Abstract

The effects of globalization — on the United States and more generally — is the topic of the day. Officials, academics and market participants all sense that the integration of national economies and the development of international markets have gone further than ever before. The extent of integration in turn creates a growing sense of helplessness about the ability of nations to control their destinies in the face of global markets. Does the growth of global markets pose a threat to distinctive national social systems? Does a world characterized by high levels of trade and large international capital flows jeopardize social cohesion and economic and financial stability and therefore require the strengthening of national safety nets and international institutions, perhaps including a world financial regulator and an international lender of last resort, or can private markets develop mechanisms for containing these risks? And, failing this, will governments retreat toward financial autarchy and succumb to populist pressures for trade protectionism? The idea that globalization today is unprecedented (if not necessarily the preceding paragraph’s pessimistic vision) is implicit in publications like Lawrence, Bressand and Ito (1996) and much informed policy discussion. But there is also an undercurrent which recognizes that

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