Globalization, Inequality, and Political Development: Modeling the Future

Is globalization conducive to long-run economic growth and development? Almost certainly yes. But as for trade’s impact on long-run political growth and development, here the state of our knowledge lags far behind. This chapter attempts to redress the imbalance. Rather than focus on globalization’s longer-run economic externalities, I highlight the political consequences of openness—e.g., the damaging effects it can have on a country’s domestic redistribution mechanisms and institutions. One possibility is that these negative effects are a function of increased trade-related societal inequality, as much of the globalization literature (with its emphasis on national Gini coefficients) implicitly assumes. In contrast, I suggest that increased trade-induced spatial inequality is at least as important: the more open a society’s economy, the more likely are that society’s haves to be isolated geographically from the have-nots. After laying out this argument, the chapter offers a preliminary assessment of globalization’s long-term demographic effects and finds that, indeed, trade does seem to be encouraging economic segregation. I close by considering—and dismissing—possible objections to the chapter’s emphasis on spatial segregation, e.g., that globalization reduces economic barriers to secession and, in this way, diffuses geographic tensions and the polarized politics that might otherwise accompany them. Book chapter prepared for the “Back to Basics: Rethinking Power in the Contemporary World” conference honoring Stephen D. Krasner, Princeton University, October 1-2, 2010.