Globalization At Risk

History has declared globalization the winner of the 20th century. Globalization connected the world and created wealth unimaginable in the wake of the Second World War. But the financial crisis of 2008-09 has now placed at risk the liberal economic policies behind globalization. Engulfing the entire world, the crisis gave new fuel to the skeptics of the benefits of economic integration. Policy responses seem to favor anti-globalizers. New regulations could balkanize the global financial system, while widespread protectionist impulses might undo the Doha Round. Issues from climate change to national security may be used as convenient excuses to keep imports out, keep jobs at home, and to clamp down on global capital. Will globalization triumph or perish in the 21st century? What reforms make sense in the post-crisis world?International economists Gary Clyde Hufbauer and Kati Suominen argue that globalization has been a force of great good, one that needs to be actively advanced and honed. Drawing on the latest economic analyses, they reveal the drivers and effects of global finance and trade, lay out the key risks to globalization, and offer a practical policy roadmap for managing the challenges while increasing the gains. Vital reading for anyone in business, finance, foreign affairs, or economics, Globalization at Risk is sure to advance public debate on this defining issue of the 21st century.

The impact of globalization of financial markets is a highly debated topic, particularly in recent months when the issue of globalization and contagion of financial distress has become a focus of intense policy debate. The papers in this volume provide an up-to-date overview of the key issues in this debate. While most of the contributions were prepared after the initial outbreak of the current global turmoil and financial crisis, they identify the relative strengths of the risk diversification and risk transmission processes and examine the empirical evidence to date. The book considers the relative roles of banks, nonbank financial institutions and capital markets in both risk diversification and risk transmission. It then evaluates the current status of crisis resolution in a global context, and speculates where to go from here in terms of understanding, resolution, prevention and public policy.

This book provides an up-to-date guide to managing Country Risk. It tackles its various and interlinked dimensions including sovereign risk, socio-political risk, and macroeconomic risk for foreign investors, creditors, and domestic residents. It shows how they are accentuated in the global economy together with new risks such as terrorism, systemic risk, environmental risk, and the rising trend of global volatility and contagion. The book also assesses the limited usefulness of traditional yardsticks of Country Risk, such as ratings and rankings, which at best reflect the market consensus without predictive value and at worst amplify risk aversion and generate crisis contamination. This book goes further than comparing a wide range of risk management methods in that it provides operational and forward-looking warning signs of Country Risk. The combination of the authors’ academic and market-based backgrounds makes the book a useful tool for scholars, analysts, and practitioners.

The market for financial derivatives is far and away the largest and most powerful market in the world, and it is growing exponentially. In 1970 the yearly valuation of financial derivatives was only a few million dollars. By 1980 the sum had swollen to nearly one hundred million dollars. By 1990 it had climbed to almost one hundred billion dollars, and in 2000 it approached one hundred trillion. Created and sustained by a small number of European and American banks, corporations, and hedge funds, the derivatives market has an enormous impact on the economies of nations—particularly poorer nations—because it controls the price of money. Derivatives bought and sold by means of computer keystrokes in London and New York affect the price of food, clothing, and housing in Johannesburg, Kuala Lumpur, and Buenos Aires. Arguing that social theorists concerned with globalization must familiarize themselves with the mechanisms of a world economy based on the rapid circulation of capital, Edward LiPuma and Benjamin Lee offer a concise introduction to financial derivatives. LiPuma and Lee explain how derivatives are essentially wagers—often on the fluctuations of national currencies—based on models that aggregate and price risk. They describe how these financial instruments are changing the face of capitalism, undermining the power of nations and perpetrating a new and less visible form of domination on postcolonial societies. As they ask: How does one know about, let alone demonstrate against, an unlisted, virtual, offshore corporation that operates in an unregulated electronic space using a secret proprietary trading strategy to buy and sell arcane financial instruments? LiPuma and Lee provide a necessary look at the obscure but consequential role of financial derivatives in the global economy.

DIVCultural studies exploration of the implications of the circulation of increasingly abstract forms of capital in the contemporary global economy./div

How to better manage systemic risks—from cyber attacks and pandemics to financial crises and climate change—in a globalized world The Butterfly Defect addresses the widening gap between the new systemic risks generated by globalization and their effective management. It shows how the dynamics of turbo-charged globalization has the potential and power to destabilize our societies. Drawing on the latest insights from a wide variety of disciplines, Ian Goldin and Mike Mariathasan provide practical guidance for how governments, businesses, and individuals can better manage globalization and risk. Goldin and Mariathasan demonstrate that systemic risk issues are now endemic everywhere—in supply chains, pandemics, infrastructure, ecology and climate change, economics, and politics. Unless we address these concerns, they will lead to greater protectionism, xenophobia, nationalism, and, inevitably, deglobalization, rising inequality, conflict, and slower growth. The Butterfly Defect shows that mitigating uncertainty and risk in an interconnected world is an essential task for our future.

From one of the most respected and vigorous economic thinkers in Washington, a wake-up call about the perils of unfettered globalization. In this impassioned, prescient book, Pat Choate shows us that while increased worldwide economic integration has some benefits for our fiscal efficiency, it also creates dependencies, vulnerabilities, national security risks, and social costs that now outweigh its advantages. He takes the long view of developments such as technology-driven progress, the offshoring of jobs, and open trade, arguing that current U.S. policies are leading to worldwide economic and political instability, in much the same way as before the Great Depression. Choate writes convincingly about the Defense Department’s growing dependence on foreign sources for its technologies, the leasing of parts of our interstate highway system to overseas investors, China’s economic mercantilism, and international currency manipulation that damages the dollar. We have been borrowing heavily from foreign lenders, who by 2009 will own more than half of the Treasury debt, a third of U.S. corporate bonds, and a sixth of U.S. corporate assets—all of which, if handled improperly, could trigger a global economic collapse. But our economic forecast need not be dire. Choate sees a way out of these dilemmas and presents politically viable steps the United States can take to remain sovereign, prosperous, and secure. He presents bold new research that identifies the special interests and structural corruption that have overtaken our democracy—and shows how they can be corrected. He illustrates how our policy-making and legislative process, currently beholden to the highest bidder, can be transformed from one of corporatism and elitism into one of greater transparency. Clear-eyed and persuasive, this is sure to be one of the most widely discussed books of the year.

The Social Contours of RiskVolume I: Publics, Risk Communication and the Social Amplification of RiskWe live in a 'risk society' where the identification, distribution and management of risks, from new technology, environmental factors or other sources are crucial to our individual and social existence. In The Social Contours of Risk, Volumes I and II, two of the world's leading and most influential analysts of the social dimensions of risk bring together their most important contributions to this fundamental and wide-ranging field.Volume I collects their fundamental work on how risks are communicated among different publics and stakeholders, including local communities, corporations and the larger society. It analyses the problems of lack of transparency and trust, and explores how even minor effects can be amplified and distorted through media and social responses, preventing effective management. The final section investigates the difficult ethical issues raised by the unequal distribution of risk depending on factors such as wealth, location and genetic inheritance - with examples from worker and public protection, facility-siting conflicts, transporting hazardous waste and widespread impacts such as climate change.