Transcript Presentazione di PowerPoint - matematica (25-49)

On the sustainability of global
development
Alessandro Vercelli
Department of Economic Policy, Finance and Development
University of Siena
[email protected]
1
Basic References
-Borghesi, S. and A. Vercelli, 2008, Sustainable
Globalization. Social and Environmental conditions,
Palgrave Macmillan
(Alessandro Vercelli e Simone Borghesi, 2005, La
sostenibilità dello sviluppo globale, Carocci editore,
Roma.)
-Stiglitz, J.E., 2006, Making Globalization work, Norton,
New York
(Stiglitz, J.E., 2006, La globalizzazione che funziona,
Einaudi, Torino)
2
FIRST PART
BASIC CONCEPTS
AND THE EMPIRICAL EVIDENCE
3
Approach
On globalisation we cannot say anything in general:
→ different phases characterised by different features and effects
→ any appraisal is relative to a particular point of view. My own:
PHASES OF
SUSTAINABLE
GLOBALISATION
DEVELOPMENT
I want to clarify whether:
• the recent phase of globalisation is consistent with the requirement of sustainable
development
• the current phase of globalisation is sustainable or requires substantial
modifications
• → policy implications
4
Definition of economic globalisation
Process of progressive integration of world markets based
on the free movement across borders of goods, services, and
production factors

THREE PERIODS:
•
•
•
1820-1915: FIRST GLOBALISATION
1915-1945: DE-GLOBALISATION
1945-2007→: SECOND GLOBALISATION
5
The three phases of economic globalisation:
the world exports
Ratio between world export of goods and world GDP
20.0
18.0
16.0
14.0
12.0
10.0
8.0
6.0
4.0
2.0
0.0
1820
1870
1913
1929
1950
1973
1990
2000
EXP/GDP
Source: Maddison (2001) updated using WTO (2001)
6
The three phases of globalisation:
the stock of Foreign Direct Investment
Ratio between the world stock of FDI and world GDP
100.0
90.0
80.0
70.0
60.0
50.0
40.0
30.0
20.0
10.0
0.0
1870
1913
1930
1945
1960
1980
1985
1990
1995
2000
FDI/GDP
Source: Obstfeld and Taylor (2004)
7
Sustainable development: definitions
Development:
process of expansion of individual economic freedom (Sen, 1999)
Sustainable development:
“Development is sustainable if it satisfies present-day needs
without compromising the capacity of future generations to satisfy
their needs” (Brundtland Report, 1987)
8
Sustainable development
Foundations
• Income
DISTRIBUTIVE EQUITY • Wealth
• Resources
CHOICE FREEDOM
2 CONDITIONS
INTER-GENERATIONAL
INTRA-GENERATIONAL
ENVIRONMENTAL
CRITERION
SOCIAL CRITERION
9
Ethical and economic foundations:
the social condition
equal access to the basic economic opportunities: ethical foundations
this is also a fundamental condition of economic efficiency
-prerequisite for a well-functioning competitive market: guarantees that the
winners of the economic competition are actually the best participants as
each of them plays on a “level playing field”
-poverty (malnutrition) implies a restriction of the option set reducing the
potential contribution of poor people to economic efficiency and wealth:
among poor people who cannot afford a good education there are
potentially good scientists, engineers, physicians, managers and so on
-social and political tensions that have negative effects on income growth
(Alesina and Perotti, 1996; Benhabib and Rustichini, 1996)
10
Ethical and economic foundations:
the environmental condition
similarly environmental degradation has adverse economic effects:

↓ health of people → ↓ productivity

↓ land productivity

poverty-environment trap: the poor rely heavily on the direct exploitation of
natural resources:
↑ environmental degradation →↑ poverty →↑ environmental degradation
11
The influence of globalisation on the conditions of sustainability
The main influence is through the impact of globalisation on income
→ positive correlation for sound theoretical reasons:
-
↑ extension of markets → ↑ division of labour → ↑ productivity
↑ scale and scope economies →↑ efficiency
↑ across borders and domestic competition
↑ diffusion of information and technology across borders
-
Globalisation offers opportunities of development provided that
the country adopting an outward trade orientation complies
with a few crucial conditions: rule of law, institutions to
monitor, control and regulate markets
-
Notwithstanding this proviso, the empirical evidence generally
finds a positive correlation: e.g. Bhagwati (2004), Wolf (2004)
12
Orientation of trade and growth rate of GDP
1963-1992
Average rates of growth of per capita GDP
In developing countries
Orientation of
trade
1963-1973
1973-1985
1980-1992
Open to trade
6.9
5.9
6.4
Moderately open
4.9
1.6
2.3
Moderately
protectionist
4
1.7
-0.2
Protectionist
1.6
-0.1
-0.4
Fig. 2
Source: World Bank
13
Evolution of per capita GDP
Source: Lomborg (2001)
Per capita GDP United Kingdom
Fig. 3
Per capita GDP (thousands of £)
Per capita GDP (thousands of $)
Per capita GDP United States
14
Impact of globalisation on
the social conditions of sustainability
1a) BETWEEN
1) INEQUALITY {
COUNTRIES
1b) WITHIN
15
Inequality indexes of individual incomes
1820-1992
Theil inequality coefficients
global inequality (*)
Inequality
between countries
Inequality
within countries
(*) Global inequality is the sum of the other two curves
Source: Bourguignon and Morisson (2002)
Fig. 1
16
Correlation between globalisation and inequality?

The global index suggests a positive answer
however, as soon as we decompose it in its two determinants, and consider
different phases, the outlook becomes more complex and articulated

Between-country inequality:

Correlation in the 19th century

In the 20th century the positive correlation breaks down
globalisation has two opposite effects on the inequality:
between globalising and non-globalising countries →↑ inequality
and within globalising countries → ↓inequality
→ the weight of the second effect progressively increased during the second
globalisation as a consequence of the spreading of globalisation
negative correlation? Question not yet settled (Branko Milanovic, 2002)
17
Correlation between globalisation and inequality?

Within-country inequality: mild positive correlation
the aggregate index conceals the empirical pattern of groups of countries

new globalising countries: India, China, Russia: ↑ inequality

most OECD countries → U pattern since 1915:
1915-1971: ↓ inequality (solidarity from wars, depression, welfare state)
1975-2005: ↑ inequality (“neoliberal policies”)
→ I will focus on the second empirical trend that has important policy implications
18
Variation in within-country income inequality
1975-1985 1985-1995
AUSTRIA
BELGIUM
CANADA
CHECK REP.
DANMARCK
FINLAND
FRANCE
GERMANY
UNGHERIA
ITALY
JAPAN
COREA
HOLLAND
NEW ZELAND
NORWAY
POLAND
SWEDEN
Source: OECD
0
+
-+
-0
+
0
0
-
++
+
0
+++
++
+
+
+
+++
+
+
+
++
+++
+
+++
+++
Fig. 4
+++ HIGH INCREASE
> 15%
++
INCREASE
7-15%
+
MODERATE INCREASE
2-7%
0
NO VARIATION
-2 - +2%
-
MODERATE REDUCTION
2-7%
--
REDUCTION
7-15%
---
STRONG REDUCTION
> 15%
19
Inequality in the U.K., 1939-1996 (%)
56
52
48
44
Gini index
40
36
32
28
24
20
16
1985
1945
1955
1965
1975
1935
1995
1970
1990
1940
1950
1960
1980
2000
Source: Brandolini (2002)
Fig. 5
20
Inequality in the USA, 1929-1996
56
52
48
44
Gini index
40
36
32
28
24
20
16
1915 1925
1985 1995
1955
1965 1975
1935 1945
1970
1990 2000
1920 1930
1940 1950 1960
1980
Source: Brandolini (2002)
Fig. 6
21
Share of income (quintiles: 1985-1995)
MIN.
INCOMES
AVER.
INCOMES
MAX.
INCOMES
=
=
=
=
+
=
=
+
--=
=
=
=
--=
=
--=
=
=
--=
=
---
=
=
+++
=
+++
+
+
=
+++
+
+++
+
+++
+
+++
+
+
AUSTRALIA
AUSTRIA
BELGIUM
CANADA
DENMARK
FINLAND
FRANCE
GERMANY
HUNGARY
ITALY
JAPAN
MEXICO
HOLLAND
NORWAY
SWEDEN
TURKEY
U. K.
U.S.A.
Source: OECD
Fig. 7
+++
INCREASE > 1.5%
+
INCREASE between 0.5 E 1.5%
=
VARIATION between -0.5 and +0.5%
-
DECREASE between 0.5 E 1.5%
---
DECREASE > 1.5%
22
The impact of globalisation on
the social condition of sustainability
The indirect effect on inequality:
the environmental Kuznets Curve
23
Indirect correlation between globalisation and
within-country inequality
Extensive empirical literature on within-country inequality studying its
correlation with per capita income
Since there is a strong correlation between globalisation and per capita income
we can interpret the above as an indirect correlation between withincountry inequality and globalisation
Literature initiated by the Nobel-laureate Simon Kuznets who suggested
in 1955 the conjecture that within-country inequality increases in the
first phase of industrial development but decreases in a second phase
24
KUZNETS CURVE (1955)
Inequality
Social carrying
capacity
Per capita income
Fig. 9
25
KUZNETS CURVE (1955)
Plausibility → take-off (triggered by the adoption of outward-oriented policies):
-diffusion takes time
-urbanisation
-growing pressure in favour of redistribution
(progressive taxation, transfers, welfare state)
Optimist message; the problem tends to disappear “spontaneously”
Kuznets conjecture corroborated by econometric studies up to the 1970s
since the early 1980s new econometric studies have progressively weakened
the empirical support (emergence of the U-pattern in OECD countries)
historical explanation: the KC described a specific historical process and not
general tendencies intrinsic in the process of globalisation→ policy is needed
26
The impact of globalisation on
the social condition of sustainability
The effects on poverty
27
Impact of globalisation on
the social conditions of sustainability: 2) poverty
we have to reject the optimist message of the Kuznets curve
however, according to many economists, in order to study the social
effects of globalisation we should focus not on inequality but on
poverty
Conviction based on the “Bhagwati hypothesis and prescription”:
Countries have similar distribution of income → we can only
reduce poverty by increasing the rate of growth of income
(Bhagwati, 2004, p.66)
28
Impact of globalisation on
the social conditions of sustainability: 2) poverty
misleading hypothesis: Bourguignon and Morisson (p.733)
calculated that:
“had the world distribution of income remained unchanged
since 1820, the number of poor people would be less than
1/4th than it is today and the number of extremely poor
people would be less than 1/8th of what is today”
→ we should try hard to realize a more egalitarian growth
29
The long-run trend of poverty
(< $2 a day)
POVERTY
3000.0
100.0%
90.0%
2500.0
80.0%
60.0%
1500.0
50.0%
40.0%
1000.0
headcount (percents)
headcount (millions)
70.0%
2000.0
30.0%
20.0%
500.0
10.0%
0.0
0.0%
1820
1850
1870
1890
1910
1929
poverty
1950
1960
1970
1980
1992
poverty %
Source: Bourguignon and Morisson (2002)
30
The long-run trend of extreme poverty
(< $1 a day)
EXTREME POVERTY
1600
90.0%
1400
80.0%
70.0%
60.0%
1000
50.0%
800
40.0%
600
headcount (percent)
headcount (millions)
1200
30.0%
400
20.0%
200
10.0%
0
0.0%
1820
1850
1870
1890
1910
1929
extreme poverty
1950
1960
1970
1980
1992
extreme poverty %
Source: Bourguignon and Morisson (2002)
31
Poverty in the world from 1987 to 1998
Extreme poverty (headcount)
100
75
Variations
50
25
0
-25
-50
-75
-100
-125
-150
East Asia
and
Pacific
Area
Europe
and
central
Asia
Latin
America
and
Caraibi
Middle
East and
North
Africa
South
Asia
Sub-saharian
Africa
Fig. 10
Source: World Bank
32
Variation rates of poverty (1985-1995)
Pre-tax transferts
Post-tax transfers
Poverty is defined as the number of persons who detain less than 50% of average income of total popolation. Taxes
include all direct taxes on incomes, included social security contributions. The transfers include all the benefits
deriving from money transfers.
Fig. 8
Source: OECD
33
The impact of globalisation on
the environmental condition of sustainability
The indirect effect:
the environmental Kuznets Curve
34
Environmental KUZNETS curve (Panayotou, 1993)
No historical series of comprehensive indexes of environmental
deterioration
→ correlation with specific indexes of environmental deterioration
Some of them behave as in the KC → “environmental Kuznets curve”
Plausibility:
-take-off: shift of labour from agriculture to heavy industry
then increase of light industry and services
-growing pressure of final users and electorate
Econometric studies seemed to corroborate the hypothesis but then it
was falsified in many cases:
- it works only when the environmental effects are local
- recently N-shaped curves
35
Environmental KUZNETS curve
Environmental deterioration
Environmental
carrying capacity
Per capita income
Fig. 11
36
Environmental KUZNETS curve
(sulfur dioxide)
Sulfur Dioxide g/m3
1972
1986
Per capita income (PPP$)
DEVELOPMENT
Source: Shafik (1994)
Fig. 12
37
Environmental KUZNETS curve
(particulate matter)
1972
1986
Per capita income (PPP$)
DEVELOPMENT
Source: Shafik (1994)
Fig. 13
38
Thousands coliforms per 100ml
Environmental KUZNETS curve
(coliform bacteria)
1986
1979
Per capita income (PPP$)
DEVELOPMENT
Source: Shafik (1994)
Fig. 14
39
Generalisation of the environmental Kuznets curve
Environmental sustainability relation:
ED growth = pc income growth + intensity of ED growth + population growth
where ED is a global index of environmental degradation; pc is per capita
Condition of long-term global environmental sustainability (ED growth ≤ 0 ):
pc income growth ≤ - (intensity of ED growth + population growth)
→ positive growth of pc income may be sustainable only if:
negative growth of ED intensity > population growth
40
Crucial requisite of sustainabilty
Development is sustainable only if:
Reduction rate of ED
intensity
>
Rate of growth of
population
More likely in developed countries
Calls for:


Technologic change
Consumption
Increasingly
eco-compatible
41
The environmental sustainability relation and the energy problem
The condition for long–term energy sustainability is given by:
pc income growth ≤ - (population growth+energy intensity growth+CO2
energy intensity growth)
or:
income growth ≤ – (energy intensity growth + ED growth)
We may define: max sustainable growth of income:
Max sustainable income growth = – (energy intensity growth + ED
energy intensity growth)
Sustainability Gap = actual income growth – max sustainable income
growth
42
The sustainability gap in the current model of
energy production and consumption
sustainability gap
3.0
2.5
rate of growth
2.0
1.5
1.0
0.5
0.0
1971-1980
1981-1990
1991-2000
2001-2025
gap
Average observed values for each decade (projection 2001-2005)
Source: Energy Information Administration
43
SECOND PART
An Attempt at Causal Interpretation
44
Prevailing empirical correlations
SUSTAINABILITY OF DEVELOPMENT
-
-
ENVIRONMENTAL
DETERIORATION
+
+
INEQUALITY AND POVERTY
+/- (Kuznets) +/-
+
PER CAPITA INCOME
+
GLOBALISATION
45
Tentative answer to the first question
Postwar globalisation: two phases
WITHIN-COUNTRY
INEQUALITY
ENVIRONMENTAL
DETERIORATION
1945-1971
MODERATE
IMPROVEMENT
WORSENING
1980-2002
WORSENING
PARTIAL
IMPROVEMENT
NEITHER OF THE PHASES OF POSTWAR GLOBALISATION
MAY BE CONSIDERED AS FULLY SUSTAINABLE
ALTHOUGH FOR DIFFERENT REASONS
46
Towards a causal analysis
STATISTICAL CORRELATION
CAUSAL ANALYSIS
DOES NOT IMPLY CAUSALITY
ECONOMIC RATIONALE OF GLOBALISATION
THE INTEGRATION OF LOCAL MARKETS IN A UNIFIED GLOBAL
COMPETITIVE MARKET IN ORDER TO REALISE THE OPTIMAL
ALLOCATION OF WORLD RESOURCES AND TO MAXIMISE THE
WELFARE OF THE INTERNATIONAL COMMUNITY
47
Towards a causal analysis
The validity of the argument depends on a series of conditions.
In particular:

Effective mobility
across countries
Anomalies


Goods and services
Production factors
Technology and information

A) barriers against imports from
developing countries (agriculture, textiles)

B) Strong restrictions to the international
mobility of labour

C) Free movement of capital without
distinction between FDI and
speculative flows
48
ANOMALIES

A) according to estimates of the UN (1994) these
protectionist measures produce a transfer of wealth
equal to the overall flow of foreign aid

B) these restrictions are much more severe now than
at the time of the first globalisation


→ “last resort” equalizing instrument
precondition of a competitive market (“laissez faire, laissez
passer”, Smith)
49
ANOMALIES

C) -FDI: factor of development – SF (speculative flows): source of instability:
dramatic change in their proportion:
 Early 1980s FDI 90%
 Now much less than 10% while daily SFs exceed the sum of
reserves in foreign currency of G7 countries

Lucas paradox:
according to the standard neoclassical theory capital should flow from
rich to the poor countries until the return to investment is equalized in
all countries
in reality the opposite happens (notwithstanding the higher marginal
product of capital in emerging countries):
role of perceived risk and institutions
50
Short-termism

the recent process of globalisation strengthened shorttermism:
a) Growing importance of finance
b) Greater flexibility of labour markets and industrial
relations
c) Incentives to top managers and directors
51
Short-termism
a)
Growing importance of finance:

Goldsmith FIR: from about 1 in the early 1980s (G5) to 2/3 2000s

Liberalisation of capital flows almost complete without distinction
between FDI and speculative flows → change of proportion

Stock exchange markets unified by Internet →↑ “herd behaviour”
→ huge gains and losses from short-term speculative transactions
52
Short-termism
managers: frequent revisions
b) deregulation labour markets {
workers: short-term horizon
short-term indexes (stock options)
c) incentives to top managers {
→ short-term objective function
Short-termism jeopardises sustainability
↑ liberalisation of
capital account

globalisation contributed to these trends {
↑ deregulation
53
Regulation of international markets
the effects of globalisation depend
crucially on the regulation rules of
the international markets
Bretton Woods period (1945 - 1971)
two phases {
Washington consensus (1980 - 2000)
Different philosophies of market regulation
54
Regulation of international markets
The Bretton Woods System
ACTIVE REGULATION OF
1.
FIXED EXCHANGE RATES IN ORDER TO
STABILIZE THE EXPECTATIONS
2.
LIBERALIZATION OF INTERNATIONAL
EXCHANGES BASED ON THE GATT
AGREEMENTS
3.
COUNTERCYCLICAL INTERVENTIONS
OF IMF IN ORDER TO AVOID EFFECTIVE
DOMAND DEFICIENCIES
4.
STRUCTURAL INTERVENTIONS
OF THE WORLD BANK MAINLY TO
FIGHT POVERTY
INTERNATIONAL MARKETS
IN ORDER TO AVOID
“MARKET FAILURES”
55
Regulation of international markets
The “Washington consensus”
1.
FLEXIBLE CURRENCY EXCHANGES
2.
INSTITUTION OF OMC TO COMPLETE
THE LIBERALISATION OF
INTERNATIONAL TRADE
3.
NEW PRESCRIPTIONS OF IMF:
DEREGULATION, PRIVATISATION
AND AUSTERITY
4.
SUBORDINATION OF FINANCIAL
SUPPORT OF THE WB TO THE
COMPLIANCE TO IMF CONDITIONS
PRIVATISATION AND
DEREGULATION OF
INTERNATIONAL MARKETS
TO AVOID STATE FAILURES
56
Regulation of international markets
The “Washington consensus”
THE NEW POLICY
PHILOSOPHY MAY
JEOPARDISE
SUSTAINABILITY
A.
THE WTO URGED THE REPEAL OF
ENVIRONMENTAL AND SOCIAL
CONSTRAINTS TO INTERNATIONAL
TRADE INTERPRETED AS
NON-TARIFF BARRIERS
B.
THE IMF URGED STRICT
BUDGETARY POLICIES EVEN TO THE
COST OF INTERRUPTING
SOCIAL AND ENVIRONMENTAL
INVESTMENT AND TRANSFERS
57
Microeconomic aspects
SUSTAINABLE FIRM
DEVELOPMENT IS
SUSTAINIBILE ONLY IF IT
IS BASED ON A FABRIC
OF
SUSTAINABLE
FIRMS
HAS UN A LONG-PERIOD TIME HORIZON
AND TAKES INTO ACCOUNT THE
INTERESTS OF ALL STAKEHOLDERS
MAX LIFE EXPECTATION
AND AVERAGE
PROFITABILITY
58
Dow Jones indexes
350
300
DJSI World:
SUSTAINABILITY INDEX
Index
250
200
DJ World:
GENERAL INDEX
150
100
50
Mar-02
June-01
Sept-00
Dec-99
Mar-99
June-98
Sept-97
Dec-96
Mar-96
june-95
Sept-94
Dec-93
0
Fig. 15
Source:www.sustainability-index.com
59
Total returns normalized to 100
The Influence of Globalisation

The growing spatial fragmentation of productive
activity made increasingly difficult the active
control of stakeholders

Progressive shortening of the time horizon of
economic decisions

The new regulation rules of International markets
contributed to weaken the sustainability of
development

The case of banking: shadow finance
60
Concluding remarks
The Implications for Economic,
Environmental and Social Policies
61
Tentative answer to the second question


The confrontation pro or con globalisation is misleading
The problems depend on:



Incompleteness of globalisation
Anomalies of globalisation
Inadequate regulation of markets
The recent process of globalisation
is not fully sustainable
it can and should be made sustainable with apt interventions of
economic, environmental and institutional policy
62
General policy interventions that descend from
the analysis

Strengthen the sustainability of world development:

more egalitarian growth rapidly reducing poverty

vigorous reduction in the intensity of environmental deterioration

Defence and corroboration of genuine environmental and
social constraints in cross-country trade

Elimination of unjustified constraints to labour mobility

Control of speculative flows and/or of their effects

Incentives to CSR and enforcement of minimal standards

Incentives to the financial system to channel saving towards
sustainable investment
63
The basic policy dilemma
Interventions such as those mentioned above may be implemented by
national policy authorities
but in the short period they could damage the national interests
or powerful particular interests
this problem extends to the global economy the dilemma:
should the markets be regulated by some sort of public authority?
64
Paradigm pro-regulation
Dominant paradigm in the Bretton Woods period:
STATE
government
regulation
standard objection:
interventions
reaction
-omniscient
state
→ state failures
{
-benevolent
market failures
economic power
defence: democratic control
Invisible hand
MARKET
65
Paradigm pro-deregulation
Dominant paradigm in the Washington consensus era:
STATE
government
deregulation
privatisation
economic power
standard objection:
the real market is not the
}→ market failures
state failures
reaction
perfect competitive market
defence: reduction of the gap
Invisible hand
MARKET
66
The gap between real markets and the ideal model
of a perfectly competitive market
distribution
a) perfect competition market: limits {
incompleteness → externalities
ideal perfectly competitive market
b) wide gap between {
real markets: strong uncertainty, bounded
rationality, transaction costs, irreversibility of time...
c) the gap may be reduced but not fully eliminated (e.g. incompleteness)
→ markets, even global markets, have to be regulated
67
Traditional paradigms

Alternation at least since Adam Smith

Both paradigms are simplistic, unilateral and misleading:
mistaken foundations of the sources of economic power and failures:
State: hierarchical and centralised (government)
trad. sources {
Market: impersonal - decentralised (invisible hand)
third source → Firms: hierarchical and centralised (governance)
-different from the state: control of stakeholders
-different from the market: Coase (1937)
→ corporate failures (short-termism & C Irresponsibility)
68
the three sources of economic power and failures
STATE
regulation and deregulation
regulation and deregulation
GOVERNMENT
state failures
constraints
lobbying
ECONOMIC FAILURES
market failures
corporate failures
INVISIBLE
CORPORATE
manipulation
HAND
MARKET
GOVERNANCE
competitive pressures
FIRMS
69
Concluding remarks on the policy dilemma
Very often deregulation and privatisation translated not in more power to the market

more power to firms (mainly to the big ones, often transnational)

this did not mean more competition: collusion, insider trading, conflicts of
interests, regulatory capture, and other corporate failures undermine
competition

neither less power to the state:
-the share of public expenditure did not diminish: what has changed is
the structure of taxation and public expenditure in a less egalitarian way
-collusion between particular corporate and political interests: crony
capitalism is by no means a distinctive trait of developing countries
(Bhagwati, 2004)
70
The policy dilemma and globalisation

What we need both at the national and international level is:




more effective competition on a really level playing field (→↓ inequality
and poverty)
more democratic control on government from citizens
more democratic control on corporations from stakeholders
the problem is not so much the dislocation of nominal power between the
three sources, but the quality of the management of power at the national
and global level:
-genuinely competitive markets
government
-accountability and transparency of
{
corporate governance
under these conditions globalisation may offer crucial opportunities of
development guaranteeing at the same time its sustainability
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Theoretical presuppositions
1) assertions on the market
-distribution
a) perfect-competition market: intrinsic limits {
-externalities
ideal of perfect competition (GEM)
b) wide gap between market {
real: incompleteness, strong uncertainty, limited rationality,
externalities, transaction costs, irreversibility, etc.
c) The gap may be narrowed but not fully closed (e.g. incompleteness)
72
2) liberalism vs. neoliberalism
α) classic
β) updated (Keynes, Pigou, etc.)

Liberalism
→ discontinuity:
{
γ) neoliberalism
α) e β) endorse the three assertions
{
γ) rejects or underscores them:
externalities → property relations
a) optimism
{
distribution: collateral effects of growth
(temporary: Kuznets)
b) minimization (e.g. contestable markets)
c) no limits in principle (e.g. Arrow securities to complete markets)
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3) Policy implications
a) public interventions inevitable

Liberalism
{ b) ↓ gap but further interventions necessary → ↑ well-being
c) abolition of unjustified constraints
a) avoid public Interventions (state failures in principle worse)

Neoliberalism { b) reducible through deregulation and privatization
c) completely superable: completion of markets, etc.
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4) Postwar globalizations
i) liberal (Keynesian updated liberalism):
1945/1971
Globalization
{
ii) neoliberalism: 1980/2007
i) ↑ welfare state
Social condition
{
ii) ↓ welfare state
i) ↓ awareness
Environmental condition{
ii) ↑ environmental policies:
rise and decline
75