Working Paper: CEPR ID: DP3524
Authors: Dani Rodrik
Abstract: The nation-state system, democratic politics, and full economic integration are mutually incompatible. Of the three, at most two can be had together. The Bretton Woods/GATT regime was successful because its architects subjugated international economic integration to the needs and demands of national economic management and democratic politics. A renewed ?Bretton-Woods compromise? would preserve some limits on integration, while crafting better global rules to handle the integration that can be achieved. Among ?feasible globalizations,? the most promising is a multilaterally negotiated visa scheme that allows expanded (but temporary) entry into the advanced nations of a mix of skilled and unskilled workers from developing nations. Such a scheme would likely create income gains that are larger than all of the items on the WTO negotiating agenda taken together, even if it resulted in a relatively small increase in cross-border labor flows.
Keywords: globalization; international institutions; international labour mobility
JEL Codes: F00
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| nation-state system, democratic politics, full economic integration (F55) | mutual incompatibility (L15) |
| economic integration (F15) | democratic politics (D72) |
| deep economic integration (F15) | political legitimacy (H11) |
| labor mobility (J62) | income levels in developing nations (O15) |
| domestic political pressures (F52) | international economic commitments (F53) |