JOSEPH STIGLITZ
(Winner of the Nobel Prize for Economic-2001.)

Globalization Today is not working for many of the World's poor. It is not working for much of the environment. It is not working for the stability of the global economy. The transition from communism to a market economy has been so badly managed that, with the exception of China, Vietnam, and a few Eastern European Countries, poverty has soared as incomes have plummeted.

To some, there is an easy answer : Abandon globalization. That is neither feasible not desirable. As I noted in chapter 1. Globalization has also brought huge benefits-East Asia's success was based on globalization, especially on the opportunities for trade, and increased access to markets and technology. Globalization has brought better health, as well as an active global civil society fighting for more democracy and grater social justice. The problem is not with globalization, but with how it has been managed. Part of the problem lies with the international economic institutions, with the IMF, World Bank, and WTO, which help set the rules of the game. They have done so in ways that, all too often, have served the interest of the more advanced industrialized countries and particular interests within those countries rather than those of the developing world. But it is not just that they have served those interests; too often, they have approached globalization from particular narrow mind-sets, shaped by a particular vision of the economy and society. - Page 214-215

TODAY, GLOBALIZATION IS being challenged around the world. There is discontent with globalization, and rightfully so. Globalization can be a force for good: the globalization of ideas about democracy and of civil society have changed the way people think, while global political movements have led to debt relief and the treaty on land mines. Globalization has helped hundreds of millions of people attain higher standards of living, beyond what they, or most economists, thought imaginable but a short while ago. The globalization of the economy has benefited countries that took advantage of it by seeking new markets for their exports and by welcoming foreign investment. Even so, the countries that have benefited the most have been those that took charge of their own destiny and recognized the role government can play in development rather than relying on the notion of a self-regulated market that would fix its own problems.

But for millions of people globalization has not worked. Many have actually been made worse off, as they have seen their jobs destroyed and their lives become more insecure. They have felt increasingly powerless against forces beyond their control. They have seen their democracies undermined, their cultures eroded.

It globalization continues to be conducted in the way that it has been in the past, if we continue to fail to learn from our mistakes, globalization will not only not succeed in promoting development but will continue to create poverty and instability. Without reform, the backlash that has already started will mount and discontent with globalization will grow.

This will be a tragedy for all of us, and especially for the billions who might otherwise have benefited. While those in the developing world stand to lose the most economically, there will be broader political ramifications that will affect the developed world too.

If the reforms outlined in this last chapter are taken seriously, then there is hope that a more humane process of globalization can be a powerful force for the good, with the vast majority of those living in the developing countries benefiting from it and welcoming it. It this is done, the discontent with globalization would have served us all well. -Page 248-249

WHAT IS NEEDED :-

1. Acceptance of the dangers of capital market liberalization, and that short-term capital flows ("hot money") impose huge externalities, costs borne by those not directly party to the transaction (the lenders and borrowers). Whenever there are such large externalities, interventions-including those done through the banking and tax system-are desirable. Rather than resisting these interventions, the international financial institutions should be directing their efforts to making them work better. -Page 236-237.

• Acceptance of the dangers of Capital market.
• Bankruptcy reforms and standstills.
• Less reliance on bailouts.
• Improved banking regulation.
• Improved risk management.
• Improved Safety nets.
• Improved response to crises.