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Abstract
Since the mid-1980s, the pace of globalization in the world economy has quickened considerably. World trade has increased nearly twice as fast as world GDP, financial markets in many countries have been liberalized rapidly, and capital flows to many developing countries have accelerated. Clearly, some economies have benefited from globalization enormously. With this World Economic Outlook, Hong Kong, Korea, Singapore, and Taiwan Province of China (together with Israel) are moved from the developing country group to the new advanced economy group; they vividly demonstrate the great successes that can be achieved when policies take advantage of these forces. But what do the pressures of globalization mean for economic performance and policy orientations in developing countries more generally? Do larger trade flows and more liberal financial markets benefit all countries equally, or are some economies better positioned to reap the gains than others? What do closer trade and financial linkages suggest for the cross-country income convergence process? Are there successive groups of developing countries following in the footsteps of the Asian success cases or not? Are there particular policies that can help countries enjoy the benefits of globalization, enhance economic performance, and reduce the danger of becoming marginalized? These issues are the focus of this chapter.
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