There are, certainly, many reasons for such situation with the poverty and unemployment rates. One of the reasons is certainly a set of misguided policies toward free trade and global trade liberalization, imposed on the poor countries by the IMF, the WTO and the World Bank. In recent years, trade liberalization has led to drastic decrease in the manufacturing sector that caused the loss of jobs by hundreds of thousands of people. There are only two immediate solutions of this crisis situation. The first is to drop the trade liberalization policies imposed by the WTO and the US government. The second is to launch a movement in support of the government. This last suggestion is consistent with the recent tendencies of changes in opinions concerning the relations between governments, multinational corporations, and the world economy management.
One of the root causes of all these problems is the misunderstanding of the meaning of the word ‘globalization’. Globalization is not only trade liberalization, it is a result of rapid innovation and technological change, which allows the increasing integration of economies around the world and the movement of people, goods, services and ideas across boundaries.
‘Globalization today is not working. It is not working for many of the world’s poor. It is not working for much of the environment. It is not working for the stability of the global economy... The West-acting through the IMF and the WTO — has seriously mismanaged the processes of privatization, liberalization and stabilization, and that by following its advice, many third world countries and former communist states are actually worse off now than they were before’ .
Such situation occurs, since Western countries encourage only those aspects of globalization that are beneficial to them. For example, they will demand the lifting of barriers to the movement of services across boundaries, but, at the same time, will impose strict barriers on the movement of people across the same boundaries.
In his book, Stiglitz gives several examples of countries that did well by defying the international institutions controlled by the West. Let’s consider the two communist economies, Chinese and Russian, as an example of the opposite outcomes from following an independent course. China imposed capital and import controls despite the pressure of the IMF and the West. It joined the WTO when it felt it was ready and entered on its own terms. Even now, no one can claim that China has fully accepted a policy of trade liberalization. On the other hand, Russia completely swallowed the liberalization, stabilization and privatization programs of the IMF and the West. The contrast between the two former communist powers is very stark. China has been able to reduce poverty. Russia has seen its poverty rate increase from 2% under Communism to 23.8% in 1998.
It is clear that globalization and trade liberalization are simply economic tools. Hence, each country must determine its own goal, such as economic growth and political stability, which can be achieved only in case of poverty elimination. However, country can adopt trade liberalization policies if it can provide safety nets for the poor. In case country does not have the means to do so, it must aspire to full employment in the economy. And if this means abandoning trade liberalization and imposing controls, then country can accept them.
‘Concept of GLOBALIZATION is a serious provocation, since it anticipates leaving the traditional for us structure of the society arguing that societies inside separate states may be differentiated and considered as superior power in the process of modernization’ .
In his book, which caused numerous disputes, one of the greatest modern sociologists Ulrich Bek expresses his critical attitude toward today’s increasing world socio-political and economic integration. He argues that transnational organizations replace national ones in managing the society. It is his strong belief that globalization can lead to the elimination of social equity and security.
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