In the article “Globalization and Growth” in The New York Times on March 14, 2016, the author Brad DeLong mentions that most people believe that economic globalization will bring benefits to every country.

    Global trade is believed to help a country manage its capital, bring new technology and new production techniques. Because of that, it becomes very important for a country to remain open in the global economy. However, we find that globalization does not make poor countries become rich.

    In other words, the wealth does not flow to poor countries. As the author has mentioned, there is another idea that could be true. DeLong has a thoughtful response, arguing that “the really big benefits of globalization come from technological diffusion.”

    Personally, I believe that globalization cannot bring benefits to every country at the same time. We know that the investment flow, including capital, from other countries is only profitable if the marginal product of capital in the country is higher than the world real interest rate.

    In other words, productivity plays a key role in the globalization of economy. The story of Mexico is a good example to support this idea. As the author has mentioned, “[The globalization] effect on development has been ... underwhelming.”

    We find that the productivity of Mexico is one-third of the United States, which means the marginal product of capital (MPK) of Mexico is small. As we have mentioned before, the lower MPK means less profit from globalization and less capital flow to the country.

    Because of that, the difference in productivity causes the different roles in the globalization of the economy. So, if a country wants to remain open in the global economy, it is important to increase productivity first.