By Sitati Wasilwa
The global integration of the nations of the world on different paradigms and strands has largely been beneficial but at the same time, it has generated negatives on a wider scale. This is in no means to suppose or suggest that the global inter-linking of states and non-state actors is doomed to fail, but rather a wake-up call to the concerned entities (the multi-lateral institutions in particular) about the rising uncertainties and/or backlash against the doctrine of globalization.
There are two critical junctures in world history that apparently and ultimately led to the surge of globalization; the economic reconstruction of Europe after World War Two as directed by the Marshall Plan, formulated under the auspices of George Marshall, who served then as the Secretary of State for the United States of America. It was during this point in time that the Bretton Woods institutions namely the World Bank (International Bank for Reconstruction and Development, IBRD) and the International Monetary Fund (IMF) were established. The economic relations between Europe and the USA were furthered by these institutions and the mandate of the two was later expanded to reflect a global view.
The other critical juncture was the fall of the Berlin Wall and the fall of communism in Eastern Europe that culminated in the end of the Cold War. This was a milestone in view of globalization because it meant the opening up of the communist states and other aligned communist nations to the politico-economic activities of the rest of the world (Read the capitalistic world). It is important though to note that the surge in globalization was dampened by the global financial/economic crisis witnessed in 2008/09.
So, why the dissatisfaction and dissent against globalization? This has largely been occasioned by unfulfilled promises propagated by the pro-globalization individuals and institutions. As a matter of fact, globalization was initially touted as a mechanism that would effectively enhance the economic growth and development of the so called Third World countries. The notions that were initially harbored envisaged a fair global trade regime with minimal interference and interventionist policies by the advanced economies of the world. But the resentment against globalization can be clearly noticed even in the developed economies.
The Developed Economies Vantage Point
As noted, the negative effects of globalization are not confined to the developing economies and the newly industrializing economies as a significant number of the advanced economies are experiencing the backlash against this politico-economic phenomenon. The relocation of a good number of industries from the Western world to some of the Asian economies has resulted in labour redundancy with the industrial workers of the former being rendered jobless. Of course this relocation of industries is premised on the incentives at play and the aspect of economic geography. The Asian economies where these industries relocated were guaranteed access to relatively cheap labour plus other subsidies offered by the governments. This is a matter that a significant number of citizens in the Western economies view as a negative engendered by globalization.
It goes without doubt that the rise in populism and nationalism in some of the Western nations is perhaps a harsh reaction to globalization. The influx of immigrants has led to resentment with the right-wing ideologues taking it as part of their agenda to formulate policies and pieces of legislations that seek to check on the number of immigrants. There is a growing perception that the immigrants are competing directly for employment opportunities with the natives even for the low skilled jobs and this factor was partly responsible for Brexit and the triumph of President Donald Trump in the hotly contested and divisive US presidential election.
Of essence is the prevailing attitude that membership to economic blocs and/or economic unions has curtailed the power of the independent states to be able to negotiate for better trade deals with other countries. Despite a guaranteed access to a ready market, majority of the Britons so it fit to vote in favour of Brexit in pretext of the jeopardized sovereignty thanks to the policies and legislations of the European Union. Through the Executive Orders, President Trump nullified the membership of the USA to the North America Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP). The reason for this; industries/firms would shift to member countries where business costs are a bit lower.
An African Standpoint
Whether the African countries have benefited from globalization or not depends on which angle one views the matter from. The concept of globalization, from an African point of view, has not greatly benefited the African economies. Of course one of the factors that supports this statement is the aspect of global trade where African economies operate on the periphery and are well stuck at the bottom of the international trade. This has ostensibly been precipitated by the protectionist measures adopted by the developed economies and some of the newly industrializing economies.
The World Trade Organization (WTO) has never been committed to ensure that the principle of fairness is adhered to in global trade which has given room for the advanced economies to institute protectionist measures against some of the agricultural products/produce originating from Africa. But it is a matter of political expediency as the WTO is controlled by the world’s developed economies. Even the Africa Growth Opportunity Act (AGOA) was to help the African economies to access the American textile market but its efficiency as a policy instrument is highly questionable.
Economic globalization has led to the incidence of capital flight and tax evasion from Africa through the multi-national corporations (MNCs). This is simply corruption at play and the bottom line is that most of the African governments collude with some of the MNCs to rob the African countries. When the so-called trade deals are signed between two countries (an African one and a foreign state) to develop infrastructure or exploit minerals, full disclosure of the trade agreements are never made to the public. This is the major reason why some of the MNCs take the lion’s share of the revenue from the natural resources and even engage in illicit economic activities.
Political globalization has always taken a backseat with economic globalization being prioritized and this has disadvantaged Africa. The non-commitment by the advanced economies to institutionalize reforms in the multi-lateral institutions is a pointer to the continuation of the dependency syndrome which has over the years been perfected by the world’s dominant economies. The World Bank must be reformed if the development assistance that it offers to African countries is to be beneficial. The International Monetary Fund should be reformed so that its policies are not in favour of the USA and other advanced economies as it is currently. Reforms are needed at the WTO to ensure that Africa, highly disadvantaged on the global trade scale, benefits the most from international trade. The United Nations must also be reformed and have an overarching role in view of the other multi-lateral institutions.
The Chinese Eye View
For a relatively long period of time, accusations have been labeled against the Chinese for being circumspect towards globalization. Should the Chinese really be blamed for this? The Chinese should not be blamed wholesomely for the (perceived) failures of globalization. China was very clear on its economic model and set out to actualize it through the implementation of feasible and viable economic policies that were suitable to the Chinese socio-economic and political conditions.
China outsmarted globalization at that point in time when the Western nations were busy propagating for the idea. It was through the economic wisdom of the Chinese that they instituted industrial protectionist policies to cushion the local industries and create more employment opportunities for the Chinese nationals. In fact, the industrial economies of scale created from the concentration of industries in regions/cities with very high populations (economic geography) led to the relocation of a significant number of industries from the Western economies to China. If China was to fully embrace globalization as it was being pushed to, then the economic growth and structural transformation witnessed in the country could not have taken place.
From a Chinese perspective, embracing globalization at the early stage of the economy’s reformation would have been economically suicidal as globalization is a jungle where the strongest (advanced economies) always take advantage of the weakest (economies that are playing catch-up). At the moment, though, China’s economic progress significantly relies on globalization with the country making serious infrastructural investments in Africa, Europe, South America and largely trading with the USA (China is the largest trading partner of the US). There is a very high possibility that China could be the world’s major driver of globalization at this moment in time.
The Road Ahead
The world should concentrate its efforts in making political globalization to work by being committed to reforming the United Nations, the World Bank, the IMF, and the WTO among other multi-lateral institutions. Institutional reforms would imply that proxy wars are eradicated from the face of the globe and viable investments are made by these institutions. This is a potent way of reducing the number of immigrants into the advanced economies. Advanced economies allocate a lot of financial resources to fund the wars at the expense of investing in their respective economies.
Skepticism in the face of constructive globalization is inevitable because of the geopolitical interests at play. Africa, through the African Union must seize the moment and push for better deals at the global roundtable. The reformation of globalization will be beneficial to all the units though in varying degrees but at least guarantee the socio-economic transformation of developing economies ceteris paribus.
China’s continued structural transformation will play a very significant role in reshaping the globalization trajectory. This could work in favour of Africa or against Africa depending on the costs and benefits realized from the Chinese model of international relations.
The writer is an Economist & Researcher at Savic Consultants, Nairobi.