Has globalization gone too far?

What are the economic solutions and business practices for the
months and years to come?
What is there we would like to see changed for the months and years to come?

Name: Toivino Kais Junior Massamba

Professor: Viola Krebs

Brazzaville, November 02, 2020

 Globalization is quickly creating problems between the people with the education, skills, and

mobility to succeed in a world market, and those who do not have the skills needed to succeed.

There is severe tension arising between the market and broad sectors of society with

governments caught up in the middle. The world economy faces a serious problem in ensuring

that international trade does not contribute to domestic social disintegration. "Has Globalization

Gone Too Far?" by Dani Rodrick takes a close look at the good and bad of globalization. He

focuses on three major sources of tension: the transformation of the employment relationship,

conflicts between international trade and social norms, and pressures brought to bear on national

governments maintaining domestic cohesion and social welfare systems.

Globalization is facing a growing backlash around the world. The rapid growth in trade,

financial and labour flows over recent decades has been blamed for many of the world’s most

pressing problems. What’s more, the empirical evidence on the impacts of globalization is

mixed. Empirical research has found that trade liberalization associated with the spread of

globalization is, on average, followed by a two percentage point increase in per capita GDP

growth. Similarly, it is also associated with an average of four to five percentage point increase

in investment to GDP ratio. (Lakshman Kadirgamar Institute 2018)

Globalization has had a similarly significant effect on poverty. Developing countries that

liberalized their economies in the 1980s and 1990s had a poverty rate that was one-fifth of the

level in countries that had not done so. (Devarajan, S et al.2018)

However, at the country level, empirical evidence shows a much-varied impact. Some countries

have seen an acceleration in economic growth and significant reductions in poverty as a result of

liberalisation, while others have seen little acceleration in growth, and in some cases even seen a
slowdown. It has also been followed by an increase in inequality in some countries. (United

Nations report 2010)

As evidence suggests, the impact of globalization has been mixed. One reason for this could be

because the forces of globalization have not reached the non-tradable sectors of the economy,

limiting the potential benefits of liberalisation. (World trade report 2008)

The big benefit of globalization was that it forced monopolistic firms to face competition; but in

many developing nations, the focus was only on the tradable sector. In this sense, globalization

may have, in fact, not gone far enough.

OECD Ministers took a deep dive into these issues at our 2017 Ministerial Council Meeting in

June. We identified several complex and inter-related challenges that must be addressed to

maintain open markets and shape a more harmonious and inclusive globalization. Let me briefly

highlight some of them.

First, we need to prioritize people-centered growth. This requires a wide range of structural

policies, from social protection and active labour market policies, to strategic investments in

education, skills, innovation and physical infrastructure. It means implementing the ambitious

commitments set out in the Paris Agreement on Climate Change and the SDGs. It means

equipping people to seize the benefits of rapid digitalization and technological change. And it

also means designing a new social contract for the age of global integration, with a focus on

gender inclusion, migrant integration, early childhood education, ageing and strengthening ties

between rural and urban areas.

Second, we need to fight the dark side of globalization and restore trust in global economies

and global integration. The proliferation of high-level corruption, tax evasion and tax avoidance
scandals have taken their toll. We need to reverse these trends, complementing social reforms

with policies that promote transparency and nurture a culture of integrity. We need an effective

and fair global tax architecture, we need comprehensive and multilateral anti-corruption tools,

we need instruments to tackle counterfeiting and regulate lobbying, we need robust standards in

responsible business conduct and good corporate governance.

Third, we need to make trade and investment work for all and resist protectionism. We must

keep building more inclusive global value chains (GVCs); supporting medium, small and micro-

enterprises by providing better financing and lowering the costs of regulation; and facilitating

access for Low Income Developing Countries (LIDCs). It is also crucial to empower our people

with the skills needed to unlock jobs in the most sophisticated sectors. We cannot continue to

base our key comparative advantage on low salaries.

References

Dani Rodrik Has Globalization Gone Too Far? (Harvard University). March 1997.

Devarajan, S et al. (2018). Traders’ Dilemma: Developing Countries’ Response to Trade

Disputes. World Bank Policy Research Working Paper 8640. [online] Available

at: https://www.gtap.agecon.purdue.edu/resources/download/9267.pdf

Lakshman Kadirgamar Institute. (2018). Spotlight on Globalization and the Global South with

Dr. Indra De Soysa. Lakshman Kadirgamar Institute. [online] Available

at: https://lki.lk/publication/globalisation-and-the-global-south-an-interview-with-dr-indra-de-

soysa/
OECD Secretary-General. 2017 Challenges and Solutions for Globalization [online] Available

at: https://www.oecd.org/social/challenges-and-solutions-for-globalisation.htm

United Nations. 2010 Economic liberalization and poverty reduction. [online] Available at:

https://www.un.org/esa/socdev/rwss/docs/2010/chapter6.pdf

World trade report 2008 Page 27. [online] Available at:

https://www.wto.org/english/res_e/booksp_e/anrep_e/wtr08-2c_e.pdf