Rethinking Globalization

Rethinking Globalization

by

Dawood Mamoon

Globalization in economics sciences means the movement of goods and services and financial flows along international borders. The book presents a rich literature review to establish the efficacy of globalization in raising income levels across nation states as well as it is foundational to economic development of a nation state. However, with a recent trade war between US and China, it is now understood that globalization that started with reduction in trade barriers across nation states in 1980s is concluding. Notwithstanding the conclusion of hyper globalization after US and China trade war when President Trump imposed multi-billion dollars of tariffs on Chinese imports in 2016, international trade is still central to every country’s national progress through foreign exchange  earnings. This book analyses how globalization can be interacted with socio-economic variables like rule of law, educated population or democracy to create an effective pro poor strategy for developing countries. If international trade is embraced without having significant improvements in social sector, globalization may create income disparities because international trade and globalization favors urban areas and educated segments of the population in developing countries.

1.  Integrating the Concepts of Global Freedom: Economics versus Society

Society is the derivative of human social evolution and contemporary globalization out of its technical progress strives to integrate the global society on common grounds for understanding and re-emphasizing all what becomes the basis of being a human and what it entails. Since ancient times of foretold lore, observed practices of human civilization explain and motivate to derive the application of concepts like trust, welfare, empowerment and awareness towards unbiased social integration as all such concepts have been harnessed at most in time locally and sometimes, especially lately at regional level and thus we ask to ourselves whether a universal application of it is possible and if yes then why it has yet to be applied successfully?

Today, because technology is at the forefront of our social and economic integration, it has at least succeeded in presenting a holistic picture for the challenges human society still face by means of inherent discrimination or subtle indifference of many well practiced methodologies of development by means of which many still fail to become part of the freedom equation quite eloquently put down recently by Amertya Sen (See Sen, 1999). To take him as an example out of many, who are at the forefronts of developing need based economic methodologies of contemporary globalization by streamlining refined understanding accompanied by stressed linguistic undertones of optimism for many a challenges faced by development discourse, is to identify ideas of significant practical application. Thus such words of strong expressionism like ‘Development as Freedom’ need to be practiced through their transformation into empirical models of robust explanatory power which then can transcend to become a set of some simple inter-connected policy guidelines of positive change which development practitioners look for while working in the field where theory becomes a reality of complex qualitative identifications at both macro and micro level. Theorists of economics of all schools also become important to be weighted equally and thus are considered as a matter of self correction for any empirical analysis which has been carried out at any of relevant institutions or observatories meeting varying economics and social research needs at national or international level.

Capitalism, a Utilitarian (so called Darwinist) point of origin to explain and derive economics of successful commerce and a basis for Classical and Neo Classical economics, must define social norms as a matter of quantified indicators to bring an overarching picture of reality which is now known to have been constraint with relativity of approach. Markets rule in capitalism on the basis of their efficiency as they bring equal opportunity to all to carry out commerce as well as it provides social welfare at a price freely determined by various integrating market forces. Such successful analogies apply well to developed nations, who have been witnessed to work with not only best of business practices but they have also developed social norms which follow well to the best of the capabilities of all stakeholders and thus efficiency is harnessed not only at market level but also at individual level and notions like freedom of expression, human rights, tolerance, and rule of law are preserved and also because a level playing field has been successfully established for all stakeholders. However, in the absence of level playing field, where developing countries have to carry out their daily business, capitalism evidently seeks to learn from contemporaries who promote institutional approach to economic problems because not only that in developing peripheries market structures work under imperfect information but  society as a whole suffers from major qualitative constraints of social morbidity. The institutional approach carries on an argument of bottom up analysis whereby local institutions are focused in the development discourse and primary modes of production are still taken into account to count for the social capital and/or livelihoods of the economically deprived ones and thus all such are taken as empowered citizens of significance who are included in market paradigm as entities of power and its sharing within all inclusive society – local as well as global. Economic development cannot take place in thin air of capital creation as it is witnessed that growth just would not trickle down to alleviate deprivations among populations in developing world. Rather in most instances, where economic freedom has been unduly emphasized while institutional side of the economy is ignored, neither growth is achieved nor could efficiency be promoted. Rather deprivation has struck with intensity to the surprise of proponents of globalization but for the critiques, rising poverty or inequality trends have even questioned the wisdom behind free market economic framework and thus put it as a tool of exploitation where developing societies are exposed to the brutes of information asymmetries and take a course of silent demise of their economic and social institutions when many developing countries fail to compete with their developed counter parts. Here we should remember that the world constitutes a complex net of developed and developing countries who exchange or would exchange myriad of goods and services under free market paradigm and net benefits or losses would be relative to each country’s level of development. Here in this chapter, an introduction to the coming chapters of the book is presented where a balance between market economy approach and institutional side of development thinking would be aimed at to find a generic back ground models which are applicable to developing countries - many of whom are well integrated with global economy and many are excluded by choice or by coincidence. Indeed, such exercises are already in abundance and ours may only provide with yet another of a similar voice to suggest freedom is best served when economy is not isolated from the society. However the consequence of circumstances under which freedoms are harnessed is also important to yet enable freedom in society to lead to best economic solutions which are well aligned with global standards.

‘Growth of GNP or of individual incomes can, of course, be very important as means to expanding the freedoms enjoyed by the members of society. But freedoms depend also on other determinants, such as social and economic arrangements (for example, facilities for education and health care) as well as political and civil rights (for example, the liberty to participate in public discussion and scrutiny). Similarly, industrialization or technological progress or social modernization can substantially contribute to expanding human freedom, but freedom depends on other influences as well. If freedom is what development advances, then there is a major argument for concentrating on that overarching objective..............Development requires the removal of major sources of un-freedom: poverty as well as tyranny, poor economic opportunities as well as systematic social deprivation, neglect of public facilities as well as intolerance or over activity of repressive states. (Sen, 1999;3)’

There are macro and micro agents of economic participation to define freedom. Global freedom for comity of nations may mean free movement of labor and capital while ensuring sustainability of effort which protects environment whereas, at national level freedom may become relative to the former where choice at national level is streamlined with well charted out international standards. Nations behave freely and seek opportunities freely to enable their populations achieve economic and social empowerment while also supplement other nations in doing the same. With the advent of 21st century this motivation has formatted new standards in international governance practices where international institutions promote models of economic efficiency tied up with well thought of modes of social responsibility.

In theory, the process of motivation of international freedom has been present since long ago, but practical application is a challenge duly faced by development practitioners partly because it is a very recent phenomenon to concentrate on the concepts of economic and social freedoms whereby there is an institutional change in how global, regional or local policies are streamlined to ensure economic efficiency for how freedom is achieved at grass roots level as a matter of bottom up approach and thus negative externalities of global modes of production and integration are taken into account and such solutions are devised where social outcomes of production profiles of international commerce are well related