A University of Queensland economist believes that reversing the tide of globalisation is likely to be more difficult than ever, despite episodic pauses in the process due to occasional international financial crises.
Associate Professor Tony Makin said many economists endorsed the globalisation process on the grounds that increased international exchange had the potential to raise employment levels and living standards and improve consumer product choice.
"The notion that increased international integration of markets expands exchange opportunities that in turn bestow national income gains is certainly not new, however," he said.
"The arguments for free international trade espoused by the classical British economists, Adam Smith, David Ricardo and John Stuart Mill, provide an intellectual foundation for globalisation, though in a slightly different guise."
Dr Makin said there was a key difference between the international economic and political environment of today and that of the last globalisation era that ended with the Great War.
"There now exists a well established supranational institutional framework fostering international economic exchanges," he said.
"In contrast, in the first globalisation era that ended with the Great War, all economic institutions were strictly nationally based and no independent international institutions existed to oversee the economic behaviour of the participants in international exchange."
Dr Makin and Professor Clem Tisdell of UQ's Economics Department were guest speakers at a public Forum on Globalisation, organised by the UQ's Economics Alumni Association at Brisbane Customs House on May 4.
Dr Makin said that the economic crises recently experienced by emerging economies are attributable to domestic weaknesses in those economies, rather than to financial globalisation.
"Globalisation is likely to continue to intensify well into the next millennium as considerable potential remains for increased integration of the markets for commodities, manufactures, services and financial assets," he said.
"The proportion of trade to national income remains relatively small for many advanced and developing economies, both relative to the past and relative to the most open economies of the contemporary world economy. Additionally, most of the domestic investment that occurs in many economies is still financed by domestically sourced saving, which implies that much greater scope exists for increasing the scale of international saving and investment flows."
Professor Tisdell said the role of the World Trade Organisation and other organisations in the globalisation process was currently generating considerable social conflict.
"To some extent, labour bodies, environmentalists and trade-protected farmers appear to have formed a political alliance," he said.
"There is little doubt that free international trade in products promotes equalisation of factor prices as suggested by economic theory.
"Some types of labour (mostly that in greatest as supply, probably unskilled labour or labour with little skill) can experience falling real wages or unemployment as a result of increasing liberalisation of trade, although relatively scarce factors globally are likely to gain.
"In the very long-term it is, however, possible that all factors of production, including all types of labour, will gain, if global economic development can be sustainable. There is, unfortunately, a high risk that this development will not be sustained for environmental reasons
"It seems that Bretton Woods institutions are finding it more difficult to deal effectively with global economic issues. This is partly because there are no effective mechanisms to integrate global economic objectives and global environmental concerns. Although it is now generally accepted that economic and natural systems are interdependent, most global institutions cling to the view that these matters can be compartmentalised.
(The term "Bretton Woods institutions" refers to those international institutions [International Monetary Fund, World Bank and the GATT - predecessor of the WTO] established after WW2 following a major international conference held in the small New Hampshire (USA) town of Bretton Woods in 1944.)
"Consequently, we have several Bretton Woods institutions, conceived to deal with international problems of more than a half a century ago, promoting world economic growth with comparatively little regard for its environmental and other consequences.
"They prefer to leave the consideration of side-effects to more specialised global bodies which in many respects it seems have turned out to be ?toothless tigers'. "
Professor Tisdell said an end purpose of trade policies should be to promote sustainable development and that the World Trade Organisation should articulate this end-purpose.
"While this seems reasonable in principle, there are also problems - the term sustainable development is frequently imprecise and has a variety of interpretations, this objective could be used to support special interests given its lack of clarity and may generally muddy the waters," he said.
"Nevertheless, such a goal could provide a basis for a holistic approach to trade liberalisation and economic globalisation and is worth further consideration."
Enquiries can also be directed to communications@mailbox.uq.edu.au
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