Globalisation and Development

updated May 2016

Globalisation is defined by the integration of people, goods, finance, knowledge and culture throughout the living world. Each of these dimensions of globalisation has advanced since the dawn of civilisation, at a pace determined by the available technologies for transport and communications.

The direct impact on ordinary households is most apparent in high and middle income countries. A significant proportion of consumer goods is imported from a single country, China; simple enquiries about banking or insurance may involve a call centre in India; a globetrotting executive can sustain family intimacy through social media tools.

These illustrations of globalisation are broadly positive in their effect on individuals, creating space for personal fulfilment, stimulating wealth and encouraging cross-cultural experience.  However, the more disruptive social, economic and environmental consequences of globalisation in the modern era have exposed the limitations of nation states to govern them.

Global Governance

In the aftermath of the Second World War, new international institutions were established to govern cross-border issues, initially focusing on peace and human rights, before eventually targeting stability of the global financial system.

The fitness of these international institutions to manage the forces of globalisation is no longer taken for granted. From the perspective of the world’s poorest countries, the roadmap for their development has been impeded by undemocratic global governance. Whilst economic and digital integration powered by private capital has advanced at lightning speed, political globalisation moves at snail’s pace.

In consequence, strong nation states remain more powerful than global institutions established for the common good, and less powerful than the world’s largest corporations. Horizons of accountability have become incompatible with the global consequences of actions. International finance in particular has moulded an earthly paradise from the stardust of globalisation; too big to fail, too complex to regulate, and too mind-blowingly lucrative to care.

In more than twenty years since the fall of the Berlin Wall, governance structures of the World Bank, IMF and the World Trade Organization (WTO) have remained largely unchanged. Control of policy and senior appointments is dominated by the richer countries; governance continues to be driven by economic power rather than democratic principles.

For example, amendments to voting rights of the IMF board proposed during 2010 are of modest aspiration and have not yet been implemented. The Financial Stability Board established in response to the 2008 banking crisis offers no representation to poorer countries. Such inertia may have provoked China’s initiative to establish the Asian Infrastructure Investment Bank to perform functions similar to the World Bank. Strong US opposition to the move has proved ineffective.

If the international rules for conduct of a globalised economy are created by the dominant participants, those yet to gain a foothold are unlikely to win favours. Regulations for international trade, investment, tax and intellectual property rights are the principal examples of economic injustice, too often blind to national development goals and individual human rights.

Belated recognition of current global governance shortcomings emerged in the Sustainable Development Goals, approved by world leaders in 2015. Target 10.6 calls for “enhanced representation and voice for developing countries in decision-making in global international economic and financial institutions.”

Multilateral environmental agreements already enjoy more democratic governance through equal voting rights enshrined in UN treaties such as the UN Framework Convention on Climate Change. However, in the absence of majority voting, richer countries have been able to stall actions to protect the environment or to compensate poorer countries which are most affected. The US has refused to participate in the UN Convention on Biological Diversity.

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more Globalisation briefings
Winners and Losers
International Development Model
Globalisation and Environmental Limits
Globalisation and Migrant Workers
Anti-globalisation
Source material