The new conventional wisdom on globalization emphasizes that reaping the benefits of trade and financial integration is not automatic, and requires better domestic institutions, essentially improved safety nets in rich countries and improved governance in the poor countries. The prevailing strategy is predicated on the presumption that insufficiently open markets continue to pose an important constraint on the world economy. In reality, lack of openness is no longer the binding constraint for the global economy. The gains to be reaped by further liberalization of markets are meager for poor and rich countries alike. An alternative approach to globalization would focus on enhancing policy space rather than market access, and on devising the rules of the game to better manage the interface between national regulatory and social regimes. It is possible to envisage such rules without slipping back into protectionism.
