BUS2036 Week 5

Issues about Globalisation

Adapted from Prof Joseph E. Stiglitz

Dr Emre Unlu
unlue@edgehill.ac.uk

edgehill.ac.uk
Learning Outcomes
Session 1: Globalisation Drivers and success of
globalisation

Session 2: Discontent in globalisation: outcomes, trade,

finance

Session 3: Discontent in globalisation: Knowledge,

environment, global governance & ideas for Reforms

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Globalisation could involve all of these…

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 Drivers of globalisation
• Made possible by:
– Technology
– Communication networks
– Internet access
– Growth of economic cooperation – trading blocs
(EU, NAFTA, etc.)
– Collapse of ‘communism’
– Movement to free trade

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 Historical Perspective
• 1820: China had 1/3 of global GDP, India
more than 15%
• 1814-1828: Industrial Revolution and tariff
barrier knocked out Indian export
– Indian textile export to Britain fell by two-thirds
– British export of textile to India rose five times
• Trade wars, and other external and internal
problems had contributed to China’s declining
share

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 The Successes of Globalisation
• China and India, with 2.4 billion people, growing at
historically unprecedented rates
– Continuing the successes of the East Asia Miracle,
which Japan had led beginning in the early 1960s
– Countries that were marginalised, excluded from the
global economy are closing the gap between
themselves and advanced industrial countries
• China at close to 10% for 30 years
• India recently at more than 8%
– Engine of global economic growth
• Global growth at 5% for past couple years has
been almost historically unprecedented
• Increased demand for commodities has helped
developing countries

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 Globalisation has played major role in their
success
Globalisation—the closer integration of the countries of the world as a
result of lower communication and transportation costs and
reduction of man made barriers to movements of goods, services,
people, capital, ideas, knowledge

• 50 percent compounded annual decline in telecommunication cost

in the 1990s
– Fiber optic glut during the Internet Bubble slashed telecom cost
– Scanners convert data to image file - 160 pages per minute.

Developing countries have benefited through

• Access to markets
• Access to technology

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 About Joseph E. Stiglitz
• One of the most celebrated dissenters of globalisation.
• Chief Economist of the World Bank till Jan 2000.
• Nobel Prize in Economics in 2001.
• Chairman of Clinton’s Council of Economic Advisors.
• Currently teaching at the Columbia University.

Stiglitz says:
The average European cow gets a subsidy of £1.20 a day, more
than what is earned by half the people in the developing world.
For much of that world, globalisation seems like a pact with the
devil.

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Books by Stiglitz
• Making Globalisation
Work
• The Roaring Nineties
• Globalisation And Its
Discontents
• Fair Trade for all
• Stability for Growth
• And many more.

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 Stiglitz’s transition
I was in the White House as Russia began its transition
from communism and I worked at the Bank during the
financial crisis that began in East Asia in 1997 and
eventually enveloped the world. I had always been
interested in economic development and what I saw
radically changed my views of both globalisation and
development. I have written this book because while I was
at the World Bank, I saw first-hand the devastating effect
that globalisation can have on developing countries, and
especially the poor within those countries.

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 Stiglitz’s transition
I believe that globalisation— the removal of barriers to
free trade and the closer integration of national
economies—can be a force for good and that it has the
potential to enrich everyone in the world, particularly the
poor. But I also believe that if this is to be the case, the
way globalisation has been managed, including the
international trade agreements that have played such a
large role in removing those barriers and the policies that
have been imposed on developing countries in the
process of globalisation, need to be radically rethought.

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