Dynamics of Globalization and Development

348 Pages·1997·14.434 MB·English

by  Satya Dev Gupta, Nanda K. Choudhry (auth.), Satya Dev Gupta, Nanda K. Choudhry (eds.)

Dynamics of Globalization
and Development
RECENT ECONOMIC THOUGHT SERIES
Editors:
Warren J. Samuels William Darity, Jr.
Michigan State University University of North Carolina
East Lansing, Michigan, USA Chapel Hill, North Carolina, USA
Other books in the series:
Magnusson, Lars: EVOLUTIONARY AND NEO-SCHUMPETERIAN
APPROACHES TO ECONOMICS
Reisman, D.: ECONOMIC THOUGHT AND POLITICAL THEORY
Burley, P. and Foster, J.: ECONOMICS AND THERMODYNAMICS:
NEW PERSPECTIVES ON ECONOMIC ANALYSIS
Brennan, H.G. and Waterman, A.C.: ECONOMICS AND RELIGION:
ARE THEY DISTINCT?
Klein, Philip A.: THE ROLE OF ECONOMIC THEORY
Semmler, Willi.: BUSINESS CYCLES: THEORY AND EMPIRICS
Little, Daniel: ON THE RELIABILITY OF ECONOMIC MODELS:
ESSAYS IN THE PHILOSOPHY OF ECONOMICS
Weimer, David L.: INSTITUTIONAL DESIGN
Davis, John B.: THE STATE OF THE INTERPRETATION OF KEYNES
Wells, Paul: POST-KEYNESIAN ECONOMIC THEORY
Hoover, Kevin D.: MACROECONOMETRICS:
DEVELOPMENTS, TENSIONS AND PROSPECTS
Kendrick, John W.: THE NEW SYSTEMS OF NATURAL ACCOUNTS
Groenewegen, John: TRANSACTION COST ECONOMICS AND BEYOND
King, J.E.: AN ALTERNATIVE MACROECONOMIC THEORY
Schofield, Norman: COLLECTIVE DECISION-MAKING: SOCIAL CHOICE
AND POLITICAL ECONOMY
Menchik, Paul L.: HOUSEHOLD AND FAMILY ECONOMICS
Gupta, Kanhaya L.: EXPERIENCES WITH FINANCIAL LIBERALIZATION
Cohen, Avi J., Hagemann, Harald, and Smithin, John:
MONEY FINANCIAL INSTITUTIONS AND MACROECONOMICS
Mason, P.L. and Williams, R.M.:
RACE, MARKETS, AND SOCIAL OUTCOMES
Gupta, Satya Dev: THE POLITICAL ECONOMY OF GLOBALIZATION
Fisher, R.C.: INTERGOVERNMENTAL FISCAL RELATIONS
Mariussen, A. and Wheelock, J.:
HOUSEHOLDS, WORK AND ECONOMIC CHANGE:
A COMPARATIVE INSTITUTIONAL PERSPECTIVE
Gupta, Satya Dev: GLOBALIZATION, GROWTH AND SUSTAINABILITY
Dynamics of Globalization
and Development
Edited by
Satya Dev Gupta
St. Thomas University
Fredericton, New Brunswick
Canada
with
Nanda K. Choudhry
University of Toronto
Toronto, Ontario
Canada
SPRINGER SCIENCE+BUSINESS MEDIA, LLC
Library of Congress Cataloging-in-Publication Data
Dynamics of globalization and development / edited by Satya Dev Gupta
with Nanda K. Choudhry.
p. cm. -- (Recent economic thought series)
lncludes bibliographical references and index.
ISBN 978-1-4613-7852-5 ISBN 978-1-4615-6219-1 (eBook)
DOI 10.1007/978-1-4615-6219-1
1. Economic development. 2. Economic policy. 3. International
economic relations. 4. Competition, International. I. Gupta,
Satya Dev. II. Choudhry, Nanda K. III. Series.
HD74.D96 1997
338.9--dc21 97-23308
CIP
Copyright © 1997 Springer Science+Business Media New York
Originally published by Kluwer Academic Publishers in 1997
Softcover reprint of the hardcover 1s t edition 1997
AlI rights reserved. No part of this publication may be reproduced, stored in
a retrieval system or transmitted in anY form or by any means, mechanical,
photo-copying, recording, or otherwise, without the prior written permis sion of
the publisher, Springer Science+Business Media, LLC.
Printed an acid{ree paper
To Gangadevi
CONTENTS
Preface XI
1. Dynamics of Globalization and Development: An Introduction 1
Satya Dev Gupta and Nanda K. Choudhry
Globalization at the Crossroads? 4
Financial Liberalization 6
Multinational Enterprises, Investment and Technology 8
Micro Foundations 10
Conclusion 12
References 13
I. FINANCIAL LlBERALIZA TION
2. Foreign Aid and Growth: A Simulation Model 15
Kanhaya Gupta and Robert Lensink
A Non-technical Explanation of the Model 16
The Coefficients and the Simulation Strategy 18
The Simulation Results 20
The Alternative Simulations 25
Conclusions 32
Appendix: The Model 34
References 40
3. Liberalization and Growth-oriented Structural Adjustment
Programs: A Financial Programming Approach for India 41
M J Manohar Rao and Balwant Singh
Analytical Framework For Macroeconomic Management 43
Financial Programming 52
Conclusions 61
References 64
4. The Monetary Dynamics of Economic Integration 65
Paul Deprez and Johan Deprez
A Keynesian Theoretical Foundation 66
A Keynesian Interpretation of the Monetary Dynamics
of Integration 68
Monetary Integration and Economic Growth 73
The Policy Requirements for Effective Economic Integration 76
References 79
Vlll
II. MULTINA TlONAL ENTERPRISES, INVESTMENT AND
TECHNOLOGY
5. EU, ASEAN and North American Integration:
Lessons from Their Degrees of Integration 81
Maria Sophia Aguirre
Blocs and Their Degrees of Integration 83
Econometric Analysis 95
Conclusions 107
References 109
6. Speculation-led Development in the Third World 111
Ilene Grabel
Theoretical Foundations of Speculation-led Development 114
Speculation-led Development 118
Consequences of Speculation-led Economic Development 126
Implications for Financial Liberalization Theory and Policy 127
References 130
7. Globalization and Development: Lessons from the
Peripheral Countries of the European Union 135
Eleni Paliginis
Conditions for Convergence in the EU Periphery 136
Economic Structures: Core and Periphery 138
The Single European Market 142
Policies for the Development of the European Periphery 143
Conclusion 149
References 150
8. Globalization's Implications for Indonesia:
Trade Policy, Multinationals, and Competition 153
William E. James and Eric D. Ramstetter
Recent Economic Trends and the Policy Debate 155
Changing Trade Structures and Comparative Advantage 158
Foreign Multinational Firms and Competition in Manufacturing 165
Conclusions 177
Appendix 179
References 183
9. Technical Diffusion and Confusion 187
Michael Bradfield
Back to the Basics 188
Reality Check 199
Alternatives 201
References 204
ix
10. The Role of Intellectual Property Rights
in Economic Growth 209
David M Gould and William C. Gruben
Intellectual Property Rights Protection 211
Intellectual Property Rights and Economic Growth Theory 213
Intellectual Property and Economic Growth 215
Intellectual Property Rights and Economic Growth: The Results 217
Intellectual Property in Open and Closed Trade Regimes 222
Conclusion 231
Data Source Appendix 232
References 237
III. MICRO FOUNDATIONS
11. A New Approach to Global Trade Imbalances 243
Ravi Batra
The Absorption Approach 245
An Alternative Approach 247
A Critique of the Current Thinking 255
A New Interpretation of U.S. BOP History 257
Developing Economies 260
Conclusion 260
References 260
12. Structural Microeconomics of Productive Efficiency
and Strategic Alliances 261
Robin Rowley and Renuka Jain
Inertial Forces and Prior Commitment to Competition 262
Theoretical Omissions and Realistic Inadequacies 263
Structural Design, Technological Progress and Information 265
Microeconomic Foundations of Globalization 266
International Collaboration, Standards and Alliances 268
Dynamic and Integrated Global Processes 269
Reconstruction, Communication and Managerial Limits 270
Recasting Some Earlier Theories of the Large Firms 271
Concluding Remarks: Globalization and Micro-Macro Synthesis 273
References 275
13. Markets, Globalization and Structural Change 281
Masudul Alam Choudhury and Abdul Fatah Che Hamat
Questions on the Methodology of Oligopolistic Decision Making 282
The Contractarian Nature of Oligopolistic Decision Making 284
Alternative Concept of Market Contract 285
Social Contractarianism of Markets: Hayek and Buchanan 286
x
A Model of the Market as a System of Social Contract 290
Oligopolistic Behavior in the Light of Knowledge Induced
Markets 293
Islamic Relevance of Malaysian Development Initiatives 300
Political Economy of Markets in the Globalization Process 301
Some Empirical Inferences on Markets and Globalization 304
Conclusion 307
References 308
14. A New International Economic Priority:
Policy Responsibilities among Multilateral and
Regional Institutions 311
H Edward English
The Unique Example of the EEC 313
Shifting Priorities Since the 1960s 314
A Common Theoretical Context-Market Failure
and "Subsidiarity" 316
Competition Policy Issues 319
International Investment and Technology Issues 320
Environment and International Transactions 322
Policy Priorities and Programs Linking Competition,
Investment and Environment Issues to Multilateral and
Regional Institutions 324
Appendix 327
References 331
Index 333
Contributors 341
PREFACE
Globalization is transfonning the world at an accelerating pace, expanding and
intensifying international linkages in economic, political and social relations.
Liberalization of trade and fmance, lubricated by revolutionary changes in
infonnation technology, has resulted in significant economic growth at the global
level. On the other hand, the process of globalization is changing the nature of
production relations, threatening the traditional roles of the nation-state, and
carrying with it far-reaching implications for sustainable growth, development and
the environment.
As the United Nations' Human Development Report, 1996 indicates,
although both developed and developing countries are actively participating in this
saga of globalization, nearly ninety countries are worse off economically than they
were ten years ago, leading to "global polarization" between haves and have nots.
The report further indicates that the gap between the per capita incomes of the
industrialized world and the developing countries, far from narrowing, has more
than tripled during the last thirty years. A majority of the countries benefiting from
globalization have seen a rise in inequality and poverty. This failure of market
driven globalization to distribute its benefits equitably led the United Nations to
proclaim 1996 as the International Year for the Eradication of Poverty, and the
decade of 1997-2006 as the international decade for the eradication of poverty and
the promotion of "people-centered sustainable development".
It is against this backdrop that nearly seventy leading scholars world wide
have come together to explore and analyze a variety of challenges facing the "global
village". Their research is contained in a set of three volumes. One volume, entitled
Globalization, Growth and Sustainability, examines the implications of regional
and global trade liberalization and complementary macroeconomic policy refonns
for growth, equity, and sustainability. Several contributors to this volume point to
a set of proactive policies needed to remedy intra-national, international, and inter
generational inequities aggravated by the rapid globalization of the world economy
Another volume, The Political Economy o/Globalization focuses on globalization
issues arising from a political economy perspective, including issues such as the
erosion of national sovereignty, increasing tensions between the North and the
South and between capital and labor, and possible roles for international institutions
in ameliorating undesirable outcomes.
Contributors to this anthology debate the role of structural adjustment
programs and policies, the implications of fmancialliberalization for growth and