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Globalization and Its Discontents is a book written in 2002 by the 2001 Nobel laureate Joseph E. Stiglitz. Image File history File links No higher resolution available. ...
Joseph Stiglitz (born February 9, 1943) is an American economist and a member of the Columbia University faculty. ...
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The English language is a West Germanic language that originates in England. ...
A KFC franchise in Kuwait. ...
A publisher is a person or entity which engages in the act of publishing. ...
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ISBN-13 represented as EAN-13 bar code (in this case ISBN 978-3-16-148410-0) The International Standard Book Number, ISBN, is a unique[1] commercial book identifier barcode. ...
Image File history File links Stiglitz. ...
Image File history File links Stiglitz. ...
The University of Michigan, Ann Arbor (U of M, U-M or simply Michigan) is a coeducational public research university in the state of Michigan, and one of the foremost universities in the United States. ...
The Nobel Prizes (pronounced no-BELL or no-bell) are awarded annually to people who have done outstanding research, invented groundbreaking techniques or equipment, or made outstanding contributions to society. ...
Joseph Stiglitz (born February 9, 1943) is an American economist and a member of the Columbia University faculty. ...
According to James M. Rossi, Globalization and Its Discontents is a concise, devastating, and relentless indictment of the global economic policies of the International Monetary Fund, World Trade Organization, and World Bank. Stiglitz singles out the IMF for most of the blame: flawed economic theories, lack of transparency and accountability to the public, and the pursuit of special corporate interests. The book draws on Stiglitz's personal experience as chairman of the Council of Economic Advisers under Bill Clinton from 1993 and chief economist at the World Bank from 1997. During this period Stiglitz became disillusioned with the IMF and other international institutions, which he came to believe acted against the interests of impoverished developing countries [1]. Stiglitz argues that the policies pursued by the IMF are based on neoliberal assumptions that are fundamentally unsound: This article needs additional references or sources to facilitate its verification. ...
The World Trade Organization (WTO), (OMC - Spanish: , French: ), is an international organization designed to supervise and liberalize international trade. ...
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See: transparency (optics) alpha compositing GIF#Transparency transparency (overhead projector) market transparency transparency (telecommunication) transparency (computing) For X11 pseudo-transparency, see pseudo-transparency. ...
Accountability is a concept in ethics with several meanings. ...
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The Council of Economic Advisers (CEA) is a group of economists set up to advise the President of the United States. ...
William Jefferson Bill Clinton (born William Jefferson Blythe III[1] on August 19, 1946) was the 42nd President of the United States, serving from 1993 to 2001. ...
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The term neoliberalism is used to describe a political-economic philosophy that had major implications for government policies beginning in the 1970s – and increasingly prominent since 1980 – that de-emphasizes or rejects positive government intervention in the economy, focusing instead on achieving progress and even social justice by...
- Behind the free market ideology there is a model, often attributed to Adam Smith, which argues that market forces--the profit motive--drive the economy to efficient outcomes as if by an invisible hand. One of the great achievements of modern economics is to show the sense in which, and the conditions under which, Smith's conclusion is correct. It turns out that these conditions are highly restrictive. Indeed, more recent advances in economic theory --ironically occurring precisely during the period of the most relentless pursuit of the Washington Consensus policies--have shown that whenever information is imperfect and markets incomplete, which is to say always, and especially in developing countries, then the invisible hand works most imperfectly. Significantly, there are desirable government interventions which, in principle, can improve upon the efficiency of the market. These restrictions on the conditions under which markets result in efficiency are important--many of the key activities of government can be understood as responses to the resulting market failures. [2]
Stiglitz argues that IMF policies contributed to bringing about the East Asian financial crisis, as well as the Argentine economic crisis. Also noted was the failure of Russia's conversion to a market economy and low levels of development in Sub-Saharan Africa. Specific policies criticised by Stiglitz include fiscal austerity, high interest rates, trade liberalization, and the liberalization of capital markets and insistence on the privatization of state assets. Adam Smith FRSE (baptised June 5, 1723 O.S. / June 16 N.S. – July 17, 1790) was a Scottish moral philosopher and a pioneering political economist. ...
This article or section does not cite any references or sources. ...
Economics is the social science studying production and consumption through measurable variables. ...
The Washington Consensus is a phrase initially coined in 1987-88 by John Williamson to describe a relatively specific set of ten economic policy prescriptions that he considered to constitute a standard reform package promoted for crisis-wracked countries by Washington-based institutions such as the International Monetary Fund, World...
A developing country is a country with low average income compared to the world average. ...
Look up efficiency in Wiktionary, the free dictionary. ...
The East Asian financial crisis was a period of economic unrest that started in July 1997 in Thailand and affected currencies, stock markets, and other asset prices in several Asian countries, many considered East Asian Tigers. ...
The Argentine economic crisis was part of the situation that affected Argentinas economy during the late 1990s and early 2000s. ...
A political map showing national divisions in relation to deonte Shepard Club Of America Free burgers for new members the ecological break (Sub-Saharan Africa in green) A geographical map of Africa, showing the ecological break that defines the sub-Saharan area Sub-Saharan Africa is the term used to...
An interest rate is the price a borrower pays for the use of money he does not own, and the return a lender receives for deferring his consumption, by lending to the borrower. ...
Free trade is an economic concept referring to the selling of products between countries without tariffs or other trade barriers. ...
In general, liberalization refers to a relaxation of previous government restrictions, usually in areas of social or economic policy. ...
The capital market (securities markets) is the market for securities, where companies and the government can raise long-term funds. ...
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Joseph Stiglitz (born February 9, 1943) is an American economist and a member of the Columbia University faculty. ...
Contents of the Book
In his book Stiglitz claims that globalization has not brought the promised economic benefits to some of the poorest nations in the world. This can be easily evidenced by the fact that during the last decade of the twentieth century the number of people living in poverty increased by almost 100 million. During this same period world income rose by 2.5%, signaling a growing divide between the rich and the poor (p. 5). The grim reality is that we still have 2.8 billion people living on less than $2 a day (p. 25). A KFC franchise in Kuwait. ...
Stiglitz offers many reasons as to why this growing divide exists, and many of these reasons put the blame squarely on the International Monetary Fund, which is a public organization funded by the worlds’ taxpayers with the intent of warding off economic crises. The IMF is supposed to focus on a country’s macroeconomic issues, such as the budget deficit, its monetary policy, its inflation, its trade deficit, or its borrowing from abroad. The World Bank, the IMF’s sister institution is in charge of economic development, and focuses its efforts on structural issues. These would include what the country’s government spent its money on, the country’s financial institutions, its labor markets, or its trade policies. The problem was how the structural issues were handled often affected the macroeconomics of the country, so the IMF viewed both issues as being within its sphere of power. The IMF became an incredibly powerful player, influencing any country that faced an economic crisis. Stiglitz asserts that it is this power, and the poor policy decisions that followed that have made matters even worse for the people they were entrusted to help. This article needs additional references or sources to facilitate its verification. ...
Macroeconomics is the study of the entire economy in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behavior of prices. ...
A budget deficit occurs when an entity (often a government) spends more money than it takes in. ...
It has been suggested that monetary theory be merged into this article or section. ...
Balance of trade figures are the sum of the money gained by a given economy by selling exports, minus the cost of buying imports. ...
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One of the IMF policies harshly criticized by Stiglitz is the forcing of developing economies to open up their markets to foreign competition before they are ready to do so. Even the most advanced industrial societies, such as the United States, built up their economies by selectively protecting certain industries deemed unfit to compete with foreign markets. Only when these industries became strong enough were they opened up. The IMF seems to completely ignore this fact when they provide funds contingent upon rapid trade and capital market liberalization. Doing so destroys jobs rather than creating them, especially in agriculture where poor farmers simply can’t compete with highly subsidized goods from Europe and America. There are no safety nets set up in these developing countries to deal with a market economy. They have no minimum wage or working condition standards, and they certainly do not have welfare and unemployment systems. In summary Stiglitz writes, “Small developing countries are like small boats. Rapid capital market liberalization, in the manner pushed by the IMF, amounted to setting them off on a voyage on a rough sea, before the holes in their hulls have been repaired, before the captain has received training, before life vests have been put on board. Even in the best of circumstances, there was a high likelihood that they would be overturned when they were hit broadside by a big wave (p. 17).” The capital market (securities markets) is the market for securities, where companies and the government can raise long-term funds. ...
For other uses, see Europe (disambiguation). ...
This article needs additional references or sources to facilitate its verification. ...
The minimum wage is the minimum rate a worker can legally be paid (usually per hour) as opposed to wages that are determined by the forces of supply and demand in a free market. ...
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Stiglitz also criticizes the way leaders are selected to head such powerful institutions. They come from industrialized nations, with the head of the IMF always being a European, and the head of the World Bank always an American. No experience working in the developing world is necessary. These leaders are closely aligned with the financial community, with many coming and going to large investment firms like Citigroup or Goldman Sachs. This bias has led Stiglitz to believe that the leaders of these institutions are acting in the best interest of the advanced industrial countries, and not those they are supposed to serve. Citigroup Inc. ...
The Goldman Sachs Group, Inc. ...
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Yet another aspect of the IMF that Stiglitz is critical of is the way they research their policy decisions and make recommendations. The IMF has only one resident representative living in the country being assisted, with teams of economists flying in for only three week missions. Rather than getting a true feel for the country, these economists spend their time in five star hotels pouring over financial data. He makes the claim that one must be able to “feel” what their recommendations impose, and that one cannot do so from a luxury hotel. Alan Greenspan, former chairman, United States Federal Reserve. ...
Stiglitz provides a lengthy example of the poor recommendations the IMF makes when he talks about Ethiopia, one of the poorest countries in the world with a per capita income of just $110. The Prime Minister Meles Zenawi had recently come to power after his guerillas won a seventeen year battle against the former Marxist regime. The IMF had suspended its lending program despite the fact that Ethiopia had no inflation and had output growth, two key indicators of a solid macroeconomic framework. They had cut back on military expenditures, and focused their attention on the poorest of the poor living in the rural sector. The IMF suspended its $127 million in lending because it was worried about the country’s budgetary position. The government only had revenue from taxes and foreign aid, and the budget showed that if foreign aid dried up, Ethiopia would be in trouble. This essentially means that revenue from taxes alone must equal expenditures, which in turn means that any foreign aid received can’t be spent without getting their budget out of whack according to IMF standards. The IMF also contended that foreign aid was too unstable to be relied upon, but in actuality, Stiglitz argues, it was far more stable than the tax revenue of a developing country where the variations in economic conditions can be vast. Map of countries by GDP (nominal) per capita. ...
Per capita is a Latin phrase meaning for each head. ...
List of Heads of Government of Ethiopia (Dates in italics indicate de facto continuation of office) Affiliations:- See also Ethiopia Rulers and Heads of State of Ethiopia List of Presidents of Ethiopia Lists of office-holders ...
Meles Zenawi (Geez መለስ ዜናዊ meles zÄ“nÄwÄ«, b. ...
Marxism is the political practice and social theory based on the works of Karl Marx, a 19th century philosopher, economist, journalist, and revolutionary, along with Friedrich Engels. ...
Macroeconomics is the study of the entire economy in terms of the total amount of goods and services produced, total income earned, the level of employment of productive resources, and the general behavior of prices. ...
Military expenditure by country using CIA World Factbook figures Military spending as a percentage of GDP using CIA World Factbook figures This is a list of countries by military expenditures using the latest information available. ...
The IMF also imposed strict financial policies on Ethiopia before assistance would be released. They wanted the country to open up their financial markets to Western competition, and divide its largest bank into several pieces. Local banks simply cannot compete with global giants such as Citibank. Stiglitz declares that these global giants suck up all of the depositors’ money in the area, and ship them off in the form of loans to the West, rather than providing these much needed funds to an economically depleted area. Opening up their markets makes the country worse off. The IMF also demanded that interest rates be freely determined by the market, because that has been a driving force of prosperity in the West. But the United States did not adopt this policy until after 1970 when they had a far more developed market. The IMF was imposing policies on these countries that are common in industrialized societies, but what they fail to realize is that it took time even for these advanced societies to adopt these policies. These things don’t just happen overnight, and doing so before these markets are ready can lead to disastrous results. Ethiopia’s leadership foresaw these results, and fortunately resisted these policies. As a result, IMF lending was suspended, and it took a valiant effort by the World Bank to get this lending restored. Citibank is a major international bank, founded in 1812 as the City Bank of New York. ...
An interest rate is the rental price of money. ...
Stiglitz argues a large part of the problem with the IMF is the amount of power they wield. Many of the nations that come to them for help know the policies they will surely recommend are not well suited to their country. They simply have no other place to turn. They must adhere to IMF policies or risk losing much needed funds. Exacerbating this problem is the fact that when IMF money is pulled, World Bank money generally follows, as well as many private investors. This forces them to accept policies from poorly trained economists (with respect to developing economies), that only spend three weeks in the country before giving their recommendations. Such a short time span often leads to a “one-size-fits-all” approach, and that is simply not good enough for the unique and complex situations they often encounter. Stiglitz writes about an occasion where a report was borrowed from one country for another, and the name of the country in the original report wasn’t even changed.
After all of these criticisms Stiglitz mentions that IMF money and time is not always wasted. IMF money has gone to countries with good economic policies in place, and when it has, has made a difference in those countries. He mentions that the IMF is so stringent in its impositions due to experiences where once countries were given funds did nothing to reform their economic framework. Regardless of the reasons, he now feels it is time to grade these institutional powerhouses to see if they are really doing what they set out to do when they were founded. But make no mistake, Stiglitz still feels that globalization can deliver on its original promises. He closes the first chapter by saying, “globalization can be reshaped, and when it is, when it is properly, fairly run, with all countries having a voice in policies affecting them, there is a possibility that it will help create a new global economy in which growth is not only more sustainable and less volatile but the fruits of this growth are more equitably shared (p. 22).” The world economy can be represented various ways, and broken down in various ways. ...
Criticism Although Globalization and Its Discontents has earned praise from some reviewers [3], its methodology and key findings have been criticised by others. Writing in Public Choice DW MacKenzie asserts that Stiglitz mischaracterizes government failures as market failures. While Stiglitz claims that free market fundamentalists in the Washington consensus formed policy based on ideology, his own examples indicate otherwise. Stiglitz describes how the IMF forced bank restructuring and bank closures, supplied subsidies to narrow business and financial interests, and interfered with nuts and bolts decision in forms on what to produce, how to produce, and how to organize internally. Rather than promoting free markets, the IMF carried out government intervention, and delivered economic failure.
Daniel T. Griswold of the Cato Institute labels the book a "score-settling exercise distorted by the author's own political prejudices and personal animus." Griswold takes issue with Stiglitz's assumption "that protectionism enriches those nations that practice it" and notes that "while he is not questioning free trade, Stiglitz is disparaging the free flow of capital. The book blames the East Asian Financial Crisis almost entirely on one factor: capital account liberalization." Stiglitz demonstrates this belief by "prais[ing] Malaysia for spurring IMF advice ... by imposing capital controls to stem the flight of short term flows." Griswold also states that Stiglitz provided no evidence to support his belief that Malaysia was rewarded for their efforts. He counters that Malaysia's GDP had fallen much farther than the other countries listed by Stiglitz, down to 6.7% and "recovered less rapidly in 1999 and 2000 even though [others] did not resort to capital controls Stiglitz champions." Griswold concludes by arguing that Stiglitz "distorts the history of the East Asian Miracle", with Russian privatization he "ignores the fact that Russia's initial reforms were timid and half baked" and that the IMF with its beliefs in bail outs and non-market exchange rates is not the "great symbol of market fundamentalism".[4][5] The Cato Institute is a libertarian think tank headquartered in Washington, D.C. The Institutes stated mission is to broaden the parameters of public policy debate to allow consideration of the traditional American principles of limited government, individual liberty, free markets, and peace by striving to achieve greater involvement...
Protectionism is the economic policy of restraining trade between nations, through methods such as high tariffs on imported goods, restrictive quotas, a variety of restrictive government regulations designed to discourage imports, and anti-dumping laws in an attempt to protect domestic industries in a particular nation from foreign take-over...
The capital account is one of two primary components of the balance of payments. ...
Capital controls are restrictions on the trade of assets across international borders. ...
Data from The World Factbook. ...
Map of East Asian Tigers Hong Kong Singapore South Korea Taiwan, Republic of China Skyline of Hong Kong Island, taken from Tsim Sha Tsui, Kowloon, Hong Kong The skyline of Singapores Central Business District (CBD) seen here at dusk Taipei is Taiwans largest city and financial center. ...
This article does not adequately cite its references or sources. ...
Market fundamentalism (or free-market fundamentalism) is a conviction that free markets are generally beneficial. ...
The IMF, by the voice of Kenneth Rogoff, wrote a letter of answer :[1] Kenneth Rogoff served as Economic Counsellor and Director, Research Department of the International Monetary Fund from August 2001 to September 2003. ...
References - ^ http://www.wwnorton.com/catalog/spring03/032439.htm
- ^ http://human-nature.com/nibbs/02/stiglitz.html
- ^ http://www.wwnorton.com/catalog/spring03/032439.htm
- ^ http://www.ciaonet.org/olj/cato/v22n3/cato_v22n3grd01.pdf
- ^ http://www.cato.org/pubs/journal/cj22n3/cj22n3-12.pdf
External links - Review by Doug MacKenzie in Public Choice
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