GLOBAL ECONOMIC GLOBALIZATION

INTRODUCTION

  • The United Nations (UN) addressed global problems guided by eight Millennium Development Goals (MDGs) created in the 1990s, with a target to achieve them by 2015.
  • Among the eight MDGs:
    • Eradicate extreme poverty and hunger (first priority).
    • Achieve universal primary education.
    • Promote gender equality and women empowerment.
    • Reduce child mortality.
    • Improve maternal health.
    • Combat diseases like HIV/AIDS and malaria.
    • Ensure environmental sustainability.
    • Have a global partnership for development.
  • Source: United Nations, 2015.

ECONOMIC GLOBALIZATION AND GLOBAL TRADE

  • Two main types of economic policy related to globalization: protectionism and trade liberalization.
  • Protectionism: a policy of systematic government intervention in foreign trade to encourage domestic production, including preferential treatment for domestic producers and discrimination against foreign competitors.
    • Typical tools: quotas and tariffs.
    • Tariffs are duties on imports or exports.
    • Example tariff incumbent on a pen: if base price is 1.00 in Country A and a tariff of 5.00 is applied in Country B, the price becomes 6.00.
    • Mercantilist era (16th–17th centuries) involved protectionist practices; protectionism peaked during the Great Depression of 1929.
    • Even today, protectionism exists; accusations of protectionist behavior have touched major economies like China, Japan, and the United States (Ritzer, 2015).
  • Trade liberalization and globalization: shift toward free trade following World War II, aided by free-trade agreements and technological advances in transportation and communication, enabling goods and ideas to move more easily globally.
  • Leapfrogging: countries can skip older technologies and adopt newer, more efficient ones; mobile phones cited as a transformative technology for the developing world, enabling banking, payments, education access, and information dissemination.
    • Mobile phones also help farmers obtain market information and better prices; cellphone towers can be cheaper to deploy than laying extensive telephone lines.
    • Economists describe leapfrogging as bypassing earlier stages of technology adoption.
  • International trade creates new opportunities for selling goods and labor in a global marketplace.

ECONOMIC GLOBALIZATION AND SUSTAINABLE DEVELOPMENT

  • A major critique of globalization is its potential lack of sustainability: concerns about using Earth's finite resources for present needs without compromising future generations.
  • Sustainable development is development that meets present needs while protecting the ability of future generations to meet theirs.
  • Sustainable development is a middle path between economic growth and a sustainable environment, aiming to balance economic, political, and technological dimensions of globalization (Borghesi and Vercelli, 2008).

ENVIRONMENTAL DEGRADATION

  • The Industrial Revolution accelerated development but increased environmental harm due to higher emissions and greater resource use.
  • Harmful consequences include increased carbon emissions, damage to the atmosphere, destruction of coral reefs and marine biodiversity from waste, deforestation, pollution, and climate change.
  • Concerns persist that the planet cannot sustain an ever-growing global economy; rising living standards and demand for goods may exacerbate environmental pressures.

FOOD SECURITY

  • Global food demand is projected to be about 60\% greater than today, with a goal to feed about 9\times 10^{9} people by 2050.
  • Global food security means delivering sufficient food to the entire world population and maintaining the sustainability of society amid factors like population growth, climate change, water scarcity, and agriculture.
  • India example (Breene, 2016):
    • Agriculture accounts for 18\% of the economy's output and 47\% of employment.
    • India is the second-largest producer of fruits and vegetables.
    • Yet, approximately 194\times 10^{6} Indians are undernourished, the largest number in any country.
    • About 15.2\% of India’s population is malnourished.
    • A third of the world's malnourished children live in India.

ECONOMIC GLOBALIZATION, POVERTY, AND INEQUALITY

  • Globalization creates winners and losers:
    • Winners include corporations and stockholders who earn higher profits and consumers who pay lower prices.
    • Losers include high-wage workers whose jobs may move overseas; some low-wage foreign workers may gain income, but may also face hazardous working conditions.
  • The process creates tensions around labor markets and worker protections.

GLOBAL INCOME INEQUALITY

  • Two main types of economic inequality:
    • Wealth inequality: distribution of a country’s net worth, i.e., assets across natural, physical, and human resources, minus liabilities; wealth reflects a stock of resources, not a flow.
    • Income inequality: distribution of new earnings (flow) from the economy.
  • Economists measure inequality using income via GDP-related concepts; GDP reflects the value of goods and services produced, i.e., the flow of income.
  • The relationship between globalization and inequality is debated; inequality today is influenced by globalization and trade, not solely by the Industrial Revolution.
  • Freeman (2011) summarized the effect: globalization and market capitalism have raised living standards for billions, while concentrating wealth among a few; i.e., the poor may gain but the rich gain more.

GLOBAL INEQUALITY (CONTINUATION)

  • Global inequality and the role of globalization in reducing or widening disparities remain contested; policy choices influence distributional outcomes.

ECONOMIC GLOBALIZATION TODAY

  • The global financial crisis highlighted vulnerabilities and sparked nationalist calls to shield economies; nevertheless, many argue that some form of international trade remains essential for development (the Washington Consensus debate).
  • Exports and trade shares have shifted over time:
    • Historically, advanced economies (United States, Japan, EU) accounted for about 65\% of global exports, while developing countries accounted for about 29\%.
    • By 2011, developing countries (e.g., the Philippines, India, China, Argentina, Brazil) accounted for about 51\% of global exports, while advanced economies’ share fell to about 45\%.
    • WTO-led reductions in trade barriers accelerated free trade and altered global export dynamics.
  • Global per-capita GDP growth: IMF estimates suggest per-capita GDP rose by more than five-fold in the second half of the 20th century, contributing to the rise of large Asian economies (Japan, China, Korea, Hong Kong, Singapore).
  • Globalization remains uneven: some countries, firms, and individuals gain more than others; trade talks under the WTO have achieved tariff reductions but can be perceived as unfair in some contexts.
  • Protectionist frictions persist in certain sectors, e.g., the U.S. sugar industry example, where protected sectors can keep prices high for domestic consumers and businesses reliant on those inputs.
  • Beneficiaries of global commerce have often been transnational corporations (TNCs) rather than governments; host countries may respond by lowering taxes and cutting social and environmental protections to attract investment, leading to a race to the bottom in labor standards and environmental regulation.
  • The race to the bottom describes governments’ strategic lowering of labor and environmental protections to attract foreign investment for higher profits by TNCs, potentially causing ecological and social harms.
  • Important nuance: while economic integration is central to globalization, it is only one dimension; globalization also includes cultural and political transformations facilitated by trade networks.

CONCLUSION

  • Given high stakes, policymakers should pursue ways to make economic globalization more just without abandoning global trade entirely.
  • Strategies include making trade deals fairer and cushioning the most damaging effects of globalization to ensure benefits accrue broadly.
  • The idea is to balance openness with protections for vulnerable communities and the environment, recognizing globalization as a complex system with economic, cultural, and political facets.