Introduction Challenges of Globalization

The world economy has never been wealthier than it is today. Yet many wonder about what can go wrong. This introduction discusses three relevant areas. The first section provides a brief overview of the great economic, social, and political achievements of globalization in the last three decades, one of the greatest booms in world history. Now, however, the world is experiencing an abrupt end to this period of achievement following the eruption of a financial crisis that began in the United States and may spread to other regions. Worry dominates. The second section discusses the underlying macroeconomic imbalances in the world economy and how they contributed to the current crisis. Various aspects of these imbalances are the theme of six of the ten chapters of this book. Globalization arouses anxiety, whereas capitalism in one country is much less controversial. The third section of this introduction and the last four chapters of the book discuss how the economic model that has improved economic welfare is developing or should evolve.