Multifaceted globalization

Developed countries' sluggish growth and greater disparity between developing countries are forcing reevaluation of national policies and a new global development landscape

Globalization is a concept full of contradictions and paradoxes. It brings countries closer, and yet makes their conflicts more acute. Instead of making the world flatter and countries more alike, it promotes more diversified development patterns.

Despite globalization, developing countries have seen great divergences in development, which are not always caused by external factors, but, to a great extent, by national strategies and policy choices, as well as affected by the domestic political environment.

Globalization does not mean the market replaces the government to take control over the economy, but rather, puts forward even higher requirements for the government's governance capacity.

A country's decision to support or oppose globalization hinges on its development stages and is also affected by its policy choices.

Specifically, the following aspects show that globalization is multifaceted.

First, globalization has not been driven by the liberal ideals of several advanced economies.

Almost all countries are naturally mercantilist and only some of them eventually became supporters of free trade.

The first wave of globalization that started in the 1870s was mainly driven by a sharp drop in transport and communications costs brought by technological progress. However, the United Kingdom, a major driver of the process, long practiced mercantile principles — scrambling for overseas resources and expanding overseas markets while implementing import restrictions to protect the domestic market. It is because of the open markets in its colonies that implemented free trade policies that the UK formed a global free trade network, thus turning the country into a supporter of free trade.

Similarly, although the United States became the leader of globalization after the end of World War II, protectionism has long been the main feature of its trade policy.

Second, there are no fixed winners or losers of globalization. Throughout history, there have been both great divergences and convergences in development.

During the first wave of globalization, Western countries, by virtue of dividends from industrialization, have widened their gap with the rest of the world. Such a gap reached its peak after the end of World War II, with Western countries accounting for 73 percent of the world economy.

In the two waves of globalization after World War II, developing countries' economic growth rates caught up with and then surpassed those of Western countries. In the meantime, the development gap within developing countries widened. Asian countries achieved a development miracle of sustained high-speed growth, standing out from the developing world. Latin American countries saw frequent economic turmoil and crises after implementing neoliberal reforms in the 1980s. African countries, following long-term economic stagnation after independence, gained new growth momentum from taking part in global value chains since the turn of the century.

However, in general, the current international economic and trade rules have restricted the policy space of developing countries, making it difficult for them to upgrade their industries and escape the middle-income trap.

Industrialization was an essential path for nations to economically grow. Since the 1990s, however, premature deindustrialization has swept across much of the developing world, where industry contributed less to job creation and economic growth.

The traditional path of industrialization has become more elusive in the era of globalization but the changing global economy and technological progress create new opportunities for developing countries. In particular, China's economic rise has great implications for other developing countries in terms of the process and pattern of industrialization.

Third, globalization has intensified competition between countries and given birth to different response patterns.

Developed countries' pressure comes from increased demand for social protection, whereas developing countries' pressure mainly comes from less policy space for economic catch-up.

On the one hand, the high fluidity of global capital has increased the developed countries' bargaining power, which forces developing countries to attract global capital by lowering taxes or loosening their domestic policy controls.

On the other hand, turmoil caused by market opening-up has exacerbated the insecurity of people at home, who put forward higher requirements for social welfare safeguard measures.

Developed countries' rigid social welfare systems can hardly provide sufficient protection for post-crisis society; therefore, they tend to opt for trade protectionist measures. Emerging economies, on the other hand, are able to more flexibly provide social protection and advance trade liberalization based on their respective socioeconomic structures. This has a far-reaching influence on the global economic order and the future of globalization.

Fourth, globalization has a noticeable effect on poverty reduction but also widens the gap between the rich and the poor.

The world population living in poverty has been declining since 1980. The number of people living in absolute poverty decreased by 1.1 billion over the past 40 years. However, within the developing world, countries have displayed great differences in poverty reduction achievements.

China used to have the largest population living in extreme poverty, but has lifted all of them out of extreme poverty over the past 40 years. In the meantime, many other developing countries, although having implemented an array of poverty-reduction strategies, have never got out of the poverty trap.

Also, globalization has widened the gap between the rich and the poor, both between different countries and within countries.

Finally, globalization has resulted in competition as well as cooperation between different international aid and development cooperation models.

The development aid led by developed countries and the South-South cooperation paradigm advocated by developing countries have both profoundly changed the trend of international development in mid- to late 20th century.

Since the turn of the century, alongside China and other emerging economies' rise and their active participation in development cooperation, a new paradigm for international development cooperation has gradually taken shape.

Although globalization has not been reversed yet, developed countries' sluggish growth and greater disparity between developing countries have weakened its growth momentum.

Countries across the world need to reevaluate and reassess their domestic policies and formulate more reasonable game rules for global governance, so as to make the allocation of globalization outcomes more just and reasonable.

The author is a professor of the School of International Relations and Public Affairs at Fudan University. The author contributed this article to China Watch, a think tank powered by China Daily. The views do not necessarily reflect those of China Daily.

Contact the editor at editor@chinawatch.cn