Dani Roderik: The Globalization Paradox December 2011 WRR

The evolution of capitalism: version 3.0,a beta full of bugs Insight: full-fledged fledged globalization (“hyperglobalization(hyperglobalization”)requires elimination of transaction costs on internationaltrade and finance, both at and behind the border Regulatory harmonization and reduction of “policy space” In practice: financial globalization + World Trade Organization But a fatal flaw: domestic governance/regulatorymechanisms were weakened while their globalcounterparts remained incomplete Economic malfunction: inequality, financial crises, unevendevelopment Political costs: loss of voice, concern over democratic legitimacy,inequality and “level playing fields” Europe: the “exception” that tests the rule