Trade Liberalization, Employment and Global Inequality

By Ghose, Ajit K. | International Labour Review, January 1, 2000 | Go to article overview

Trade Liberalization, Employment and Global Inequality


Ghose, Ajit K., International Labour Review


Trade liberalization-- which, together with marked improvements in transport systems and communications/information technologies, has been driving globalization - has suddenly acquired the status of a muchmaligned monster. Industrialized nations, which earlier vigorously preached the virtues of free trade, now worry about its vices. Many developing countries feel marginalized in the emerging world economy and wonder whether their fear of free trade was not justified after all. Economists are engaged in (as yet inconclusive) debates on the "rights" and "wrongs" of trade liberalization and popular opposition to it has grown so much that a crisis of legitimacy looms.

Three main concerns underlie these developments. First, it is suspected that trade liberalization has been a major contributory factor in the growing international economic inequality. Second, it is widely believed that trade liberalization has had serious adverse effects on employment and the wages of low-skilled workers in industrialized countries. Third, there are apprehensions that trade liberalization is leading to a deterioration of global labour standards.1

Unfortunately, in the popular view, these perfectly legitimate concerns tend to assume the status of well-established facts. The political pressures thus generated now threaten to stall the process of trade liberalization. At the international level, there is growing demand for global enforcement of environmental and labour standards. At the national level, non-tariff barriers to trade have tended to increase in the industrialized world. Labour market policies in some industrialized countries have also been increasingly geared to a cheapening of unskilled labour for the employers through various forms of wage subsidies, the reform of social security and unemployment benefit systems, and the flexibilization of labour markets.

Yet, to economists, the concerns only suggest hypotheses to be explored through empirical research. That international economic inequality has been growing is not in serious dispute,2 but it is certainly not clear whether and to what extent trade liberalization is responsible for this. There is consensus among economists that less skilled workers in the industrialized world have been facing either declining real wages or rising unemployment, or both, but empirical research is yet to establish that such trends have been generated by the growth of trade with the developing world. As for global labour standards, it is not even known whether they have deteriorated.

Against this backdrop, an attempt is made here to examine the extent to which the concerns have valid empirical foundation. The internationally available statistical data are analysed to study the nature and effects of growth of trade between industrialized and developing countries on international economic inequality, employment and wages in individual countries and on global labour standards. This article concentrates on examining the implications of the relevant empirical results and avoids presenting detailed descriptions of methodology and statistics. The empirical results are drawn from a larger study by the author (Ghose, 2000)3 which reviews the literature, provides detailed descriptions of the database and methodologies, and develops many of the arguments and observations more fully.

Trade and international economic inequality

Contrary to a common misconception, there has been no explosive growth of world trade since the early 1980s even though trade liberalization has certainly gathered pace. Two facts suggest this: the first emerges from figure 1, which shows the movement in the share of world exports in world GDP over the period 1960-96. The share showed a steady, rising trend for the entire period but no noticeable deviation from the long-term trend in the 1980s or 1990s. The second fact is that over the same period the growth of world GDP had actually been decelerating: the average annual rate of growth of world GDP was 5. …

The rest of this article is only available to active members of Questia

Sign up now for a free, 1-day trial and receive full access to:

  • Questia's entire collection
  • Automatic bibliography creation
  • More helpful research tools like notes, citations, and highlights
  • Ad-free environment

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Trade Liberalization, Employment and Global Inequality
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Full screen

matching results for page

Cited passage

Style
Citations are available only to our active members.
Sign up now to cite pages or passages in MLA, APA and Chicago citation styles.

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

"Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited passage

Thanks for trying Questia!

Please continue trying out our research tools, but please note, full functionality is available only to our active members.

Your work will be lost once you leave this Web page.

For full access in an ad-free environment, sign up now for a FREE, 1-day trial.

Already a member? Log in now.