Over the recent decades, the world economy has experienced not only a quantitative leap in the volume and value of international trade and financial transactions, but a qualitative transformation in the way residents of different nation-states interact with each other. National economies are increasingly linked through international markets for products and factor markets, leading to increased cross-border flows of goods, capital, labour, and through flows of information, technology and management know-how. The world economy is becoming increasingly integrated.
This process of globalisation is one of the most critical developments affecting the evolution of national economies. Globalization offers participating countries new opportunities for accelerating growth and development but, at the same time, it also poses challenges to, and imposes constraints on policy makers in the management of national, regional and global economic systems. While the opportunities offered by globalization can be large, a question is often raised as to whether the actual distribution of gains is fair, in particular, whether the poor benefit less than proportionately from globalization – and could under some circumstances actually be hurt by it.
The risks and costs brought about by globalisation can be significant for fragile developing economies and the world’s poor. The downside of globalisation is most vividly epitomised at times of periodical global financial and economic crises. The costs of the repeated crises associated with economic and financial globalization appear to have been borne overwhelmingly by the developing world, and often disproportionately so by the poor who are the most vulnerable. On the other hand, benefits from globalisation in booming times are not necessarily shared widely and equally in the global community. The fear that the poor have been by-passed or actually hurt by globalisation was highlighted by the finding from a number of...