Gordon Hanson Quoted in the Wall Street Journal
IMF Fuels Critics of Globalization
Oct 11, 2007
By Bob Davis, Wall Street Journal
Abstract
The IMF's findings, published in the fund's semiannual economic review, the World Economic Outlook, confirm the work of other economists, who have been trying to figure out why income inequality has widened in both rich and poor countries in the past two decades. The report is an unusual admission by the IMF of the downsides of globalization.
Sub-Saharan Africa is an exception to the rule, the IMF said, though its report didn't address why the income gap there had diminished. Gordon Hanson, a trade economist at the University of California at San Diego who consulted with the IMF researchers, said the reason may be that the many African civil wars destroyed the wealthy classes. Income equality may have improved but not for reasons any other region would want to emulate, he said.
The IMF researchers separated "globalization" into three components -- technology, foreign investment and trade -- and looked at how changes in each of the three corresponded with changes in income inequality globally. According to the results, technology and foreign investment deepened income inequality, while trade diminished it. Overall, globalization has contributed "moderately to net changes in income shares," the IMF found.
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