Session 8 Joseph Stiglitz, Globalization and its Discontents, 2002 Chapters 1 and 2

Chapter 1: The Promise of Global Institutions I. International Organizations powerful institutions today . International !ureau"rats the #fa"eless symbols of the world e"onomi" order$ are under atta"% !. Protests of Int&l Org 'eetings "ontinual flashpoints("onfli"t 1. )TO *eattle+ 1,,, protest -. nnual I'.()orld !an% protests /. Protests not new in de0eloping world+ 12 new in de0eloped world 3. 4ow+ with "ommuni"ations ad0an"es+ e0en 156year olds ha0e an opinion on 4 .T 7. s result+ e0en "onser0ati0e politi"ians must pay heed to negati0e effe"ts of globalization 8Chira" "ited as e9ample: Globalization . !rought mu"h good through int&l trade 84i%e fa"tory e9ample: !. *o"ial benefits as well: Greater "onne"tion throughout world has allowed things li%e the International Campaign to !an ;andmines and anti6globalization mo0ement to de0elop C. 2"onomi" integration helped stop sian .inan"ial Crisis from growing in <,= >. *ometimes results mi9ed: integration(mar%et reforms in 1ussia so far bad 2. )estern6dri0en with disproportionate share of benefits: Terms of Trade for poorest de"lining 8=: .. Other related issues: spe"ulation+ property rights infringement+ "onditionality of aid as a for"e that "an undermine national so0ereignty+ en0ironmental probs The 'a?or Institutions of Globalization I'.+ )orld !an%+ )TO . International 'onetary .und 8I'.: goal: to ensure global e"onomi" stability 1. Originally designed to pro0ide loans to "ountries fa"ing e"onomi" downturn to stimulate aggregate demand 8@eynesian approa"h: -. 4ow+ be"ause of free mar%et ideologi"al influen"e+ "ountries re"ei0e funds only if "ountries raise ta9es or interest rates+ or slash defi"its /. Publi" institution only A.*. has effe"ti0e 0eto 3. !e"ause de0eloping "ountries in "ontinual "risis+ I'. "ould regularly impose "onditions on them !. )orld !an% goal: to redu"e po0erty 1. Ander '"4amara and Chenery+ !an% was 0ery sympatheti" to po0erty redu"tion fo"us -. In 1,BC&s 81eagan era:+ Clausen and @reuger mo0ed the !an% in a mu"h more free mar%et dire"tion 8go0ernments were the problem: /. In 1,BC&s+ !an% lending went beyond ?ust normal pro?e"ts to in"lude stru"tural ad?ustment loans C. )orld Trade Organization 8)TO: goal: to go0ern int&l trade relations . *pawned from the General greement on Trade and Tariffs in 1,,7 !. .orum for trade agreement disputes and enfor"ement body The )ashington Consensus . 4ame for the "onsensus between I'.()!(A.*. Treasury for #right$ e"onomi" poli"ies for de0eloping world to pursue !. These poli"ies not always right for promoting growth

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1. 29ample: #"apital mar%et liberalization has been pushed despite the fa"t that there is no e0iden"e showing it spurs e"onomi" growth$: -. 29ample: A.*. and Eapan used prote"tionism as an important tool for growth+ but I'.()!()TO does not promote that C. I'.()TO()! leaders dominated by wealthy "ountry interests >. ;eaders are "hosen behind "losed doors and often ha0e little e9perien"e in de0eloping world 2. )orld situation is now one of #global go0ernan"e without global go0ernment$ these %ey players dominate Chapter -: The Promise of Global Institutions I. >istin"tions !etween the I'. and )orld !an% . )orld !an% has #substantial fra"tion$ of staff in "ountryF I'. only one #resident representati0e$ in "apital 8for more+ -3: !. I'.&s 0iew of a "ountry from a lu9ury hotel out6of6tou"h The 1ole of the I'. and its Problems . 1ole in International ssistan"e: To re0iew ma"roe"onomi" situation 8growth+ unemployment+ and inflation: and ma%e sure "ountry is li0ing within its means !. Parti"ularly "on"erned with inflation+ e0en though may o0erfo"us on this to the detriment of growth and de0elopment 82thiopia e9ample on page -B6/1: C. *trong finan"ial fo"us+ as in the "ase of pushing for 2thiopia to open ban%ing system to foreign "ompetition and liberalize finan"ial mar%ets >. Insisten"e on wanting "ountries to rely on mar%et for"es for stabilization and growth 2. #One6size6fits6all$ ad0i"e of I'. that ri"her "ountries+ li%e the A.*. "an ignore 8/3+ 3,:F further e9ample+ report done with sear"h and repla"e 83=6B: .. 4ot interested in hearing the thoughts of <"lient "ountries& 83C: G. Photo of I'. 'anaging >ire"tor Camdessus lording o0er the President of Indonesia who was for"ed to sign an agreement 83C61: G. I'. "an not only "ut off funds but has power to dis"ourage in0estments from pri0ate mar%ets 83- the "ase of @orea: I. .o"used on intermediate 0ariables+ li%e money supply+ setting stri"t /C6+ 5C6+ and ,C6day targets+ rather than ?ust o0erall growth+ unemployment+ and inflation E. 29ample of s%et"hy I'. ad0i"e to @orea and others: !uild Central !an%s that with mandate to fo"us on inflation 8opposite to A.*.+ whose !an% fo"uses on growth and inflation: @. Treated 1ussia and @enya different be"ause 1ussia a strategi" nu"lear power ;. 29e"uti0e >ire"tors 8"ountry representati0es: at I'. often %ept in dar% about de"isions '. 2s"aping publi" a""ountability 4. *tiglitz: need for a publi" institution&s .reedom of Information "t to %now what su"h institutions are doing !otswana as an e9ample of an approa"h alternati0e to the I'. 8/5: . !otswana used 0ariety of outside ad0isers+ in"luding .ord .oundation+ publi" institutions+ and pri0ate foundations !. )hen I'. mission "ame in 1,B1+ found that !otswana was already doing many of the things it would ha0e re"ommended sin"e then+ !otswana has not turned to the I'. for help

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