Don’t blame globalization for failures of governance

Globalization train has long left the station and it’s not turning back — and that’s good for the world, and also good for the countries where globalization is under fire

  
Painted sculptures of bull and bear are seen during the anti-globalisation movement ATTAC protest in front of the Frankfurt Stock Exchange on the 10th anniversary of the global financial crisis of 2008, in Frankfurt, Germany, September 15, 2018. REUTERS

Painted sculptures of bull and bear are seen during the anti-globalisation movement ATTAC protest in front of the Frankfurt Stock Exchange on the 10th anniversary of the global financial crisis of 2008, in Frankfurt, Germany, September 15, 2018. REUTERS

Ralph Orlowski

The great American writer Mark Twain, after reading his own obituary, famously observed: “The reports of my death are greatly exaggerated.” The same may be said about globalization, a concept increasingly under question in several Western countries, though less so in the Middle East and Asia.

Growing populist movements on the left and the right in the US and parts of Western Europe look at globalization with a wary eye, identifying it as the source of ills ranging from job losses in manufacturing to the loss of national identity.

To others, globalization is on the ropes amid China-US trade wars and the COVID-19 shutdowns that have accelerated digitization and cratered foreign travel. This has led many to declare the demise of globalization — in itself a nebulous term that essentially boils down to connectivity across countries and continents for the flow of goods, services, ideas, culture (both pop and highbrow), and people.

While pundits may debate the viability of globalization, the world is still busy globalizing. Simply put, the globalization train has long left the station and it’s not turning back — and that’s good for the world, and also good for the countries where globalization is under fire.

Consider the US, where many have come to reflexively blame globalization for job losses in manufacturing. It’s worth noting that automation created by US high-tech firms has done a mighty good job of destroying those jobs, and the increasing pace of automation, backed by artificial intelligence, bodes ill for the kind of manufacturing jobs familiar to many Americans.

On the other hand, there are still a wide range of medium-skilled and high-skilled manufacturing jobs available in the US from building aircraft to cars to rockets — and those jobs are fueled by global trade. US aircraft manufacturer Boeing would be a much more modest company if it could not sell to foreign markets. From 2010-18, Boeing sold more aircraft in foreign markets than it did in the US.

That means jobs. Boeing employed about 141,000 people in 2020, and many of those jobs are highly reliant on foreign aircraft sales — America’s top export item. This does not include more than 1 million supplier-related jobs that Boeing’s supply chain supports across the US.

The same goes for the manufacturing of cars in the US. America is the third-largest car exporting country in the world after Germany and Japan and, in an interesting twist on globalization, the largest US car exporter by value is neither Ford, GM or indeed any US brand. It’s German carmaker BMW, which produced more than 360,000 vehicles at its plant in South Carolina, exporting nearly $9 billion in value. That’s a lot of manufacturing jobs, supplier chain jobs, and associated industries jobs.

Meanwhile, General Motors sells more cars in China than it does in the US, and three of the top seven “Made in America” vehicles based on the use of US-made parts are foreign brands manufactured in the US. Until recently, the Honda Odyssey was the most “Made in America” car. Again, these are real jobs driven by globalization.

To put an exclamation point on it, a recent study found that international trade supports nearly 39 million American jobs —at least one in five employees. Any presidential candidate with a plan to deliver 39 million jobs would be elected in a landslide.

Globalization is, in many ways, like technology, or maybe a super-app; it is value-neutral. How you use it depends on you. As the author and geo-economic strategist Parag Khanna told me last week: “Instead of worrying about the demise of globalization, people should be worrying about their place in globalization, because if you do not have a place you will regret it.”

The extraordinary rise of several Asian countries over the past five decades has been driven by globalization of the markets and trade. Does anyone really believe that Africa would be better off with less globalization?

Critics will argue that globalization has allowed multinationals to wipe out their competition. There is some truth to that, but the reality is that another “g” word is more important than globalization in deciding the fate of nations: Governance. Those nations and companies that are governed well, with far-sighted vision backed by hard work, can find their place in globalization, and leverage this value-neutral app.

The hazy concept of globalization does not care if your leader is corrupt or lacking in vision, if your company fails to move with the times, or if you choose to shut yourself off from the world. That’s not globalization’s fault. That’s poor governance.

Globalization has also been blamed for rising inequality, which is a serious problem, but inequality has been a permanent feature of human life for millenia and has roots in many issues. Governments need to do a better job of stemming this rise tide of inequality, but shutting borders and cutting trade won’t help.

Countries and companies have agency and responsibility. They can choose from the menu of globalization. They need not buy it all at once. Protecting infant industries can sometimes be good policy as long as the goal is to have those industries become world-beating exporters. This is what South Korea and Japan did.

There are many ways to approach globalization, but doing so while poorly governed will always fail, and countries that do that are failing their own most precious resource — their people. Well-governed countries can benefit from the globalization super-app, one that has lifted hundreds of millions from poverty and has fueled a global prosperity unimaginable to previous generations.

  • Afshin Molavi is a senior fellow at the Foreign Policy Institute of the Johns Hopkins University School of Advanced International Studies and founder of Emerging World, a newsletter that explores the emerging markets transformation shaping our world. Twitter: @afshinmolavi
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