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Globalization Contents

Globalization Contents

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Published by: Thalia Sanders on Apr 25, 2013
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Globalization and Its Contents29
 Peter Marber is an author, professional money manager, and faculty member at the School of International and Public  Affairs at Columbia University.
Globalization and Its Contents
 Peter Marber 
Ask ten different people to define the term“globalization” and you are likely to receiveten different answers. For many, the mean-ing of globalization has been shaped largelyby media coverage of an angry opposition:from right-wing nationalist xenophobes andleft-wing labor leaders who fear rampanteconomic competition from low-wage coun-tries to social activists who see a conspiracyon the part of multinational corporations toseek profits no matter what the cost to localcultures and economic equality to environ-mentalists who believe the earth is beingsystematically ravaged by capitalism runamok. “Globalization”—as if it were a ma-chine that could be turned off—has beenpresented as fundamentally flawed and dan-gerous. But “globalization” is a term thatencompasses all cross-border interactions,whether economic, political, or cultural.And behind the negative headlines lies astory of human progress and promise thatshould make even the most pessimistic ana-lysts view globalization in an entirely differ-ent light.Two decades ago, globalization washardly discussed. At the time, less than 15percent of the world’s population partici-pated in true global trade. Pessimism col-ored discussions of the Third World, of “lesser developed” or “backward” countries.Pawns in the Cold War’s global chess game,these countries conjured images of famine,overpopulation, military dictatorship, andgeneral chaos. At the time, the prospect of the Soviet Union or Communist China inte-grating economically with the West, or of strongman regimes in Latin America or Asiaabandoning central planning, seemed far-fetched. The possibility of these countriesmaking meaningful socioeconomic progressand attaining Western standards of livingappeared utterly unrealistic. Yet the forcesof globalization were already at work.On average, people are living twice aslong as they did a century ago. Moreover,the world’s aggregate material infrastructureand productive capabilities are hundreds—if not thousands—of times greater than theywere a hundred years ago.
Much of this ac-celeration has occurred since 1950, with apowerful upsurge in the last 25 years. Nomatter how one measures wealth—whetherby means of economic, bio-social, or finan-cial indicators—there have been gains invirtually every meaningful aspect of life inthe last two generations, and the trendshould continue upward at least through themiddle of the twenty-first century.Most people are living longer, healthier,fuller lives. This is most evident in poorparts of the world. For example, since1950, life expectancy in emerging markets(countries with less than one-third the percapita income of the United States, or nearly85 percent of the world’s population) hasincreased by more than 50 percent, reach-ing levels the West enjoyed only two gener-ations ago. These longevity gains are linkedto lower infant mortality, better nutrition(including an 85 percent increase in dailycaloric intake), improved sanitation, im-munizations, and other public healthadvances.Literacy rates in developing countrieshave also risen dramatically in the last 50
years. In 1950, only a third of the peopleliving in these countries (roughly 800 mil-lion) could read or write; today nearly two-thirds—more than 3.2 billion people—areliterate. And while it took the United Statesand Great Britain more than 120 years toincrease average formal education from 2years in the early nineteenth century to 12years by the mid-twentieth century, somefast-growing developing countries, likeSouth Korea, have accomplished this feat infewer than 40 years.The world now has a far more educatedpopulation with greater intellectual capacitythan at any other time in history. This isparticularly clear in much of Asia, wheremass public education has allowed billionsof people to increase their productivity andintegrate in the global economy as workersand consumers. Similar trends can be seenin Eastern Europe and in parts of LatinAmerica. This increase in human capital hasled to historic highs in economic output andfinancial assets per capita (see chart below).During the twentieth century, economicoutput in the United States and other WestEuropean countries often doubled in lessthan 30 years, and Japan’s postwar economydoubled in less than 16 years. In recentdecades, developing coun-try economies have surgedso quickly that some—like South Korea in the1960s and 1970s, or Chi-na in recent years—haveoften doubled productiveoutput in just 7 to 10years.We often forget thatpoverty was the humanliving standard for mostof recorded history. Untilapproximately two hun-dred years ago, virtuallyeveryone lived at a sub-sistence level. As theeconomist John MaynardKeynes wrote in 1931in
Essays in Persuasion
:“From the earliest timesof which we have record—back, say, to two thou-sand years before Christ—down to the beginning of the eighteenth century,there was no very greatchange in the standardlife of the average man living in civilizedcenters of the earth. Ups and downs cer-tainly. Visitation of plague, famine, and war.Golden intervals. But no progressive violentchange. This slow rate of progress was dueto two reasons—to the remarkable absenceof technical improvements and the failure of capital to accumulate.” Beginning in theearly nineteenth century, this picture beganto change. The proportion of the world’spopulation living in poverty declined from
Measured Global Progress, 1950-2050E
195020002050Global Output,Per Capita ($)5866,66615,155Global Financial MarketCapitalization, Per Capita ($)15813,33375,000Percent of Global
Emerging Markets 55055Industrial Countries957545Life Expectancy (years)Emerging Markets 416476Industrial Countries657782Daily Caloric IntakeEmerging Markets 120026003000Industrial Countries220031003200Infant Mortality (per 1000)Emerging Markets 1406510Industrial Countries3084Literacy Rate (per 100)Emerging Markets 336490Industrial Countries959899
 Sources: Bloomberg,
World Bank, United Nations, and author’s estimates.Output and financial market capitalization figures are inflation-adjusted.
over 80 percent in 1820 to under 15 percentin 2000; moreover, the actual number of people living in poverty over that period de-clined, even as the world’s population ex-ploded from something over 1 billion tomore than 6 billion.The application of mass productiontechnology, together with excess capital (or“profit”) and a free market to exploit suchtechnologies—is at the rootof our modernprosperity. Uponfurther examina-tion, one can seethe virtuous cy-cle that connectshuman progress,technology, andglobalization.Let’s take twocountries, onebeing richerthan the other.The richer coun-try has a moreeducated work-force, with near-ly 99 percentliteracy, whilethe poor one hasonly 50 percentliteracy. Due toits less educatedworkforce andlack of infrastructure, the poor countrymight only be able to participate in globaltrade through exporting commodities—let’s say fruits and vegetables. The richcountry grows fruits and vegetables as well,but it also produces clothing and lightmanufactured goods such as radios. In theclassic Ricardo/Smith models of compara-tive advantage and free trade, the wealthycountry should utilize its skilled work-force to produce more clothing and radiosfor domestic consumption and export,and it should import more fruits andvegetables from the poorer country. Thiswould, in turn, provide the poorer countrywith capital to improve education andinfrastructure.As this trade pattern creates profits forboth countries, human capital can be mutu-ally developed. Eventually, the poorer coun-try (by boosting literacy and education)should develop its own ability to produceclothes and radios. Over time, the wealth-ier country—having reinvested profits inhigher education, research and development,etc.—will begin to produce higher-techgoods rather than clothes and radios, per-haps televisions and cars. At this stage, thewealthy country would export its cars andtelevisions, and import clothes and radios.In turn, the poorer country begins to importagricultural products from an even poorerthird country while exporting clothing andradios to both countries. As participatingcountries make progress through cross-
Globalization and Its Contents31
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-1,600- 1,400- 1,200- 1,000- 800- 600- 400- 200- 0100% -90% -80% -70% -60% -50% -40% -30% -20% -10% -0%
Historic World Poverty Levels, 1820-2000
Percentage of world that is poorNumber of poor people (millions)
   1   8   2   0   1   9   9   2   1   9   9   0   1   9   8   0   1   9   7   0   1   9   6   0   1   9   5   0   1   9   2   0   1   8   9   5   1   8   7   0   1   8   4   5   1   9   9   4   2   0   0   0   1   9   9   8   1   9   9   6
 Sources: World Inequality Database, Asian Development Bank, World Bank, et al., as cited by Surjit Bhalla in “Imagine There’s No Country: Poverty, Inequality, and Growth in the Era of Globalization”(Institute for International Economics, 2002), p. 144.

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