globalization can be described as the combined influences of trade liberalization, market integration, international finance and investment, technological
change, the increasing distribution of production across national boundaries and the emergence of new structures of global governance. Globalization and its impacts have profound implications for a broad range of issues important to the funding community. These issues range from the sustainable use of the worlds' resources and the protection and preservation of the environment, to the need to improve living standards, safeguard human rights, promote and protect cultures, and ensure democratic and responsive global governance. While the idea of globalization has only recently captured public attention, "globalization" has been occurring for centuries. Indeed, current trends continue age-old interactions among societies and historic struggles between nations for economic and cultural primacy. Over the last few years, attention in the U.S. has been galvanized by the "Battle in Seattle" and subsequent demonstrations in Washington, D.C., Davos, Prague, Quebec City and Genoa.
www.fntg.org/global/index.html
What is it? The growing integration of economies and societies around the world. Globalization is an inevitable phenomenon in human history that's been bringing the world closer through the exchange of goods and products, information, knowledge and culture. But over the last few decades, the pace of this global integration has become much faster and more dramatic because of unprecedented advancements in technology, communications, science, transport and industry. While globalization is a catalyst for and a consequence of human progress, it is also a messy process that requires adjustment and creates significant challenges and problems. This rapid pace of change can be unsettling and most societies want to control or manage it. Why should I care? Globalization has sparked one of the most highly charged debates of the past decade. When people criticize the effects of globalization, they generally refer to economic integration. Economic integration occurs when countries lower barriers such as import
tariffs and open their economies up to investment and trade with the rest of the world. These critics complain that inequalities in the current global trading system hurt developing countries at the expense of developed countries. Supporters of globalization say countrieslike China, India, Uganda and Vietnamthat have opened up to the world economy have significantly reduced poverty. Critics argue that the process has exploited people in developing countries, caused massive disruptions and produced few benefits. But for all countries to be able to reap the benefits of globalization, the international community must continue working to reduce distortions in international trade (cutting agricultural subsidies and trade barriers) that favor developed countries and to create a more fair system. Some countries have profited from globalization.
China: Reform led to the largest poverty reduction in history. Between 1990 and 2005, poverty rates in the country fell from 60% to 16%, leaving 475 million fewer people in poverty. India: Cut its poverty rate in half in the past two decades. Uganda: Poverty fell 40% during the 1990s and school enrollments doubled. Vietnam: Surveys of the country's poorest households show 98% of people improved their living conditions in the 1990s. The government conducted a household survey at the beginning of reforms and went back 6 years later to the same households and found impressive reductions in poverty. People had more food to eat and children were attending secondary school. Trade liberalization was one factor among many that contributed to Vietnam's success. The country cut poverty in half in a decade. Economic integration raised the prices for the products of poor farmersrice, fish, cashewsand also created large numbers of factory jobs in footwear and garments, jobs that paid a lot more than existing opportunities in Vietnam.
But others have not
Many countries in Africa have failed to share in the gains of globalization. Their exports have remained confined to a narrow range of primary commodities. Some experts suggest poor policies and infrastructure, weak institutions and corrupt governance have marginalized some countries. Other experts believe that geographical and climatic disadvantage have locked some countries out of global growth. For example, land-locked countries may find it hard to compete in global manufacturing and service markets.
Over the last few years, there have been protests about the effects of globalization in the United States and Europe. But in a lot of developing countries there is very strong support for different aspects of integrationespecially trade and direct investment, according to a
recent survey conducted by The Pew Center. In sub-Saharan Africa, 75% of households thought it was a good thing that multinational corporations were investing in their countries.
http://youthink.worldbank.org/issues/globalization/
Globalisation and Development guide From the perspective of the world's poorest countries, undemocratic global governance has allowed the economic dimension of globalisation to dance to the tune of big business. Globalisation not only distributes its favours too unevenly, but also accelerates patterns of unsustainable consumption. Recent financial chaos may G8 Edinburgh protest Peter prompt world leaders to be more conscious of the Armstrong complex social and environmental consequences of unrestrained markets. 508 updated February 2011 Winners and Losers International Migration Washington Consensus Environmental Limits Exclusion Anti-globalisation Development Model Globalisation in Retreat Governance Winners and Losers Globalisation has drawn attention to itself as a consequence of its rapid acceleration. The spread and integration of people, commerce, knowledge and culture across the planet has advanced since the dawn of civilisation. It is only over the most recent generation that, driven by the wonders of microchip technology and the efficiency of container shipping, the intensity of globalisation has delivered controversial results. The pace of change is most apparent in high and middle income countries. Most everyday household goods and clothing are imported from a single country, China; simple enquiries about banking or insurance may involve a call centre in India; a globetrotting executive can sustain family intimacy through social media tools. These illustrations of globalisation are broadly positive in their
Motherboard of a laptop Greenpeace International
effect on individuals, creating space for personal fulfilment, stimulating wealth and encouraging cross-cultural experience. At national level, the economic opportunities presented by globalisation have been responsible in part for the success of countries such as China, Vietnam and Brazil in achieving significant poverty reduction. But most low income countries have been less fortunate and there is rising concern that the global poor have been left behind in the slipstream. Whereas sharply rising volumes of foreign trade and investment over the last twenty years have transformed standards of living in industrialised countries, the number of sub-Saharan Africans living in extreme poverty has risen. Whereas internet technology has revolutionised our capacity for knowledge and interaction, swathes of South Asia and Africa provide no electricity, let alone computers. Whereas the global supply chains of our supermarket culture deliver exotic year-round affordable foods, over 900 million people in the developing world experience hunger. Contemporary globalisation is therefore linked with widening global inequality. The continuing post-colonial search for an effective development model for the losers of globalisation reflects the anxiety of the winners.
Thomas Friedman, author of The World is Flat, explains his interpretation of the history of globalisation, from United Way of Greater New Haven.
top Washington Consensus The sequence of major wars and economic depression that marked the first half of the 20th century induced a profile of inward-looking states with closed economies. The relative stability that evolved after 1945 boosted confidence. By the 1980s, most of the wealthier western economies had lifted capital controls, enabling foreign ownership of business assets. Strong leadership of US president Reagan and UK prime minister Thatcher shaped the emerging ideology of economic management. This favoured a diminished role for government through privatisation of state-owned enterprises and deregulation of barriers to foreign trade, investment and capitalist enterprise. These principles of neoliberal or open market economics became known as the Washington Consensus. The collapse of the Berlin Wall in 1989 added countries of the Bolivians protesting former Soviet Union to the western template, its greatest moment of against water triumph. Even the major surviving communist regimes in China and privatisation Julie Plasencia / AP / The UNESCO Courier
Vietnam had by then introduced doi moi (open door) policies as a gesture to market discipline. Within this short space of time, the worlds major corporations had been presented with what they desire above all else a massive increase in the size of the market. Integration of the global economy therefore became the driving force of globalisation. Many industrial and financial corporations quickly became larger entities than the developing countries with which they were involved. top Exclusion from Globalisation Such was the dominance of the Washington Consensus that it was imposed on the poorest countries through the 1980s as a condition for World Bank and IMF support. As an economic template for development, the Consensus proved to be a disaster. Government spending on health and education was curtailed, institutions coordinating state support for agriculture and nascent industries were dismantled and utilities were privatised without recognising the needs of poorer customers. Into the new millennium, the results were painfully clear. Whilst developed economies gorged on booming international trade and investment, global poverty remained trapped in a parallel expanding universe. Economic growth in Africa has been relatively strong but has tended to create urban elites, whilst rural livelihoods remain primitive. India too has had very considerable success as a participant in the globalised economy, yet over a third of the worlds extreme poverty remains located in that country. If Chinas success in poverty reduction is removed from global figures for the period 1990 to 2005, the number of people living below the international poverty line of $1.25 per day has risen. This is a poor advertisement for globalisation. Those who describe our world as a global village, in India hosts both global industry which we can understand and support each other in our increasingly common lifestyles, overlook the exclusion of and global poverty bbjee (flickr) many countries from the opportunities of globalisation. A more accurate representation is of an interconnected world in which the actions, and more especially the excesses, of a consumer culture impact unjustly on those unable to enjoy its rewards. The three major contemporary crises of global recession, food insecurity and climate change can each be interpreted in these terms.
Nancy Birdsall, President of the Center for Global Development, offers a very brief explanation of why we should be concerned about the effect of globalisation on inequality.
top In Search of a Development Model Embarrassed by the global divide, world leaders signed up to the Millennium Development Goals, targets-based promises to direct new policy to the cause of poverty reduction. Whilst the neoliberal Washington Consensus has been rejected for poor countries, no clear economic model of development has taken its place. Developing countries must build capacity for industrial and agricultural production. Ideally they should identify potentially competitive sectors for export and support them with subsidies and protective tariffs. This approach mirrors the historical development model for most of the worlds major industrialised countries. The grievance of todays developing nations is that global regulations for trade and investment deny them this critical policy space. In practice, globalisation reinforces the monopolistic patterns of big business, erecting high barriers to entry. The development model permitted by contemporary regulations seeks to attract foreign investment through the creation of special economic zones, regions ring-fenced with business incentives such as streamlined bureaucracy and low rates of tax.
The price of inclusion in globalisation by this means can be high; foreign investment has limited value to a developing country if no tax is paid, if no skills are transferred to local workers, if domestic businesses are forced to close and if no intellectual property rights are gained. Loss of national sovereignty is the undertone of globalisation. New jobs created by this model can be compromised by pressure to drive down wage levels, labour conditions and environmental standards. Corporate social responsibility departments of large western companies are much exercised in vetting their production chains for sweatshop labour or environmental abuse. top Governance of Economic Globalisation The obstructive framework impeding the search for a development model is the product of unrepresentative global governance. Whilst economic integration powered by private capital has advanced at lightning speed, political globalisation moves at snails pace. In more than twenty years since the fall of the Berlin Wall, governance structures of the World Bank, IMF and the World Trade Organization (WTO) have
Nike worker in Asia Corporate Watch
remained largely unchanged. Amendments to voting rights of the Bank and the IMF boards advanced during 2010 have negligible effect. Governance is therefore driven by economic power rather than democratic principles. If the international rules for conduct of a globalised economy are created by the dominant participants, they are likely to prejudice those yet to gain a foothold. Trade, investment and intellectual property rights are the principal examples. In practical terms African governments have been largely excluded from the latest crisis discussions on international banking regulations. top International Migration An alternative for the global poor is to seek work abroad. Globalisation has commoditised labour migration, notably in many Middle Eastern countries which are totally dependent on Asian migrants for the dirty, dangerous and difficult jobs rejected by nationals. Airlines construct their schedules to serve the routes taken by migrants; the receiving countries build infrastructure not just to accommodate foreign labour but also to create an appropriate cultural environment. Payments, known as remittances, that are sent home by international migrants have become an important measure of the performance of a globalised world economy. In 2009, remittances exceeded $300 billion, almost three times total foreign aid disbursements. Opportunities for migrant workers can therefore be viewed as a positive characteristic of globalisation. Many economists go further in advocating that free movement of labour would be the most effective means of reducing global inequality. Migration in Europe Frum However, the ideological passion for free movement of Barcelona 2004 goods and capital extolled by many of the richer countries is not extended to people. Most rich countries impose strict regulations on labour migration. The unacceptable branch of international migration is human trafficking. This has grown in parallel with economic globalisation, perhaps as a consequence of it. As extreme poverty and cross-border mobility are the drivers of sex trafficking and other bonded labour, the suggestion of cause and effect is inevitable.
American philosopher, Noam Chomsky, discusses whether contemporary globalisation has favoured the owners of capital at the expense of people, from WGoltermann
top Environmental Limits
Inequality is not the only weakness of neoliberal economics that has been globalised. Failure of the global chain of production to internalise environmental costs means that globalisation is accelerating our headlong rush towards the limits. Future generations will search in vain for rational explanations of why our common household goods are transported half way around the world from China, not just once but a second time, in the reverse direction for the purpose of recycling. Shipping and aviation are the engines of globalisation. Although they contribute less than 5% of current greenhouse gas emissions, future projections rise sharply whilst other sources fall. Unfortunately, there are no obvious green substitutes for kerosene, nor for the dirty bunker fuel used for shipping. Economic globalisation also has less explicit implications for climate change and resource depletion. Until emissions trading schemes extend their reach, the manufacturing process in most parts of the world incurs no costs for carbon dioxide emissions or use of water. Rich countries with legal obligations to reduce greenhouse gas emissions therefore have incentives to outsource their production to developing nations such as China. Globalisation also moves virtual water around the world, often from countries which can ill afford its loss.
Container shipping AH Knight / Flickr
Globalisation is not itself responsible for these failures of open market economics. Indeed, if we could identify an alternative and sustainable economic model, then its globalisation would become desirable. Meanwhile, poorer countries will tend to be the losers when confronted with scarcity of food, water and natural resources. Such scenarios also elevate the risk of violent conflict. Good governance of globalisation is once again the only avenue for equitable management of its risks. The current track record of UN institutions is not particularly inspiring. For example, the urgency of tackling climate change is not reflected so far in the outcome of negotiations to renew the Kyoto Protocol. top Anti-globalisation The 1990s slide towards greater poverty and environmental breakdown, together with the dilution of powers of developing countries to manage their own affairs, led to a strong public reaction against global bodies deemed to be responsible. For many activists, globalisation had lost its broader meaning and become synonymous with the advance of capitalism. Others went further and perceived globalisation as Americanization, a new form of cultural imperialism.
The term anti-globalisation therefore embraces a broad range of causes and is often associated with activists who target meetings of G8 or G20 leaders, or international financial institutions. Anti-globalisation campaigners unite around the belief that world governance is influenced too strongly by corporate interests. The World Social Forum (WSF) was created in 2001 as a counterweight to the World Economic Forum, an influential network of government and big business. Participants in the WSF strive to articulate that another world is possible, a vision which puts people before profits. A paradox of anti-globalisation campaigns is their adoption of the same tools and techniques that drive economic integration. International activism has been galvanised by smart use of new communications technologies.
Joseph Stiglizt at the WSF, Mumbai, 2004 OneWorld TV
Successful campaigns for aid and debt relief leading up to the Edinburgh G8 summit in 2005 were associated with synchronised world concerts and branding of the globally recognised white band. top Globalisation in Retreat The 2008 financial crisis has proved to be an unlikely ally of the anti-globalisation movement. No greater damage could be done to the creed of globalisation than the extensive state ownership of western banks that now prevails. World leaders convey a sense of fear of losing control of the sheer complexity of the interdependent world created by globalisation. Labour migration rules are being tightened in many countries. American supremacy has softened considerably and unemployment in that country has engendered a backlash against the free trade mantra. These hints of protectionism will undermine the further attempt during 2011 to complete the so-called Doha development agenda. This round of trade negotiations facilitated by the WTO aims to increase global trade through agreement to relax trade tariffs and quotas. Failure would be another signal of globalisation in retreat. Despite all these setbacks, globalisation appears to be staggering back to its feet, having narrowly avoided a knockout punch. No credible alternative global economic model emerged, even when the world's investment banks were at the mercy of public opinion. 21st century search for food security ActionAid UK
It seems possible that the anti-globalisation movement has missed its golden opportunity. If
this is so, then the planets major problems urgently depend on a new vision of globalisation, recalibrated to address the mistakes of the past.
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