Globalisation

Globalisation has brought us closer to “the end of geography”. The intensified cross-border exchange of goods, services, capital, technology, ideas, information, legal systems, and people — is irreversible. The outright rejection of globalisation and a retreat into autarky is neither practical nor desirable.

Globalisation is not uncontrolled. The movement of people remains tightly restricted. There is a growing divergence in income levels between countries and peoples, with widening inequality among and within nations. Assets and incomes are more concentrated. Wage shares have fallen. Profit shares have risen. Capital mobility alongside labour immobility has reduced the bargaining power of organised labour. The growth in transnational flows has not been matched by an equivalent growth in global governance mechanisms to regulate them. And yet the very nature of the structure of globalised networks, which intertwine global actors and interests, ensures that no single power is able to maintain its position within the newly emerging global disorder without making compromises with other global players.

Over the last two decades, overseas development assistance from the rich to poor countries has totalled $50-80 billion per year. In the same period, every year, $500-800 billion of illegal funds have been sent from the poor to rich countries. That is, for every one dollar of aid money over the table, the West gets back $10 under the table. Illicit trade, accounting for 10 per cent of global economic product according to some estimates, could be growing at seven times the rate of growth of legal trade.In Africa, home to 36 of the world's 50 least developed countries, state weakness often has opened the door to transnational crime and terrorism. Garth le Pere and Brendan Vickers highlight six pathologies that are particularly prevalent across Africa: illegal exploitation of natural resources, terrorism, the drug trade, illegal migration and human trafficking, gun running, and money laundering.

The benefits and costs of linking and delinking are unequally distributed. Industrialised countries are mutually interdependent; developing countries are largely independent in economic relations with one another; and developing countries are highly dependent on industrialised countries. Brazil, China and India are starting to change this equation. Even before the global financial crisis (GFC), many developing countries were worried that globalisation would impinge adversely on economic sovereignty, cultural integrity and social stability. “Interdependence” among unequals translates into the dependence of some on international markets that function under the dominance of others. The GFC confirmed that absent effective regulatory institutions, markets, states and civil society can be overwhelmed by rampant transnational forces. The growth of the transnational networks threatens state institutions and civil society in many countries.

The notion that endless liberalisation, deregulation and relaxation of capital and all border controls (except labour) will assure perpetual self-sustaining growth and prosperity has proven to be delusional. The three Baltic nations that embarked on this course (Estonia, Latvia and Lithuania) — to which, for good measure, they added the flat tax — all had double-digit negative growth in 2009. For developing countries, lowering all barriers to the tides of the global economy may end up drowning much of local production. Raising barriers that are too high may be counterproductive, if not futile. National-level progress in India has gone hand in hand with an ever greater gap between the prosperity of urban, middle-class Indians and the squalor still seen in many of its 600,000 villages where most Indians live. Uprooted from ancestral lands and unable to adapt to the demands of a modern economy, aboriginal populations (Adivasis) often see revolutionary redemption as the only way out of their predicament. 40% of Indians still live below the poverty line; 93 million live in slums; 128 million do not have access to clean water; and over seven million children are still excluded from education. The statistics for malnutrition among children, and for maternal deaths, remain equally distressing.

Jorge Heine holds the Chair in Global Governance at the Balsillie School of International Affairs and is a Distinguished Fellow at the Centre for International Governance Innovation (CIGI) in Waterloo, Ontario. Ramesh Thakur is Professor of Political Science at the University of Waterloo.

Taken from The Hindu