declining barriers to trade, migration, capital flows, foreign direct investment (FDI), and technological transfers. This paper will restrict itself to explo

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