Tag Archives globalisation

Amid the US-Sino rivalry: how high is the risk of a deglobalisation trajectory for China?

Amid the US-Sino rivalry: how high is the risk of a deglobalisation trajectory for China?

The ongoing military conflict between Ukraine and Russia has allegedly changed the course of history and revived the era of ‘Great Power Rivalry’. Under this backdrop of re-energised geopolitical competition, ...

What the war in Ukraine and the COVID-19 crisis teach us about our global interconnectedness and its implications for inequality

What the war in Ukraine and the COVID-19 crisis teach us about our global interconnectedness and its implications for inequality

Due to the war in Ukraine not only the country's inhabitants have come under fire, but also the granary of much of the world. If the war is not stopped, ...

COVID-19 | Lessons from the COVID-19 crisis for climate change politics by Murat Arsel

COVID-19 and climate change bear striking – and worrying – similarities and differences. Both are characterized by high uncertainty, but while COVID-19 has been identified as an immediate threat and action has been taken despite the absence of comprehensive knowledge, uncertainty has been touted as impeding concerted efforts to transform energy systems to combat climate change. The global economic system has strongly contributed to our failure to make radical changes. A different system – one that is not so fundamentally focused on maximizing profits over all other concerns – could have been better placed to make the undeniably painful economic adjustments we are forced to make, both before the emergence of COVID-19 and to prevent a catastrophe arising due to climate change. While both crises require dramatic societal transformations, we need to be aware of the potential negative political consequences of declaring them as emergencies.


One thing is certain about COVID-19: we simply do not know enough. Some aspects about it are simply unknown, on others we have conflicting information. Scientists are asked to take shortcuts from their rigorous methods and to offer their ‘best guess’ on hugely consequential questions. Policy makers then take decisions within a fog of uncertainty since experts have also argued that doing nothing is the absolute worst option. This is a terrifying situation for us all, but it is not entirely without precedent.

While the threat of COVID-19 might seem unique, there are some interesting parallels between this threat and that of climate change. At a general level, neither is simply a ‘natural’ phenomenon. This is not to suggest – as some have – that they are a ‘hoax’. Viruses exist, mutate, and infect ‘naturally’. Similarly, the climate of the earth shows variation due to various factors outside of human influence. But what imbues both COVID-19 and contemporary climate change with a catastrophic potential is the political economic context in which they are developing. More specifically, it is global capitalism that takes what is ‘natural’ and weaponizes it against humanity.

In the case of climate change, the problem is not that humans are extracting natural resources in order to secure their livelihoods. The manner in which this extraction is carried out, its continuous intensification and, most importantly, the extraction of resources not necessarily to meet the human need to exist and to thrive, but rather to fulfil the need of capitalism to continuously expand, is what transforms extraction into a planet-altering force captured in the concept of the Anthropocene.

Similarly, the astonishing spread of COVID-19 could not have been possible without the incredible powers of global capitalism. The virus has spread so quickly and so effectively on the back of a global structure that transports goods, humans and – let us not forget – ideas at almost magical speeds. But it is important to not fall into the trap of blaming connectivity and mobility for the spread of the virus but the underlying economic structures that made combatting it so difficult and painful. While such a pandemic could also occur under a different global economic order, the precarity of not just individuals or classes but even some of the richest and technologically sophisticated economies is what makes COVID-19 so dangerous. A different system – one that is not so fundamentally focused on maximizing profits over all other concerns – could have been better placed to make the undeniably painful economic adjustments we are forced to make.

The parallels between climate change and coronavirus do not end there. Climate scientists – those in the natural as well as the social sciences – have long been arguing that if drastic changes are not made to the way we produce and consume, in other words to the way we live, we can expect apocalyptic changes to global ecosystems. When these materialize, their impacts are likely to be just as and probably even more colossal than the toll that COVID-19 will have exacted. Yet scientists’ pleas for radical action have been rebuffed on two grounds – we do not know enough, and dramatic curbs to economic activities are fundamentally against public interest. The effectiveness of these arguments has been far greater in the case of climate change than in COVID-19! As the COVID-19 crisis shows, these two grounds have not prevented governments across the world from acting in response to the COVID-19 threat.

Can we expect a change in attitude to climate change politics once the COVID-19 crisis is over? That is certain though it is possible to expect two dramatically different responses which will depend on how, in the aftermath of COVID-19, societies around the world come to understand the now evolving response. If the response to COVID-19 comes to be seen as an overreaction or a form of mass delusion, this would have massively negative effects on ongoing efforts to respond to climate change. That would mean not only that scientific authorities – not just the epidemiologists or immunologists but the entire enterprise itself – will be discredited, opening the door to an ever-intensifying challenge that will dwarf the anti-vaccination movement. Worse still, such an impression will embolden the Trumps and Bolsanaros of the world (unfortunately not a rare breed!) to challenge and pull back all too necessary measures to reduce greenhouse gas emissions.

However, if the experts as well as politicians and policy makers who follow them are vindicated in making draconian changes (and if those who do not do so are vilified), we can expect a new era in which scientific authority is once again celebrated and valorised (rather than challenged by baseless arguments as has been the case with the anti-vaccination movement). It can also be expected that the spectre of an ecological apocalypse will be taken more seriously, bringing it with it meaningful socio-economic and cultural transformations to adapt to and mitigate climate change.

Authoritarianism creeping in through the back door

Implementation of dramatic societal transformation in response to anticipated catastrophes might at first be seen as an entirely positive outcome. But it is important to remember that all appeals to emergency, such as the declaration of a state of emergency, regardless of how justified they are, contain within them the seed of authoritarianism. A call to urgent action is almost by definition a call to silence dissent, to short-circuit deliberative democracy and to privilege the opinion of a select few over all others.

While rare, the climate movement has long had an authoritarian streak as demonstrated by this statement by no less than the developer of the Gaia hypothesis, James Lovelock: “We need a more authoritative world. We’ve become a sort of cheeky, egalitarian world where everyone can have their say. It’s all very well, but there are certain circumstances – a war is a typical example – where you can’t do that. You’ve got to have a few people with authority who you trust who are running it”[1]. A few years ago, such statements could have been considered fringe opinions intended more for provocation than for actual implementation. With countless leaders and scientists comparing COVID-19 to a war, there is genuine reason to be actively worried about ending up in a situation where climate change too becomes securitized in this manner.

This brings us back to the question of uncertainty and authority. While our knowledge of climate change – how it works, what its impacts are and how we can reverse it – are incomparably better than what we know about COVID-19, the socio-economic and ecological decisions that need to be taken are far from obvious if we are to avoid an economic crisis similar to the one brewing at the moment. How can we transition towards a carbon neutral economy? Which fossil fuel reserves need to be designated as ‘unburnable’? Where do we restore ecosystems and to what state? How, if at all, do we prevent flooding of cities and towns? What are the ecological tipping points and how can we prevent them if they remain largely unseen? These and countless other questions require not only authoritative scientific input but genuine deliberative discussion as well.

No society – regardless of how extensive its education and research attainment – is ready for this challenge. This is because the model of economic development that has dominated since World War II has created a relationship with science that Ulrich Beck has brilliantly described as “organized irresponsibility”[2], in which global capitalism has powerfully capitalized on the explosion of productivity enabled by modern science and technology while brushing under the metaphorical carpet its risks and uncertainties. Debates about the safety of genetically modified foods and nuclear power were harbingers of a brewing crisis of how science and technology can be socialized. COVID-19 is a stark reminder that the challenge remains great. If it is not addressed, we can expect many more war-like situations, not least in relation to climate change.

[1] https://www.theguardian.com/environment/blog/2010/mar/29/james-lovelock
[2] https://www.theguardian.com/education/2015/jan/06/ulrich-beck

This article is part of a series about the coronavirus crisis. Find more articles of this series here.


74804489_10163151698620144_409485347391537152_oAbout the author:

Murat Arsel is Professor of Political Economy of Sustainable Development. His research and teaching focus on the tensions between nature, capitalism, and emancipatory socio-economic development. Additional details of his work can be found at www.marsel.me

Image Credit: Markus Spiske on Unsplash

Europe in Times of Deglobalization by Peter A.G. van Bergeijk

Europe in Times of Deglobalization by Peter A.G. van Bergeijk

The current phase of deglobalization is a challenge for social sciences. Peter van Bergeijk discusses what we can learn from previous deglobalizations. What do the periods of the Great Depression ...

The New World “Order”: Brexit, Trump and the Developing Countries by Peter A.G. van Bergeijk

The New World “Order”: Brexit, Trump and the Developing Countries by Peter A.G. van Bergeijk

Deglobalisation is not the mirror image of globalisation. The losers of globalisation will thus not be the winners of deglobalisation. Indeed, the vulnerable and poor will be the big losers ...

Deglobalisation Series | Will deglobalisation save the environment? by Sylvanus Kwaku Afesorgbor and Binyam Afewerk Demena

Anti-globalists and some environmentalists argue that globalisation is harmful to the environment because it leads to an increase in the global demand for and supply of goods and increased energy production. If globalisation is perceived as harmful to the environment, then should we expect that the current deglobalisation trend in the Global North can reverse the harmful impacts that globalisation is seen to have borne on the environment?


 

An important global concern has been to understand the way in which the increasing pace of globalisation affects the environment. Although the literature has been fraught with contrasting results, there are many who strongly believe that increased globalisation has had a deleterious effect on the environment. A large number of environmentalists supporting this view base their argument on the premise that globalisation leads to an increase in the global demand for goods, resulting in increased production that exploits and depletes natural resources and the environment—what is known as the scale effect. On the basis of rising environmental concerns, an important question, then, is whether deglobalisation would produce the opposite effect. Put differently, if globalisation is harmful to the environment, then should we expect deglobalisation to inflict less harm?

Currently, this is an important question to ask considering the heightened anti-globalisation sentiments that have engulfed the Global North. In the recent past, we have not only witnessed Brexit, the election of Trump, and the Belgian opposition of the trade agreement between the EU and Canada, but, more recently, we have seen anti-globalisation sentiments reaching a climax even and especially in the United States (USA) that once was the strongest architect and proponent of globalisation. This has culminated in increased uncertainty and an a near-stalemate for NAFTA, with the US pulling out of Trans Pacific Partnership (TPP) trade agreement, proposing the erection of a wall the border it shares with Mexico, and hiking steel and aluminium tariffs as part of the ongoing trade war with China.

Untitled2The adverse effect of globalisation on the environment is supported by race-to-the-bottom hypothesis. This school supports the hypothesis that increased gains from globalisation is achieved at the expense of the environment by economies more open to global trade adopting looser environmental standards. Those who support this view of the detrimental impact of globalisation on the environment allude to how increasing globalisation creates global competition, resulting in an increase in economic activities that deplete natural resources. An increase in economic activities as a result of the thriving of economies of scale leads to increased emissions of industrial pollutants and to environmental degradation. The pressure on international firms to remain competitive forces them to adopt cost-saving production techniques that can be environmentally harmful.

Lower environmental standards

However, deglobalisation may not necessarily translate into the reduced emission of harmful gases such as CO2, SO2, NO2, but could actually produce the opposite effect. Through the technique effect, we know that globalisation can trigger environmentally friendly technological innovations that could be transferred from countries with strict environmental regulations to pollution havens. With globalisation not only entailing the movement of final goods, but also the transfer of intermediate, capital goods and technologies, multinational corporations with clean state-of-the-art technologies could transfer their green technologies to countries with low environmental standards. It is widely recognised that multinational firms use cleaner types of energy than local firms and thus attain more energy-efficient production processes. Thus, deglobalisation could mean a minimal transfer of these environmental-friendly technologies.

Domestic production means greater pollution

Moreover, the rise of anti-globalisation forces would mean less specialisation in sectors of countries with a comparative advantage. The gains-from-trade hypothesis states that this can result in the loss of the associated gains from trade and specialisation, resulting in the inefficient allocation of resources that would lead to the dissipation of scarce economic and natural resources. If every country has to produce goods to meet its domestic demand, this could result in duplication in the production process, with an associated increase in local emissions. Since some countries have weaker environmental standards, this could possibly worsen overall global emissions. For example, the imposition of economic sanctions on Iran (making Iran less integrated into the world economy) has triggered domestic production (of oil) that has resulted in immense damage to the environment. As a result of import bans, Iran started refining its own crude oil that contains ten times the level of pollutants of the oil it formerly imported.

The rise of ‘eco’ products

The notion of globalisation also has been used to create public awareness regarding labour and environmental standards through international campaigns culminating in the Fairtrade and Eco labellings, for example. The success of these public awareness programmes is based on the different preferences of consumers. Producers are able to increase their market access by producing eco-friendly products. Without international trade, consumers would have been presented with limited choices, and may have been forced to only purchase the domestic goods that may have been produced under loose environmental standards. Thus, globalisation can expand the choice of consumers, enabling them to select environmentally friendly products.

Indirect conservation mechanisms

Globalisation achieved through multilateral negotiations on the platform WTO has also demonstrated that although environment protection is not the WTO’s core mandate, it has indirectly stimulated enthusiasm within its member countries for sustainable development and environmentally friendly trade policies. The green provisions of the WTO provide general exceptions that allow countries to protect human, animal or plant life and conserve their exhaustible natural resources.

Apart from the WTO, regional trade agreements (RTAs) are another appendage of globalisation that promote environmentally sustainable policies. As countries seek to join RTAs, they are made to simultaneously embrace environmental co-operation agreements. Many countries (such as Canada and member states of the EU) have developed national policies whereby conducting environmental impact assessments before signing trade agreements is mandatory. Thus, trade agreements can only be signed when they are compatible with the environmental standards of individual EU member states. This thus compels partners to trade agreements to adhere to environmental provisions contained in the agreements.

Leaders and followers

We have seen over the years how countries such as China that used to be pollution havens have had tremendous gains in reducing their emissions, especially after becoming more integrated into the world economy. Because of globalisation and the incentives to increase its global market access for its products, China has moved away from its image as a top polluting country in the world to a global leader spearheading the fight against pollution. In 2017, China closed down tens of thousands of factories that were not complying with its environmental standards.

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Beijing workers’ stadium on smoggy and clear days from https://www.huffingtonpost.ca/entry/china-air-pollution-2014_us_568e592ce4b0a2b6fb6ecb73

In contrast, we have seen a country like the US that has been at the forefront of fighting against environmental damage slowly drifting away from this fight because of its embracing the anti-globalisation sentiments of the current president Donald Trump. Through its America First Energy Plan, the Trump administration has outlined its preference for polluting industries, the use of fossil fuels, and revival of the coal industry. This points to the fact that countries seeking self-sufficiency or expressing anti-globalisation sentiments may drift away from sustainable development practices towards industrial policies that may be injurious to the environment.

Restricting international trade may have a negative impact on the environment. Deglobalisation would isolate countries, making them less accountable toward other countries for protecting the environment. The gains associated with globalisation could be used as an effective bargaining strategy or as an incentive to demand environmental accountability from countries that want to benefit from global trading systems.


About the authors:

csm_SKA_Picture_Academic_4c02c69704Sylvanus Kwaku Afesorgbor is Assistant Professor at the Department of Food, Agricultural and Resource Economics (FARE), University of Guelph, Ontario, Canada. His research and teaching experiences are in the areas of International Political Economy, Globalisation and Development, Impact Evaluation, Applied Econometrics, and Food and Development.

downloadBinyam Afewerk Demena is a Teaching and Research Fellow at the ISS. His research interests are in the broad area of applied empirical research with a particular focus on applied micro-econometrics in development, international and fishery economics. In his PhD, he examined the impact of transmission channels of intra-industry productivity using applied micro-econometrics, meta-analysis, multi-country micro-panel data, and applied field research via on-site visits.

 

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

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 ...

Deglobalisation Series | Financial deglobalisation: a North-South divide? by Haroldo Montagu

Deglobalisation Series | Financial deglobalisation: a North-South divide? by Haroldo Montagu

The Financial Crisis of 2008/09 led to a structural break in financial globalisation, setting cross-border capital flows back to the average of the 1990s. Do differences between cross-border financial flows ...

Deglobalisation Series | China: ‘restarting’ globalisation? by Chenmei Li

After benefiting from international trade and investment for the past 30 years, China’s global position is starting to change. This is perhaps most evident when regarding its position at the centre of an ongoing ‘trade war’ with the United States. Given its role as leader in international trade, will China be able to ‘restart’ globalisation and offer an alternative to globalisation and deglobalisation as defined by the West?


As developed countries appear to step back from globalisation, China senses an opportunity to step forward and set new rules for globalisation. A major component of the Chinese strategy to lead changes in how globalisation is thought of and practiced is the One Belt and One Road Initiative (OBOR) of the Chinese government. Aimed at improving infrastructure and connectivity between China and the world, this initiative comprises more than physical connections. The Chinese government argues that this initiative includes not just economic, but also socio-cultural linkages, ultimately leading to mutual benefits for all countries involved. The OBOR defines China’s idea of globalisation in a new era in which emerging economies backed by rising economic power and strong alliances are seeking greater influence on global issues.

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Figure 1. Map of China’s One Belt One Road Initiative, with China in red and the land (black) and sea (blue) routes indicated. Source: https://en.wikipedia.org/wiki/One_Belt_One_Road_Initiative

China’s push for globalisation has evoked mixed reactions across the world, and Beijing has had to deal with multiple obstructions to its vision. Moreover, logistical and bureaucratic issues are plaguing countries participating in the OBOR. For instance, although China has signed bilateral cooperation agreements with Pakistan, Hungary, Mongolia, Russia, Tajikistan, and Turkey, with a number of projects planned under those agreements, the proposed projects have not been implemented. Most such projects are infrastructure-related, for example a proposed train connection between eastern China and Iran, which eventually may be expanded to Europe. Powerful Western economies and neighbouring Asian giants have remained cautious in their assessments and acceptance of the initiative.

Sustaining the benefits of globalisation

An important motivation behind the OBOR is the endeavour to continue to benefit from globalisation. Since 1979, China has implemented an Opening and Reforming Strategy. However, its export in percentage of GDP (trade openness) in 1980 was only 5.9% and outward Foreign Direct Investment (FDI) was 1.7 billion US dollars. Only after the 1990s China’s globalisation process really began. Joining the WTO in 2001 pushed its trade openness to the highest point—higher than the world average and the levels of the UK and US (Figure 2).

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Figure 2. Trade openness from 1960 to 2016 for four of the world’s largest economies, with the world average also indicated. Source: World Development Indicators (2018).

China is said to have been the largest beneficiary of globalisation until the economic crisis hit in 2008. After the economic crisis, the international market became weak and the Chinese economy could no longer count on export as its most powerful economic ‘carrier’ (besides investment and consumption). Immediately following the crisis, the Chinese government injected 4 trillion renminbi (RMB) into the economy and boosted short-term investment and consumption. Its long-term plan, which was not clear until 2012, is to further stimulate trade openness and integration into the world economy. China thus seeks to leverage the global market and resources to boost its economic growth.

At the helm of rebuilding globalisation efforts?

China does not only want to continue to benefit from globalisation, but also wants to lead the rebuilding of a global system where it could assume a leading role. The current deglobalisation phenomenon does not mean that the general globalisation trend will cease, because the core driver of globalisation is technology, which is advancing faster than ever. However, it does suggest a splintering (if not collapse) of the current globalisation system created after World War II and shaped to its current state largely by developed economies.

Trumpism and Brexitism are both symbols of the deglobalisation phenomenon but are not evidence that the traditional leaders of globalisation are deglobalising their economies. Instead, such symbols show the recognition of the need for a new globalisation system by both ‘traditional’ world leaders like the US and UK as well as emerging powers who were largely excluded from the last global rulemaking process and now hold a share of the world GDP so significant that they cannot be ruled out again.

However, globalisation in China has always been selective, well-managed, and restricted mainly to economic and trade-related activities. Besides its achievement regarding global trade, China shows little achievement or/and willingness to be globalised in terms of, for example, finance, human resources, and culture. The exchange rate is under careful control. English education in China is mandatory since middle school, but the real usage of English is still quite limited. China is known to be the most difficult country for foreigners to attain residence permits, and to date it blocks direct access to the global internet. These are all signs that Beijing is not too eager to participate in all forms of globalisation.

China needs to tread carefully

And thus its attitude may jeopardise China’s idea of globalisation through the OBOR initiative. The explanation often used by Chinese government for the selectivity related to the initiative is its desire to minimise the negative effect of Western-Defined Globalisation and to respect China’s special country situation. However, China’s attitude towards the OBOR must be open-minded and holistic, both tolerable of and acceptable to a wide range of ideologies.

The Chinese government seems to realise that and is promoting the OBOR as ‘the most inclusive globalisation system’. Formally, the OBOR emphasises five key areas of cooperation, including economic, financial and social exchanges, and the private sector is encouraged and expected to be the main driver of the initiative. Unfortunately, the current situation suggests that OBOR has been largely driven by state-owned enterprises and government-level trade agreements, and is limited to global trade. The areas that are not engaged by the plan, such as culture, education, data sharing and immigration, are likely to hinder China’s efforts towards globalisation, especially in a digital world where technology is developed at such a high speed.

In conclusion, China will continue to seek leadership in restoring the globalisation system, with the OBOR initiative as its core measure. However, both traditional leaders and other emerging powers still have a say in how and whether the globalisation system is re-established. Consensus may not have been reached between countries, but the globalisation trend is likely to continue—and at a faster pace due to new technologies. If China truly wants to become a major global leader in the quest to ‘restart’ globalisation, private sector involvement in areas other than trade need to be encouraged through a more open-minded attitude.


Also see: Deglobalisation 2.0: Trump and Brexit are but symptoms by Peter. A.G. van Bergeijk and Challenges to the liberal peace by Syed Mansoob Murshed


untitled.pngAbout the author:

Chenmei Li is a Project Analyst at Institute of New Structural Economics, Peking University—one of the top 25 think tanks in China. She is working on economic transformation of developing countries (especially in Africa) and China’s engagement with LDCs. She received a Master’s degree from the ISS in 2016.

 

 

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

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. But the logic of the capitalist ...

Deglobalisation Series | Backtracking from globalisation by Evan Hillebrand

Deglobalisation Series | Backtracking from globalisation by Evan Hillebrand

While globalisation still enjoys strong support in the Global South, major economies in the Global North now seem less enthusiastic about its purported benefits. This article explores how the United ...

Deglobalisation Series | Is anti-globalisation only a preoccupation in the Global North? by Rory Horner, Seth Schindler, Daniel Haberly and Yuko Aoyama

A remarkable ‘big switch’  has emerged from the turn of the millennium in terms of attitudes towards and discourses over globalisation. But while the world is currently witnessing a new backlash against economic globalisation, considerable support for globalisation within some parts of the Global South should not be overlooked.


While the world is currently witnessing a new backlash against economic globalisation, considerable support for globalisation within some parts of the Global South should not be overlooked. Supporters of the UK’s exit from the European Union seek to “take back control” from Brussels, while Donald Trump’s economic ethno-nationalism has promised to put “America first”. In contrast, the picture that emerges in the Global South is quite different, as part of a remarkable ‘big switch’ that has been taking place from the turn of the millennium in terms of attitudes towards and discourses over globalisation.

Support for globalisation in the global South

The polling company YouGov, in a 2016 survey of people across 19 countries, found that France, the US and the UK were the places where the fewest people believe that “globalisation has been a force for good”. In contrast, the survey found the most enthusiasm for globalisation in East and Southeast Asia, where over 70% of respondents in all countries believed it has been a force for good. The highest approval rate, 91%, was in Vietnam.

From a poor starting point, many in the Global South have experienced some improvement in basic development indicators in the 20th and 21st Centuries. People living in Asia accounted for the vast majority of those who experienced relative income gains from 1988 to 2008. In comparison with the 1990s, the Global South now earns a much larger share of world GDP, has more middle-income countries, more middle-class people, less dependency on foreign aid, considerably greater life expectancy, and lower child and maternal mortality rates.

Less of a backlash in the Global South necessarily means support for neoliberal globalisation—and the optimism in countries such as Vietnam may paradoxically be a result of an earlier rejection thereof. China, in particular, has not followed the same approach to economic globalisation as that which was encouraged by the US and organisations such as the IMF and World Bank in the late 20th Century.

Meanwhile, many of the world’s poorest in the Global South have seen very little improvement in quality of life in recent years, yet they are much more marginal and less well-positioned to express their frustrations than the ‘losers’ in countries such as the US and UK. They must not be forgotten.

China and India warn against deglobalisation

Most notably, the last two World Economic Forum gatherings at Davos have seen explicit statements from the respective leads of China and India warning against deglobalisation. In January 2017, China’s president Xi Jinping said that his country would assume the leadership of 21st Century globalisation. Defending the current economic order, Xi said that China was committed to making globalisation work for everyone—its responsibility as “leaders of our times”.

At Davos in 2018, Narendra Modi, prime minister of India, warned against deglobalisation:

It feels like the opposite of globalisation is happening. The negative impact of this kind of mindset and wrong priorities cannot be considered less dangerous than climate change or terrorism.

 The ‘big switch’ on globalisation

It is remarkable that the backlash most associated with the Brexit referendum in the UK and the election of Donald Trump in the US has emerged from the right of the political spectrum, in countries long recognised as the chief architects and beneficiaries of economic globalisation.

At the turn of the millennium, the primary opposition to globalisation was concerned with its impacts in the Global South. Joseph Stiglitz, former chief economist at the World Bank, in his 2006 book Making Globalization Work wrote that “the rules of the game have been largely set by the advanced industrial countries”, who unsurprisingly “shaped globalization to further their own interests.” Their political influence was represented through dominant roles in organisations such as the World Bank, the International Monetary Fund and the WTO, and the corporate dominance of their multinationals.

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Protests in Seattle against the WTO in 1999. By Steve Kaiser from Seattle via Wikimedia CommonsCC BY-SA

In the 1990s the anti-globalisation movement opposed neoliberal economic integration from a range of perspectives, with a particular emphasis on the Global South. The movement was populated by activists, non-governmental organisations and groups with a variety of concerns: peace, climate change, conservation, indigenous rights, fair trade, debt relief, organised labour, sweatshops, and the AIDS pandemic.

Yet, in the aftermath of the Brexit vote, UK prime minister Theresa May offered a sceptical assessment at the 2017 World Economic Forum at Davos, arguing that “talk of greater globalisation can make people fearful. For many, it means their jobs being outsourced and wages undercut. It means having to sit back as they watch their communities change around them.” The US, under Trump, subsequently began renegotiating NAFTA and withdrew from the Trans-Pacific Partnership.

Significant proportions of the population in the US and other countries in the Global North have experienced limited, if any, income gains in the most recent era of globalisation. Leading global inequality expert Branko Milanovic has explored changes in real incomes between 1988 and 2008 to show who particularly lost out on relative gains in income. He found two groups lost most: the global upper middle class—those between the 75th and 90th percentiles on the global income distribution scale, of whom 86% were from advanced economies—and the poorest 5% of the world population.

Emerging evidence indicates that increased global trade has played a role in economic stagnation or decline for people in the North, especially in the US. MIT economist David Autor and his colleagues suggest that the ‘China shock’ has had major redistributive effects in the US, leading to declines in manufacturing employment.

Economists had previously argued that the “losers” from trade could be compensated by transfers of wealth. Autor and his colleagues found that while there have been increases in welfare payments to regions of the US hardest hit by the trade shock, they fall far short of compensating for the income loss.

Not just globalisation

Not all of the stagnation and decline experienced in the Global North can be attributed to economic globalisation. Technological change is a big factor and national policy choices around taxation and social welfare have also played key roles in shaping inequality patterns within countries. In such a context, ‘globalisation’ has been deployed as a scapegoat by some governments, invoking external blame for economic problems made at home.

The current backlash is not just about economic globalisation. It has involved ethno-nationalist and anti-immigrant components, for example among supporters of Trump and Brexit.

A key lesson from the late 20th Century is to be wary of wholesale attacks on, and sweeping defences of, 21st Century economic globalisation. In light of the difficulties of establishing solidarity between ‘losers’ in different parts of the world, the challenge of our times is for an alter-globalisation movement which addresses all of them.

Moreover, if the stellar growth rates of the last 15-20 years slow down, the relatively positive view of globalisation in much of the global South may not continue, with the possibility of a backlash (re)emerging beyond the Global North.


Also see: Deglobalisation 2.0: Trump and Brexit are but symptoms by Peter A.G. van Bergeijk


About the authors:

Rory_Horner_work_profile_photo.JPGRory Horner, Lecturer, Global Development Institute, University of Manchester321250

Daniel Haberly, Lecturer In Human Geography, University of Sussex;

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Seth Schindler, Lecturer, Department of Geography, University of Sheffield, and Aoyama2016

 

Yuko Aoyama, Professor of Economic Geography, Clark University