Since leaving the public sector he has held a number of chairman and chief executive positions in the private sector; he is currently Vice Chairman of Goldman Sachs Europe, Independent Director of the Santander Banking Group and of Aviva plc, and Chairman of the Instituto de Empresa Business School. Do not go any further if you are looking for another polemic about globalization and its problems.
A lively and accessible argument about the impact and consequences of globalization from a leading figure in economics - Dehesa is Chairman of the Centre for Economic Policy Research and a member of the Group of Thirty Tackles the two fundamental arguments often raised against globalization: An Oxfam report in quoted Rahana Chaudhuri, a year-old mother working in the garment industry in Bangladesh:. This job is hard--and we are not treated fairly. The managers do not respect us women. But life is much harder for those working outside. Back in my village, I would have less money. Outside of the factories, people selling things in the street or carrying bricks on building sites earn less than we do.
There are few other options. Of course, I want better conditions. But for me this job means that my children will have enough to eat and that their lives can improve. They discovered that the average monthly income of workers in garment-export factories was 86 percent above that of other wage workers living in the same slum neighborhoods. Another indication of this relative improvement can be gauged by what happens when such opportunities disappear. In , anticipating a U. About 10, children went back to school, but the rest ended up in much inferior occupations, including stone breaking and child prostitution.
That does not excuse the appalling working conditions in the sweatshops, let alone the cases of forced or unsafe labor, but advocates must recognize the severely limited existing opportunities for the poor and the possible unintended consequences of fair trade policies. Even when new jobs are better than the old ones, the transition can be wrenching.
Most poor countries provide very little effective social protection to help people who have lost their jobs and not yet found new ones. Moreover, vast numbers of the poor work on their own small farms or for household enterprises. The major constraints they usually face are domestic, such as lack of access to credit, poor infrastructure, venal government officials and insecure land rights. Weak states, unaccountable regimes, lopsided wealth distribution, and inept or corrupt politicians and bureaucrats often combine to block out the opportunities for the poor.
Opening markets without relieving these domestic constraints forces people to compete with one hand tied behind their back. The result can be deepened poverty. Conversely, opening the economy to trade and long-term capital flows need not make the poor worse off if appropriate domestic policies and institutions are in place--particularly to help shift production to more marketable goods and help workers enter new jobs. Contrasting case studies of countries make this quite apparent. Although the island economies of Mauritius and Jamaica had similar per capita incomes in the early s, their economic performance since then has diverged dramatically, with the former having better participatory institutions and rule of law and the latter mired in crime and violence.
South Korea and the Philippines had similar per capita incomes in the early s, but the Philippines languished in terms of political and economic institutions especially because power and wealth were concentrated in a few hands , so it remains a developing country, while South Korea has joined the ranks of the developed.
Botswana and Angola are two diamond-exporting countries in southern Africa, the former democratic and fast-growing, the latter ravaged by civil war and plunder. The experiences of these and other countries demonstrate that antipoverty programs need not be blocked by the forces of globalization. There is no race to the bottom in which countries must abandon social programs to keep up economically; in fact, social and economic goals can be mutually supportive. Land reform, expansion of credit and services for small producers, retraining and income support for displaced workers, public-works programs for the unemployed, and provision of basic education and health can enhance the productivity of workers and farmersand therebycontribute toa country's global competitiveness.
Such programs may require a rethinking of budget priorities in those nations and a more accountable political and administrative framework, but the obstacles are largely domestic. Conversely, closing the economy to international trade does not reduce the power of the relevant vested interests: Thus, globalization is not the main cause of developing countries' problems, contrary to the claim of critics of globalization--just as globalization is often not the main solution to these problems, contrary to the claim of overenthusiastic free traders.
What about the environment? Many conservationists argue that international integration encourages the overexploitation of fragile natural resources, such as forests and fisheries, damaging the livelihoods of the poor.
What Do We Know About Globalization?: Issues of Poverty and Income Distribution
A common charge against transnational companies is that they flock to poor countries with lax environmental standards. Anecdotes abound, but researchers have done very few statistical studies. It found very little evidence that companies chose to invest in these countries to shirk pollution-abatement costs in rich countries; the single most important factor in determining the amount of investment was the size of the local market. Within a given industry, foreign plants tended to pollute less than their local peers.
Like persistent poverty, lax environmental standards are ultimately a domestic policy or institutional failure. A lack of well-defined or well-enforced property rights or regulation of common property resources often leads to their overuse.
Responding to pressure from powerful political lobbies, governments have deliberately kept down the prices of precious environmental resources: The result, unsurprisingly, is resource depletion. To be sure, if a country opens its markets without dealing with these distortions, it can worsen the environmental problems. In many areas, advocates in both camps see the potential for coordination among transnational companies, multilateral organizations, developing country governments and local aid groups on programs to help the poor. Going beyond the contentious debates and building on the areas of emerging consensus and cooperation, international partnerships may be able to make a dent in the poverty that continues to oppress the lives of billions of people in the world.
Here are some measures under discussion.
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The flow of international investment consists both of long-term capital such as equipment and of speculative short-term capital such as shares, bonds and currency. The mobile telephone took ten years to reach 25 percent of the population in the US and the Internet has taken less than five years to reach 26 percent of US citizens.
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Both are based on the telephone and the latter is also based on the computer. This makes it much easier for them to be disseminated than other first-generation technologies, such as electricity, the telephone, the automobile and the computer.
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