After having briefly reviewed the recent experiences with trade liberalization the paper argues that the
effects of financial liberalization on employment and incomes often carry great disturbances for economic
and social development. Therefore, financial liberalization warrants at least as much attention as
trade liberalization. The paper weights the potential benefits in terms of growth against the adverse
effects of volatility and crises that are frequently associated with financial liberalization, and in particular
with debt and portfolio flows. It is motivated by the concern expressed by the World Commission on the
Social Dimension of Globalization that “[g]ains in the spheres of trade and FDI run the risk of being set
back by financial instability and crisis” and draws the conclusion that volatility in international financial
markets is currently perhaps one of the most harmful factors for enterprises and labour in developing
countries. Hence, the paper suggests how greater policy coherency between international and national
financial, economic and employment policies can give greater attention to employment and incomes.
