Global Policy Forum

Globalization of the Economy

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Picture Credit: UN Photo/Kibae Park
Advances in communication and transportation technology, combined with free-market ideology, have given goods, services, and capital unprecedented mobility. Northern countries want to open world markets to their goods and take advantage of abundant, cheap labor in the South, policies often supported by Southern elites. They use international financial institutions and regional trade agreements to compel poor countries to "integrate" by reducing tariffs, privatizing state enterprises, and relaxing environmental and labor standards. The results have enlarged profits for investors but offered pittances to laborers, provoking a strong backlash from civil society. This page analyzes economic globalization, and examines how it might be resisted or regulated in order to promote sustainable development.

 



General Analysis on Globalization of the Economy

With international trade, financial transfers, and foreign direct investment, the economy is increasingly internationally interconnected. This page analyzes economic globalization, and examines how it might be resisted or regulated in order to promote sustainable development.

International Trade and Development

Trade Agreements, such as the FTAA, NAFTA, and CAFTA facilitate international trade, thereby strongly impacting people at all levels of the economy. They make trade "free" for Northern exports, without prohibiting the rich countries' protectionist measures that harm Southern competitors. Such agreements tend to slow development in poor countries and pull them deeper into poverty.

Trade Agreements

Trade Agreements, such as the FTAA, NAFTA, and CAFTA facilitate international trade, thereby strongly impacting people at all levels of the economy. Rich countries often manage to prioritize their own interests in such agreements, which tend to harm development of poor countries, pulling them deeper into poverty.

Multilateral Agreement on Investment and Related Initiatives

In May 1995, the Organization of Economic Co-operation and Development committed itself to the immediate start of negotiations aimed at reaching a Multilateral Agreement on Investment (MAI).

Transnational Corporations

Transnational corporations have become some of the largest economic entities in the world, surpassing many states. Their continuous push for liberalization has driven globalization while challenging environmental, health, and labor standards in many countries.

Export Processing Zones

Export Processing Zones, sometimes known as maquiladoras or Special Economic Development Zones, are usually exempt from national taxes, tariff duties and a wide range of regulations, including those on wages, working conditions, health protection, environmental safety and trade union rights. Governments have set up these zones in the hope of attracting investments and creating jobs. But in so doing, they turn over sovereignty to corporate investors and seriously undermine national tax and regulatory systems.

Foreign Direct Investment

Transnational corporations and private individuals invest more money abroad than ever before; foreign direct investment has increased tenfold over the last 20 years. While many poor countries see foreign capital as a tool for growth, it has often increased instability and inequality as well.

World Trade Organization

This intergovernmental organization sets and enforces the rules of international trade. It has become a target of civil society's criticism over its opaque, undemocratic operating procedures and neo-liberal ideology.

World Bank

The World Bank's mission is to erradicate poverty by loaning poor countries money for economic development, but these loans often come with demands of economic liberalization.

International Monetary Fund

The IMF was orginally envisoned as a "lender of last resort" for countries experiencing economic crises. Now, however, the IMF conditions assistance on neo-liberal reforms that exacerbate poverty.

Global Taxes

This page explores the different ways to implement global taxes, the need for democratic oversight and control, the policy shaping effects, the distributive effects, and the possible use of such taxes to fund the UN, its agencies, and other programs for worldwide human security and development.

Dollarization

In many countries, the US dollar has become the national currency. In others, the national currency has been pegged to the US dollar. In still others, major transactions like real estate usually take place using the dollar. Dollarization eliminates the possibility of independent national monetary policy and it exposes countries to policies set in Washington.
 

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