GLOBALISATION provokes heated debates. While anti-globalisation groups highlight the problems faced by developing countries from premature trade and capital inflow liberalisation, its supporters emphasise the stagnation in countries like North Korea that remain delinked from the global economy.
So, does globalisation help or hurt developing countries?
Since globalisation is a complex concept, one must disaggregate it to answer this question meaningfully. Simply stated, globalisation means an increase in cross-border interactions that lead to high similarity globally in different life spheres.
Cross-border interactions include the flow of goods, services, finances, people, nature, laws and ideas. Thus, though people generally mainly focus on economic globalisation, one can also speak of globalisation in other life spheres, e.g. political, cultural, psychological and ecological globalisation.
Given globalisation’s multifaceted nature, a closer look unsurprisingly reveals that neither supporters nor opponents accept or reject it in totality. So, neoliberal groups favour greater flow of capital and trade globally which benefits them. However, they oppose the greater flow of people (immigration) into developed countries and technology and aid to developing countries.
They also oppose greater political globalisation under the aegis of democratic global institutions since it undermines their interests. Thus, it is simultaneously pro- and anti-globalisation. The same is true of other stakeholders. So, instead of one monolithic globalisation template seeking to enhance all global flows, there exist several globalisation projects, each run by competing interest groups and seeking to increase certain transnational flows and reduce others in line with their interests. Viewed so, the question is not whether globalisation helps or hurts developing countries but which globalisation project helps or hurts them.
Five major contrasting globalisation projects exist today—three right-wing and two left-wing ones.
The most well-known right-wing project is neoliberal globalisation, which emerged around 1980 in Europe and the US in reaction to the increasing powers of governments and unions and shrinking corporate profits. The coalition for this project includes conservative politicians, large-scale business interests, neoclassical economists and multilateral economic institutions.
Although neoliberal globalisation benefits the rich, it actually harms developing countries. While academic work on the pitfalls of hasty liberalisation also undermined neo-liberalism, the more decisive blow to its credibility came from several financial crises it caused globally, including in Mexico in 1994, Southeast Asia in 1996, Russia in 1998 and globally in 2008.
The other two right-wing projects transgress the realms of legality. The first— underground globalisation — is run by criminal cartels involved in the illegal flows of goods, services, people, finances and nature globally. Its rise has ironically been facilitated by neo-liberalism as governmental capacities to control cross-border flows have shrunk under the influence of neoliberal ideology. Thus, illegal globalisation represents deep neo-liberalism: the complete absence of government control, legality and morality.
In contrast, the Al Qaeda-led jihadist globalisation project has emerged in opposition to neoliberal globalisation. Unlike neoliberal and underground globalisation, it focuses on political and cultural, rather than economic, globalisation and dreams of establishing a global fundamentalist caliphate. Obviously, neither of these right-wing globalisation projects benefit developing countries.
The first left-wing project is Keynesian globalisation championed by Keynesian economists like Joseph Stiglitz. Keynesian globalisation-related national policies seek foreign aid, technology, long-term investments and export markets for goods and labour while discouraging short-term, footloose, capital inflows and the import of intermediate goods which the country seeks to manufacture and export.
In practice, Keynesian globalisation policies have underpinned the success of several Asian countries, including Japan, the Asian tigers and, more recently, China and India. Despite its success, Keynesian globalisation carries limited replication potential for developing countries due to several reasons. Firstly, negatively affected by the success of these Asian countries, developed countries now actively seek to block such policies through bilateral and multilateral treaties with developing countries.
Secondly, such policies require strong governance which most developing countries lack.
Thirdly, the success of these Asian countries has arrested the industrialisation of other developing countries since aggregate global demand can support a limited number of cheap manufacturing countries. Finally, such policies have accelerated ecological globalisation (global warming) as these Asian countries have become large polluters.
Led by ecological economists and green activists, the second left-wing globalisation project emerged out of environmental concerns and can be termed as the green globalisation project. While the green movement may not see itself as a globalisation project since it opposes neo-liberal globalisation vociferously, it supports globalisation along several dimensions. While it opposes unfettered trade and capital flows, it supports greater global regulation (political globalisation), and flow of aid and technology to poor countries and of migrants to rich countries.
The project opposes Western cultural hegemony but supports cultural globalisation based on mutual respect and learning. Greens point to the large literature that shows that wealth does not increase life satisfaction beyond a certain level but precipitates global warming and increasing inequality. Thus, Greens favour steady-state, low-growth economies where countries live within the world’s ecological limits. Greens argue that this goal should be pursued immediately by rich countries, and subsequently by developing countries once they eradicate poverty based on freer and larger flow of technology, aid and investments from developed countries.
Thus, all projects support some form of globalisation. The closest exponent of complete de-globalisation is North Korea, whose abysmal record should deter others from following this path. That said, the green globalisation which will most benefit developing countries and actually all humankind is very different from the neoliberal globalisation template which today is globalisation’s most actively marketed brand.
The writer is a political economist at the University of California, Berkeley.