INTRODUCTION

Globalization is a process of interaction and integration among the people, companies, and governments of different nations,a process driven by international trade and investment and aided by information technology.

This process has its effects on the environment, culture, political systems, economic development and prosperity, and human physical well-being in societies around the world.

Globalization is a reigning reality of the 21st century. The growing importance of economic ties, innovations in transportation and the revolution in communications have sped the global transmission of new technologies, new ideas, and new diseases.

In an effort to help clarify the debate over future course of globalization, I will focus on the deepening economic ties that have come with the spread of international trade, growth of foreign direct investment, spread of new technologies and emergence of global capital markets.

ADVANTAGES AND DISADVANTAGES

To simplify matters, I will focus on globalization as the array of impacts that arise from the increasing tendency for national borders to be crossed by people, goods, services, and information. It is still true, sadly, that very few accurately look at both the bright side and the dark side of globalization.

Most economists continue to sharpen their tools of analysis and demonstrate that a more open international economy generates benefits to both developed and developing countries.

Economists and business leaders focus on the benefits or what is called the bright side of globalization. A greater flow of international trade and investment stimulates economic growth. That rising output requires more employment and generates higher living standards. Global competition also keeps domestic businesses on their toes. It forces them to innovate and improve the quality of products and services. Rapidly developing economies generate a new middle class.

On the other hand, the critics seem to associate a global economy with almost every shortcoming that faces humanity. These voices in the globalization debate emphasize a very different set of issues – the dark side of the international economy. The critics live in a world where workers are threatened by unfair competition from low-cost sweatshops overseas. Citizens worry about the poor conditions in those foreign sweatshops, especially the presence of children in the workplace. Overseas investments are viewed as designed mainly to take advantage of low labor costs.

It is sad to report that globalization is still seen as either the bright side or the dark side of the moon. Well, which is it?

My approach is to “break the ice” by identifying some common ground on which people of good will on both sides of the heated controversies on globalization might possibly agree.

I will focus on some useful changes in policy. Therefore I have assembled five suggestions – Reform the World Trade Organization, Help the people hurt by globalization, Strengthen the international labor organization, Give people a voice via Internet and Welcome voluntary business standards.

REFORM THE WORLD TRADE ORGANIZATION

Many of the criticisms of the World Trade Organization are on target. The WTO has become closed and bureaucratic. But there is no value in shutting down the WTO. Its fundamental notion of advancing the rule of law on international trade is very appealing. For starters then, the general sessions of trade negotiations should be open to the public. So should the hearings at which the various interest groups present their views. It does not mean, though, that the members will not have an opportunity to go into closed executive sessions when they begin to do the actual negotiations. That is indeed a sensible distinction.

Similarly, the WTO’s critical process of settling trade disputes should be opened up. The critics should be allowed to see for themselves the nitty-gritty of the workings of the WTO. The hearings of the dispute panels should be open, as courtroom proceedings typically are.

This does not require that the panel deliberations be public events. After all, jury deliberations are not held in public.

HELP THE PEOPLE HURT BY GLOBALIZATION

Here I suggest a two-pronged approach. In the advanced industrial nations, we must do better in helping people who lose their jobs due to imports or the movement of production to overseas locations. Simultaneously, we must grapple with the issue of the labor and environmental standards followed in poor countries that export to the developed nations.

In the developed nations, the most effective way to help those who lose their jobs due to globalization is to achieve a growing economy that generates an ample supply of new jobs. Without a strong economy, no adjustment policy for unemployed workers will be effective. However, a successful macroeconomic policy is not enough. More specific actions must be taken to improve the adjustment process.

One example is the idea of providing “wage insurance” to older workers who lose their jobs due to imports. “Wage insurance” gives older workers the incentive to get back to work before their skills become rusty and they become discouraged.

STRENGTHEN THE INTERNATIONAL LABOR ORGANIZATION & GIVE PEOPLE A VOICE VIA INTERNET

Many people are truly uncomfortable with the vision of children in Central America or East Asia replacing adult workers in Chicago or Berlin. If imposing costly standards via the WTO is not practical, then effective alternatives need to be considered. A global organization that warrants more attention is the International Labor Organization (ILO).

Yet unions are reluctant to rely on it to enforce international labor standards – and for good reason. When it comes to ensuring compliance with the enlightened standards it adopts, the ILO has been a paper tiger. However, there is a way of promoting adherence to the ILO labor standards without resorting to trade sanctions or other forms of compulsion.

The ILO should post on the Internet the names of the countries that are not complying with the core labor standards. Such a “deal of disapproval” should be widely publicized. The supporting information should be made available to the media worldwide. Consumers around the world would be discouraged from purchasing goods made in those countries.

WELCOME VOLUNTARY BUSINESS STANDARDS

A serious international standards movement has developed. Voluntary efforts often have been sponsored by professional or business associations. The subjects covered range from the environment and social responsibility to detailed engineering specifications. Perhaps the most hotly debated area of international standards today covers accounting and financial reporting.

The major European countries tend to favor broad and general principles while Americans traditionally prefer detailed and specific rules and regulations. The broader adoption of these voluntary codes of conduct would be a useful step in reducing the current high level of mistrust that characterizes so much of the present-day debates on globalization.

CONCLUSION

Moving to the high middle ground on globalization is difficult and will take time. Developing a feeling of trust, or at least common understanding, is a badly needed precondition. But in order to achieve real progress, we must “break the ice” by taking the concerns of the critics seriously and responding with constructive action rather than just more talk.

Let me end with a final point. The most fundamental and positive result of globalization is not economic at all. By enabling more people to use modern technology to communicate across traditional national boundaries, the international marketplace makes possible a far greater exchange of the most powerful of all factors of production – new ideas. This process enriches and empowers the individual in ways never before possible.