In too many stories about the modern economy, “globalization” is cast as either the hero or the main villain. In reality, globalization is one of several central facts of life. There is a widespread failure in business — without any connection to globalization. And yet, globalization can trigger excesses.

Economists generally agree that there have been two waves of modern globalization. Economists also agree that globalization is driven by two forces: first, the developments in technology and second, the developments in policy. In technology, modern globalization has been spurred by the rapid decline in the cost of communication and transport. In communication, the greatest single breakthrough was probably the telegraph, followed closely by the telephone, satellite relays, the internet, the mobile telephone and email.

As a result of these inventions, communication around the world has been transformed from something that costs hundreds of dollars and took hundreds of days to an instantaneous process that can be almost free. Television and movies have similarly made the spread of cultural influences much cheaper than ever before. In transportation, the steam engine, then the diesel engine, the railroad, shipping, highway transport and the aeroplane, as well as refrigeration and containerization, have all driven down the price of delivering goods and people. This has occurred to the point that distance hardly matters for much of the world’s population.

But the technical change does not make globalization inevitable. Between 1913 and 1945 — a period of shrinking trade, shrinking migration and the drive for economic self-sufficiency — technology was not forgotten or lost. It was government policy that changed: protectionism, capital controls — and barriers to human migration spread from country to country. In the post World War II period, the capitalist world took measures that we hope will prevent another such retreat from international cooperation. The Bretton Woods institutions — the World Bank and the IMF — and the United Nations, as well as the GATT and now the WTO, all were created to ensure cooperative outcomes, in which all parties benefit, rather than combat in which all parties lose.

In the view of the great majority of economists, these institutions have been successful. The world trade has grown faster than the world output almost every year. International capital movements have allowed countries with low saving rates to have higher investment rates. Foreign direct investment also has brought new technology and new management ideas for factories and finance to almost every corner of the world — with spillovers to other businesses.

For me, there is a bottom-line benefit. A number of countries — Japan, Korea, Taiwan, China, India, Chile and Mexico among them — have been able to specialize in production of manufactured goods and services for export. That has allowed them to grow much faster than if they depended on domestic demand alone. More than half the people who lived in desperately poor countries in 1945 now live in prosperous or rapidly growing countries that have managed to use the global marketplace to their great advantage.

Critics of globalization point to its destructive features. New ideas do indeed displace established ideas and beliefs — and new competition threatens existing economic interests. In some cases, these forces can be very destructive.

Technical change alone is a constant source of “creative destruction.” It is no accident that many in the anti-globalization movement also fight against technical change, longing for a better life that they invent for the past. These traumas, including those that result from trade, call for a secure safety net for innocent people hurt by rapid change — not for a policy that tries to stop or reverse change. Global connections — through trade, financial flows and migration — can be part of the solution to these problems. But they also could become a distraction or a scapegoat.

In every country, there are demagogues who try to divert the attention from the real problem. Tough economic times can help such a message find listeners. By the same token, the opposite is also possible — that people use globalization as a deliberate distraction, as if some external connection could solve economic problems. Greater openness alone is not a magic key that can open the door to prosperity and security. Participation in multilateral agreements can help assure access to foreign markets — which, in turn, can make it easier for new export industries to grow. Participation also requires real commitments to policy reform, which will make a country a better trading partner and a better host for new investment — by domestic investors as well as by foreigners.

Better to pursue constructive interactions than to look for a solution alone. Globalization can neither explain the world’s problems nor offer an easy solution, but constructive interaction is part of the solution.