‘Globalization’ has been defined as “a phenomenon by which economic agents in any given part of the world are now affected by events that occur elsewhere than ever before.” Since the end of World War II, there has been a significant increase in economic growth and the standard of living as globalization has become a dominant force. However, globalization has negative implications as well in which it has contributed to the large disparity of wealth, and created a volatile market environment. Skeptics argue that globalization has “passed its peak” in which national governments have turned to protectionism in order to reduce its negative effects. Advocates of globalization ...view middle of the document...
Rawi Abdelal and Adam Segal argue that globalization has weakened due to the political backlash against economic openness. This backlash is a result of two domestic fears. The first fear comes from citizens who feel that their livelihoods are often threatened by the outsourcing of jobs overseas. The second is by national governments in which they are heavily concerned with the state of their domestic economy due to growing competitiveness as well as the loss of sovereignty over their economic activities to non-state actors. These two fears are predominantly felt in developed countries and have been intensified since the economic crisis. As a result of the backlash on economic openness, many states have turned to protectionist measures to reverse the negative forces of globalization through the implementation of subsidies, anti-dumping policies, procurement, and even tariffs to help ailing national industries. Such measures have ultimately led to globalization passing its peak.
Abdelal and Segal also argue that multilateral institutions such as the World Trade Organization (WTO), the International Monetary Fund (IMF), and the World Bank are no longer adequate governance mechanisms because they have failed “to ensure the widespread benefits of an internationalized economy” due to Western dominance. The global economic governance structure has been criticised by the anti-globalization movement for catering to the needs of developed countries, rather than promoting free trade and fair competition around the world. This favouritism, as a result of the hegemonic power of the developed world, has contributed to the vast inequality among the rich and poor countries, and has ultimately led to the negative response of globalization by developing countries, non-governmental organizations (NGOs), and civil society groups.
III. The Potential of Globalization
Skeptics of globalization and those within the anti-globalization movement have made valid arguments that help illustrate the its decline, especially in the wake of the global economic crisis. However, these arguments are limited, and are simplistic perspectives of how globalization has passed its peak. The effects of globalization and economic openness have brought widespread benefits with the improvement of technology in transportation and communication in which information, people, goods, and services can be transmitted quickly and cheaply around the world. Skeptics have failed to take into account the dominant effects of global integration and interdependence that cannot be deflated so easily by protectionism.
Trade in goods and services is more integrated today than ever before as a result of “vertical specialization”, or the global supply chain, in which countries no longer specialize in final products, but focus on the steps in the process of production. Vertical specialization has contributed to the rapid expansion of trade, particularly since the end of the Cold War in 1989....