how to save globalization

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The Journal of International Trade and Diplomacy 1 (2), Fall 2007: 1-33 HOW TO S VE GLOB LIZ TION FROM ITS CHEERLE DERS Dani Rodrik *  I. INTRODUCTION When future economic historians write their textbooks, they will no doubt marvel at the miraculous turn the world economy took after 1950. Over the long stretch of history, neither the Industrial Revolution nor the subsequent economic catch-up of the United States and other “western offshoots” looks as impressive (Figure 1). The period since 1950 has witnessed more rapid economic growth than any other period before, with only the classical gold standard era between 1870 and 1913 coming close. Even more striking, there has been a quantum jump in the growth rate of the most rapidly growing countries since 1950. Prior to 1950, growth superstars experienced growth rates that barely surpassed 2 percent per annum (in per capita terms) over long stretches. Compare this with the post-1950 growth champions: Japan, South Korea, and China; each grew at 6-8 percent per annum during 1950-73, 1973-90, and 1990-2005, respectively. Even allowing for the shorter time slices, this indicates that the world economy became a much more enabling environment for economic growth after 1950. Clearly, the architects of this new world economic system got something right. Going forward, there can be few things more important than to maintain a global economic environment that is as enabling in the future as it has been in the recent past. This requires that we interpret the reasons behind the post-1950 boom appropriately. A simple “it’s all due to globalization” view receives little support from Figure 1. It is significant that the world economy experienced a more significant boost during 1950-73 than it did during either the post-1990 period of gung-ho *  Kennedy School o f Go vernment, Harvard University. E-mail: [email protected]. I thank several commentators on my blog, in particular Paine, Steveb, and Andrew, for catching mistakes and typos.

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