WB economists' defence of globalization

Hakki Alacakaptan nucleus at superonline.com
Wed Jan 2 07:22:53 PST 2002


Oops, should have read the comments before posting that one. This guy says the Dollar&Kraays paper is based on arbitrary sampling so Chile, COlumbia, Haiti, etc. don't get included among the "globalizers". However the WB guys do say that without institutional reforms, changing the trade regime isn't going to help. What they fail to mention is that you can't reform under a crushing debt burden, and without basic health, education, or infrastructure.

Hakki -------------------------------- by jembendell on Friday December 28, @06:40AM (#1442) User #2352 Info

Oh well here goes again... Dollar and Kraays article is a rehash of their study published in 2000 which was shown to be based on very questionable evidence by Rodrik in a paper you can download from the eldis website. A summary of that paper follows. Its been interesting to see how civil servants and politicians now often say that "research shows that globalisation is good for the poor" and even quotes stats from the Dollar and Kraay report. No matter that the World Bank and other orgs have published dozens of reports showing the exact opposite. It seems that for people who have succeeded within current economic and political institutions there is indeed no alternative... as this would threaten their sense of self-esteem by undermining their whole world view. Its something we all have to be aware of, as certainty kills curiosity. www.jembendell.com --------------- Is the link between "globalizing" economies and economic performance a dubious one? This brief paper attacks Dollar and Kraay's widely read article 'Trade, growth and poverty'. Dollar and Kraay indicate that post-1980 "globalizers" performed better than "non-globalizers". Rodrik criticises this thesis on the basis that: The study applies an arbitrary set of selection criteria to their sample of countries. This arbitrary selection, biases the result in the selection of globalizers through: Combining a policy measure (tariff averages) with an outcome (import/GDP) measure in selecting countries The paper uses different base years for calculating changes in tariffs and trade volumes They exclude one country (Colombia) that should be in their list of “globalizers” according to all their stated criteria They include in their list 6 additional countries (out of 18) that do not fit the stated criteria Rodrik carries out exactly the same exercise, without resorting to the trickery that Rodrik claims Dollar and Kraay (DK)have employed. When one performs the DK test without making arbitrary choices that bias the selection of the country samples, one gets results that provide no support to the hypothesis that “globalizers” did significantly better Conclusions: The analysis in this paper of the post-1980 "globalizers" is extremely misleading When the analysis focuses on indicators of trade policy, we find no evidence that rapid/deep trade liberalizers did better than other countries (and some evidence to the contrary) Direct indicators of trade policy (tariff averages and NTB coverage ratios) do a reasonably good job of ranking countries vis-à-vis each other with respect to trade policy openness Trade volumes (as a share of GDP) are correlated with incomes, but this is devoid of policy content unless one is able to trace out the links from policy via trade to growth The cross-country evidence is consistent with the hypothesis that the quality of institutions (appropriately instrumented) is the driving force behind both trade and incomes The authors’ claims regarding the beneficial effects of trade liberalization on poverty have to be seen as statements based on faith rather than evidence http://www.globkom.net/rapporter/rodrik.pdf



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