Back in high school, the first book I read making the arguments against global corporations and globalization was Global Reach, which had been published a few years earlier back in 1974. Since then, anti-globalization arguments have been a consistent drumbeat in the background. I remember controversies over the “Tokyo round” of world trade talks in the 1970s, and “Uruguay round” of talks in the 1980s. I remember the extreme fears of how trade with Japan was going to overwhelm the US economy from the 1970s into the late 1980s, and then the fear about how trade with Mexico would injure the US economy (if the North American Free Trade Agreement was signed) in the early 1990s. I remember highly vigorous protests against globalization and the World Trade Organization in 1999 in Seattle, and then in other cities. And of course, I’m aware of anti-globalization protests in the last quarter-century, as well.
Even as the US and the world economy have evolved in the last half-century, it feels to me as if the arguments against and for globalization have not changed very much. This seems odd. Surely, the accumulation of experience with globalization should influence the arguments for and against?
Jason Furman is a few years younger than I am, but he expresses sentiments that I share in “Globalization With Minimal Apologies,” delivered as a keynote address at a World Trade Organization Public Forum (September 11, 2024). Furman argues:
I first started learning economics at university in the late 1980s. At that point in time, a certain amount of economic theory said that there should be convergence among countries, where poorer countries grow faster than richer countries. But that theory wasn’t working in practice. Global inequality was growing, the rich countries were growing faster than the poor countries and pulling further apart from them. You might be tempted by that observation to subscribe to theories like Dependency Theory in Latin America, that rich countries were getting rich at the expense of poor countries, that trade was zero sum, and that to reverse this global inequality somehow needed to separate yourself from the rest of the world.
If you were sitting in the United States when I first started learning economics, you were 20 years into a dramatic productivity slowdown, a dramatic reduction in the growth of living standards, an increase in inequality, and you were also looking at other countries—in our case, at the time, Japan—worried that somehow they were getting rich at your expense and taking advantage of the United States. …
Now, after a quarter century of hyper globalization, the poor countries are, on average, growing faster than the rich countries. That’s happened on a sustained basis for about 30 years now. That’s even true if you take China out of the equation and look at the rest of the developing and emerging economies. This has happened because growth has increased in developing and emerging economies not because it has slowed in the rich countries. In fact, if anything, relative to when I first started studying economics, productivity growth has picked up, especially in the frontier economy of the United States.
This isn’t just an abstract set of economic statistics. … [O]ver the last quarter century, a billion people have been lifted out of extreme poverty. Even at the same time that the global population has increased by 2 billion, so if you look at the share of people in deep poverty around the world, it’s fallen by 70 percent. It’s not just poverty. It is life expectancy, maternal mortality, literacy, all of the things that matter to a good life, all of the things that are most important to us as humans, have gotten dramatically better over these 25 years.
Part of the improvement has been a function of the increase in incomes. Life expectancy, maternal mortality, all of those are very much a function of income. But also, amazingly, for any given income, you see less maternal mortality, less child mortality, higher life expectancies than you did before. So, we’ve also gotten more efficient at translating GDP into the things that matter for people.
Yes, globalization isn’t the only factor in these changes. But as Furman points out: “[N]o country has been very successful anywhere in the world without a very big component of that success being that their country is a major part of the phenomenon of globalization. And conversely, countries that have tried to separate themselves from it have done the worst job participating in this miracle that I’ve talked about.”
Even if one just focuses on the US economy, it seems clear that US economy did not crumble under competitive pressure from Japan, and has not crumbled under competitive pressure from China. Yes,. globalization has disrupted industries and jobs, but such disruptions are standard for as economies evolve and grow. For example, the disruptions in the US economy earlier in the 20th century as the workforce shifted from agriculture to manufacturing and then from manufacturing to services, or the shifts as the US population and economy shifted toward “sun belt” states of the south and west, were also considerable. The revolution in widespread use of information technology and its applications, especially since the internet entered into widespread use in the 1990s, would have disrupted the US economy for reasons having nothing to do with international trade. Indeed, the US economy, with its mammoth internal market, is much less disrupted by trade that most other countries in the world: for example, US imports of goods and services are about 15% of GDP, but imports for the average country in the world is 30% of GDP–and it’s much higher for many smaller economies.
Furman digs into some of reasons why positive effects of globalization are not more widely appreciated, and I’ll let you read that part of his essay on your own. But I did want to emphasize one of his other themes: the resilience of globalization. Furman writes:
I’ve been hearing about the imminent end of globalization for pretty much my entire career. Yet globalization has been much more like a dandelion than it is like an orchid. Dandelions can thrive no matter what you throw at them. Orchids are very sensitive and need to be nurtured with exactly the right conditions. Trade and other types of globalization are like a dandelion because the benefits are so large. All the things that I was talking about, all the gains from trade, are precisely why it is so strong and so resistant.
The nature of globalization does seem to be shifting: in particular, services and information flows delivered across national borders are becoming more important, compared with physical goods. But although government policy decisions will shape the course of globalization, the the fundamental drivers of globalization are about how gains from trade across international borders benefit people’s lives.
