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In defense of globalization
Sunday, 08 February 2009 02:07

Globalization is getting a really bad rap at the moment, as the global financial crisis drags our economies deeper and deeper into recession.  But it is important to look clearly at the different dimensions of globalization.  We can't throw the baby out with the bathwater.  So, here is a little tale of seven dimensions of globalization.

1.  Trade.  The globalization of trade is undoubtedly a good thing.  We can all specialise in what we are best at.  We can buy products from all around the world.  If we are free to buy and sell with our fellow citizens, why not be free to do so with citizens from other countries.  The real problem in international trade is counterfeited products, arms, drugs, etc.  This is the dark side of international trade.

2.  Foreign investment.  This is beneficial both to investors who earn more by investing abroad, and to recipient countries who can benefit from employment, economic activity and technology and knowledge transfer.  What we have to watch out for here is irresponsible behaviour by some multinational enterprises, especially when they invest in national resource projects in poor and corrupt developing countries.

3.  International finance.  Financial globalization should be a good thing, as it should allow capital to flow to its most productive uses.  But the reality is that financial globalization has led to many financial crises, wreaking havoc on our economies.  This is by far the most dangerous form of globalization.

4.  Migration.  While borders are substantially open to trade, investment and other financial flows, there are many restrictions on migration.  Nevertheless, migration is on the rise, particularly migration of skilled and unskilled workers.  Migrants fill skill gaps in our economies, and do jobs that our citizens do not want to do.  They usually earn more abroad than at home, and are able to send remittances back to their families.  We need migrants, and will need them more and more as our working age populations decline with the ageing of our societies.  True, migrants often suffer from problems of intregration into our societies and economies.  But, we must do a better job at facilitating this integration, because we need migrants.

5.  The global environment.  The world's climate, air, seas, fish, forests and so on were given to us by God.  And being part of the global commons they have to be jointly managed by the international community.  But, we are doing a terrible job.  It is every man, woman and country for itself, as we are depleting and destroying the global commons -- to the undeniable detriment of poor people and future generations.

6.  The social dimension of globalisation.  Millions of people have been lifted out of poverty thanks to globalization.  Sure, the rich are perhaps winning more from globalization than others, but we are all doing well.  You only have to look at the experience of East Asia.  In four decades, Korea went from being one of the world's poorest countries to an advanced country.  And in China, the number of people living in poverty has fallen by over 500 million since reforms were launched 30 years ago.

7.  Culture.  Globalization is contributing to change in our cultures.  But cultures have always changed, and all are hybrids.  More importantly, globalization is bringing all the world's cultures into closer contact with each other.  We can only hope that this will improve cross-cultural understanding, and improve the foundations for peace, stability and security.

So, as we are mired in this global financial crisis, do not throw the baby out with the bathwater.  Overall, when globalization is well-managed, it is very beneficial.  It is really only financial globalization that is a big danger.  And solving that one means that government must govern Wall Street, not the reverse.  

Even Fidel Castro flirts with globalization.  Cuba courts international tourists to earn foreign exchange to keep the country afloat.  

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