E8 - Trade, corporate strategies and development

Summary

Globalization, a positive force for development

Despite the critics of globalization, an objective review of its achievements over the past two decades reveals it has been a positive force for progress and prosperity in the world. Expressed in simple terms, globalization has been responsible for raising productivity levels, revolutionizing communications, increasing competition and boosting global economic growth and interdependence through trade and foreign direct investment (FDI) flows. Most importantly, globalization has created additional employment opportunities which have helped lift millions of poor people out of poverty in the developing world.

The facilitators of globalization included the international integration of capital markets during the early to mid 1980s followed shortly by the globalization of the manufacturing industry (‘companies trade, countries don't’) during the late 1980s and early 1990s. In turn this was followed by the emergence of regionalization (North America and Mexico; Western Europe; and South/North East Asia including Oceania) that took place during the early to mid 1990s (Kenichi Ohmae's The Borderless World – published in June 1990), by which time intra-regional trade had grown to three times that of the total of world trade.

Globalization could not have taken place on the scale and speed at which it did without the political leadership and will to adopt open market principles in place of centrally planned/import substitution-based economics. Support for this new liberal economic thinking was expressed through GATT (the Global Agreement on Tariffs and Trade), which was founded with the objective of putting in place a multilateral rules-based framework for trade, and the conclusion of the Uruguay Round in 1994.