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Globalization is here to stay
Tuesday, 19 May 2009 10:35

Some observers are ringing the death knell of globalization.  They argue that wreckless globalization caused the financial and economic crisis.  And now that trade and financial flows are in a tail spin, "de-globalizatiion" is taking over. 

According to Moises Naim from the Foreign Policy journal, nothing could be further from the truth.  Globalization is a much more complex phenomenon.

While the World Bank estimates that most of the G20 countries have implemented some protectionist measures in response to the crisis, the most vocal voices in favour of maintaining open markets have been the emerging economies like Brazil and China.  Not surprising, as these countries -- especially their burgeoning middle classes -- have gained so much from the past decade or more of globalization.  In any event, once markets and borders are open, it is mighty difficult to close them again in today's world.  

It is true that private sector trade and finance has been affected by the crisis.  At the same time, official capital flows from the IMF, World Bank and other international financial institutions have been stepping in to help out, including for trade finance.  Last year, the US Federal Reserve and central banks from Brazil, Korea, Mexico and Singapore entered currency deals to stabilise financial markets.  And sovereign wealth funds from Asia and the Middle East are finding new investment opportunities.  While global foundations and charities are also seeing a rise in the demand for their assistance from the developing world.

Globalization is to some extent a continuation of long term trends in global integration, but this episode of globalization is different.  The Internet is connecting people in every remote corner of the globe in unprecedented ways.  Nothing can stop this!

While everyone focuses on the US lightning rod, globalization no longer means americanization, if it ever did.  Everything is global from Japanese sushi and Latin American telenovelas to fundamentalist Islam and Indian cinema. 

One aspect of globalization that will simply not go away is its dark side like terrorism, nuclear proliferation, transnational crime, pandemics, illegal migration and so on.

In short, we are now more interconnected than we have ever been.  And however disfuntional international organisations like the United Nations might seem to be, they are more necessary than ever to solve our collective problems.  But for global governance to work for the benefit of us all, national governments must be willing to work together. 

As Naim concludes, "Whether the issue is climate change or terrorism, loose nukes or avain flu, the gap between the need for effective collective action at the global level and the ability of the international community to satisfy that need is the most dangerous deficit facing humanity". 

Reference:

"Think Again: Globalization", by Moises Naim.  Foreign Policy, March/April 2009.  www.foreignpolicy.com

World Bank -- www.worldbank.org 


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