С Reading
- l. Read the text and answer the questions.
- What effects does globalization have on the economic development?
- How does the author define ‘localization’?
- Why do you think the author described theory of comparative advantage as an ‘ivory tower’?
- How should GATT and WTO be revised to be relevant to today’s reality?
There Is an Alternative to Globalization: It’s Localization — a Global Manifesto
Colin Hines — Associate of the International Fomm on Globalization.
The arguments and alternative policies proposed in this paper are to be found in his new book “Localization — A Global Manifesto. ”
Localization — an Idea Whose Time Has Come
Globalization and free trade are under unprecedented attack as its adverse effects on the majority and the environment becomes ever clearer. Now is the time for a comprehensive and radical alternative to enter the public arena. This must be based on a new direction for the global economic system. Only when a new policy is worked out will inequality be improved. It must reduce, improve the basic provision of needs, and adequately protect the environment.
This process is “Localization” — a set of interrelated and self-reinforcing policies that actively discriminate in favour of the local. It provides a political and economic framework for people, community groups and businesses to re-diversify their own local economies. Not only does it have the potential to increase community cohesion, reduce poverty and inequality, but also it can improve livelihoods, social provision and environmental protection and provide the all-important sense of security.
It is the very antithesis of globalization, which emphasizes a beggar-yo- ur-neighbour reduction of controls on trade and contorts all economies to make international competitiveness their major goal.
Localization involves a “better your neighbour” supportive internationalism where the flow of ideas, technologies, information, culture, money and goods has as its end goal the protection and rebuilding of local economies world-wide. Its emphasis is not on competition for the cheapest, but on co-operation for the best.Globalization — World-wide Reality Based on Unrealistic Theories
Trade liberalization is built on the flawed theory of comparative advantage, the unchallenged diktat of being internationally competitive, and the illusionary promise of growth generating future wealth for all. Comparative advantage, “do what you do best, and trade for the rest” was an ivory tower theory that ignored the reality of the differences in power between traders and producers as well as those between nations. It was also originally developed against a backdrop of the certainty that money would remain local. However fundamental these flaws are and however irrelevant the theories are to today’s realities, the World Trade Organization is the global cheerleader and enforcer of comparative advantage.
“Capital advantage” holds that the free flow of money internationally ensures its efficient and rational use, allows financial investors to diversify risks globally and in the process ensure that governments run their economy to the benefit of such investors. The reality is the opposite, with investors exhibiting a herd instinct fuelled by “the trend is my friend” mentality. To woo footloose capital countries try to provide the low inflation, low tax, low government expenditure policies investors deem “prudent.” This means giving up power over major domestic control mechanisms like interest rates and government borrowing and risking reduced demand levels through lower domestic expansion. Recent economic crises have highlighted the adverse effects of global money flows and the Multilateral Agreement on Investment designed to speed this process up was defeated by international opposition.
The Advantages of Shifting from Globalization to Localization
The international resistance to the adverse effects of globalization is on the rise, providing an opening to pursue the case for localization. The parameters of the “local” although predominantly the nation state depend to some extent on the goods and services being considered. These range from the subnational for food stuffs, to the geographic region for aeroplanes. Localization requires widespread involvement, it will therefore be something done by people, not something done to them. The huge potential of localization includes devolved power, control of the economy, increased environmental and social protection and benign technological developments. Global financial instability makes such a radical departure evermore timely.
Localization can foster and build sustainable local communities to help rebuild local economies everywhere on a permanent and inclusive basis. It allows the achievement of social cohesion and economic renewal particularly through investment in labour intensive, infrastructural renewal and face to face caring. Local businesses have a central role and much to gain. Globalization on the other hand poses a triple threat to sustainable local communities. Its fetishism of international competitiveness lead to public expenditure curbs which constrains community renewal; to the opening up of government purchasing to foreign interests, thus cutting local jobs; and the shifting of agriculture away from smaller scale farming for local markets to agribusiness methods to feed the wealthy globally.
Achieving Localization
The first step to localization is a “mindwrench” away from passive acceptance that globalization is as inevitable as gravity and towards a set of selfreinforcing measures that will bring about a ‘Protect the Local, Globally’ end goal for the international economic system. Protective safeguards such as import and export controls, quotas, subsidies, etc.
will need to be introduced over a clearly agreed transition period. These will not be introduced as old style protectionism which seeks to protect a home market whilst expecting others to remain open. Any residual long distance global trade will instead be geared to funding the diversification of local economies. Such a dramatic, radical change will need to be introduced at first at the level of regional groupings of countries, especially the most powerful — Europe and/or North America.Trade and Aid for Localization
The General Agreement on Tariffs and Trade (GATT) rules at present administered by the World Trade Organization should be revised fundamentally to become a General Agreement for Sustainable Trade (GAST), administered by a democratic World Localization Organization (WLO). Their remit would be to ensure that regional trade and international aid policies and flows, information and technological transfer, as well as the residual international investment and trade should incorporate rules geared to the building up of sustainable local economies. The goal should be to foster maximum employment through a substantial increase in sustainable, regional self-reliance.
How Localization Might Come About
The widespread resistance to globalization can be built upon to help fashion a viable localist alternative. There are already countless people and groups strengthening their local economies from the grass roots up. The greatest spur to consideration of such radical local alternatives at the governmental level will be the need to respond to global economic upheavals and the deflation, the job losses and inadequate consumer demand that will come in its wake. Equally crucial in shaping a different localist imperative amongst politicians will be the pressure that the politically active can bring to bear. This must shift from fighting separate issue specific aspects of globalization to realizing that their individual successes can only be secured as part of an overarching change to localization, but in an internationally supportive manner.
In short to Protect the Local, Globally.- 2. Decide whether these statements are True (T) or False (F).
- Globalization has had a positive effect on the economic development of the world.
- Globalization must reduce inequality, improve the basic provision of needs, and adequately protect the environment.
- “Localization” is a set of interrelated and self-reinforcing policies that actively discriminate in favour of the local.
- According to the author each country should do what it can do best, and trade for the rest of the world. It must reduce inequality, improve the basic provision of needs, and adequately protect the environment.
- The greatest alternatives to globalization accepted at the governmental level will spur global economic upheavals and the deflation, the job losses and inadequate consumer demand that will come in its wake.