Globalization will help world realize innovative potential

Globalization has come under fire in recent years, with people in some countries becoming increasingly frustrated with the uneven distribution of its gains. But weaknesses in management or execution should not be allowed to obscure globalization's far-reaching potential benefits, including its promotion of productivity-enhancing technology transfer and innovation worldwide.

As the April 2018 issue of the International Monetary Fund's World Economic Outlook says, globalization has substantially bolstered the diffusion of knowledge and technology. The increased international competition associated with globalization may also contribute to overall prosperity, as it strengthens incentives to adopt new technologies and to innovate.

By bolstering productivity, the average output can be increased at a relatively low cost. The WEO estimates that in emerging market economies, foreign knowledge accounted for about 0.7 percentage points of annual growth in labor productivity from 2004 to 2014, and a total of 40 percent of observed sectoral productivity growth. From 1995 to 2003, that rate was just 0.4 percentage points.