Crisis jolts globalization process Economic and financial globalization and the expansion of world trade have brought

substantial benefits to countries around the world. But the current financial crisis has put globalization on hold, with capital flows reversing and global trade shrinking. Some analysts see the drivers of the recent globalization wave getting undermined, with protectionism on the rise. Even supporters of globalization agree that the benefits of globalization are not without risks such as those arising from volatile capital movements. The IMF works to help economies manage or reduce these risks, through economic analysis and policy advice and through technical assistance in areas such as macroeconomic policy, financial sector sustainability, and the exchange-rate system. This page pulls together the IMFs work on globalization and includes links to key articles, documents, and background information. Good news and bad The complex interaction of trade, capital, information, and technology is leading to a new global convergence, for better and for worse. The surge in information enhances human lives improving health, education, and communication. Trade and financial integration have underpinned strong growth and job creation and helped narrow the gap between rich countries and poor. Division between rich and poor countries is blurring as technology becomes global commodity that developing and emerging economies import But, as we have seen from the prolonged global financial crisis, our interconnectedness carries grave risks of contagion as well as benefits. Small economies can bring down large ones, and a disaster in one country has ripple effects around the world. The September 2012 issue of Finance & Development looks at different aspects of interconnectedness, globally and in Asia. The global village People now are interconnected at a level never seen before in history,says Kishore Mahbubani, Dean of the National University of Singapores Lee Kuan Yew School of Public Policy. Technologyin the form of mobile phones, the internet, Skype, and computersis saving lives and connecting lives. But global supply chains mean that a disruption on the other side of the world can affect what cars one can buy from the dealer down the street. Travelers transmit disease across continents with a single plane ride. And global warming challenges all nations to work together. Mahbubani says the global village increasingly requires a new global ethic to save itglobal solutions to big emerging problems such as financial crisis, flu outbreaks, and climate change. He expands on these ideas in his forthcoming book, The Great Convergence: Asia, the West, and the Logic of One World. The division between rich and poor countries is blurring as technology becomes a global commodity that developing and emerging economies import and adapt to catch up with advanced economies. Dervis looks at three fundamental shifts in the global economy that are leading to major adjustments in the balance between east and west: convergence of emerging and advanced economies economic growth; interdependence of countries fortunes; and divergence of incomes within countries