Excellent Globalisation Articles


by Shariq
11th June, 2008 at 5:09 pm    

Thought I’d post a couple of links on globalisation. Tyler Cowen has an interesting piece on how the benefits of free trade continue to be underestimated.

More than 400 million Chinese climbed out of poverty between 1990 and 2004, according to the World Bank. India has become a rapidly growing economy, the middle class in Brazil and Mexico is flourishing, and recent successes of Ghana and Tanzania show that parts of Africa may be turning the corner as well.

Despite these enormous advances, however, there is a backlash against globalization and a widespread belief that it requires moderation. Ordinary people often question the benefits of international trade, and now many intellectuals are turning more skeptical, too. Yet the facts on the ground show that the current climate of economic doom and gloom simply isn’t warranted. The classic economic recipes of trade, investment and good incentives have never been more successful in generating huge gains in human welfare.

Dani Rodrik responds on his blog with an excellent post of his own.

It is important to understand this because it provides an important clue as to why domestic and international trade are different. Domestic trade takes place within thoroughly embedded markets; there are clear rules and they apply to all transactions equally. International trade, on the other hand, is conducted in only weakly embedded markets: the rules either do not exist or apply unevenly. I believe this is the fundamental reason why their consequences are often perceived so differently.


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  1. interesting facts about mexico

    [...] More than 400 million Chinese climbed out of poverty between 1990 and 2004, according to the Wohttp://www.pickledpolitics.com/archives/2056The Independent Voice of the University of New Mexico since 1895 University of New Mexico Daily [...]




  1. halima — on 11th June, 2008 at 5:57 pm  

    Good discussion topic , i like it, though not sure i know enough about what’s happening with the Doha discussions at the moment.

    Globalisation would be good for the world’s poor if the trade rules weren’t distorted to subside farmers in the US and Europe – what we have at present is globalisation and world trade rules on the west’s terms whereas genuinely free trade would be immensely beneficial to poor countries and the world’s poor.

    The future for a fairer society , though has to be around fairer trade rules, and if we achieved this than the case for aid would be redundant – except in the emergencies of emergencies.

    Are the Bretton Woods Institutions and the rules that govern these and their impact on world trading regimes still considered unfair by the likes of Oxfam?

    India, China ( to a lesser extent Ireland ) are interesting – high levels of remittance being pumped into their economies, but complimented by human capital returning to the respective countries ( helping to create/enlarge market space) that made the difference to growth – which tells you something about the nature and scale of globalisation.

  2. digitalcntrl — on 11th June, 2008 at 7:59 pm  

    “Globalisation would be good for the world’s poor if the trade rules weren’t distorted to subside farmers in the US and Europe – what we have at present is globalisation and world trade rules on the west’s terms whereas genuinely free trade would be immensely beneficial to poor countries and the world’s poor.”

    In this era of high food prices, its a bit difficult to argue that western agriculutre subsidies unfairly depress agriculture prices for the developing world. If anything they are actually helping us all by reducing the inflationary pressure on all of us.

  3. Mayur — on 12th June, 2008 at 6:19 am  

    I personally feel that globalisation has it’s own set of advantages and disadvantages.
    The picture looks gloomy on one side with flourishing middle class, posh highways, malls and brilliant urban infrastructure coming up….
    On the other hand, it is causing the growing disparity between social layers…..
    I’m sure we could find a mean to have a win-win deal for all…

  4. halima — on 12th June, 2008 at 12:22 pm  

    “In this era of high food prices, its a bit difficult to argue that western agriculutre subsidies unfairly depress agriculture prices for the developing world. If anything they are actually helping us all by reducing the inflationary pressure on all of us.”

    Trade distorted subsidies are what’s stalling the Doha discussions so it’s as topical as ever and will be forever until the rules of the game change.

    Reducing trade distorted subsidies is a big part of the Doha negotiations- the reason is that they are the clearest examples of how wealthier countries benefit from unfair trade rules – and have negaive impact on say, African producers. I think it’s cotton subsidies in particular that are problematic and the most oustanding example of how subsidies can negatively affect poor countries.

    Sure getting rid of subsidies for farmers will temporarily hike up prices – because farmers can’t produce, out of business and needing social protection/security – but essentially the bigger picture , and the longer term reform agenda, is that subsidies distort world trade and negatively impact on developing countries. I don’t think this is disputed by many – but people recognise national or regional interests first and prioritise these before fair trade.

    Food prices are high this year for lots of reasons, bad harvest, bio fuels and other reasons – but these are seperate from the more fundamental reforms needed in world trade.

    There’s no equal access to the market as such for all countries – there’s unequal access as you probably know and poorer countries have access to US and EU markets on terms that aren’t competitive, and are in fact highly restrictive , and in addition to being restrictive, subsidies exists for US and European farmers. So it’s doubly hard to penetrate or be globally competitive if you , say, happen to be a producer from Mali.

    OK, sure if our argument is that our farmers matter more than the poorer farmers of this world, this is OK ( for some) and we like our countryside to be green etc .

    The other part of the deal is I suppose is special and differential treatment on a case by case basis for poor countries – which helps to smaller and more vulnerable economies to integrate slowely into global trading system – too much liberalisation, too quickly will hurt these economies.

  5. digitalcntrl — on 13th June, 2008 at 1:10 am  

    “Trade distorted subsidies are what’s stalling the Doha discussions so it’s as topical as ever and will be forever until the rules of the game change.

    Reducing trade distorted subsidies is a big part of the Doha negotiations- the reason is that they are the clearest examples of how wealthier countries benefit from unfair trade rules – and have negaive impact on say, African producers.”

    That would be true in a buyers market where there is an oversupply of goods. However, with food products selling at such high prices, how are African producers affected negatively?

    “Food prices are high this year for lots of reasons, bad harvest, bio fuels and other reasons – but these are seperate from the more fundamental reforms needed in world trade.”

    A bad harvest may not carry on from year to year, however, many of the other reasons are unlikely to change. Biofuel production and increasing demand from the burgeoning middle classes China and India for high quality foods (e.g. meats) are likely to keep food prices high for the time being. The last thing we need right now is even higher food prices which would result with the loss of such subsidies. I mean there have already been riots in Pakistan and elsewhere about the current price of food.

    “There’s no equal access to the market as such for all countries – there’s unequal access as you probably know and poorer countries have access to US and EU markets on terms that aren’t competitive, and are in fact highly restrictive , and in addition to being restrictive, subsidies exists for US and European farmers. So it’s doubly hard to penetrate or be globally competitive if you , say, happen to be a producer from Mali. ”

    Developing countries themselves place extremely high tariffs on imported food anyhow. I mean India (and most African countries) ban many imported foodstuffs for their benefit, how is this any different than what the US and Europe are doing? As for subsidies I doubt farmers around the globe are suffering from competition from them, its a sellers market.

  6. halima — on 13th June, 2008 at 3:23 am  

    digitalcntrl

    Not many would dispute that trade distorted subsidies don’t hurt poor African farmers. US cotton subsidies have been declared illegal by the WTO for quite some time …

    http://www.wto.org/English/thewto_e/whatis_e/tif_e/agrm3_e.htm

    http://www.oxfam.org/en/news/pressreleases2005/pr050303_wto.htm

    Yes, the demand for food/oil from India, China is driving up prices at moment – but as I said , this is a temporary problem, and unequal access to markets is a structural problem in global trading that has been with us for quite some time,

    also – when we think about developing countries these days we have Mali and Benin in mind – not countries like India and China that have almost moved up to middle income status.

  7. digitalcntrl — on 13th June, 2008 at 4:38 am  

    “Not many would dispute that trade distorted subsidies don’t hurt poor African farmers. US cotton subsidies have been declared illegal by the WTO for quite some time … ”

    Well cotton is a specific and unique case since it is obviously not food and prices on it have not risen the same way as most agriculture.

    However, I don’t really expect the situation for cotton subsidies to change even if agreements are made during the Doha negotations. Even if Bush et al signs up to ending cotton subsidies (unlikely) and the congress ratifies it (even more unlikely), there is nothing really preventing cotton subsidies from being included in next year’s budget. Any congressman/senator from any of the farm states would be commiting politcal suicide if he followed the Doha agreements. The only recourse the WTO offers is the authorization to slap high tariffs on the offending states by the affected countries, however in the case of poor African countries this worthless as they don’t buy American products anyhow.

    http://www.monstersandcritics.com/news/usa/news/article_1406837.php/House_overrides_Bush_veto_of_agriculture_legislation

    “Yes, the demand for food/oil from India, China is driving up prices at moment – but as I said , this is a temporary problem, and unequal access to markets is a structural problem in global trading that has been with us for quite some tim”

    Not so sure its temporary…
    http://allafrica.com/estories/200806120774.html

  8. halima — on 13th June, 2008 at 11:12 am  

    Cotton is the most outstanding example of how agricultural subs hurt poor economies – that’s why I used it as example.

    true, US unlikely to change it’s position, but let’s hope one day… one day things change.

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