Is Continued Globalization of the World Economy Inevitable?

The International Economy, Summer 2004 | Go to article overview

Is Continued Globalization of the World Economy Inevitable?


Some analysts argue that lasting cultural rigidities will obstruct or perhaps even reverse the globalization process. Others counter that deep down everyone is truly Economic Man. Everyone, as New York Times columnist Thomas Friedman's book title implies, dreams of one day owning a Lexus. What are the chances the globalization process of recent decades will be seriously obstructed or will actually begin to reverse?

Thirteen experts offer their views.

Yes and no (but probably yes).

JAGDISH BHAGWATI Senior Follow, Council on Foreign Relations, and University Professor, Columbia University; author of In Defense of Globalization (Oxford, 2004)

Is (economic) globalization reversible? Yes and no. Since increased integration of the world economy reflects two forces--improved and cheaper communications and transportation and policies such as freeing of trade--a reversal is perfectly possible. This is what interrupted the First Wave of Globalization of 1870-1914. At the same time, the current Second Wave of Globalization is unlikely to be interrupted, at least in the near future, by policy reversals.

First, in trade, we have the WTO which has made it ever more difficult to indulge in the 1930s-style competitive raising of trade barriers. We have binding tariffs; we also have orderly ways of raising tariff barriers (as with safeguards actions) in politically difficult circumstances. In the East Asian financial crisis, these new realities helped eliminate the conventional response of abandoning freer trade as a way of dealing with the crisis.

Second, multinationals have become an important fact of life. Virtually all countries, no matter what their political rhetoric, are anxious to compete for multinationals. The left still agitates against multinationals, as do several non-governmental organizations; but they remain an indisputable force and policies towards them are easing, not tightening.

Third, on international migration, demographics are beginning to produce more open doors and benign attitudes. Many OECD populations are below reproductive levels, and their social security systems are facing bankruptcy as their populations age. Immigration suddenly looms large as a way of dealing with labor shortages and the social security problem. At the stone time, the advantages of skilled immigration are reflected in shifts of legal immigration systems toward importation of more skilled workers, even as the developing countries with such manpower are happy to oblige.

Fourth, and finally, while the financial crises resulting from freeing of short-term capital flows may not be brought fully under control, we have learned some lessons--such as the need for reformed and stronger banking systems that should reduce the probability of occurrence of such crises.

Globalization is not inevitable.

ANTONIA JUHASZ Project Director, International Forum on Globalization, and co-author of the upcoming 2nd edition of Alternatives to Economic Globalization: A Better World Is Possible

Globalization is not an inevitable process. It is one set of policy priorities chosen by certain political and economic elites to achieve a centralized economic model in which global corporations act as the engines of economic growth. Alternative policies do and have always existed.

"Globalization" refers to a continuation of the processes of colonialism and imperialism, with a new post-WWII emphasis on the specific neo-liberal policies of tree trade, financial market liberalization, deregulation, and privatization. It is a model based on the taking of resources--human, natural, and capital--from the many for the benefit of the few.

Even in 1944 when the main institutions of modern globalization were being created--the World Bank, the International Monetary Fund, and what would become the General Agreement on Tariffs and Trade--alternative proposals were put forward to shift the responsibilities for development, trade, and global finance to the Third World-dominated United Nations. …

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