Global Economy
Globalization has its downsides and its benefits, but in the long run, the benefits far outweigh any disturbing effects. In the last few decades, it has lifted hundreds of millions of people out of poverty all around the world while it helped to stabilize the the planet. Wars have become scarcer since most countries are so intervoven that the interdependence prompted leaders to co-operate. To ensure that globalization works for all, it is important to understand it. We have to stand up for free trade and get rid of unfair regulations and barriers.
Series: The Pace of Globalization (November 2009)
>>> The Pace of Globalization I
>>> The Pace of Globalization II
>>> check out “Category Globalization”
http://www.whatmattersweblog.com/category/globalization/
>>> Japan in Deflation - don’t underestimate the Japanese consumer!
>>> China’s Environmental Challenge - The True Cost of Growth
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This is a post from my old blog (http://economatters.wordpress.com) on the collapse of WTO talks from July 30, 2008.
WTO talks collapse is adverse for all…
The latest attempt to liberalize international trade failed. That’s pretty bad news for business people, blue and white collar workers and farmers in industrialized as well as developing nations. The World Trade Organization (WTO) Doha Round negotiations which were started seven years ago were aimed at making global trading fairer, less expensive, easier, more transparent and beneficial to everybody. However, the talks ended in deadlock on Tuesday after emerging nations such as India and China couldn’t agree with the United States and Europe on a set of common basic principles of trade. Although it appeared as if the talks were close to a breakthrough before the weekend with concessions by the U.S. and Europe to cut agricultural subsidies decisively, a dispute over agricultural subsidies and restrictions under the cover of safeguarding farmers caused the talks to collapse. Now, bilateral deals are likely to be made which is a hindrance to free trade, causes unfair and different legislation and doesn’t keep the United States and the European Union from subsidizing agricultural products and harming poor farmers in developing countries. The further outlook for the negotiations is rather glimpse with election dates in several countries approaching. Free trade deals in the coming years will be harder to be passed through Congress altogether. Protectionist sentiment is coming up fueled by the housing crisis, the international food and energy crisis. However, the food crisis is not caused by free trade but by protectionist action of specific governments. Major rice exporters like India and Thailand banned or limited exports which threatens the very survival of millions of people in some African countries. The agricultural sector is especially delicate as the nutrition of billions of people has to be ensured and politicians try to achieve that but unsurprisingly, many fail to do a good job. What I found most staggering is that emerging nations justified their uncooperative attitude by fears that jobs could be lost and their countries could be flooded with cheap subsidized agricultural products. Besides, they say they fear that unlimited access of Western service providers could threaten national players. Especially China and India are definitely among the countries that have been favored most by globalization. Outsourcing in Western countries created millions of new jobs in emerging nations, poured billions of dollars into their foreign currency reserves (resulting in soaring trade deficits for industrialized countries) and helped to lift millions out of poverty.
But on the side of first-world countries, there are many hailing the end of talks without results. Leftish groups have been campaigning against free trade and want to establish it as the culprit for earnings inequality which obviously can only be attributed to differences in educational quality. The popular untruth that trade drives down all blue collar wages is simply no true and those politicians who eagerly blame globalization, trade and competition for their own failures should reconsider whether they’re just in office for power and money or to bring us forward and to create a framework so that we can increase our competitiveness and face global competition. Unfortunately, most politicians tend to campaign against free trade instead of providing an educational basis to people from all walks of life and especially children regardless of their social background. Nowadays, a good education, knowledge and good judgment are the most precious resources. Investments in education pay off best at all. And cautious spending on education is setting the stage for a social demise. It’s useless to fight for jobs that have become unprofitable. If there are people elsewhere doing the same job for less money at the same quality, we shouldn’t try to and we can’t prevent this development. Instead, the jobs lost can be created in another industry, probably paying even better, provided we accept change and jump at the chance. In order to ensure that the jobs lost can be replaced with better ones, our workforce has to be flexible, good educated and willing to face challenges, adapt to a new business environment and update their knowledge and abilities. But first and foremost, giving children a good education should be top priority. Especially in the U.S., where many minorities are being integrated, a good education is essential to the success of the integrating process. Immigration - even from poor countries - can be seen as a chance, if the society is willing to be generous at first and provide a good education so that immigrants and their children can adopt the new lifestyle, language and culture quickly. Then, the children of immigrants have a good chance to join the workforce, contribute to economic growth, pay taxes and to return what they were given before. Next to providing education to those who are at risk of being refused access to higher education or simply cannot afford, encouraging adolescents to become actively involved in class and to become aware of the possibility to impact their later lives in a positive way is important. Taking responsibility is essential and next to hard skills and factual knowledge, soft skills such as the ability to communicate with people, take leadership, a cooperative spirit and confidence are the must-have skills to compete and be successful in today’s global society.
