Globalization

Globalization results in an increase in international trade. It is beneficial to corporations that can take advantage of international opportunities as the free market directs them to countries and regions where commodities can be produced at the lowest cost. It also seems beneficial, at least at first, to countries where commodities are produced, because they are then able to use the foreign exchange to subsidize "modernization", which promises to improve the lives of citizens. With time, however, the benefits disappear. The resource may become depleted, or the international company that is buying the resource finds another country that will supply it more cheaply. By this time, the producer nation is accustomed to a so-called higher standard of living and the government cannot easily survive with reduced international income. The next step is to go into debt to international lending banks and agencies, which brings even greater pressure to liquidate more quickly the remaining natural resources. This scenario often is the cause of tropical deforestation, as discussed in Chapter 4.

However, globalization is not necessarily destructive to all aspects of the economy. Within the community of mainstream economists there is considerable debate about the pros and cons of globalization:

"The most pressing moral, political and economic issue of our time is third-world poverty. Globalization through technology offers the best hope of remedying the problem. The advances achieved in computing and telecommunications in the West offer enormous opportunities for raising living standards in the third world. New technologies promise not just big improvements in local efficiency, but also the potentially bigger gains that flow from an infinitely denser network of connections, electronic and otherwise, with the developed world" (The Economist 2000).

However, in the same journal, Wade (2001) wrote:

"Technological change and financial liberalization result in a disproportionately fast increase in the number of households at the extreme rich end, without shrinking the distribution at the poor end. Population growth, meanwhile, adds disproportionately to numbers at the poor end. The prices of industrial goods and services exported from high-income countries are increasing faster than the prices of goods and services exported by low-income countries. As a result, the gap between the richest 10% of the world's population and the poorest 10% is widening".

Rosenberg (2002) has made the argument that globalization has failed the world's poor, but it is not free trade that has hurt them - it is that the system is manipulated. She feels that the architects of globalization are right, that international economic integration is not only good for the poor, it is essential. To embrace self-sufficiency or to criticize growth is to glamorize poverty. No nation has ever developed over the long term without trade. For example, since the mid-1970s, Japan, Korea, Taiwan, and China have lifted 300 million people out of poverty, chiefly through trade. However, she also points out that those who protest globalization are also right. No nation has ever developed over the long term under the rules being imposed today on Third World countries by the institutions controlling globalization. The United States, Germany, France, and Japan all became wealthy and powerful nations behind the barriers of protectionism. East Asia built its export industry by protecting its markets and banks from foreign competition and requiring investors to buy local products and build local know-how. These are all practices discouraged or made illegal by the rules of trade today.

There are claims that globalization of agriculture has helped third-world farmers and contributed to the alleviation of hunger. Southeast Asia has seen impressive gains in food production as a result of the Green Revolution. During two decades of Green Revolution advances (1970-1990), figures from the United Nations showed that the total food available per person in the world rose by 11%, while the estimated number of people suffering from hunger fell from 942 to 786 million, a 16% decrease (Rosset and Mittal 2001). Despite the Green Revolution, World Health Organization data showed that even now, one third of the world's children suffer from malnutrition (De Onis et al. 2001). Hosington et al. (1999) cited the need for genetic engineering "to feed a world population growing by up to 160 people per minute, with more than 90 percent of them in developing countries". Mann (1997) predicts that through the work of plant breeders, crop physiologists, and botanical geneticists, humankind ultimately will be able to feed itself, but only if the world engages in a "gigantic, multiyear, multibillion-dollar scientific effort that emphasizes genetic engineering".

However, not all agree. The impact of globalization on agriculture is a particular worry for environmentalists. "Expanded economic growth and global development", writes Goldsmith (1996 b) "cannot be achieved without an immense overuse of resources, a fierce assault on remaining species of flora and fauna, the creation of toxic wastelands and seas, and the degradation of the planet's natural ability to function in a healthy way. The idea, promoted in corporate circles, that first we must make countries wealthy through development and then take care of the environment is high cynicism, since development does not produce wealth, save for a few people; the wealth that is produced is rarely spent on environmental programs; and anyway, by the time the theoretical wealth is generated, life will be unlivable".

Herman Daly, a former staff member of the World Bank, has written scathing denunciations of globalization, from the viewpoint of an insider with privileged access to the results of development projects aimed at integrating the global economy. "Globalization", he writes, "risks serious consequences. They include standards-lowering competition to externalize social and environmental costs with the goal of achievement of a competitive advantage". This results in a race to the bottom as far as equity in income and environmental standards are concerned. Globalization also risks increased tolerance of mergers and monopoly power in domestic markets so that corporations become big enough to compete internationally. Monopoly power in agriculture results from trade-related intellectual property rights, such as the need for third-world farmers to pay royalties to international agri-businesses when the farmers plant genetically modified seeds. These practices put the farmer in debt to these corporations (Daly 2001).

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