Owen Barder asks a good question: what can we do to ensure poor countries reap a greater share of the benefits of globalization?
I agree with his proposals, and with his rejection of another, a Tobin tax.
There’s one thing I’d add – encourage FDI to flow to developing countries.
UNCTAD figures (free reg req) show that last year African countries got only 2.8% of the world’s FDI flows – less than France.
How do we increase FDI to developing economies? One possibility would be to encourage increased economic freedom. In the latest Cato Journal Marshall Stocker shows that improvements in this lead to rising share prices (pdf). The same things that encourage equity investment should also increase FDI.
You might think that encouraging increased economic freedom in poor countries is a “right-wing” agenda.
Not necessarily. It might be that one way to increase economic freedom would be to increase the equality of assets. Doing this would reduce demands for taxation and regulation that harm growth.
Sadly, though, there seems little demand, either in poor or rich countries, for egalitarian freedom.