The Two Faces of Globalization Impoverishment or Prosperity

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The Two Faces of Globalization Impoverishment or Prosperity...

    Globalization (2003)

The Two Faces of Globalization: Impoverishment or Prosperity?

    Lucky O. Imade

    Shaw University

    International Studies Center

    We cannot forget that while the iron curtain has been brought down, the poverty curtain still separates two parts of the world community.

    Javier Perez de Cuellar


    Globalization is certainly the buzzword of the new millennium. The nature and impact of globalization has been the subject of profound debate and concern in economic circles since the mid-1990s. The controversy surrounding the on-going debates about globalization is whether unfettered market forces will further diverge or converge income the world over. On the one hand, proponents of globalization say it has promoted information exchange, led to a greater understanding of other cultures, raised living standards, increased purchasing

    1power (most especially in the west) and allowed democracy to triumph over communism. On

    the other hand, opponents of globalization, such as those who protested against the ministerial meetings of the World Trade Organization (WTO) in Seattle and most recently in Quebec City, say the Wests gain is at the expense of developing countries. These opponents charge that globalization is synonymous with imperialism and does little more than encourage corporations to relocate factories to countries with the cheapest labor and the

    2weakest environmental laws. They further argue that, even in the developed world, not

    everyone has been a winner. The freedoms granted by globalization are leading to increased insecurity in the workplace. Unskilled workers in particular are under threat as companies

    3shift their production lines overseas to low-wage economies.

    Mainstream economic thought promises that globalization would lift the poor above poverty, dissolve dictatorships, protect the environment, integrate cultures, and most importantly, reverse the growing economic gap between rich and poor countries of the world. But the evidence of globalization has spurred a political backlash such as the street protests that plagued the WTO ministerial meetings in Seattle in fall 1999, Prague in fall 2000, Quebec City in spring 2001, and Genoa in summer 2001. This backlash has succeeded in uniting several categories of the protesters from all walks of life to form a common front against the inequalities caused by globalization. For example, cultural custodians have charged that national cultures and identities are under constant threat due to the spread of Internets,

    satellite TV, international media networks, and increased personal travel. Democrats have charged that MNCs are becoming more powerful and influential than democratically elected governments. Ecologists are overly concerned about corporations disregard for

    environmental degradation. Human rights activists are lamenting the loss of freedom to corporate power. To crown it all, small business owners are crying wolf about losing their market shares to mega-corporations due to economies of scale.

    The frequent observation that globalization is not global, meaning that processes and benefits associated with globalization are uneven throughout the world, is reinforced in this backlash. In other words, a large percentage of the worlds population feels excluded from

    the benefits of globalization. Statistics abound showing how globalization is increasingly

    impoverishment and prosperity. As the polarizing the world into two different camps

    juxtaposition of wealth and poverty at the opposite extremes of the globe continues, thus the orthodox model of development is being held up for closer scrutiny, as we become knowledgeable of the challenges and opportunities that globalization and the so-called

    4Washington Consensus bring in their wake. Given all the uncertainties about globalization, the time is right to rethink the nature of North-South economic relations in the global economy. Is the relationship based on a win-win situation? Finding the answer requires

    going beyond the modernization thesis and employing an approach based on four related and overlapping, but still distinct concepts: technological innovation and information revolution, trade liberalization, internationalization of capital, and the new international division of labor. These four concepts are the basic building blocks for explaining the two faces of globalizationwhile some countries are enjoying the prosperity globalization brings in its wake, others are languishing in impoverishment as a result of globalization. The level of technological innovation and information revolution in ones country determines whether a

    country reaps the benefits of globalization or not. The more a country liberalizes its economic and at the same time the more safety valves it creates to protect certain industries determines how competitive that country will be in the international market. Internationalization of capitalthe more production and capital are concentrated in few

    countries (mostly advanced industrialized countries), the more it engenders monopolistic practices and stifles competition; and the new international division of laborthe more some

    countries specialize in the production of primary products while others specialize in manufactured goods, the more the gap between rich and poor countries will continue to widen.

    The degree of technological innovation and information revolution taking place in a country determines the benefits of globalization accruing to the country concerned. Moreover, an expanding high-tech, information-based economy increasingly defines globalization and shapes the business cycles within it. The size of a nation economy protects a nations market

    from trade liberalization. The internationalization of capital favors the rich and well-endowed nations more than the poor ones, and moreover, links more countries to a worldwide division of labor and diminishes autonomous development, thus leading to intensification of the contradictions inherent in capitalism. Much of the flow of capital, labor, service, and goods among Asia, America, and Europe is technology-based. The benefits of the new international division of labor lie in different factor abundance in different countries. These concepts help us make sense of what globalization means and which country is well positioned to reap its

benefits and which ones will fall behind.

    The ways in which these ideas fit together helps illuminate such crucial globalization issues as the relationship between impoverishment and prosperity, environmental degradation, national cultures and identities, cultural imperialism, global economies of scale, digital divide, mono-cropping, cheap labor, and the interactions among individuals, firms, and governments. These concepts serve as powerful tools for analysis, not as isolated variables but as patterns of interrelationships.

    It is my contention here that for globalization to become a win-win situation, rules, regulations, and international conventions must count as much as market mechanism. The

    technological innovation, trade liberalization, internationalization way these four concepts

    of capital, and the new international economic orderinteract, shows that without an

    effective international rules and legal system that protects labor, environment, and monopolistic practices, globalization can lead to oppression, exploitation, and impoverishment. The fact remains: capitalism has always operated within the context of the rule of law.

    In trying to explain why globalization is not a win-win game, we must ask fundamental questions in terms of these four concepts: Is the information revolution beneficial to all or to some well-endowed countries? Is trade liberalization really a free trade or there are some elements of protectionism acting as a stumbling block on the way of some countries? Does internationalization of capital add up to monopoly capital, which might stifle competition or does it allow infant industries from the South to compete fairly? Does the new international division of labor engender comparative disadvantage or will it relegate the weak economy to the periphery merely as supplier of raw materials, cheap labor, and market for finished products?

    These questions relates to how unbridled globalizationtechnological innovation, trade

    liberalization, internationalization of capital, and the new international division of laborcould wreak havoc on some countries while simultaneously opening the doors of opportunity to others. This paper concludes by proposing recommendations on bridging the development gap between developed North and developing South so as to give the future

    trends in globalization a human face.

    If there is any lesson to be drawn from the event of September 11, 2001, it is that while

    many in the first world benefit from free markets in capital, labor, and goods, these same anarchic markets leave ordinary people in the third world largely unprotected. Because we

    have become a society glutted on market fundamentalism, laissez faire, and affluence, regulation of the market is being nonchalantly shoved aside. Because we have lost a proper perspective of time, history, and education, Third World development is taking its dying breaths. Even if Third World were the only victim, it would still be a remarkable tragedy in the annals of Western civilization. But what is worse is that all these ills that plague Third World nations reveal deeper problems about the West, most especially the United States and the disastrous direction it is headed. What has become apparent to the rest of us after September 11 is that that same deregulated disorder from which financial and trade institutions imagine

    5they benefit is the very disorder on which terrorism depends.

    To fully understand the concept of globalization in theoretical and practical terms, globalization, first and foremost has to be viewed from a historical perspective. It is only

    through an examination of history that one can fully understand the current environment within which globalization dwells and its implications for the poor and powerless. Historical Overview

    The term globalization was first coined in the 1980s, but the concept stretches back centuries and beyond. The forces and events leading to globalization can be traced as far back as 1492 B.C.E., when people began to link disparate locations on the globe into extensive systems of communication, migration, and interconnections. This formation of systems of interaction between the global and local has been a central driving force in world history. According to Emma Rothschild, one way of looking at globalization from an historical

    perspective has to do with the economic and social history of international relationships, and in particular with the history of earlier periods of rapid increase in international trade,

    6investment, communication, and influence. She went on to add that, the export

    investment booms of the 1860s and the early twentieth century are just two of the more

    7dramatic examples. Other prominent events and forces shaping globalization that have impacted global history deserve to be mentioned here. In 325 B.C.E. Chandragupta Maurya, a Buddhist, triggered the first globalization revolution by combining the expansive powers of a world religion, trade economy, and imperial armies for the first time to connect the Mediterranean, Persia, India, and Central Asia. Between 650 850 B.C.E., Islam followed suit

    by expanding from Western Mediterranean to India. In 1492, Christopher Columbus and in 1498 Vasco da Gama started navigating the world waterway in an effort to connect the globe. The former supposedly discovered the Americas and the latter discovered the sea route to India. These discoveries set the stage for the inter-imperialist rivalries that engulfed the

    ththadvanced capitalist countries between 17 and 19 centuries. This interconnectedness also

    paved the way for the slave trade that soon followed in 1650 during the hey-day of mercantilism. By 1648, the imperial powers created the modern state system, which was engendered by the treaty of Westphalia.

    8Adam Smiths influential book the Wealth of Nations unleashed a new era of market

    fundamentalism in Europe. In his book, Smith used the invisible hand to denote the free

    enterprise system that was fast developing at the time. Though in its nascent stage, it continued to influence other thinking about economic principles and ideas. Concomitantly, between 1865 and 1871, the mechanism that produced the European Union was set in motion. The power struggles and economic competition that ensued resulted in the partition of Africa in the Berlin Conference of 1885. The economic crises and contradictions associated with inter-imperialistic struggles led to several conflicts the world over, most especially the Great Depression of 1930s. Nation states drew back into their shells on realizing that international markets could deliver untold misery in the form of poverty and unemployment. The cumulative effects of these rivalries and contradictions in capitalism hit all parts of the world simultaneously. This helps to explain the First World War in 1914 and again the Second World War in 1935. The League of Nations, founded after World War I to prevent future wars, came short of expectations when it failed to stop World War II and was later replaced by the UN in 1945. Most scholars attributed its failure to the absence of the US to sanction its authority.

    Most European nations emerged out of the Second World War weak, feeble, and powerless.

Their weaknesses served as a breaking point for Europes inability to reverse the militant

    nationalist movements that sprung up in their colonies, and as a result, capitulated to the subtle process of decolonization triggered by the colonies mass protests and demonstrations,

    9which gradually freed European colonies in Asia and Africa.

    The resolve of Western states to build and strengthen international ties in the aftermath of World War II laid the groundwork for the Bretton Woods System. This system brought together 44 nations in Bretton Woods, New Hamsphire in 1944. The outcomes of that meeting further strengthened globalization, which resulted in the establishment of the three institutionsIMF, World Bank, and GATT.

    The period between 1945 and 1989 was dominated by the Cold War as the two super powers competed for both ideological and technological advances. By 1989, after the demise of the former Soviet Union, Francis Fukuyama wrote The End of History, signaling the triumph of

    democracy over communism. Thus globalization came into full swing with no major opposition. These events, coupled with the industrial revolution, catapulted globalization into the apogee that it presently enjoys today. As this brief historical review has shown, globalization has come a long way. It has survived the African heat, the Soviet winter, the Asian volcanoes, the Turkey earthquake, and finally the Florida hurricanes to become, as

    10Francis Fukuyama puts it, a true global phenomenon, and the end of historysymbolizing

    the victory of capitalism over communism.

    Theoretical Perspectives on Globalization

    A high degree of conceptual clarity is essential to tracking the historical roots and precedents of globalization and understanding both its causes and its consequences. Unfortunately, what prevails in the burgeoning empirical and theoretical literature on globalization is conceptual confusion and disarray. As Douglas Kellner notes, the term globalization is thus a theoretical

    11construct that is itself contested and open for various meanings and inflections.

    Globalization, in the eyes of some scholars, pundits, and policy makers, is a process, a

    12system, a force, an age, or a revolution. Others have used globalization interchangeably

    13with words like internationalization, liberalization, universalization, and westernization .

    These competing perspectives have different meanings.

    It is difficult to define globalization as a concept because of a vast range of different interpretations. The ambiguity surrounding the term is partly the result of the alacrity with which globalization has been incorporated into the literature. In this paper, globalization is simply defined as a process consisting of technological, economic, political, and cultural

    14dimensions that interconnect individuals, firms, and governments across national borders.

    Distinguished economist David Henderson further expanded the definition of globalization into five related but distinct components:

     the increasing tendency for firms to think, plan, operate, and invest for the future

    with reference to markets and opportunities across the world as a whole;

     the growing ease and cheapness of international communications, with the Internet

    the leading aspect;

     the trend towards closer economic integration, resulting in the diminished

    importance of political boundaries. This trend is fueled partly by the first two trends, but

    even more powerfully by official policies aimed at trade and investment liberalization;

     the apparently growing significance of issues and problems extending beyond

    national boundaries and the resulting impetus to deal with them through some form of

    internationally concerted action; and

     the tendency toward uniformity (or harmonization), by which norms, standards,

    rules, and practices are defined and enforced with respect to regions, or the world as a

    15whole, rather than within the bounds of nation-states.

    In the literature on globalization, one can schematically distinguish three different dominant theories that provide the point of departure for understanding globalization. These theories are realism, liberalism, and Marxism. First, is the realist school that is closely associated with the writings of Han Morgethau, Kenneth Waltz, and Edward Carr to name a few. Niccolo Machiavelli is considered by many to be one of the exponents and originators of the realist tradition. His emphasis on what is as opposed to what should be, has a tremendous

    influence on contemporary writers like Hans Morgenthau. Three fundamental assumptions of realism are widely shared in the field. They are that states are the most important actors,

    that they seek power, and that they pursue their policies in an essentially rational manner,

    16calculating costs and estimating benefits, typically in a logical fashion.

    The second approach is liberalism, which draws heavily on the writings of Adam Smith, David Ricardo, and W.W. Rostow. These liberals view globalization differently. For them, globalization is a natural outgrowth of capitalist development. Liberals believe that non-state actors are dominant players in the globalization game and that trade is its primary stimulusthe engine of growth‖—for increasing productivity and raising income levels in developing countries. Integration in the international economy through trade is supposed to stimulate growth, diffuse new technologies, generate investments, and transform traditional

    17social-cultural practices that are incompatible with the market ethos. Liberals also believe

    that a law-governed international society could emerge without a world government, and that the core sources of poverty are internal to a society: lack of knowledge, education and science, lack of the rule of law, lack of institutions that protect peoples lives and property and

    provide a framework of incentives for individual action and enterprise, lack of capital equipment of all kinds, massive macroeconomic instability, and predatory governments. These same problems can transcend national borders and spill over to hamper markets in their external dimension, that is, globalization.

    In 1776, Adam Smith wrote the Wealth of Nations in support of this contention. In his book, Smiths theory blazed the trail in explaining why unrestricted free trade is beneficial to a country. Smith argued that the invisible hand of the market, rather than government policy, should determine what a country imports and what it exports. The basis of Smiths argument

    was premised on the principle of laissez-fairea hands off political economic philosophy.

    One of the most influential liberal assessments of the development dilemma in Less

    18Developed Countries (LDCs) to emerge was the work of W.W. Rostow. According to Rostow,

    like the developed nations of the North, the less developed South must undergo a series of changes in their socioeconomic system in order to develop and industrialize. Evolutionary change is represented by series of stages of economic growth that society passes through on its way to development. Rostow identified five stages of the modernization process: traditional society, precondition for takeoff, takeoff, drive to maturity, and age of mass consumption. Rostows theory of economic development was based largely on the historical

    experience of Western nations, especially Britain and the United States. Critics, however, argued that the neo-liberal discourse is both theoretically flawed and not validated by empirical evidence. This perspective led to the next school of thought that vehemently attacked liberalism for failing to take other variables besides the market into their analysis. The third broad perspective is the Marxist approach, which, since the demise of the former Soviet Union, most scholars and pundits have dismissed as no longer useful in explaining contemporary issues in international studies. Still, from my perspective, the Marxist contentions that capitalisms perpetual quest for expansion and its various inherent

    contradictions make the system fatally flawed remain valid. For Marxist and non-Marxist theorists, the evolution and spread of capitalism worldwide explains the growing disparity between the industrialized nations of the North and the underdeveloped nations of the South. In support of this contention, writing as far back as 1848 in the Communist Manifesto, Marx and Engels argued that for capitalism to survive, it must nestle everywhere, settle

    everywhere, establish connections everywhere In place of the old local and national

    sufficiency, we have intercourse in every direction, universal seclusion and self-

    19inter-dependence of nations. Here, Marxist scholars view globalization as synonymous

    with imperialism; its, nothing particularly new, and really only the latest stage in the development of international capitalism. Rather than making the world more alike, it further deepens the existing divide between the core, semi-periphery, and the periphery. Among the many writers who explicate theories of imperialism, V.I. Lenin, Immanuel Wallerstein, Andre Gunder Frank, and Samir Amin represent a central dimension of the debate. In his book Imperialism: The Highest Stage of Capitalism (1917) Lenin draws heavily

    on the works of J.A. Hobson and Rudolf Hilferding, emphasizing the merger of industrial and bank capital into finance capital, the expansion of capital exports, and the increase in military production and militarism. As Lenin puts it:

    Monopoly is exactly the opposite of free competition; but we have seen the latter being transformed into monopoly before our very eyes, creating large-scale industry and eliminating small industry, replacing large-scale industry by still larger scale industry, finally leading to such a concentration of production and capital that monopoly has been and is the


    In his book, Lenin contends that the idea of under-consumption, overproduction, and over-saving is the root cause of capitalist expansion-for-survival and results in postponement of its inevitable crisis and metamorphosis into socialism. This explains according to Lenin why Karl Marxs prognosis of proletariat revolution did not take place.

    Now let us turn to the central theme of this paper, that is, whether the four concepts described earliertechnological innovation and information revolution, trade liberalization, internationalization of capital, and the new international economic order will produce impoverishment or prosperity in LDCs without rules, regulations, and international conventions guarding globalization.

    Technological Innovation and Information Revolution

    One of the main drivers of globalization is technology. For the past two decades, globalization has been growing by leaps and bounds with the aid of technology. Global production of technology and international trade in high-tech have had an extraordinary growth between

    211975 and 1986, multiplying six and nine times respectively. The mainstreams prognosis

    that technology will spread to LDCs and could produce a digital dividend failed to

    materialize, instead it produced a digital divide. The forecast failed because it was based on

    a faulty assumption. As studies have shown, technological development has proven to benefit the big MNCs and well-endowed individuals much more than the small companies and poor individuals. As a consequence, globalization thus has increased the gap between the rich and the poor. The concept of digital divide as it is now called has served as a source of market

    stratagem in the globalization game used by the rich and well-endowed countries to keep the forces of globalization unchecked.

    According to a recent UN Human Development Report, industrialized countries, with only 15 percent of the worlds population, are home to 88 percent of all Internet users. South Asia, with 23 percent of the worlds population, has less than 1 percent of the worlds Internet

    users. In Southeast Asia, only one person in 200 is linked to the Internet. In the Arab states, only one person in 500 has Internet access. The situation is even worse in Africa. With 739million people, there are only 14 million phone lines, fewer than the number in New York and Paris.

    In a speech at Telecom 99 in Geneva, Switzerland, UN Secretary General Kofi Anan warned of the danger of excluding the worlds poor from the information revolution. The issue of

    technology transfer has not received any significant attention from the developed nations. In spite of the hues and cries about the Norths monopoly of technology, efforts to transfer

    technology to the South has resulted, in most cases, in the transfer of obsolete technology that is no longer needed in the North and not appropriate for Third World environment. This situation was especially true during the Cold War. After all efforts to transfer technology failed, most countries in the developing world have now resorted to piracy as their last resort. Case

    22in point, Chinas piracy of Microsoft software

    In the agricultural sector, the situation is even worse. Most developing countries today still lag behind their counterpart in the north as far as mechanized farming is concerned. To a large degree, the agrarian stage of economic development characterized by primitive farm tools amid traditional farming techniques still looms large in most LDCs. Mechanized farming has been directed to cash crops for export to the Norths industries at the expense of food

    production. In the final analysis, most LDCs now import food from industrialized countries at exorbitant prices hence, famine and starvation.

    Some critics have questioned the role of MNCs in the agricultural sector of LDCs. MNCs have been reluctant to invest in developing economies. In some cases, where MNCs invested in the economy of the developing nations, they employed capital-intensive production techniques that are often antithetical to job creation and creativity of local artisans, which serves as an impediment to industrial revolution and the consequent destruction of infant industries in developing nations. Thus, the phrase digital divide becomes the rule rather than the


    The information superhighway, the internet, e-commerce, cable TV, and modern

    transportation also involves the dissemination of new technologies that have tremendous impact on the polity, society, culture, and every-day lives of citizens living in developing countries. Time-space compression produced by new media and communications technologies are overcoming previous boundaries of space and time, creating a global

    cultural village and dramatic penetration of global forces into every realm of life in every

    23region of the world. As Renato Ruggiero, director general of WTO puts it:

    Telecommunications is creating a global audience. Transport is creating a global village. From Buenos Aires to Boston to Beijing, ordinary people are watching MTV, theyre wearing

    Levis jeans, and theyre listening to Sony Walkman as they commute to work. This global

    culture includes the proliferation of media technologies that veritably create Marshall Mcluhans dream of a global village. These technologies allow transnational media and

    information to instantaneously traverse the globe. This process has led some to celebrate a new global information superhighway and others to attack the new wave of media pervasiveness in their lives as cultural imperialism.

    In the globalization debate between Friedman and Ramonet, Friedman asserted that the wretched of the earth want to go to Disney world, not to the barricades. They want the Magic

    24Kingdom, not les Miserables. Just ask them. In a response to Friedmans observation,

    Ignacio Ramonet referred Friedman to go back and read the 1999 Human Development Report from the United Nations Development Programme, which states that 1.3 billion people (or one-quarter of humanity) live on less than one dollar a day. Ramonet further argues: Going to Disney world would probably not displease them, but I suspect they would prefer, first off, to eat well, to have a decent home and decent clothes, to be better educated, and to have a job. To obtain these basic needs, millions of people around the world are without doubt

    25ready to erect barricades and resort to violence. It is certainly apparent that many people

    around the world are going to Disney World, wearing jeans and listening to U.S. pop music; what is less apparent is the persistence of underlying value difference. But the goal of globalization still remains: non-western societies are expected to abandon their traditional cultures and to assimilate the technologically and morally superior ways of the West.

    Not everyone will believe in this assumption, though. The impression that we are moving toward a uniform McWorld is partly an illusion. Fridah Muyale-Manenji notes, culture is a

    continuous process of change but in spite of the change, culture continues giving a

    26community a sense of identity, dignity, continuity, security and binds society together.

    Globalization in Africa involves one fundamental project: that of opening up the economies of all countries freely and widely to the global market and its forces argues Muyale-Manenji.

    From the above analysis, it becomes clear how technological innovation and information have combined to widen the gap between the haves and the have-nots. Technology plays a central role in the drama of inequality, and it seems to be making the situation worse, not better when you put it in the perspective of trade liberalization.

    Trade Liberalization

    Another challenge of globalization is the perception that trade liberalization has exacerbated the gap between rich and poor countries, and between the rich and poor within countries that have liberalized. In this study, Trade liberalization is defined as the opening up of borders so goods and services can move freely across border without any restrictions from tariffs and non-tariffs barriers. Moreover, this definition encompasses laissez fairean economic

    doctrine that opposes governmental regulation of or interference in commerce. This doctrine has been the main tenet of the so-called Washington Consensusthe idea that

    markets are efficient, that states are unnecessary, that poor and the rich have no conflicting

    interests, that markets perform at the highest level when left alone. It held that privatization and deregulation and open capital markets promote economic development, that

    27government should balance budgets and fight inflation and do almost nothing else. This

    has been for the most part the driving force of globalization. As Professor Richard Petrella has noted, six logics of the neo-liberal discourse is now analogous and fast replacing the biblical Ten Commandments:

    Thou shalt globalise. Thou shalt incessantly strive for technological innovation. Thou shalt drive thy competitors out of business, since otherwise theyll do it to you. Thou shalt liberalise

    thy market. Thou shalt not countenance state intervention in economic life. Thou shalt


    Critics charged that this economic logic is more illusion than reality. Conventional wisdom has it that the market is far from being perfect. Critics argue that the evidence on the ground juxtaposed the propagandas presented by this laissez-faire doctrine. They pointed to empirical evidenceof weak economies (witness by Thailand, Indonesia, Russia and Brazil) overwhelmed by easy money and vulnerable to volatile shifts in capital flows, of jobs less secure than the livelihoods abolished by globalization, of sweatshops and child labor, of environmental devastation, of wealth not enlarged but distributed upward to local elite and

    29multinational corporations, and of intensified social and political conflict. The reason

    globalization has failed to spread its benefits, critics further argue, is that, it has been

    promoted and carried forward at the behest of MNCsand their political supporterswith an

    over riding interest in maximizing profits. Unlike the U.S. economy, which is regulated by labor, health and environmental laws, the global economy is relatively free of such regulated


    Thus unbridled globalization engenders the wide acceptance of what George Soros calls market fundamentalism, which implies that opening up to international trade represents the most certain path to global prosperity. Since 1950, global trade has grown faster than output. After stagnating in the 1970s and 1980s, trade has boomed in the 1990s, led by the rapid growth of East Asian exports. Merchandise trade grew exponentially, but trade in services grew more sharply; the latter share in world exports rose from 15 percent in 1980 to 18 percent in 1995. The string growth of international trade is due to the liberalization of markets worldwide, the achievement of the Uruguay Round, and other multilateral agreements over the course of the past several decades. Tariffs have been falling, and perhaps even more important, non-tariff barriers are being dismantled.

    Historically, the U.S. and Great Britain had been in the forefront in the struggle to liberalize trade, but today, advanced economies have not always been helpful. Despite progress in the postwar era, advanced-economy trade barriers remain stubbornly high against clothing, textiles, and agricultural goods, the very products in which LDCs have a natural comparative

    31advantage. Thomas Hertel of Purdue University and Will Martin of the World Bank found that the average tariff that rich countries impose on manufactured goods from poor countries

    32is four times higher than the average tariff rich countries impose on each others goods.

    The irony of globalization is that it is premised on expanded trade, but trade liberalization, which is the gospel of IMF and the World Banks standard policies in developing countries, is

    not practiced in advanced capitalist countries where protectionism still looms large. For LDCs

    goods to enter the Norths market is analogous to the biblical saying, that is, to pass a camel

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