Does globalization cause economic instability in developing nations?
The fact that developing nations experience repeated economic crises is blamed on globalization by some sectors of the world community. The recent crisis in Argentina is a perfect example of this. It is true that events originating outside a country can trigger instability in some developing nations. A crisis originating in a given country can have a domino effect and reach several other countries. And, as indicated in the discussion of the previous issue, under certain conditions capital movements can be destabilizing. However, countries that routinely apply prudent economic policies are much less vulnerable to crises than nations that do not. Most often the real causes of the crises are the harmful economic policies followed by many developing nations. It is bad economic management which makes them crisis-prone. Then, once a crisis is underway and the nation asks for help from the International Monetary Fund (IMF), the severity of the crisis is blamed on having followed IMF advice. I
