| Globalization and Free Trade |
| Eds Philip Booth and Richard Wellings, Edward Elgar, 2009, 736 pages, £210. |
| This volume is a collection of previous publications of the Institute of Economic Affairs, with a view to reiterating “the case for free trade and the accompanying process of globalization.” The explicit aim of this collection is, “To counter the forces of dirigisme”. Its publication seems timely. A successful conclusion to the Doha Development Round looks elusive despite nine years of negotiations; the visible role of the state in the US and EU has increased dramatically with state ownership of banks and automotive companies. |
| How effectively does the volume deliver its aims? As the papers are arranged in chronological rather than thematic order, the reader often has to go through several papers to piece together a coherent answer to this query. Nonetheless, the arrangement enables the reader to see that supposedly novel challenges to free trade such as environmental degradation, labour standards and rising inequality have long existed. |
| What is perhaps new today is where the challenge to free trade and globalization is being mounted from. Whereas many developing countries, most notably China, are now relatively firm supporters of free trade and globalization (due to their interest in exporting to and investing in the developed economies), resistance is now rising in the US, a previously firm pro-globalizer. |
| In recent years, one of the commonly cited problems in the international economy has been that of ‘global imbalance’, a catch-all phase which points to the imbalance of demand and supply of goods and capital – there is an over-dependence on heavily-indebted US consumers providing final demand for goods produced or assembled in China, Japan and Germany. In Lal’s paper, he provides some counter-arguments to the earlier view that exports from developing countries can still grow even if incomes in developed countries remain stagnant, explaining that the growing exports can displace domestic production in these developed countries. Yet a problem resolved for the developing countries creates a new one for the developed countries – how should we deal with the political backlash against globalization resulting from a rising level of unemployment in the US? This issue is insufficiently addressed in the volume. |
| In addition, a more substantive introduction and overview would have strengthened the volume considerably. The editors provide only a very brief introduction to the papers and how they fit together. They introduce the term ‘globalization’ to refer to: “The extension of free trade and a liberal economic order beyond the developed countries between which trade is already reasonably free”, even though not all the papers explicitly adopt such a definition. The issue of what ‘dirigisme’ means in different historical and geographical contexts is largely assumed rather than explicitly engaged with despite persistent differences in state involvement in the US, European and Asian economies. It might also have been helpful for the editors to highlight the disagreements among the papers so that the readers are able to weigh both sides of the argument on issues about which proponents of free trade disagree. For instance, Gerald P O’Discoll, Jr and Sarah F Cooper take a more sanguine view of bilateral and regional free-trade agreements in promoting international trade than Jagdish Bhagwati and Razeen Sally. |
| Nonetheless, the collection of articles is, on the whole, invaluable to those seeking affirmation of the principles of free trade and globalization. Its price will, unfortunately, be a barrier to most readers bar academic libraries. |
Mui Pong Goh
Research Fellow, Chatham House |
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