Globalization, whether embraced by a country or not, is inherently
constraining. Regardless of its approach to globalization, the
country experiences effects that are both economic and legal in
nature. Globalization has dramatically manifested itself in recent
years in trade, capital flows, and participation in international
bodies. Whether countries are choosing to participate or not,
globalism constrains them.
In the case of trade, a country that embraces globalization abandons
tariffs and other protectionist measures. The country's inhabitants
gain the opportunity to purchase foreign goods, which may be available
at lower prices and/or better quality. However, some local industries
may experience difficulties. By embracing free trade, the country has
constrained itself to not impose protectionist measures to protect
industries that are not competitive. In general, it is believed that
trade leads to economic development and an overall higher standard of
living. However, participants in particular industries may suffer
under a free trade regimen.
A country that resists globalization favors local industries and
imposes protectionist measures to protect them. While this benefits
the participants in those industries, the country's inhabitants may be
forced to purchase goods at higher prices and/or lower quality than
they would otherwise. The country may have constrained itself to
economic stagnation, particularly if trade wars break out in response
to its protectionist measures.
Capital flows became especially controversial during the Asian crisis
of 1998. Many countries who had embraced globalization by allowing
their currencies' exchange rate to be determined by markets suffered
greatly when investors fled their currencies in a panic. However, by
allowing floating exchange rates and not implementing currency
controls, countries are more readily able to access foreign capital to
promote economic development and can also obtain loans from the World
Bank and International Monetary Fund when needed. China, whose
currency does not float and is not freely convertible, did not suffer
as badly during the Asian crisis. However, the country is now risking
inflation and has difficulty controlling its economy because it has
not embraced globalization in terms of its currency.
Finally, participation in international bodies has taken on greater
importance. The United States largely abandoned this aspect of
globalization by not forming a broad-based coalition in the United
Nations prior to invading Iraq as it did prior to the first Gulf War.
As a result, the country now faces difficulty in getting member
nations to contribute troops under the auspices of the United Nations
to stabilize Iraq. The United States has limited its options for
other military engagements because it cannot withdraw its troops from
Iraq by replacing them with troops from other countries. The United
States has also chosen to not recognize the International Criminal
Court, which limits its influence over its development. While
countries may choose to ignore international bodies, they may find it
difficult to influence their actions, thereby constraining themselves.
In extreme cases, countries choosing to not embrace this aspect of
globalism may find themselves faced with penalties ranging from
economic embargoes to invasion if their refusal to adopt international
standards of conduct are sufficiently abhorrent.
By choosing to participate in international bodies, countries agree to
adopt a variety of international standards and policies that constrain
their actions. For example, the newly admitted members of the
European Union have had to adopt new rules regarding border controls,
budget deficits, and reduced trade restrictions. However, they
clearly believe that these constraints are worthwhile.
Whether they choose to embrace globalization or not, countries are
inherently constrained by the process in a variety of ways, both
economically and politically.
Sincerely,
Wonko |
