Globalisation has its critics, and there is much for them to criticise:
- worldwide risks and uncertainties
- wild swings in profit and loss
- a sense of a lack of control
- the erosion of national boundaries and certainties
But is globalisation, in itself, such a bad thing? Free trade promotes wealth, so the theory goes, enabling each country to do what it does best.
How does the reality match up to the theory?
Globalisation Winners and Losers
Free trade may enable one country to focus on a particular product or service. But this might be at the expense of another. And if the country’s specialisation shifts, say, from manufacturing to services, what happens to its displaced workers?
This contributes to the sense that globalisation has led to greater inequalities of wealth, with pockets within countries of people who feel they have lost out completely.
If those disaffected by globalisation have politicians and leaders pandering to their sense of unrest, where does this lead? Does it mark the beginning of the end of globalisation, ushering in a new era of protectionism?
World Trade Complexities
There is a misconception that world trade is a finite resource, and if one country, or continent, gets a bigger portion, then there will be proportionately less for others.
The anti-globalisation narrative works like this. As an example, for China’s economy to grow, the west will get poorer. In contrast, the positive theory of globalisation is that growth in one area will contribute to growth in another. This is the concept of comparative advantage.
The problem is that in practical terms, globalisation is immensely complex, with myriad economic issues and problems all struggling for some sort of resolution.
However, the alternative, whereby nations retreat behind barriers, is only going to make the world economy less uncertain. Global protectionism and the imposition of tariffs can only accentuate differences and widen schisms between countries.
The future lies in co-operation. This is why globalisation, for all its reported disadvantages, remains, on balance, a good thing. It is about fuelling growth across national boundaries and boosting the world economy.
For exporters, a global free market is an enabling environment, with minimum restrictions and the potential to maximise opportunities.