“Globalisation will make our societies more creative and prosperous, but also more vulnerable” – when it comes to understanding and evaluating globalisation, most people hold a similar view as this. While on hand, we appreciate the many boons of the growing inter-connectedness and prosperity showered by the phenomenon of globalisation, over the years many have also raised an eyebrow regarding its many banes that included threat to native cultures, sovereignty and over-exposure. We evaluate both sides of the story in this essay, with an especial focus on the growth of ‘hyper globalism’.
What is globalisation and hyper-globalisation?
Globalisation refers to the increasing inter-connectedness and inter-dependency of the world’s nations and their people into a single global, economic, political and global system. It includes:
·Cultural Globalisation – the movement of ideas, attitudes, meanings, values and cultural products across national borders.
·Economic Globalisation – the global expansion of international capitalism, free markets and the increase in international trade.
·Political Globalisation – the process where the sovereignty of nation states is reduced due to the increasing power of International Institutions, such as the United Nations.
Hyper Globalisation is the concept that believes that globalisation is happening and there is an emergence of a homogenous global culture. Most hyper globalists believe that globalisation is a positive process characterised by economic growth, increasing prosperity and the spread of democracy. Also known as optimistic globalists, they welcome the idea of globalisation but focus on the potential of interconnections and stretched social relations to bring people together, improve the quality of everybody’s lives, ‘global village’ promoting the sharing of cultures and intermingling of peoples’ across the world in cities and towns, so that we are all become ‘world citizens’ through global communication, travel and work flows.
While it is true that globalisation offers extensive opportunities for truly worldwide development but it has not progressed evenly. Some countries have become integrated into the global economy more quickly than others. Countries that have been able to integrate are seeing faster growth and reduced poverty. Outward-oriented policies brought dynamism and greater prosperity to much of East Asia, transforming it from one of the poorest areas of the world 40 years ago. And as living standards rose, it became possible to make progress on democracy and economic issues such as the environment and work standards. By contrast, in the 1970s and 1980s when many countries in Latin America and Africa pursued inward-oriented policies, their economies stagnated or declined, poverty increased and high inflation became the norm.
Problems of hyper globalism
(Sources: imf.org / pwc.nl)
The crises in the emerging markets in the 1990s have made it quite evident that the opportunities of globalisation do not come without risks - risks arising from volatile capital movements and the risks of social, economic, and environmental degradation created by poverty. This is not a reason to reverse direction, but for all concerned to embrace policy changes to build stronger economies and a world financial system that will produce rapid growth and ensure that poverty is reduced. How can the developing countries, especially the poorest, be helped to catch up? Does globalization exacerbate inequality or can it help to reduce poverty? And are countries that integrate with the global economy inevitably vulnerable to instability?
Major problems facing globalisation today are:
·The 20th century saw unparalleled economic growth, with global per capita GDP increasing almost five-fold. But this growth was not steady and the strongest expansion came during the second half of the century, a period of rapid trade expansion accompanied by trade and financial liberalisation.
·The story of the 20th century was of remarkable average income growth, but it is also quite obvious that the progress was not evenly dispersed. The gaps between rich and poor countries, and rich and poor people within countries, have grown. The richest quarter of the world’s population saw its per capita GDP increase nearly six-fold during the century, while the poorest quarter experienced less than a three-fold increase.
·It is clear that the income gap between rich and poor countries has been widening for many decades.
·Globalization has made capitalism an export product. Because capital is under a continuous threat of leaving, there are serious restraints on wages and tax arrangements. Trade agreements have a disproportionally large impact on the welfare and wellbeing of low skilled workers anywhere on the globe.
·Dani Rodrik, professor of International Political Economy at the USA defines hyper globalisation as - globalization that creates more negative side effects than we wish for and can control with the political and economic instruments we currently have. Rodrik has pointed to a series of recent events that have challenged the idea that growing free trade would be peacefully accepted.
·Many believe that globalisation has created a toxic environment. There are many groups and individuals who are the victims of globalisation, such as women, unskilled manual labourers, and local tribal people.
The other side: positivist view of hyper globalism
(Sources: imf.com / revisesociology.com)
From a globalist’s perspective, globalisation’s potential benefits are ‘to improve the quality of everybody’s lives’. Thomas Friedman argues that globalisation has occurred because of the global adoption of neoliberal economic policies. Neoliberalism insists that governments in developing countries need to remove obstacles to free trade and free market capitalism in order to generate development. Governments should limit their role to providing a business-friendly environment that enables businesses to make a profit.
·More international trade,
especially since the 1950s had led to increasing wealth, health, education for most countries. For instance, China which has benefitted from increasing is just one of four nations known as the BRIC Nations
(Brazil, Russia, India and China) that are considered the upcoming economies predicted to be wealthier than Britain by 2050.
·Transnational Corporations are a force for good. Companies such as Apple, Sony, etc. bring investment and jobs to developing countries.
·Patterns of consumption are becoming globalised – more people around the world are consumers rather than living subsistence lifestyles.
·Globalisation does not reduce national sovereignty. It does create a strong incentive for governments to pursue sound economic policies.
·The spread of democracy and respect for human rights – for example, the end of colonial rule in Africa, the collapse of communism and the Arab Spring. This is also evidenced in the establishment of the United Nations and the growth of global social movements such as green peace.
Globalisation has seeped into most countries by the means of culture and social media. While its impact has been uneven, it is also true that the problems can be dealt with to ensure improvement. The experience of the countries that have increased output most rapidly shows the importance of creating conditions that are conducive to long-run per capita income growth. Economic stability, institution building, and structural reform are at least as important for long-term development as financial transfers, important as they are. What matters is the whole package of policies, financial and technical assistance, and debt relief if necessary. Advanced economies can make a vital contribution to the low-income countries’ efforts to integrate into the global economy by promoting trade, encouraging flows of private capital to the lower-income countries, particularly foreign direct investment, and supplementing more rapid debt relief with an increased level of new financial support.