Policy Combinations for Inclusive Globalization

Abstract

For a long time, freer trade was respected as the best policy among the majority of economists. Globalization leads to substantial losses for certain people, but the overall gains outweigh this loss and thus opening trade was perceived as a good policy for the domestic economy as a whole. However, the increase in inequality due to international trade and insufficient redistribution for losers has escalated discontent and political pressure. This phenomenon illustrates the importance of "inclusive" globalization. Even if trade liberalization policy brings more gain than loss, policies for redistributing trade gains, reducing inequality, and minimizing trade adjustment costs must accompany the globalization process to alleviate resistance and make economic growth sustainable.