Is globally beneficial globalization an unobtainable utopian concept?

You would think that all countries, big and small, working together, would be a productive and efficient way to increase and improve global living standards. However, we humans have proven that this is not the case. To get us all on the same page, the definition of globalization is as follows: the process by which businesses or other organizations develop international influence or start operating on an international scale. I will be discussing some of the reasons, as there are many, as to why globalization is not working and using this to decide whether humans can create a situation in which globalization could reach its potential of becoming a globally beneficial layer to our economic system. 

The impact of globalization is meant to be positive. Trade liberalization between nations – whether they be advanced countries (ACs) or low-Income developing countries (LIDCs) – was hoped to lower poverty levels and help LIDCs rise up and out of the poverty cycle, but this is not the case. The reasons for this are succinctly summed up in Joseph Stiglitz’s book Making globalization work, where he states, “the current process of globalization is generating unbalanced outcomes, both between and within countries. Wealth is being created, but too many countries are not sharing the benefits.” Smaller nations which join large trading blocks are often taken advantage of due to their need for trade and to gain profit, even if this profit is extremely small. Hence, the actions of small nations suddenly become dictated by giants such as the United States with their billion-dollar companies. The LIDCs are so desperate to have some form of trade and integrate themselves into the global trading platform that they agree to any proposition given by a trade giant (for example a multinational company such as NIKE), however, these LIDCs are aware that they are not being paid the profit they deserve. Therefore, globalization is a hindrance to countries who are trying to become more independent and amass wealth at the same time. 

Stiglitz proposes six reasons why globalization is not having its desired effects, and therefore, that it is not globalization which is the problem, but the way in which it is managed. One of these reasons is the failure of wealthy nations to have a sense of paternalism towards economically struggling countries. The system of giving a loan and then asking for it back five years later has proven to not help the countries in need. This is illuminated by the fact that debt burden of the least developed countries rose to $744 billion in 2019 – this overhang of debt does not help them get out of poverty. Furthermore, excessive conditionality over the process of giving aid, the legislation that needs to be passed, in most likely a not highly efficient and democratic government, draws out the aid process making it less attractive to many wealthy nations. This means that globalization cannot be effective in these LIDCs because they will not have the money and services to provide enough trade opportunity which will lure in large trading blocs or interested multinational companies. Therefore, the poorer countries can’t trade and profit. So, poorer countries get poorer while the rich get their pick of trading partners making them richer still. This demonstrates how globalization cannot work in this world: we need to change it. Wealth is too uneven resulting in a fracturing economic relationship between the wealthier and poorer countries of our globe. 

This has only scratched the very surface of the issue that globalization poses to the global economic dynamic and what problems globalization itself faces in becoming a friend instead of foe to humankind. For the idea of globalization to work we need to re-write the way in which the international economy works, with the help of international organizations such as the International Monetary Fund (IMF) and the World Bank. It could be possible, but not without serious actions that aim to redistribute the world’s wealth more equally. This would enable LIDCs to begin to stimulate economic growth on the international trading platform, by enticing the trade giants into working with them to grow their worldwide influence. Only then could we attain a world where international business and trade is constructive for all those involved, making globalization a positive construct. 

Hannah, Deputy Head Girl

Photo Credit:
Mike Agliolo / Photo Researchers / Universal Images Group
Rights Managed / For Education Use Only