More Globalization, More Rights

And keeping on the theme of trade, globalization, and human rights, David Held at Prospect Magazine argues that social democracy needs to be expanded along with trade liberalization.

The writer, a professor of Political Science at the LSE and author of Global Covenant: The Social Democratic Alternative to the Washington Consensus (Polity Press) is no crass enemy of free markets. Imagine my surprise, then, when I read this choice research observation:

Furthermore, recent research has found that one of the main factors limiting the capacity of the poorest countries to develop is the liberalisation of capital. Geoffrey Garrett, a professor of political science at UCLA, has shown that what hurts developing countries faced with a broad liberalisation programme is not the pursuit of free trade per se, but the free movement of capital. While tariff liberalisation can be broadly beneficial for low-income countries, rapid capital liberalisation in the absence of sound domestic capital markets can be a recipe for "volatility, unpredictability and booms and busts in capital flows." Countries that have rapidly opened their capital accounts have performed significantly less well in terms of economic growth and income inequality than countries that have maintained tight control on capital movements but cut tariffs. An IMF study published in March 2003 found that there is no consistent support for the theory that financial globalisation per se delivers a higher rate of economic growth.