The Hindu : Opinion / News Analysis : The paradox of globalisation

Online edition of India's National Newspaper
Thursday, May 26, 2005

Opinion

Opinion - News Analysis

The paradox of globalisation

John Madeley

A cure-all or a recipe for economic disaster?

FOR SOME, liberalising world trade is the cure for the world's economic ills, generating growth and driving up incomes, for others it's impoverishing millions and making matters worse. Set against the booming liberalised economies of India and China are the shrinking economies of Africa.

The Chinese economy grew by 9.5 per cent in 2004 and the World Bank expects it to be 8.3 per cent this year (2005) and 7.5 per cent in 2006. But the Cambridge (U.K.) economist Ha-Joon Chang has pointed out the two booming Asian giants may be more the exception than the rule.

Economic growth

He has looked at economic growth rates between 1960 and 1980 — 20 years when globalisation was less progressed than now — and found the world economy grew at just over three per cent a year in per capita terms. "But in the following 20 years — the period of accelerating globalisation — it grew at only about two per cent," he says.

His research reveals the growth slowdown was especially marked in developing countries where economies grew at about three per cent between 1960 and 1980, but at only about 1.5 per cent during 1980 and 2000. "African economies have been shrinking, at a rate of about 0.8 per cent per year versus a 1.6 per cent growth rate before."

Advocates of globalisation claim that it works because the most efficient producers can sell their goods anywhere in the world and point to the growing liberalised economies of India and China.

But critics question who actually benefits from this form of economic growth. In a study of trade liberalisation's impact on food markets in developing countries, the Swedish-based aid agency Forum Syd concluded the poor had lost out. The study found that cheap food imports had driven many farmers in developing countries into bankruptcy.

Losses widely spread

And the Dutch development economist Jan Pronk believes that in the move to a liberalised economy, losses were widely spread while the initial benefits were enjoyed by only a few.

Ha-Joon Chang, at Cambridge, says that since through globalisation it has become easier to transfer economic activities across the globe the process has simply increased inequality, unemployment, and poverty. And, he says, the losers are not confined to the developing world.

Through globalisation, for example, workers in advanced countries lose their jobs as manufacturing is moved to lower-wage countries, while developing country workers, who used to work in protected industries, lose their jobs as imports flow in.

This last, says Christian Aid's Dominic Nutt, a result of current World Trade Organisation (WTO) rules, which prevent poor countries from supporting their own farmers.

And in any case, the World Bank warned in its 2004 World Development Report that economic growth alone will not be enough to reach the UN's Millennium Development Goals one of which is to half the number of people who live in poverty by 2015.

The goals are behind schedule. It seems that more than globalisation will be needed to rescue them. —

Printer friendly page
Send this article to Friends by E-Mail

Opinion

News Update

Stories in this Section

After the shock, hope for the tiger

Firm up support to Palestine

Ensuring a more accountable judiciary

The paradox of globalisation

BBC — earning more criticism than praise

Lessons from the Michael Jackson trial

When oil wells run dry

The Centre was right

What was the hurry?

On horse-trading

Undeterred by tragedy