Globalization and the Twin Protections
Documents de travail de l'OFCE
Documents de travail de l'OFCE : N°2007-21
The aim of this short paper is to devise policies to avoid that the present course of globalization becomes so unstable that it would lead to a general rejection in both rich and poor countries. If we try to disentangle rhetoric from reality, globalisation is not exactly what we think it is. It is happening in a world populated by Nation-States whose main function is to protect its population. The Nation States of the world are alive and well: the hyper power of the United-States, the super power of Europe, Russia, China, India etc… Hence for globalisation in the effective sense, not the rhetoric one, to be sustainable, it has to become acceptable. For that it has to achieve a more balanced emphasis between competition and cooperation (or solidarity). The reason why welfare state building has to be pursued and protectionism refrained in developed countries has to do with the nature of our growth regime. Social protection is not charity, but insurance, i.e. risk guaranteeing and innovation stimulating. Combined with a reactive macroeconomic policy, it protects individuals and firms by maintaining a high degree of economic activity. Yet if plain protectionism should be prohibited for developed economies, it has some merits for potentially emerging and emerging one. The locus of solidarity at the global level is the provision of global public goods. Cooperation leads to a clearer design of the future because it raises the level of solidarity between nations. Furthermore, the provision of global public good, like health, education, environment and energy should be an engine for growth. The paper focus on the provision of two public goods –environment and knowledge– to show that contrary to common wisdom they may be the engine for growth of tomorrow, if they are provided with the help of a global public found mainly financed by developed countries.