se, but rather against “ world economic forums ”. clearly, the risk is that support for restrictions on trade is not dead, only quiescent. in many important respects, the past half century has represented an uneven struggle to repair the close linkages among national economies that existed before the first world war. the hostilities bred of war, the substantial disruptions to established trading patterns associated with that conflict, and the subsequent poor economic performance over the next few decades triggered the erection of trade barriers around the world that have taken even longer to dismantle. to repeat that error would be a tragic act of foolishness and waste. central bankers can make two contributions to ensure an open trading system. for one, we should not hesitate to remind our fellow citizens of the manifest net benefits of free trade in goods, services, and assets, benefits that accrue not only to all trading partners on average but also especially to some of the least fortunate within those trading societies. i would further emphasize that the free market system has proven itself better than all other forms of organization dedicated to harnessing the underlying competitive forces of the division of labor and comparative advantage. for another, we monetary policymakers must keep hold of the anchor provided by price stability so as to support maximum sustainable economic growth over time. by fostering such economic performance, our arguments for free trade and open markets should find a receptive audience.

alan greenspan : the important engine of growth for our mutual economies - the force of globalization speech by mr alan greenspan, chairman of the board of governors of the us federal reserve system, at the banco de mexico 75th anniversary conference “ stabilization and monetary policy : the international experience ”, held in mexico city, on 14 november 2000. * * * i am honored to be speaking before this distinguished group on the occasion of the bank of mexico ’ s 75th anniversary. appropriately, major mileposts encourage introspection and a search for perspective. this morning, i shall focus my remarks on the important engine of growth for our mutual economies the force of globalization. although globalization has its critics, i say with some conviction that the increasing interaction among national economies has engendered benefits that have significantly exceeded their costs over the years. and the clearest way to understand those net benefits in the 21st century is to examine the record of the prior two centuries, both for ways in which the current experience is similar and for ways in which it is different. after touching upon the benefits that closer linkages have provided to us all, i will then discuss the importance of not ceding the progress that we have won thus far. how the world is similar though economic data are increasingly suspect as we look further back into the past, three regularities in the long sweep of the record strongly suggest that the degree of globalization today is not measurably greater than that prevailing in the century - ago world of our great grandparents. one is the importance of trade in the overall economy. measures of total trade across industrial countries, including those that simply sum merchandise exports and imports, have grown rapidly relative to total output over the past fifty years. but this growth mostly reverses declines in the ratio of total trade to gdp in the first half of the 20th century. in fact, for many industrial countries, total trade as a share of gdp is not much above levels that were commonplace in the late 19th century. second, trade in goods was accompanied by substantial trade in assets. a century ago, net capital flows across the major industrial economies were often greater than today when scaled to gdp. this integration of global financial markets was made possible in part by technological advances, including importantly the laying of the transatlantic cable in 1866. and, like today, open markets allowed capital to flow to the most productive uses where prospective returns were judged to be highest. third, because funds could flow across national borders to their most profitable uses, national investment