Taking sides Number 1: Is economic globalization a positive trend? International Monetary Fund Staff and Nancy Birdsall In this issue, International Monetary Fund staff and Nacy Birdsall explain and discuss the impact of globalization on the world economy. Globalization essentially means that the world interacts more. From an economic perspective, this means that global trade and international investment have grown exponentially while tariffs have fallen. Free trade is encouraged, notably by the United States, in the hope of maximizing profits for all countries involved. The United States even helped create the IMF. Their article, “Globalization: A Brief Overview,” argues for economic globalization. In IMF research they find that, according to the author, global inequality is high and continues to grow. Birdsall admits that in some countries inequality has not actually changed and in a few countries it has actually decreased. His argument is simply that globalization increases the likelihood of higher rates of inequality. Birdsall describes three ways in which globalization achieves this. First, countries with more and better productive assets will do better in the global economy. Productive assets include secure government as well as physical assets. This means that some countries will already have an advantage over others. Second, Birdsall believes that global markets are imperfect and lead to some failures. She writes: “The classic example of market failure is that of pollution, where the polluter captures the benefits of pollution without paying the full costs” (21). Third, Birdsall argues that globalization only helps make the rich richer. Birdsall concludes of globalization: “Even if it is not the root cause of global inequality, it tends to exacerbate inequality, all other things being equal” (24). She believes that for globalization to reach its potential as a useful rather than a harmful tool, global politics needs major measures.