Globalization – For Better of Worse?

Globalization – For Better Or
For Worse?
An Introduction
Arguments For Globalization
Arguments Against Globalization
What is Globalization?
• ” Globalization is a phenomenon whose
economic dimensions involve increases in the
flows of trade, capital, and information, as well
as mobility of individuals across borders”
• “Globalization is characterized, in particular, by
an intensification of cross-border trade and
increased financial and foreign direct
investment flows, promoted by rapid
liberalization and advances in information
Globalization - For Better Or For
First wave (1870) - Big increase in
flows of capital, people and trade driven
by liberalized policies and technology
Interwar collapse of Globalization continued technology progress, but
complete reversal of policies, a retreat
into nationalism and protectionism.
Second wave (after WW2) - restored
the level of integration in wave one, in
terms of trade. We don't see a
restoration of globalization in terms of
capital flows and flows of people.
Third wave (currenct wave) - two
dramacitally differences:
GDP rises to unprecedented levels.
The structure of trade is
Globalization - For Better Or For
Transformed Trade
1980: three-quarters of developing
country exports were primary
commodities – minerals and
Today: 80 percent are manufactures.
Will this have a big impact on poverty
Commodity exports benefit the owners
of land.
Labour intensive manufactured goods
tend to benefit a much wider segment
of society, especially people who own
the labour, the skills.
How did this happen?
Lowered barriers, market access.
Improvement in developing countries.
Globalization - For Better Or For
Economic Growth – Some Examples
Of course – Growth by itself is
not very interesting!
Uganda and Vietnam –
Began integrating rapidly with
the world economy in the
Later than most other “more
globalized” countries.
But they nonetheless achieved
rapid growth and rapid poverty
Globalization - For Better Or For
The number of absolute poor in
the world rises inexorably right
through until about 1980.
Then for the first time in world
history, we see substantial absolute
declines in the number of poor.
The number of people living in
extreme poverty began to fall in
the 1980s and continued to fall
through the 1990s, even as the
world population grew by 1.6
billion in 1980-2000.
Anything to do with global
Globalization - For Better Or For
Integration and economic growth
Before 1980 - division between
the North and the South.
After 1980 - division within the
More globalized countries –
3 billion people (India, China etc.).
Less globalized countries –
2 billion people (sub-Saharan Africa,
the Middle East and former Soviet
The gap is narrowing between
the rich countries and the more
globalized countries, BUT SOME
Globalization - For Better Or For
Arguments For Globalization:
1. Trade:
International trade and investment have been the
engines of world growth over the past 50 years
The tonnes of goods traded around the world have
grown by 16 times since 1950, reflecting the
lowering of tariff barriers.
The benefits of that growth have been shared
The countries that are getting poorer are those that
are not open to world trade, notably many nations
in Africa.
Globalization - For Better Or For
Many people believe that exports create jobs, and
imports cost jobs and that it therefore makes sense
to have barriers against imports. This thinking led to
the Great Depression in 1930, because so many
countries had erected barriers against imports that
global trade fell with catastrophic consequences.
Companies of all sizes are involved in world trade –
the benefits do not just flow to large multi-nationals.
In most trading nations, raging from Thailand to
France, small firms employing less than 200 people
account for between 10 and 25% of exports.
Globalization - For Better Or For
Environmental Issues:
The remedy is to make the polluter pay. Indeed the
principle that the polluter should pay underlies
both the Kyoto Protocol greenhouse gas emissions
and agreements to control acid rain in the United
States and Europe.
What is required to impose ‘polluter pays’ principles
on a global basis is stronger democratic institutions
so that those who feel the impact of pollution can
exercise their political rights to have it stopped.
Globalization - For Better Or For
The Internet, Communication
and Technology:
Technology can do much to reduce poverty and
environmental damage. It can increase the supply of
food and reduce morbidity and mortality, particularly in
DC see Internet as an opportunity to gain access to
knowledge and services from around the world. To both
import and export.
The internet may also facilitate opportunities for
economic development in industries such as tourism.
Communication infrastructure - Mobile telephony vs poor
land line telephone system.
Globalization - For Better Or For
Globalization has drastically improved access of
technological latecomers to advanced technologies
and, to the extent that technological upgrading is
important for development, it provides a unique
opportunity for low-income countries to raise per
capita income.
Research shows that improved access to technology
imports is improving the demand for skilled labour in
many low-income countries.
"The Internet does not act like a cybermissionary.
Instead it acts like a universal conduit, carrying ideas
and information from one place to another".
Globalization - For Better Or For
Globalization Alternatives
The increase in world trade as a proportion of world
GDP was proportionately greater between 1870 and
1914 than it has been since 1975. That expansion
was stopped, not just by the first world war, but by
the loss of support for free trade which followed.
Tariffs and controls on capital were imposed around
the developed world. This led directly to the 1930
depression and indirectly to the second world war.
Globalization - For Better Or For
Arguments Against Globalization
1. Globalization increases the gap between rich
and poor countries:
Over the past ten years, the number of people earning $1 a day
or less has remained static at 1.2 billion while the number
earning less than $2 a day has increased from 2.55 billion to 2.8
billion people.
The gap in incomes between the 20% of the richest and the
poorest countries has grown from 30 to 1 in 1960 to 82 to 1 in
2. Trade between industrialized countries and
developing countries is of relative small
range,eg. the USAs trade with developing
countries is only about 4 percent of GDP.
Globalization - For Better Or For
Cooperation on globalization was initiated by
the richest even from the beginning and it is
still these nations who set the agenda for
discussions and decisions in the greatest
forums of globalisation.
Global organisations like the WTO, the IMF and
the World Bank are undemocratic, and
developing countries have little influence:
Trade policy is dictated by corporate interests.
Undemocratic processes in the WTO: Secret negotiations (eg.
TRIPS), "green room"meetings, limited participation in discussions.
DCs do not have the resouces for lobbying activities or to analyse
policy proposals in depth.
IMF's programmes are all in DCs, but the institution is contolled by
the advanced industrial countries, and only one country has
effective veto power.
Globalization - For Better Or For
WTO trade policies are unfair and hurt
developing countries:
Trade agreements have left in place barriers in the
north against the exports of the DCs, typically labour
intensive goods like textile and agricultural produce,
even as the DCs have opened up their markets to the
goods of the industrialised countries.
The intellectual property regime (TRIPS) makes drugs
unaffordable to DCs, and this has negative implications
for the combat of the AIDS pandemic.
Globalization - For Better Or For
6. IMF policies have not been good for growth
and hurt DCs:
Rapid capital market liberalisation that has been forced
on many DCs as a condition for their loans, has had
many negative effects.
Due to problems like corruption, weak financial
institutions and lack of safety nets the countries were
not ready for rapid liberalisation.
Instability and unemployment have increased, and the
debt burden is often enormous.
Globalization - For Better Or For
Globalization is empowering corporations at
the expense of the nation state:
MNC are extremely powerful, and many MNCs are larger
than nation states.
Multinational companies exploits workers in countries with
inferior labour standards.
Small farmers and businesses in DCs have difficulties
competing with the MNCs.
Globalization - For Better Or For
Globalization is bad for the environment:
Rich countries export their polluting industry to poor
countries which have less strict environmental standards.
Processes of industrialisation are leading to global
warming and a deterioration of the atmospheric quality.
Developing countries have been excluded from the Kyoto
Protocol, providing a loophole for transnational companies.
Resource industries such as forestry, mining and fisheries
exploit the resources of poor countries with little regard to
either the long term cost to the country in terms of the
loss of a national resource, or to the environment.
Globalization - For Better Or For

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