Deglobalisation Series | (de)globalisation and the fear of trade by Ana Cristina Canales Gomez

While the consequences of globalisation over health and nutrition can be contradictory, trade openness can be a relevant policy for reducing food insecurity. This relatively inexpensive action, when compared to technology or research-based programmes, can increase the availability of nutritional foods, increase higher nutritional variety in diets, and can stabilise the food supply, reducing food shortages.


“One of the biggest ideas to hit the political world in recent years is that politics is increasingly defined by the division between open and closed, rather than left and right” (The Economist, March 24, 2018)

The recent trend of pushing against globalisation is based on different sources of information that varies from science-based evidence to ideas that trade and global agreements form part of a mastermind plan of invisible benefactors of the globalisation system. This phenomenon of deglobalisation has occurred before, but a major difference can be seen between the current and previous manifestations: in the 1930s, deglobalisation was pushed by governments, while the current expression of deglobalisation is pushed by the general public through social media.

When it comes to health and nutrition, the matter of globalisation and its impacts can be somewhat contradictory, and as with most economic matters, the perception of globalisation will depend on the viewer’s position: if you are in the LDCs where malnutrition is a leading cause of mortality, hinders development and entails national losses of around 6% of GDP[1], you might see globalisation as a beacon that could signal the introduction of greater nutritional diversity to local diets. If, on the other hand, you live in countries such as Chile or Mexico where undernourishment is no longer the main issue and the country now faces a transitional economic phase wherein obesity becomes a cause of concern, the increased inflow of foods from countries such as the United States might be viewed in a more negative light—as an influx of unhealthy types of food that contribute to obesity (Giuntella 2017).

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Graph 1 Changes in trade (% of GDP) and the prevalence of stunting in children under 5 years of age, world level. Source: author’s elaboration using STATA and the WDI (Last updated January 25, 2018).

From a descriptive perspective, during the last 30 years, and particularly after the Marrakech negotiations that led to the formation of the World Trade Organization (WTO) and its agreements, there has been an increase in trade openness and a reduction in the prevalence of stunting (PAHO 2017), even though hunger is still the leading cause of death and primary contributor to disease worldwide (Pongou et al. 2006).

We can assess the impact of trade openness using the Depth of the Food Deficit (DFD), an outcome indicator that measures inadequate access to food (Reddy et al. 2016, Santeramo 2015) by determining the amount of calories needed to lift the undernourished out of this position, ceteris paribus (Reddy et al. 2016, World Bank Group. 2017, Dithmer and Abdulai 2017).

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Table 1: Effect of the import and export value indexes (2000=100) over the depth of the food Deficit (kcal per person per day), world level.

Table 1 shows the effect of Export and Import Value Indexes, included in logarithmic form, over the DFD. There is overall a strong and significant relation between both values and the indicator: an increase of one percentage point of the Import Value Indexes reduces the Depth of the Food Deficit in a range of 21 to 37 kilocalories, such change being consistent to the inclusion of all controls. Hence, a reduction of the DFD responding to an increase in both exported and imported values speaks of narrowing gaps between current nutritional status and the average dietary energy requirements of the population, and can contribute to SDG2—Zero Hunger.

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Table 2: Effect of import and export Values (2000=100) over depth of the food deficit (kcal per person per day) in Latin American countries (excluding Haiti, Cuba and the Small Caribbean States).

The same regression can be run for the Latin American countries, including a variable constructed by the author measuring the number of food security programmes per country per year. The impact of trade openness over DFD is still strong and relevant in magnitude, and there is a linear albeit insignificant relation where programmes reduce the prevalence of undernutrition. When the quadratic variable is applied it hints—the coefficients are not significant—that such an effect only goes so far, and that, after a breaking point, these programmes show detrimental results.

Considering all of the above, the evidence shows that trade openness is in fact a relevant policy when it comes to reducing food insecurity, increasing social wellbeing and leading to socioeconomic progress. Furthermore, it would seem that trade openness is a more effective tool than the implementation of specific programmes that attempt to target food insecurity that many times end up doing more harm than good. This could be explained by the fact that there is a trend towards the indiscriminate adoption of programmes, both local and foreign. Additionally, more programmes usually signal the lack of effective stakeholder coordination, the lack of continuity in governmental strategies, and the inefficient expenditure of available resources.

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Table 3: Effect of export and import Values (2000=100) over obesity prevalence for children under 5 years of age, world level.

When it comes to obesity, our research shows inconclusive results: there is a significant albeit small effect of trade openness—both export and import values—on the prevalence of obesity, but this effect fades when controls are included in the models. This can be due to the fact that obesity is a more recent phenomenon and besides integration of economies into global markets responds to many factors, such as economic growth, urbanisation trends, and the rise of the middle class (PAHO 2017).

Conclusion

While the consequences of globalisation over health and nutrition can be contradictory, it is an effective tool for the reduction of hunger, currently the leading cause of death in the world. This relatively inexpensive action, when compared to technology or research-based programmes, can increase the availability of nutritional foods, increase higher nutritional variety in diets, and can stabilise the food supply, reducing shortages in times of dearth. Overall, opening up to trade, at least from the health and nutrition perspective, seems to be a policy worth trying, but there is only so much that trade can do without a strong institutional background.

[1] Which is the case for Central America and the Dominican Republic according to the CEPAL (as cited by Jara Navarro (2008: 9)

[2] According to the WHO, stunting is defined as the impaired growth and development that children experience from poor nutrition, repeated infection, and inadequate psychosocial stimulation. Children are defined as stunted if their height-for-age ratio is more than two standard deviations below the WHO Child Growth Standards median.


References
Dithmer, J. and A. Abdulai (2017) ‘Does Trade Openness Contribute to Food Security? A Dynamic Panel Analysis’, Food Policy 69: 218-230.
Giuntella, O., M. Rieger and L. Rotunno (2017) ‘Weight Gains from Trade in Foods: Evidence from Mexico’, University of Pittsburgh, Kenneth P. Dietrich School of Arts and Sciences. Working Paper Series 17/010 Weight gains from trade in foods: Evidence from Mexico. 17/010.
Jara Navarro, M.I. (2008) ‘Hambre, Desnutrición y Anemia: Una Grave Situación De Salud Pública’, Revista Gerencia y Políticas de Salud 7(15): 7-10.
PAHO (Last updated 2017) ‘Sobrepeso Afecta a Casi La Mitad De La Población De Todos Los Países De América Latina y El Caribe Salvo Por Haití’ (a webpage of PAHO/WHO). Accessed April 12 2017 <http://www.paho.org/chi/index.php?option=com_content&view=article&id=856:sobrepeso-afecta-a-casi-la-mitad-de-la-poblacion-de-todos-los-paises-de-america-latina-y-el-caribe-salvo-por-haiti&Itemid=1005&gt;.
Pongou, R., J.A. Salomon and M. Ezzati (2006) ‘Health Impacts of Macroeconomic Crises and Policies: Determinants of Variation in Childhood Malnutrition Trends in Cameroon’, International journal of epidemiology 35(3): 648-656.
Reddy, A.A., C.R. Rani, T. Cadman, S.N. Kumar and A.N. Reddy (2016) ‘Towards Sustainable Indicators of Food and Nutritional Outcomes in India’, World Journal of Science, Technology and Sustainable Development 13(2): 128-142.
Santeramo, F.G. (2015) ‘On the Composite Indicators for Food Security: Decisions Matter!’, Food Reviews International 31(1): 63.
The Economist (2018) ‘Bagehot: Rethinking Open v Closed’, The Economist March 24th-30th 2018 9084: 33.
WHO (Last updated 2017) ‘Noncommunicable Diseases’ (a webpage of WHO Media Centre). Accessed April 12 2018 <http://www.who.int/mediacentre/factsheets/fs355/en/&gt;.
Winters, L.A. (2004) ‘Trade Liberalisation and Economic Performance: An Overview’, The Economic Journal 114(493).
World Bank (Last updated 2018) ‘World Development Indicators’ (a webpage of The World Bank). Accessed March 1 2018 <http://databank.worldbank.org/data/reports.aspx?source=world-development-indicators#&gt;.

0894f1c-2.jpgAbout the author:

Ana Cristina Canales Gómez is a veterinarian at the Universidad de Chile who holds a Masters degree in Public Policy from the same institution and a Masters degree in Development Studies from the ISS. Currently, she works as a consultant for Food & Foodstuffs Trade and Nutrition Policies in the Food and Agriculture Organization (FAO).

 

Deglobalisation Series | Challenges to the liberal peace by Syed Mansoob Murshed

We may have reached a stage where economic interactions have become so internationalised that further increases in globalisation cannot deliver greater prospects of peace.[1] But the logic of the capitalist peace still holds water; the intricate nature of the economic interdependence between advanced market economies almost entirely rules out war, but other hostile attitudes can still persist, and even grow.  


Liberal peace theories posit that peace among nations is not a result of a balance of power, but rests on the pacific nature of commonly held values, economic interdependence, and mutual membership of international organisations. Ideal theories of the liberal peace can be traced back to the work of Immanuel Kant, who in his essay on the Perpetual Peace[2] argued that although war is the natural state of man, peace could be established through deliberate design. This requires the adoption of a republican constitution simultaneously by all nations, which inter alia would check the war-like tendencies of monarchs and the citizenry; the cosmopolitanism that would emerge among the comity of nations would preclude war. The European Union is the most obvious, albeit imperfect, example.

Mirroring Kant’s thoughts is the contemporary philosopher John Rawl’s [3] notion of peace between liberal societies, which he refers to as peoples and not states. He speaks of well-ordered peoples. These are mainly constitutional liberal democracies, which arrive at such a polity based on an idea of public reason. In a well-ordered society, based on public reason, human rights are respected, and the distribution of primary goods (a decent living standard, dignity, respect and the ability to participate) for each citizen’s functioning is acceptably arranged.

Another version of the liberal peace theory based on economic interdependence is the ‘capitalist’ peace notion.[4] The intensity of international trade in an economy is the least important feature in the peace engendered by capitalism. The nature of advanced capitalism makes territorial disputes, which are mainly contests over resources, less likely, as the market mechanism allows easier access to resources. The nature of production makes the output of more sophisticated goods and services increasingly reliant on “ideas” that are research and development intensive, and the various stages of production occur across national boundaries. Moreover, the disruption to integrated financial markets makes war less likely between countries caught up in that web of inter-dependence. It is also argued that common foreign policy goals reflected in the membership of international treaty organisations (such as NATO and the European Union) also produce peace.

The chances of the well-ordered, tolerant societies envisaged by Rawls living in peace within themselves and with one another have greatly diminished with the recent rise in inequality, the growing wealth and income share of the richest 1-10% of the population, and the rise in varieties of populist politics. Also, the quality of Kant’s foedus pacificum has been dealt a severe blow by nations such as the UK choosing to leave the European Union, adversely affecting the utilisation of soft power via common membership of international organisations.

We also may have come to a stage where economic interactions such as the exchange of goods, provision of services and the movement of finance have become so internationalised that further increases in globalisation cannot deliver greater prospects of peace.[5] But the logic of the capitalist peace still holds water; the intricate nature of the economic interdependence between advanced market economies almost entirely rules out war, but other hostile attitudes can still persist, and even grow, given recent developments. This includes the rise in populist politics.

The rise of populist politics

The growth in inequality, but more especially the creeping rise in the social mobility inhibiting inequality of opportunity, has spawned the illiberal backlash manifesting itself in the rise in mainly right wing populist politics. A large segment of immiserated voters vote for populists knowing that, once elected, the populist politician is unlikely to increase their economic welfare, as long as they create discomfiture for certain establishment circles, vis-à-vis whom these voters see themselves as relatively deprived. Immigrants and immigration is scapegoated and made responsible for all economic disadvantage and social evils following the simplistic and simple-minded message of right-wing demagogues. It has to be said that left-wing populism, too, has emerged in many societies, mainly among educated millenarians whose economic prospects are often bleaker than those of their parents, and in regions (such as Latin America) with a strong Peronist tradition.

By contrast, during the golden age, which lasted for a little over a quarter of a century after World War II, no particular group in society was disadvantaged by economic growth and the advance of capitalism. The elites appeared to internalise the interests of the median and below-median income groups in society. Social mobility was palpably present, and social protection cushioned households against systemic and idiosyncratic economic shocks. The growth in inequality linked to globalisation and labour-saving technological progress since the early 1980s has disadvantaged vast swathes of the population: it first pauperised the former manufacturing production worker through either job offshore relocation or stagnating real wages, and latterly it is emasculating even median service sector occupations. At the same time the income and wealth share of the top 1-10% of the population grows at an accelerating pace, faster than the rise in national income.[6]

In developing countries there has been a growth in autocratic tendencies, the liberal half of a liberal democracy, even when the other part of democracy, the electoral process, is broadly respected. The use of plebiscites by strong men to garner greater power has been a frequently used tool. There is even talk of autocratic rulers delivering development and economic growth and autocratic tendencies may be greater in nations that have achieved economic structural transformation. But the logic of the “modernisation”[7] hypothesis that argues that democracy is demanded by society as it becomes affluent may still ring true, even if the process is non-linear, and other complex factors need to be taken into account.

A hyper-globalisation trilemma?

Faced with these challenges, we need to abandon our “Panglossian” faith in the ability of markets to always do good. The rules of globalisation and capitalism only serve elites who are owners of internationally mobile skills and wealth. There may be a hyper-globalisation trilemma[8], whereby the simultaneous achievement of national sovereignty, democracy and hyper-globalisation is impossible. It is worth reiterating that hyper-globalisation refers to a situation where for the collective the pains from increased globalisation in terms of adverse distributional consequences outweigh the gains in terms of enhanced income.

Earlier advances of globalisation was made relatively more acceptable in Europe compared to the United States, given the greater prevalence of social protection in the continent. Gradually, after 1980, and especially since the dawn of the new millennium, more and more groups have been disadvantaged by globalisation, and the politics of austerity has diminished social protection, fraying pre-existing domestic social contracts. Thus, many advocate a more limited globalisation, akin to the halcyon days of the golden age, also known as the Bretton Woods era (1945-73), whose hallmark was that the demands of globalisation never exercised veto powers on the domestic social contract.

A retreat from hyper-globalisation is desirable, but not through channels that diminish international cooperation and partnership, like Brexit and President Trump’s protectionist sabre rattling that undermine agreements like NAFTA. What is needed is internationally coordinated checks on hyper-globalisation and agreements on certain wealth taxes on the richest individuals, which is needed to address the alarming rise in wealth inequality given the fact that social protection can only have a palliative, and not curative, impact on these stupendous inequalities.


References:
[1] Rodrik, Dani (2017) Straight Talk on Trade: Ideas for a Sane World Economy, Princeton: University Press.
[2] Kant, Immanuel (1795) Perpetual Peace and Other Essays on Politics, History and Morals, reprinted 1983. Indianapolis: Hackett Publishing.
[3] Rawls, John (1999) The Law of Peoples, Cambridge, MA: Harvard University Press.
[4] Gartzke, Erik (2007) ‘The Capitalist Peace’, American Journal of Political Science 51(1): 166-191.
[5] Rodrik, Dani (2017) Straight Talk on Trade: Ideas for a Sane World Economy, Princeton: University Press.
[6] Piketty, Thomas (2014) Capital in the Twenty-first Century, Cambridge, Massachusetts: Harvard University Press.
[7] Lipset, Seymour (1960) Political Man: The Social Bases of Politics. New York: Doubleday.
[8] Argued by Dani Rodrik; see, for example, Rodrik (2017), op. cit.

Also see: Backtracking from globalisation by Evan Hillebrand


csm_6ab8a5ef34f1a5efe8b07dff07d52162-mansoob-murshed_0833a7fcf4About the author:

Syed Mansoob Murshed is Professor of the Economics of Peace and Conflict at the International Institute of Social Studies (ISS), Erasmus University Rotterdam in the Netherlands. His research interests are in the economics of conflict, resource abundance, aid conditionality, political economy, macroeconomics and international economics.