By the early 1980s, a number of distinguished economists had amassed compelling evidence that outward-oriented trade policies were far more likely than protectionism to lead to economic growth. The evidence was contained in two multi-country research projects-one at the Organization for Economic Cooperation and Development (OECD), led by Ian Little and others, and the other at the National Bureau of Economic Research, directed by Jagdish Bhagwati and Anne Krueger-and in a series of studies at the World Bank.
When developing countries, convinced by these findings, began to embrace outward-oriented policies, pro-free trade economists believed they had scored a decisive victory over protectionists and turned their attention to other problems related to development. But the protectionists were not so easily defeated. Over the next few decades, they regrouped, building a new case for protectionism based on examples of countries that had apparently opened up but had failed to grow rapidly or had suffered financial crises. They also forged new alliances with certain nongovernmental organizations (NGOS) dedicated to preserving the environment and improving labor standards. By the late 1990s, the protectionists-now rechristened "anti-globalizers" to reflect the expanded scope of their agenda-seemed to have recovered some of their lost ground. Their newfound vocalism made headlines during the World Trade Organization (WTO) ministerial meeting in Seattle in 1999.
Today, however, advocates of globalization are gaining the upper hand again. Bhagwati's strikingly successful defense of open markets in his recent book In Defense of Globalization has been bolstered by another influential pro-globalization voice, that of Martin Wolf of the Financial Times. Wolf's weekly columns have already established him as one of the world's most respected economic journalists. Now his ambitious new book, Why Globalization Works, offers a patient and persuasive refutation of many of the arguments most frequently marshaled by critics of trade liberalization.
Wolf's book ranges over many topics, including, in Part III, the rise and fall of what may be called the period of "first globalization" that flourished from 1870 to 1914. But the book's
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