A must read book for everyone. The author speaks about how US (and at times the European and Japanese governments) worked to protect the interests of their corporate firms abroad - thereby resulting in losses to the developing nations. Skewed trade deals, companies despoiling the environment are spoken about with gripping examples. And also the solutions to all these problems- 'how to make globalisation work'- often citing instances of success stories in the developing nations.

Making Globalization Work by Joseph E Stiglitz is a book about the economics of globalization.

Globalization and it's discontent
Globalization and setting-up of global organizations like World Trade Organization, International Monetary Fund, World Bank was to bring unprecedented prosperity. Everyone was supposed to be winner in both developing and developed countries. Globalization and economic efficiency due to comparative advantage has resulted into tremendous benefit for both developing and developed countries, but at the same time it has also created problems for many countries & sections of the society. There are many flaws in the nature of globalization that needs to be corrected. Factory workers in United States of America feel their jobs being threatened by people from countries like China, India etc. Environmentalists feels globalization is undermining environmental and is not effective in dealing problems like global warming and pollution. Many feel wealth is being created but the same is not being shared, it is limited to sections of the society and few countries. Globalization may have helped few countries, their GDP i.e. the sum total of goods and services produced may have increased, but it has not helped most of the people even in these countries. Therefore, it’s important to understand globalization and manage it well for global positive outcome.

“We may increasingly be part of a global economy, but almost all of live in local communities, and continue to think, to an extraordinary degree, locally. It is natural for us to value a job lost at home far more than two jobs gained abroad”

Developing adequate national infrastructure for managing globalization
While market should be at the center of any successful economy, government has to create a climate that allows business to thrive and create jobs. Government has to create physical and institutional infrastructure, law & order, sound banking system and securities market in which investors have confidence that they are not being cheated. Poorly developed markets are marked by monopolies and oligopolies, governments lack strong competitive policies or through policies hinders competition and favors incumbents. Without appropriate structure of corporate governance, there might be too many instances of corporate frauds and plundering of assets rather than creating wealth. Unfettered globalization and market liberalization in countries that lacks such institutions gets negatively impacted by globalization. The lack of institutional infrastructure, understanding of globalization & its implication, trained individuals with understanding can result into much more ill effects than miniscule positive results of globalization. Sound environmental laws & policies are important otherwise GDP can be fueled by spoiling the environment, by depleting scarce natural resource, by borrowing cheap money from abroad. But such progress and development is not sustainable. Countries need time to develop adequate infrastructure for these institutions.

Conscious national policies to be adopted in order to benefit from globalization
Globalization has tremendous potential to bring tremendous benefits for both developing and developed countries. Problem is not with the globalization itself but the way globalization has been managed by the developed countries directly or indirectly to their advantage ignoring the negative externalities of globalization. China’s economic growth was based on exports, manufacturing, it has lifted several millions people out of poverty. China managed its globalization carefully & was slow & conscious to move to market economy, it was slow to open up its market for imports, and restricts the flow of speculative money. But many other countries have not benefitted due to globalization. It has increased poverty and created social unrest in many countries.

The policies adopted by countries is not going to be uniform across developing and developed countries. The policies adopted by countries regarding mix of government and market will depend on its stage of development. Policies that promote employment and education of that country will depend upon its stage of development. Educating people but not having jobs for them can result into brain drain, and subsidizing the productivity of advanced industrial economies. The developing countries invest their scarce capital in education, and developed countries often attracts best talents of developing countries. Therefore, its essential that developing countries should offer adequate infrastructure to engage the talent in the job creation and development.

Reforms in the design and structure of globalization
The rule of globalization has been set-up by advanced industrial countries, in many instances by special corporate interests within those countries. The way globalization has been shaped to further their own interests, it has not created a fair set of rules. The rules are particularly exploitative of countries endowed with minerals and other natural resources.

The focus of globalization is on liberalization of capital flows & investment which is favorable to developed countries rather than liberalization of labor laws which could benefit the developing countries and much more to the global output in terms of economy. The comparative advantage of advanced industrial countries is skill intensive sectors, whereas the comparative advantage of developing countries is labor-intensive sectors. Trade negotiations should be done taking into consideration the comparative advantage of countries. Developed countries are rich in capital and technology, while developing countries have an abundance of unskilled labor. A country with skilled labour produces skill intensive goods and services.

Simply opening up trade barriers, opening up of capital flows is not enough for global wellbeing and globalization. The need is of fairer trade regime. Unfettered capital market liberalization can result into instability rather than stability in the system in the global system.
Globalization should be sustained economically, socially, politically and environmentally. Free trade as a result of globalization as evident from many countries is not necessarily welfare enhancing. It can result into tremendous inequality, and inequality can be very costly & counterproductive to the society. The current form of globalization is unable to solve problems of global warming, environmental degradation. The degradation of non-economic values i.e. social justice due to inequality, environmental degradation, limited healthcare accessibility can damage the benefits of globalization.

The framework of Intellectual Property Rights needs to be reviewed that it is also fairer to the needs of developing countries. It has been designed as per the needs and demands of developed countries. Poorly designed Intellectual Property Regimes can result into less efficient economy rather than accelerating innovation in the society. The need of the hour is balanced intellectual property regime.

The design and structures of globalizations are largely determined by few countries with economic power. Developing countries do not have the representation in the policy making of globalization. Votes are largely determined by economic power, and even that is not changing with shift in the economic power. The voices of developing countries are heard too little, and the voices of special interests are heard too loudly. Changes in the voting structure of IMF and World Bank , giving more appropriate weightage to developing countries.

Reforms in the global reserve system in the form of diversification of reserve currencies are required as the current system is creating much more instability rather than creating stability as a result of single reserve currency in the form of US Dollar.
Making Globalization Work by Joseph E Stiglitz highlights negative externalities of current form of globalization and advocates a fairer pro-development form of globalization with effective democratic decision involving both developing and developed nations, respecting sovereignty & rights of nations.

never again.

It's pretty good. After 3 years of what has been a pretty one-sided indoctrination in orthodox neoclassical economics, it's important, and enlightening to get a more realistic perspective. He gets to be a bit too bleeding-heart at some points, and many of his arguments and evidence are clearly a little one-sided (in some ways downright manipulative), but given that he is trying to combat an equally one-sided view of globalization, I guess he can be forgiven for this.

All in all some very interesting solutions to making globalization work, and a sobering look at the darker side of global trade.

The follow-up to Globalization and its Discontents, these two books helped me to decide the area of work I wanted to get into. Already interested in International Development, I was still highly critical of so many of the ways it was addressed. This account, especially its details around the functioning of the World Bank and IMF clearly explained what otherwise seemed beyond my comprehension.

While this book may now seem a bit out of date, I still highly recommend to anyone who is interested in the development and aid machines.

Nobel winner Stiglitz's first book , Globalization and Its Discontents made a huge impact on me when I worked overseas, it definitely motivated the direction I took with my studies. I'll always remember sitting in Azerbaijan one night reading it and looking up at the TV to see Stiglitz being interviewed by a Baku station about his book-- he was visiting the country. That was one of those really weird coincidences that you feel have to be from God.

This is his follow-up book that, sadly, is not as good (maybe because I now know better). Stiglitz picks up where he left off in his previous book-- continuing to criticize the IMF and rehashing their ineptitude in East Asia, Argentina, etc. But Stiglitz also rails against the Bush administration and just about everyone else (sometimes without naming who he is railing against exactly). So much so that it seems the only entity he likes is the United Nations-- that wonderfully effective body. As such, there are a lot of inconsistencies and rambling.

The chapter on trade is pretty good, though. "We don't know what the benefits of free trade would be because we've never tried it." He points out all of the problems with trade agreements, particularly how the U.S. and other Western countries tip the playing field in their favor. Here is a favorite example:

U.S. industries will often file a petition alleging "dumping" by foreign countries. Rather than comparing the true cost of production in the offending country, trade officials will use costs in some place like Canada as a proxy. So, if one country is selling a product cheaper than what Canada can make it they can have anti-dumping duties (tariffs) imposed on their products. That hurts the developing world that happens to have cheap inputs due to abundant labor.

As the U.S. opened its markets to Vietnam, Vietnamese catfish quickly took 20% of the U.S. market. Congress passed a law stating that only U.S. catfish could be called "catfish," so Vietnamese exporters re-entered the market with a new name, "basa," which they could market as something high-end and sell it for a higher price. U.S. catfish farmers then charged Vietnam with dumping. Stiglitz witnessed all of this "kangaroo court" action while working in the Clinton administration.

He blasts the U.S. for engaging in bilateral trade agreements and rails that it hurts multilateral efforts. This is highly controversial theoretically (mathematically) but Stiglitz pronounces bilateral agreements as harmful as fact. Stiglitz criticizes the U.S. on one page for not doing as the EU did and unilaterally removing its tariff barriers to the developing world. Then a couple pages later he rants on how ridiculous it was that the EU unilaterally removed its tariff barriers because they kept their agricultural subsidy programs intact so as to render the removal ineffective. This type of inconsistency runs throughout the book.

My favorite quote from the book:

"China knows there would be high costs to it--and little benefit to the United States-- were it to allow its exchange rate to appreciate. And presumably, America understands this too."

America must not include Paul Krugman who is always ranting about China's currency (along with the media in the last year). A yuan appreciation would simply mean the U.S. would import the same amount of goods from other countries. We're a net importer because I > S while China's S > I. Economics 101.

In all, I give this book 2 stars out of 5. The problems he outlines are vast and complicated. His final solutions are to strengthen the U.N. and I.M.F. while making the I.M.F. more transparent and democratic. He proposes a single world reserve currency and to let U.N. representatives vote on who gets the shares. Just imagine how that would turn out...

Stiglitz is a talented writer and fills the book with very rich vocabulary and language. Though the book was published ten years ago, the subjects discussed in the book (global warming, intellectual property, transnational trade agreements) are still central in our current societal and electoral discussions today.

Zodra je economen gaat lezen, merk je dat het vak 'economie' echt verouderde ideologische troep is dat per direct kan worden opgeheven.

In the past decade or more economists and international observers have gone ga-ga over the perceived benefits of globalization. Mr. Stiglitz shows in this book how this mad euphoria over globalization in recent years has actually produced both winners and losers in the global economy as globalization, as it has been presently managed, has tended to favor the interests of the developed world over the interests of the developing world. Over the course of ten chapters, Mr. Stiglitz points to the fact that the lack of transparency and truly democratic institutions in such international trading regimes as the International Monetary Fund, the World Bank, the World Trade Organization has led to poorer growth rates for developing countries and shackled them to ever growing amounts of unsustainable debt that they could never possibly pay off. The problem is compounded by the fact that poor developing countries have to implement austerity measures in order to gain loans from the IMF or risk not only losing the loans, but also scaring off private investors (at least, that is what the IMF and advanced developed nations like the U.S. tell them anyway). He also points out how national policies such as large agricultural subsidies and bilateral & multilateral trade agreements tend to crowd out developing nations from the only markets that could afford to buy from them in large, profitable quantities. Each of his ten chapters lays out these problems and offers solutions to how they can be overcome. The overall theme of his recommendations is that international trade regimes need to be far more transparent and democratic in the way they do business as well as more expressly take the needs of the developing world for real growth and development. He ultimately calls for a global economic government, but stops just short of calling for a truly global government even though that would be the inevitable consequence of what he proposes. For the most part I believe his recommendations are quite sound and I believe that leaders of the developed world, if they really do care about eradicating poverty and helping the Third World actually develop, should take note of them. This book does need a bit of an update as it was written seven years ago and he fingers the Bush Administration with stalling a lot of the international solutions to these problems, particularly their rejection of the Kyoto Protocols dealing with global warming. Still, this is a fascinating read, perhaps a little bit wonky for average readers, but definitely worth the time for those who have their doubts about globalization and its benefits.

Die Globalisierung ist seit mehr als 2 Jahrzehnten im vollen Gange, weshalb eine kleine Retroperspektive nicht verkehrt ist. Wer sind die Nutznießer der global vernetzten Erde? Was sind Handelsdefizite? Wie müssen Entwicklungsländern Hilfe geschaffen werden und warum sind die jetzigen Kreditvergaben durch die IWF nicht sonderlich förderlich?
Joseph Stiglitz gibt eine Vogelperspektive auf die Vernetzung und praktische Vorschläge, wie man das Netzwerk optimieren könnte, so dass nun endlich auch Entwicklungsländer davon profitieren. Ein Buch was sehr gut die Globalisierung erklärt, anhand von vielen Beispielen vieler Länder.

Brilliant
Insights which only a person at his level will be able to perceive and connect

He has connected many dots for us which spell that Globalization and its policies are hurting us more than helping us

I don't entirely subscribe to his view that globalisation is bad for developing nations

However I am not qualified to make that statement

Mostly a very good book to understand what is the kind of problems of globalisation

Why developing countries are wary of globalisation and he has also talked about what are the fixes needed to make this global system to work much better for all the stakeholders

I highly recommend this book to anyone who is looking to learn and read and dig deeper into the various issues affecting us today

I won't assign a rating. Sorry Franz, but this book and I just do not gel. I tried to approach this objectively but the notes of bias I detected in the first couple chapters are just too much and I want my reading to be enjoyable, not something that raises my blood pressure! Examples you ask? It probably wouldn't take me too long, but I just don't have the energy for that right now!

I fully recognize that the bias is just as much mine as Stiglitz's, but I'm too old to be convinced otherwise now. He has a Nobel prize and I don't. But then again, so do Friedman and Hayek so that just goes to show how Economics is a pseudo-science. I still love it though - maybe because it is still in such a process of discovery and will probably always be a source of debate since it is, at the root, subject to the actions of human beings (hmmm, sounds a bit like "Human Action" by Mises)