Toward "better and fairer globalization"

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Citigroup Vice Chair and former IMF First Deputy Managing Director Stanley Fischer delivered the 2003 Richard T. Ely Lecture, "Globalization and Its Challenges," during the American Economic Association meetings. In it, he recounted the benefits of globalization-including improved growth-but also acknowledged that many of the problems critics point to are real. He highlighted a number of policies that are necessary to achieve a "better and fairer globalization."

In his opening remarks, he also paid tribute to his friend and colleague Rudiger Dornbusch, who passed away in July 2002 and was to have delivered the Ely Lecture.

For the full text of the lecture, see www.iie.com/fischer.

Almost everyone agrees that the world could be a better place and recognizes that much work will be required to improve it.Why, then, is so much of the globalization debate about whether the world is getting better or worse?

The reason, Fischer said, is that this debate is ultimately about policies. "The implicit premise is that if the world is going to hell, then the policies of the past 50 years are likely to be wrong and if the world has been getting better, then the policies are more likely to be right." It is a separate question, he argued, whether all recent developments in global conditions can be attributed to globalization.

A set of policy recommendations for reform-minded countries that has received much attention and a large share of negative press is the so-called Washington consensus set out by economist John Williamson in 1990. Fischer regarded its 10 elements-which included fiscal discipline, tax reform, financial and trade liberalization, deregulation, and privatization-as a useful shorthand description of part of a desirable policy orientation.

What do the data show?

Globally, poverty rates have been declining, especially in Asia, Fischer noted.Developments in income distribution are more mixed, with the evidence showing that inequality has increased among the average income levels of different countries while possibly decreasing among all individuals in the world. On average, social indicators including literacy and health have improved significantly in the developing countries. It thus appears that, on average, conditions in the developing world have improved. But, Fischer emphasized, this is not the same as...