Joseph Stiglitz Participates in Two Events at the School
Nobel Prize Laureate Speaks at IESE

Renowned economist Joseph Stiglitz was on IESE's campuses recently to participate in two events, providing his perspectives on globalization and fair trade.

Nobel prizewinner Joseph Stiglitz was on IESE's campuses recently to participate in two key events, a Continous Education session and the Human Resources Forum.

In the Continuous Education session titled “Goals for the Millennium” at IESE’s campus in Barcelona, speaker Stiglitz, Nobel Prize Laureate in Economics (2001) and Professor at Columbia Business School, advocated for greater fairness toward regions such as Latin America and Africa regarding commercial trade. The session, moderated by IESE Prof. Pedro Nueno, also included the presence of Xavier Pons Ràfols, vice-president of the Association for the United Nations of Spain.

Stiglitz focused his discussion on globalization and the importance of knowledge as an integrating factor for different countries around the world: “more than the support of resources, which only serves as a band-aid, we need to overcome the breech of knowledge, since this is what will transform the world and accelerate change.”

Stiglitz, who spoke in front of close to 200 business executives, also referenced the UNDP report (United Nations Development Program), a key UN document that establishes clear goals to reduce poverty, illiteracy, environmental damage and discrimination against women. In his opinion, the objectives of the UN haven’t been fulfilled and there continues to be a breach among these countries.

Stiglitz outlined the most important variables that need to be managed in a globalized world in order to resolve the imbalances caused by globalization. They include access to knowledge and information, commercial and investment agreements (which have been unfair toward developing countries) and democratizing global institutions (such as the World Bank and NAFTA, which in order to boast more credibility, need to operate more transparently).

Stiglitz stated that natural resources are very important to a country’s growth, although they aren’t valued as much as they should be economically.

In closing, Stiglitz announced the publication of his new book in the fall, which is titled, “Making Globalization Work” and aims to give ideas about how to better manage globalization.

Resolving Imbalances

“It is easier to move knowledge across borders, than to move goods across borders,” said Stiglitz, who also participated in the school’s Human Resources Forum in Madrid, organized by Prof. Santiago Alvarez de Mon.

However, while it seems that today’s era of fast-moving information would help level the playing field, poorer countries don’t always have access to research and the internet, putting them at a clear disadvantage. Moreover, global monopolies tend to suppress competition and international trade agreements many times don’t take into consideration the needs of developing countries.

Governments have a responsibility to manage globalization well, so that it benefits as many of the world’s citizens as possible, he stressed.

During the session, titled “Globalization, Trade and the New Agenda for Growth,” Stiglitz addressed the increased opportunities and threats of trade in today’s economic landscape. While globalization allows for “potential growth without limits,” because markets are no longer limited by domestic demand, the disappearance of borders means new and higher levels of competition. The populations of developing countries, such as India and China, are becoming integrated into the global economy at staggering rates. In total, populations of these countries represent 2.5 billion people, or 40% of the world’s population. In addition to people, they bring new competition, with surprisingly high growth rates.

Yet in today’s globalized world, “what separates developing from non-developing countries is not just resources, it’s knowledge,” said Stiglitz.

Competing Globally

To compete effectively, countries need high levels of technology and education. Investing in education and research, and understanding that these are long-term goals, has helped countries such as China and India reduce the “knowledge-gap” and become competitive forces, he said.

It is also important to recognize that globalization has limits. “A combination of local and global knowledge is at the heart of success,” he said. Even though globalization is infiltrating areas that no one thought possible 10 years ago, much knowledge has to be culled and understood at a local level. Governments, especially those of developing countries, have the large responsibility to manage globalization well. This means managing their economies and societies better to “make sure there are fewer losers and more winners.”While globalization is a strong force that seems to be moving at its own pace, there “have been reversals in the past,” he said, and it shouldn’t be taken for granted that globalization is unstoppable.

Stiglitz is professor of economics at Columbia University. Stiglitz served in the Clinton Administration as the chair of the President’s Council of Economic Advisors. He also served at the World Bank as senior vice-president and chief economist from 1997 to 2000, during in the time when unprecedented protest against international economic organizations started, most prominently with the Seattle WTO meeting of 1999.

In addition to “Making Globalization Work,” he is the author of “Towards a New Paradigm in Monetary Economics” and “Fair Trade for All.”