ECONOMIC GLOBALIZATION: the historical experience, modernity and prospects

 

This is not a full list of global problems.  As the universal community continues to develop, new problems can appear. 

As for problems connected with economic globalization, they are:

• Problem of overcoming the gap between developed and developing countries
• Problem of elimination transnational criminals
• Problem of achieving equal competitive conditions
• Problem of controlling demographic processes
• Problem of distribution human resources

 

I would like to mention that there is a special science which studies global threats for the humanity – globalistics. The researcher of globalization problems A.Chumakov emphasizes that globalistics has quite clear and already formed delineations. It represents a sphere of scientific researches, which are directed to define the essence of processes of globalization, reasons of their manifestation and tendencies of their development. Moreover, it is directed to analyze global problems, to find effective solutions.⁷ 

I will dwell on two problems which are caused by economic globalization: differences between development levels of developed and developing countries and problems of achieving equal competitive conditions.

 

2.2. Differences between development levels of developed and developing countries. 

One of the most critical problems of global development is the problem of a big gap between developed and developing countries (or between wealthy North and poor South).

Nowadays 20% of popularity of the northern hemisphere consumes about 90% of all good produced, about 60% of produced energy.  

Fast development of technology and technical science (scientific and technological revolution) has created conditions for a more effective use of resources and energy. The gap in per capita income between the countries with the richest fifth of the world’s people and those with the poorest fifth widened from 30:1 in 1960, to 60:1 in 1990 and to 74:1 in 1995. ⁸

UNCTAD's evaluation shows clearly that globalization has not involved an increase in the standards of living for the most of the world. ⁹

Regardless of transfers of capital and technologies from developed countries to countries with less developed economies, no remarkable change for the better can be observed or even expected in these countries. Besides poverty and lack of development, many developing countries are suffering from the very large debts to rich countries, which leave no hope for an improvement in their welfare.

Such a situation creates domestic and foreign policy tensions both in developing and in industrial countries, including the migration from poorer countries to the richer ones. Furthermore, prospects for development are undermined by the outflow of better-qualified labour force. However, tensions are also growing in the labour market and social system of industrial states.

In today’s globalizing and merging world differences in the development of countries is becoming a common. Regardless of the efforts of the United Nations Organization (UNO), the World Bank (WB) and other international institutions, differences in the level of development of different countries have constantly been growing over the past decades.

The analysis of tendencies in average per capita rates of Gross Domestic Product (GDR) shows the increasing tendency of differentiation of incomes and correspondingly of the increasing inequality. Another rate in comparing economies of different countries is the one, which was suggested by the United Nations Development Programme (UNDP) and is called the Human Development Index (HDI). It consists of three components: education, income and health (life span which is expected at birth).

Here is a table of HDI for 2010 (table 1) 
 
 

Table 1

 
 

During the process of globalization not only inequality between wealthy and poor countries increases, but inside popularity of these countries too. The biggest part of the poor popularity concentrates in developing countries.

Globalization opens wide opportunities to all members of universal community; however, the consumption of its welfare goes on unevenly and disproportionately.  
 
 
 
 
 
 
 

2.3 Problems of achieving equal competitive conditions.           

Another global problem which is resulted from the previous one is a problem of achieving equal competitive conditions.

                               

Developing countries have the opportunity to shape their development, occupy an appropriate position in the worldwide economy and actually do something about their economies only under equal competition conditions of economic policy.

Ending the discrimination in international trade, balancing the relations between huge multinational concerns and economically least developed countries, drafting programs of development in environmental protection, energy and water supply and solving other vital problems of the global economy are the preconditions for shaping a more stable global society.  

It is certainly impossible for the industrial countries to give up the protection of their markets in a short time, because that would mean bankruptcy for many companies and millions of people would lose their jobs.

It would be necessary to develop a program that would gradually open markets. The program should include mechanisms of solving social problems and how to pay developing countries debts caused by protectionism. 

The level of productivity in enterprises of developing countries is low. Due to low productivity the wage level is also low in developing countries. In addition to the wage level, the competitiveness of developing countries’ production in the world market considerably depends on social, environmental and other duties imposed on enterprises. 

The precondition for solving the problem of unequal conditions of competition is the ability to find such compromise criteria that would equalize the level of competitive pressure on enterprises of different countries rather than the requirement of equalizing the absolute level of conditions of competition.  

Instead of the requirement that developing countries should reach the level of social security, health care, environmental protection of industrial countries, one should agree upon reaching the share of those expenditures in GNP equal to the average share of industrial countries. This would mean a major breakthrough in the policy of developed countries with respect to developing countries. 

For the moment, the commercial policy of industrial countries has mainly been aimed at the creation of better than average competition conditions for their own enterprises. At the same time the developing countries should consider that competitiveness, achieved at the cost of working conditions that might put people’s life and health in danger together with an inhuman social environment, is not acceptable in a civilized society. 

But when we look at the table of a degree of gap between rich and poor (table 2), we realize that the United States is the dubious front runner with the highest income inequality among 20 wealthy nations. In 2000 the United States’ inequality stood well above all other rich nations. At the other end of the scale the Nordic countries plus the Netherlands had very low inequality ratios. Most Western European nations, as well as Australia and Canada fell in between. 
 

                                                                       Table 2

These data come from the Luxembourg Income Study, the most rigorous data source for cross-national income and wealth. The chart’s income gap indicator in each country is the disposable (after tax) annual income of the top 10% divided by the disposable income of the bottom 10%. In other words, the income gap is the ratio of the 10% of persons with the highest income to the 10% with the lowest.

For instance, in the USA the income of the top-earning 10% was 5.5 times that of the bottom 10%.

This problem is rather complicated, so scientists from all over the world try to find a perfect solution. But still there is no any universal method how to achieve the equality between developed and developing countries and how to make equal competitive conditions. 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

3. Estimation of globalization

         3.1 Positive estimations of conditions and perspectives of globalization.    

Positive attitude to globalization is based on understanding it as a global integrative process. In fact, the humanity during its historical development creates different social forms of unification, integration.

The development of the economic sphere of the society with its basic foundation logically leads to creation of artels, syndicates, trusts and transnational companies.

And all these is and objective process, which can’t be denied by antiglobalists. 

There are three dominant features of globalization. The first one is that the global community transforms from the messy totality of more or less connected countries to an integral economic system, where national society is an element of a common global economic organism.

This is determined mostly by the global division of labour. 

The second dominant feature is that national and global relations switch the roles of each other.

Functioning of economy of any country more and more depends on external factors: not only on export and import of goods and services, but on the inflow and outflow of capital. 

And the third qualitative feature is the depreciation of regulative functions of national government, which can’t protect national economy from undesirable external economic influence anymore.

International economic processes grow from the more or less effectively ones regulated by the national government to global, mostly irreducible government regulation.

On the principle that in some works there is an opinion that national governments should either fully or partially give in their sovereignty to transnational institutes, tendencies and values.¹⁰ 

The whole world moves to the side of the rising its degree in economical, scientific and technological integrity with a perspective of transformation in the common social and economical organism.The most positive sides of economic globalization are: an aspiration of governments to liberalize trade, markets of capital, strengthening of the global character of production, the strategy of production’s distribution, fast and wide spreading of new technologies etc.

But we have to observe and analyze not just positive sides, but the negative ones as well, because globalization is a contradictory objective social pgenomenon.

3.2. Negative estimations of conditions and perspectives of globalization. 

It is rather natural to hear negative rates of globalization. There even exists a special group of people who are against this phenomenon and called themselves antiglobalists. 

Professor S.Sokolov formulates the following four negative tendencies of globalization:

• Deepen civilizational inequality of nations and countries
• Aspiration of these nations to follow the European way, which will worsen the ecological crisis
• Aspiration of Western countries to use ‘victories’ in the cold war for worsen the ecological crisis
• Danger of intercivilizational conflict with Islamic world etc.¹¹

 

Some scientists say that the negative side of globalization is seen in the process of the so called ‘americanization’.

This term means that the influence of the United States on the popular culture, technology, business practices, political techniques or language, of other countries is quite big.

Such a rate is given by Russian researcher A. Shvechikov, who said that globalization is not an idea of saving the humanity through the interested, equal in rights collaboration in all spheres of life with the aim of achieving a more just and fair llife of the humanity, but this is ‘a wild misanthropic ideology, which should be prosecuted by the law and should be forbidden as a hostile to principles and standards of human society’.¹²  

The researchers of globalization mention that a new, spontaneously appeared and growing phenomenon of antiglobalization resists the globalization. This dynamics involves about 50 countries and 30 million people already.

One of the basic directions of antiglobalists is an opposition to the economic diktat of the financial “seven”.

 

Conclusion. 
 

In conclusion, I would like to say, that it was paid much attention to this relatively new phenomenon called globalization. Scientists expressed their different points of view on this topic.

There is still no definite answer, whether globalization is good or not. 

In the past centuries economic globalization has developed quickly and flows of capital and goods that move between countries have increased.

The globalization process has also involved developing countries. Foreign direct investments made in developing countries show a particularly rapid rate of growth. At the same time, the outflow of foreign direct investments from developing countries has also increased remarkably.

 Industrial countries' international relations generate national development. At the same time, globalization does not show positive results in developing countries. Foreign investments and inflow of loans to developing countries have not brought the expected results.  

Differences between industrial and developing countries' development have grown remarkably during the past decades. The reason for this is the industrial countries' market protection policy which ensures that competitive products cannot enter their market.

Unfair trade and competition, caused by subsidies, have also an important role.

The current organization of the global economy does not meet the requirements of the constantly globalizing and merging world.

The organization of the global economy needs a rapid and radical change towards greater openness of markets and ensuring equal competition conditions for countries with different levels of development. It is a complex and complicated task.

I have shown both positive and negative sides  

I believe that constructive globalization, which integrates all humanity and is an alternative of its modern destructive “proamerican” development, is possible in the global scale.           

 

  Bibliography 

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(http://www.warc.ch/pc/01.html#txt3) 

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