Stances on

Global Economic Integration

• The participation of developing countries in the
globalization process can enable them to better
utilize their comparative advantages, introduce
advanced technologies, foreign capital and
management experience. (Shangquan 2000)
DEALING WITH THE GLOBAL ECONOMY

Three broad ways of responding to/resisting

economic globalization:
1. Protectionism
2. Fair Trade
3. Helping the “bottom billion”
1. Protectionism
Protectionism (trade protectionism) - a policy of
systematic government intervention in foreign
trade with the objective of encouraging domestic
production. This encouragement involves giving
preferential treatment to domestic producers and
discriminating against foreign competitors.
(McAleese 2007: 1169-74)
Ways to protect and encourage domestic
production
1. Imposition of tariffs and quotas on foreign
imports.
2. Domestic production can be helped more
directly through export subsidies and more
indirectly by such policies as tax relief to
producers.
Source: Trade protectionism is not the way out for U.S
https://www.newsghana.com.gh/trade-protectionism-is-not-the-way-out-for-u-s/
• A broad consensus emerged that
protectionism did not work, but
nonetheless it continued to be
practiced by many nations and in
various economic sectors. Trade
protectionism continued to co-exist -
very uncomfortably - with trade
liberalization.
• In spite of its rhetoric of trade
liberalization, the United States, https://www.livetradingnews.com/china-capable-
among others, was often accused of dealing-rising-us-trade-protectionism-
26418.html#.XEa-EFwzbIU
practicing protectionism (especially
in agriculture).
Source: Is the U.S. ready to move away from liberalism to protectionism?…An unbiased explanation of the trade policy
options we face today… https://medium.com/@jules000120/is-the-u-s-ready-to-move-away-from-liberalism-to-
protectionism-b476a899fb39
Perceived Negative Effects of Trade
Protectionism
1. Those industries that receive protection tend,
over time, to grow increasingly inefficient. They
seem to require the competition brought about
by free trade to hone their operations. It clearly
is not in a nation's interest to support
inefficient industries, at least in the long run.
2. Protectionism not only discourages imports, but
also exports because the tariffs on imported
components raise the cost of production to
industries in the nation engaging in protectionism.
This leads to increases in prices and tends to make
a protectionist nation's exports less competitive,
especially compared to those of nations without
the kinds of trade barriers that tend to raise costs.
3. The protected industries have little interest in, and
motivation for, innovation; their protected position
makes innovation unnecessary.
4. Protectionism tends to lead, especially in
developing nations (but not, historically, in the
US), to a focus on manufacturing with the result
that agriculture is adversely affected, or at least
not similarly advantaged. Such countries are
highly dependent on their agriculture for
subsistence and its decline can have disastrous
consequences for the population as a whole.

Source: A trade war won't benefit the US
http://www.chinadaily.com.cn/a/201808
/29/WS5b85daeea310add14f388480.ht
ml
Nations that have restricted
imports (engaged in protectionism)
tended to suffer more from
protectionism than those countries
(the "victims" of protectionism)
that were impeded from exporting
to those nations.
Thus, the US, for example, would
gain more from eliminating its
protective agricultural policies than
would those nations that would
then be freer to export their
products to the US.
 • Developed nations often wanted
trade protectionism because of fear
that inexpensive imports from less
developed countries would destroy
indigenous industries.
• On the other hand, less developed
countries often complained about
continuing trade barriers in
developed nations and about
pressures on them (but not
Source: How World Bank and IMF Strangled Africa Into Poverty.
https://www.african.nambilisamuel.com/2018/06/how-world-bank-and-imf-
strangled-africa.html
developed countries) by the IMF and
the World Bank to liberalize - and
rapidly - much of their economies
 • Less developed countries often
felt that as a result of trade
liberalization they were
engaged with other less
developed nations in a "race to
the bottom" in which they
competed with one another to
Source: How World Bank and IMF Strangled Africa Into Poverty.
produce more at lower cost for
https://www.african.nambilisamuel.com/2018/06/how-world-bank-and-imf-
strangled-africa.html the developed world
Source: Arguments Against Protectionism
https://www.tutor2u.net/economics/reference/arguments-against-protectionism
 2. Fair Trade • defined as a "concern for
the social, economic and
environmental well-being
of marginalized small
producers" (Andrew
Downie 2007: C1-C5). I
• fair trade is oriented
toward a more moral and
Source: The Globalization Editorial Cartoons equitable global economic
http://www.theeditorialcartoons.com/subject/The-
Globalization-Editorial-Cartoons.php
system.
Fair Trade is concerned with…
• creating direct relationships between producers, usually in the South,
and consumers, ordinarily in the North;
• "establishing more just prices"; price should not be set simply by the
"free" market, but by what is just as far as producers, and the social
and ecological environment in which they live and work, are
concerned; price is not to be set by the "market" but negotiated
openly, transparently, and equally by producers and those who seek
to acquire what they produce; each should seek to understand and
accommodate the other's needs;
• protecting producers, especially farmers, from dramatic swings in
prices for their products;
The North-South Divide
Source: https://www.pinterest.ph/pin/279363983118193626/?lp=true

Source: The North and South: Global Economics.

http://melansonglobal.blogspot.com/2009/06/political-cartoons.html
 Fair Trade is concerned with… (continuation)
• providing work for those,
especially in the South, who
are economically
disadvantaged;
• protecting workers' rights,
including the right to
unionize;
• providing work that is safe
and not exploitative of Source: https://caribbeandilemma.wordpress.com/2015/03/12/behind-the-
swoosh-do-sweatshop-create-employment-or-exploitation/

women and children;

• engaging in environmentally sound
practices; in sustainable
production;
• being sure that product which is
produced is healthy to consume;
• educating consumers and
employing them to put pressure
on producers to engage in fair
trade practices.
3. Helping the "bottom billion"
•The most common way of looking at
economic inequality in the world is to focus
on the differences between the North and
the South, core and periphery, or between
the developed and less developed areas of
the world
•Paul Collier (2007) "the bottom billion"
•There is certainly great inequality between the
North and the South, but a focus on that
relationship tends to obscure the full extent of
global inequality. The latter is clear when we
look at the bottom billion and compare them,
at least implicitly, to the rich and the super-
rich in the world, most of whom are in the
North.
 • The vast majority (70%) of the
people in the bottom billion,
as well as the countries in
which they live, are in Africa.
Among the other countries
that contain large numbers of
the bottom billion are Haiti,
https://www.picswe.com/pics/bottom-billion-
Bolivia, Laos, North Korea,
countries-cb.html
and Yemen.
 • Wherever they live, the
bottom billion have incomes
of only about a fifth of those
in other developing countries
and their situation will only
grow worse unless there are
dramatic changes in the near
https://www.picswe.com/pics/bottom-billion- future.
countries-cb.html
• Perhaps of greatest importance is the fact that
their situation has grown worse in recent years
and they have fallen further behind those in not
only the developed countries but the other less
developed countries, as well.
• Collier argues that there are four "traps" that
differentiate the nation-states (and failed states)
that contain most of the bottom billion from other
nation-states and that disproportionately account
for the impoverishment of the bottom billion.
Four "traps" that lead to the impoverishment
of the bottom billion (Collier 2007)
1. Conflict trap
2. Natural resources trap
3. Trap of being landlocked with bad neighbors
4. Bad governance trap
1. Conflict trap (Ritzer p. 405)
• A state involved in a conflict trap is confronted with either
continuing civil wars or frequent violent coup d'états.
Various African countries (most notably Rwanda, Congo,
and Sudan) have experienced wrenching civil wars in
recent years.
• A nation caught in continuing rounds of violent conflict,
coups, coup attempts, and counter-coups is likely to suffer
economically and to see large portions of its population
plunged into poverty and, perhaps, into the bottom
billion.
• Violent conflicts within states in the North are rare
and coup d'états are even rarer. With this, Northern
states and their citizens live in much more stable
and peaceful conditions and can, as a result,
concentrate on that which enhances their
economies and their economic well-being.
Source: Hernon, Stephen. Conflict Trap. https://www.slideshare.net/shernon/conflict-trap
2. Natural resources trap
• Natural resources trap- Limiting economic
development because of excessive dependence
on abundant natural resources.
• The focus on natural resources makes it less
likely that there will be sufficient attention to
other forms of production. The result is that
these other types of production tend to decline
leading to a wide range of shortages.
•For example, in Nigeria in the 1970s, oil
became a valuable export and the focus of
national attention. Other resources such as
peanuts and cocoa came to be seen as less- or
un-profitable crops and, as a result, their
production declined precipitously as did the
income from them. It is also the case that the
availability of these crops as a source of food
for the local population declined.
Source: Economics of the Natural Resource Trap
https://www.slideshare.net/tutor2u/economics-of-the-natural-
resource-trap
Source: Economics of the Natural Resource Trap
https://www.slideshare.net/tutor2u/economics-of-the-natural-resource-trap
 3. Trap of being landlocked with bad
neighbors
• Being landlocked does not in itself
necessarily lead to poverty.
Switzerland is a landlocked country
(Luxemburg is another), but it and
its people are extraordinarily well-
off economically. However, overall,
the fact is that almost 40% of the
poorest billion live in landlocked
countries, and the overwhelming
majority of them are in Africa.
• One problem faced by these
landlocked countries is the
unavailability of
transportation to the coast
(and the high cost when it is
available), needed so that a
country can export its
products. Internally, many
African nations lack adequate
roads, railroad systems, river
boats, and the like.
• Some landlocked African countries do overcome such
disadvantages and barriers, but those seem to be countries
(e.g. Botswana) with enormous, well-managed resources.
However, in many cases, landlocked African countries lack such
enormous resources, manage them poorly, and they have "bad"
or problematic neighbors.
• Such neighbors can impede or block shipment of the landlocked
country's products, can have serious internal problems of their
own (some of which may spill over) such as growing slowly if at
all, may have weak economies, and have weak or even
nonexistent governments ("failed states" such as Somalia).
 4. Bad governance trap
• A bad government
with bad policies
can not only inhibit
an economy from
growing, but it can
literally destroy the
economy.

https://www.slideshare.net/shernon/bad-governance
• One example is the government
of Robert Mugabe in Zimbabwe
which came to power in 1980.
http://fogtdal.blogspot.com/2013/07/election-in-zimbabwe-
please-dont-be.html

• In spite of disastrous inflation in the early twenty-first

century which decimated the economy and the society as a
whole, Mugabe clung to power, and even vowed to remain
in power for the rest of his life (until he was forced into an
on-again, off-again power-sharing relationship with Morgan
Tsvangirai beginning in late 2008).
•Millions of people fled
Zimbabwe, many crossing
the border illegally into
South Africa. This led to
protests, riots, and even
violence against these http://fogtdal.blogspot.com/2013/07/election-in-zimbabwe-
please-dont-be.html

immigrants in South Africa.

Risks Brought along by Economic
Globalization
•Economic globalization has in fact expanded
rather than reduced the gap between the
North and South
•Economic globalization has also developing
countries’ risks of being concussed by
unfavorable external factors
Pros Economic Aspect (Globalization Nd)
• Employees of a transnational corporation may be well paid
compared to other workers in the country
• Increased investment in developing countries stimulates
their economies
• Free trade between nations is established – countries can
produce to its strengths and import the goods it needs
without the threat of tariffs
• A wide range of products are available at affordable prices
due to free trade
• Sharing of technological innovations is fast and fair
 Cons Economic Aspect
• Jobs are being outsourced from developed countries to
less developed countries resulting in higher
unemployment
• Transnational corporations are becoming so large they are
beyond the power of smaller governments
• Economies are linked due to trade – economic hardship in
one country will more greatly affect other nations
• Cultural identity is lost due to mass use of western
consumer products and entertainment
References:
• Faucher, Loren. 2003. World View Presentation: Globalization. Queens University of
Charlotte. https://www.tigweb.org/action-tools/projects/download/2673/fauchier.ppt

• Elsevier Science Ltd. 2001. International Encyclopedia of the Social & Behavioral Sciences
https://www0.gsb.columbia.edu/faculty/bkogut/files/Chapter_in_smelser-
Baltes_2001.pdf
• Shangquan, Gao. 2000. Economic Globalization: Trends, Risks and Risk Prevention.
http://www.un.org/en/development/desa/policy/cdp/cdp_background_papers/bp2000_
1.pdf
• Globalization. ND. https://s3.amazonaws.com/ppt-download/finalglobe-140905003709-
phpapp02.pdf?response-content-
disposition=attachment&Signature=5QjJx9YRK%2BUmYNfmwkiiAIBy3ds%3D&Expires=15
47511007&AWSAccessKeyId=AKIAIA5TS2BVP74IAVEQ