Globalization and its Discontents

Globalization is a phenomenon that can mean many things to many people. For the workers and the executives in the manufacturing units of China, it can mean new opportunities and the chance to earn a decent living. For the software engineers in India, it can mean an upward mobility towards greater economic and social status. However, globalization can also mean loss of livelihoods for the people who have lost their jobs in the United States because of outsourcing. More importantly, globalization can mean millions of people being denied the access to basic services because they cannot afford them. This happens when those without the skills or the education find it hard to compete in the global economy and hence are left out of the economic growth story.

The noted economist, Joseph Stiglitz, authored a book called Globalization and its Discontents where he makes a clear case for considering those who have been left out of the spoils and rewards of the globalization juggernaut. The book is also noteworthy for the various descriptions of how not everyone in the Third World benefits because of globalization and how the number of people who have lost out is more than the number of people who have gained.

Of course, this is not to say that globalization produces more losers than winners. Just that the benefits of globalization are skewed and despite the claims of Thomas Friedman that the world is flat, the world is flat only for those who can leverage their expertise that has been developed as a result of being endowed with favorable circumstances.

The point here is that for globalization to work for everybody, the playing field has to be leveled even for those who cannot climb aboard the bandwagon. For instance, it is often the case that rural peasants and farmers in China and India cannot compete with global agri businesses because they do not have the capital or the scale to take them on. Similarly, small traders and small businesses often find that their livelihoods are at stake because of the entry of giant retailers like Wal Mart. This explains why there are frequent protests against these companies in many countries in Asia.

The solution to this problem can be found in the governments of the country protecting their small businesses and farmers to the extent possible by giving them incentives and loans. However, it should be clear that this is not a policy recommendation for protectionism or a return of the welfare state that is unproductive and inefficient. Rather, the point here is that by incentivizing small businesses and extending credit to small farmers, the government can ensure that they can stand a chance against big business. Further, alternative employment and tie-ups with the big businesses including enlisting the services of these groups is a viable solution. The best example is the cooperative movement in India that is a federation of small scale farmers and businesses who come together to band as a unit and with governmental assistance reap the benefits of economies of scale and efficiency that they otherwise would not have done individually.


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Globalization