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CIAO DATE: 03/03
Globalization of the World Economy: Potential Benefits and Costs and a Net Assessment
Michael D. Intriligator
March 2002
Abstract
Globalization is a powerful real aspect of the new world system, and it represents one of the most influential forces in determining the future course of the planet. It has many dimensions: economic, political, social, cultural, environmental, security, and others. The focus here will be on the concept of “globalization” as applied to the world economy. This concept is one that has different interpretations to different people. Partly as a result of these different interpretations, there are very different reactions to “globalization,” with some seeing it as a serious danger to the world economic system while others see it as advancing the world economy.
There are three purposes of this paper. First, it will clarify the notion of “globalization” as applied to the world economy. Second, it will evaluate both the potential benefits and the potential costs stemming from globalization. Third, it will consider how the costs or dangers stemming from globalization could be offset through wider international cooperation and the development of new global institutions.
The view taken here, representing the thesis of this paper, is that there are both positive and negative aspects to globalization, that some of its positive features stem from the effects of competition that it entails, and that some of the negative aspects that could potentially lead to conflicts could be offset by international or global cooperation through agreements on policy or through the development of new international institutions. Thus, while globalization can cause international conflicts, it can also contribute to their containment through the beneficial effects of competition and the potential of global cooperation to treat economic and other threats facing the planet.
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