globalization and liberalization essay

Has globalization gone too far—or not far enough?

Subscribe to global connection, shantayanan devarajan shantayanan devarajan nonresident senior fellow - global economy and development @shanta_wb.

September 3, 2019

For developing countries as a whole, globalization—the process of lowering trade barriers and integrating with the world economy—has been enormously beneficial (Figure 1).

Figure 1: GDP growth rates before and after trade liberalization

Note: Red line=average growth rate before (after) trade liberalization, Blue line=growth rate (3-year MA), Dot=growth rate. Source: Wacziarg and Horn Welch (2008).

GDP growth rates have been about 2 percentage points higher after trade liberalization. Investment-to-GDP rates have been almost 10 percentage points higher—and sustained for a long time after liberalization. Moreover, this higher growth has contributed to faster poverty reduction in globalizing countries. And there is no systematic relationship between trade liberalization and inequality. In some globalizing countries inequality rose, while in others it fell.

Why then does globalization elicit so much criticism from NGOs and academics , among others? One reason is that the average growth rates hide a huge variation among individual countries. Among major Latin American countries, for instance, the only country that saw a significant increase in its growth rate post-liberalization was Chile; Brazil and Mexico experienced a decline in their growth rates. Similarly, in Africa, with the exception of Ghana, trade liberalization was accompanied by a decline in average growth rates in many countries. It is only in Asia that most countries have seen an increase in growth rates after liberalization. This includes not just the celebrated cases of India and China, but smaller countries such as Bangladesh, Sri Lanka, and the Philippines.

Furthermore, in some of the countries where the growth impact was weak, the employment effects were even more troubling. In Brazil , the regions facing tariff cuts experienced significant drops in formal-sector employment and earnings. These effects became more pronounced 20 years after liberalization.

Finally, for trade liberalization to have its intended effect, a host of other factors have to be in place. Africa still has a huge infrastructure deficit, which means that even if there is trade reform, it remains difficult to ship manufactured goods to ports. India has seen very little growth in manufacturing employment—even though it has a large number of low-skilled workers. The level of education of these people is woefully poor: The share of second-graders in rural public schools who could not read a single word was 80 percent .

Do these criticisms imply that globalization has gone too far? On the contrary, they suggest that it has not gone far enough. For the benefits of trade liberalization were not simply the efficiency gains from removing a set of tariff distortions in the economy. Simulations with computable general equilibrium (CGE) models showed that, if this were the only effect, the benefits from trade reform would be minuscule . Trade restrictions did more than add a distortion to a competitive economy. In many cases, they created domestic monopolies that could exercise their monopoly power behind trade protection. Some of these monopolists were also politically connected, which may explain the resistance to trade liberalization in many countries. When the presence of these monopolies is incorporated into a CGE model, the beneficial effects of trade liberalization become much greater . The reason is that trade liberalization subjects these monopolists to foreign competition, breaking down their monopoly power, lowering domestic prices much more (thereby making it cheaper for those who buy these goods), and permitting the exploitation of economies of scale.

But trade liberalization only affected monopoly power in the tradable sector—manufacturing and agriculture. It did nothing to break down the monopolies in the nontradable sector—services such as finance, transport, and distribution. To this day, the services sector remains largely unreformed . Yet, finance, transport, distribution, and business services are necessary inputs into the production of exports, accounting for about 30-40 percent of value-added in exports. If these nontradable services remain monopolized, then it is difficult for the tradable sector to expand in the wake of trade liberalization.

That this is not just a theoretical possibility, I will illustrate with three specific examples.

Cronyism in Tunisia. Tunisia undertook major trade reforms in the 1990s but export growth remained anemic. This is surprising given Tunisia’s proximity to Europe, fairly good infrastructure, and an educated population. During this same period, the family of the then President, Ben Ali, had interests in certain enterprises. The sectors where these enterprises were situated received protection from both domestic and foreign competition. And these sectors were telecoms, transport, and banking. So the prices of these services were artificially high (Tunisia had the third-highest telecoms prices in the world). Since you need these services to export, Tunisian exports were not competitive in world markets. The monopoly power enjoyed by these firms can be seen in the distribution of profits: The “Ben Ali firms” relative to the rest of the economy accounted for 0.8 percent of employment, 3 percent of output—and 21 percent of profits .
Roads in Africa . As already mentioned, Africa’s infrastructure deficit stands in the way of harnessing the gains from trade liberalization. But a study of the major road transport corridors in Africa revealed that vehicle operating costs along these four corridors were no higher than in France. What was higher in Africa were transport prices—the highest in the world, in fact. The difference between transport prices and vehicle operating costs is the profit margin accruing to the trucking companies. These margins were of the order of 100 percent. How can this be? Because there are regulations in the books in almost every African country that prohibit entry into the trucking industry. These regulations were introduced a half-century ago when trucking was thought to be a natural monopoly. Today, there is no need for such regulation, but there are huge trucking monopolies in every country that lobby against deregulation. The fact that relatives of the ruling family own the trucking company doesn’t help. Africa’s high transport prices are due to monopoly power in the (nontradable) transport sector, which is in turn standing in the way of the continent’s benefiting from trade liberalization.
Teachers in India . How is it that second-graders in rural public schools in India can’t read? For about a quarter of the time, the teacher is absent . How can teachers continue to be absent year in and year out? In India, teachers run the campaigns of the local politicians. If the politician gets elected, he turns around and gives the teacher a job for which he doesn’t need to show up. The result is that teachers, being providers of nontradable services, have a small degree of monopoly power that enables them to be absent without major sanctions.

In sum, the reason trade liberalization has not fully delivered on the promise is that only tradable sectors have been subject to international competition. If this competition can be spread to the nontradable sectors, we will see greater competition in those sectors and bigger gains from trade liberalization. The problem with globalization is not that it has gone too far; it’s that it hasn’t gone far enough.

Liberalization

TUM School of Governance and Bavarian School of Public Policy, Technical University of Munich

Published: 10 November 2021
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Liberalization is the removal of barriers to the cross-border movement of capital, goods, and people. Understanding liberalization is central to understanding how governments respond to and shape the global economy. This article reviews the literature on liberalization from a public-goods perspective, where liberalization is seen as benefiting the population as a whole, and from a private-goods perspective, where liberalization benefits a select few. These perspectives are united by questions over who supports liberalization, when liberalization occurs, and how governments liberalize markets. The article further explores the methods and approaches used by American International Political Economy (IPE), represented by articles published in International Organization , and British IPE, represented by articles published in the Review of International Political Economy .

The cross-border movement of capital, goods, and people is central to International Political Economy (IPE). Government policies play a key role in this regard: governments can facilitate or restrict cross-border transactions. Market liberalization—which we understand here as the removal of barriers to cross-border transactions—sets the stage for globalization, but it also shapes the form that globalization takes.

Consequently, studying the sources of liberalization takes a prominent place in IPE. And it offers lessons for political science more broadly. Ultimately, because liberalization is a policy choice by governments, questions about liberalization are questions about government behavior in domestic and international politics and about the relationship between governments and other actors in politics. Research about liberalization contributes to our understanding of distributive politics; the role of power, norms, and ideas; mass political behavior; and institutional theories of politics. And because it addresses cross-border transactions, liberalization touches on questions at the core of our understanding of the state, including control over territorial borders, the domestic economy, and policy autonomy.

A major distinction across work in this research area is what is perceived as the puzzling aspect of liberalization. One perspective views restrictions as puzzling: if liberalization is a public good with broad-based benefits, why do we observe so many market restrictions? Viewing liberalization as a public good is a natural consequence of economic theories, which emphasize the aggregate gains from trade and capital account liberalization, such as lower prices, lower borrowing costs, productivity gains, and technological spillovers. From this perspective, politics explains the maintenance of (inefficient) market restrictions.

A second perspective views liberalization as puzzling and, in more critical approaches, problematic. Liberalization—and especially liberalization in the context of a broader neoliberal reform agenda—is a private good. Liberalization from this perspective benefits a select few and frequently carries significant costs for domestic societies. These two different perspectives are united by an emphasis on collective action problems, corporate influence in politics, and bargaining between states; and by questions over who supports liberalization, when liberalization occurs, and how governments liberalize markets. 1

Liberalization as a Public Good

Viewing liberalization as a public good offers a powerful analytical framework in IPE. The liberalization of trade and capital accounts benefits societies overall, reducing the cost of goods and the cost of borrowing, reducing opportunities for rent-seeking by interest groups and policymakers, and increasing the efficiency of markets. And while liberalization creates winners and losers, in principle the gains could be redistributed to make everyone better off. Yet, because the gains from liberalization are dispersed across voters as consumers, who are a large and diffuse group, public demand for liberalization is weak ( Pareto 1927 ; Olson 1965 ). In contrast, the costs from liberalization are concentrated: with both trade and capital account liberalization, market incumbents lose market shares and may go out of business, providing an incentive to oppose liberalization.

This framework provides a parsimonious model for understanding central cleavages over government policy. Because the framework emphasizes the public goods character of liberalization, and contrasts it with the private goods delivered by market restrictions, it connects readily to other subfields in political science. If trade and financial market liberalization are public goods and hampered by firm influence, for example, political institutions that circumscribe the influence of firms—and special interests more broadly—should lead to liberalization. This argument has implications for our understanding of several dimensions of political institutions. Differences in electoral rules ( Rogowski 1987b ; Nielson 2003 ; Gawande, Krishna, and Olarreaga 2009 ; Mukherjee, Yadav, and Béjar 2014 ), checks and balances ( Mansfield, Milner, and Pevehouse 2007 ), interest group access ( Ehrlich 2007 ), and delegation to politically insulated policymakers ( Lohmann and O’Halloran 1994 ; Gilligan 1997a ) explain patterns of trade and capital account liberalization across countries. Notably, these patterns are reversed for the liberalization of migration policy, where firms tend to benefit from open markets and voters tend to be opposed ( Bearce and Hart 2017 ).

This framework also lends itself to a normative interpretation: processes and institutions that are associated with liberalization can be justified on the basis that they produce public goods, suppress the influence of special interests in politics, and are more representative of (diffuse) voter interests. In particular, liberal political systems and liberal economic policy go hand in hand (Mansfield, Milner, and Rosendorff 2000 , 2002 ; Lake and Baum 2001 ; Bueno de Mesquita et al. 2003 ; Phelan 2011 )—offering a powerful narrative behind the simultaneous waves of democratization and liberalization throughout the twentieth century ( Milner and Mukherjee 2009 ).

Moreover, if liberalization is driven by public-goods considerations, government capacity becomes an important variable in explaining why some governments refrain from liberalization despite the perceived benefits: governments may struggle to replace the lost revenue from liberalization because they lack the fiscal capacity to do so ( Richter 2013 ; Queralt 2015 ; Bastiaens and Rudra 2016 ); governments may lack the capacity to implement and enforce liberalization ( Hamilton-Hart 2003 ; Mosley 2010 ; Gray 2014 ; Betz 2019 ); and frictions in the redistribution of the gains from liberalization across groups can undermine the ability of governments to open their markets ( Davis 2020 ).

The public goods framework has additional implications for how governments liberalize their markets. If liberalization is a public good, some governments may have incentives to appear as if they put liberalization in place, while undermining the effects of liberalization on less transparent dimensions. Governments can substitute regulatory and non-tariff barriers, as relatively obscure and complex measures, for tariffs, which are a more easily observable form of trade protection ( Magee, Brock and Young 1989 ; Mansfield and Busch 1995 ; Kono 2006 ). A similar argument explains patterns of capital account liberalization, where de jure liberalization efforts are not accompanied by de facto liberalization ( Quinn, Schindler, and Toyoda 2011 ; Henisz and Mansfield 2019 ). For example, governments can open capital accounts to facilitate capital inflows while forcing foreign entrants to channel credit through domestic banks ( Pepinsky 2013 ) or liberalize capital inflows while restricting outflows ( Pond 2018c ). While governments may have incentives to provide liberalization as a public good, they systematically offset these effects by reaching for compensatory market restrictions that are even costlier to societies than the measures that were removed ( Kono 2006 ).

Liberalization as a public good, but across countries, is also the basis for theories that emphasize the international system ( Lake 1993 ). In Hegemonic Stability Theory, because of collective action challenges, a global hegemon is necessary to provide the public good of maintaining open markets, for example by punishing defectors that would undermine the liberal order ( Krasner 1976 ; Kindleberger 1986 ; Eichengreen 1987 ; Gilpin 2011 ). If open markets increase the wealth of individual states, they also increase the wealth of adversaries. This rationale underpins a large literature on the security externalities of liberalization. Governments should be more open to economic interactions with allies ( Gowa and Mansfield 1993 ; Gowa 1994 ) and with countries with similar interests ( Morrow, Siverson, and Tabares 1998 ), and they may open markets in exchange for security benefits ( Poast 2012 ).

International institutions can sustain international openness even in the absence of a hegemon, thus providing public goods at the international level. The literature offers two broader interpretations of the role of international institutions in liberalization. As a set of rules, international institutions align expectations, coordinate behavior, and empower some actors over others; but international institutions, and bureaucrats associated with them, also have agency of their own, driving policy change, reorienting the political discourse, and exploiting their agenda-setting power.

The seminal work on institutions as a set of rules has shaped the literature in both international political economy and international institutions, and the two fields remain closely aligned ( Keohane 1984 ). By aligning expectations and providing standards for evaluating government behavior, international institutions sustain liberalization once in place ( Simmons 2000 ; Rosendorff 2005 ; Chaudoin 2014 ). By structuring negotiations, international institutions mobilize domestic constituencies and shape bargaining between states ( Davis 2004 ). By providing legitimacy, international institutions also shape the responses of other governments and thus the evolution of liberalization ( Pelc 2010 ; Brewster 2013 ). And as commitment devices, international institutions reduce policy uncertainty, sustaining beliefs about continued market openness and its benefits ( Mansfield and Reinhardt 2008 ; Mansfield and Milner 2018 ).

A second strand of literature ascribes international institutions more agency in driving liberalization. The International Monetary Fund (IMF) is an early example in this literature, because international bureaucrats directly negotiate with governments over trade and capital account liberalization in exchange for loans. In terms of who is driving liberalization, this led to a vibrant literature weighing the relative importance of powerful donor countries ( Stone 2002 ; Dreher and Jensen 2007 ; Dreher, Sturm, and Vreeland 2009 ), private creditors ( Gould 2003 ; Broz and Hawes 2006 ), the Fund staff ( Momani 2005 ; Copelovitch 2010 ), and recipient countries ( Vreeland 2003 ). This research agenda presents new questions for those interested in the legitimacy of the international order, and new opportunities for understanding—and questioning—the role of powerful countries and emerging powers in international politics ( Moschella 2009 ; Fioretos 2019 ; Fioretos and Heldt 2019 ).

Increasingly, the literature also turns to other international institutions as independent actors in driving liberalization. In this area, American- and British-style research traditions are starting to see more overlap, both in substance and approach, by emphasizing the ability of international institutions as actors, independent of state interests, to change the discourse over liberalization. Consistent with sociological approaches to institutionalism, liberalization is not (solely) driven by material considerations, but also by what is perceived as appropriate and legitimate.

For example, the UN confers legitimacy to its delegates; UN delegates, in turn, can use their perceived authority to shape rule-making at the World Trade Organization (WTO) ( Margulis 2018 ). Similarly, the Organisation for Economic Co-operation and Development (OECD) played an active role in the liberalization of capital accounts by shifting the discourse over liberalization, moving beyond what OECD member states had initially envisioned ( Howarth and Sadeh 2011 ). The increasing availability of tools such as text analysis facilitates quantitative studies as well, documenting the role of language and discourse in driving liberalization both through the IMF ( Kaya and Reay 2019 ) and the WTO dispute settlement body ( Busch and Pelc 2019 ). Experience within the rule-based environment of international institutions, such as the WTO, can also lead governments to invest in their institutional capacity, allowing for a more active role of the government in shaping liberalization domestically and at the international level ( Shaffer, Nedumpara, and Sinha 2015 ; Sinha 2016 ).

The public goods framework is also amenable to the role of learning and ideas in explaining the timing and the forms of liberalization. Whether liberalization is perceived as a public good, and to what extent this belief is held and perpetuated, has changed over time. For example, waves of capital account liberalization and closure throughout the twentieth century align with waves of ideology ( Quinn and Toyoda 2007 ). The prevalence of ideas can also explain liberalization at key moments in history. Morrison (2012) documents how Great Britain’s move toward open trade was driven by a shift in the beliefs of key policymakers away from mercantilism and toward Adam Smith’s ideas of liberalism. Thus, the emergence of a new idea was key in explaining this period of globalization. The repeal of the corn laws in Great Britain can likewise be traced to a shift in ideas among political elites ( Schonhardt-Bailey 2006 ). Chwieroth (2007) offers empirical evidence for the role of ideas in explaining capital account liberalization: countries whose policymakers were socialized into neoliberal beliefs through their education tend to have more open capital accounts. Liberalization as a public good also featured prominently in the justification of the Washington Consensus and its underlying neoliberal ideas, which view market openness and deregulation as optimal and envision little role for the state ( Florio 2002 ; Helleiner 2003 , 2019 ).

Moreover, ideas shape the form of liberalization. What is viewed as a legitimate form of market restriction and as the “proper” role of the state changes over time. These waves of ideas result in different policy choices that then persist, explaining the simultaneous presence of seemingly contradictory policies—such as a more active role of government intervention in trade policies for some sectors and not others (Goldstein 1986 , 1988 ). Thus, ideas matter not only for whether governments liberalize their markets, but also how they do so. A prominent example is the pact of embedded liberalism, which emphasizes the role of the government in providing social safety nets to accompany open markets ( Ruggie 1982 ; Hays 2009 )—an idea that is distinct from the paradigms of free trade or fair trade ( Goldstein 1988 ). This pact has faltered in the wake of the global financial crisis as citizens became disillusioned with government intervention and instead associated international integration with job loss and inequality ( Frieden 2019 Ch. 2).

Prior experience—of their own and others—can be an important element in how firms, citizens, and policymakers perceive liberalization. Economic crises, in particular, provide an impetus to change the status quo and to challenge existing paradigms, which may result in a swing toward more or less liberalization ( Florio 2002 ; Brooks and Kurtz 2007 ), even beyond what the change in economic circumstances would warrant ( Widmaier, Blyth, and Seabrooke 2007 ).

The broad-scale liberalization in response to the Smoot-Hawley Tariff Act and the Great Depression, and the increasing legitimacy of capital controls in response to the Great Recession, are perhaps the most notable examples of changes brought about by crises ( Chwieroth 2013 ; Grabel and Gallagher 2014 ). But similar patterns emerge for smaller crises, and economic difficulties more generally, as well. A tightening of global credit conditions may promote liberalization if governments seek access to capital from abroad ( Haggard and Maxfield 1996 ; Betz and Kerner 2016b ). Policymakers may also use liberalization during crises to reassure citizens and markets that they are implementing sound economic policies, reinforcing the perception that liberalization is a public good ( Mansfield and Milner 2018 ).

If the experience of other countries informs the perception of economic policies, liberalization may diffuse across countries. Simmons and Elkins (2004) observe that policies of liberalization cluster in specific regions at specific times, spread by two mechanisms. First, the benefits of liberalization are larger when other countries also have open markets. Second, market openness in one country provides information about the costs and benefits of openness to that country’s peers. Both processes are consistent with the policies of liberalization that we observe. The process may also be contingent on domestic political institutions ( Steinberg, Nelson, and Nguyen 2018 ) and on the performance of the countries implementing the reforms ( Brooks and Kurtz 2007 ).

Of course, ideas can be contested. Despite a growing overlap between American- and British-style IPE in their interest in ideas, only the latter approach emphasizes the role of ideas in perpetuating existing power relationships. In particular, and reminiscent of work by Gramsci, the very idea that liberalization is a public good might be perpetuated by elites that benefit from liberalization. Political elites have constructed a discourse over liberalization that tried to obscure the costs for societies ( Siles-Brügge 2014 ). Some governments might want to give the appearance of adhering to established ideas like the Washington Consensus while in fact returning to market intervention ( Ban and Blyth 2013 ). Ideas also matter for the choice among conflicting goals, which in turn may dictate policy choices. Blyth and Matthijs (2017) identify two broad macro-regimes throughout the twentieth century—one centered on full employment, one centered on price stability—and show how adherence to each of these regimes had consequences for the liberalization of individual policies.

The public goods framework thus speaks to several important debates and provides a clear analytical framework for understanding liberalization. At the same time, the public goods framework, which emphasizes the price effects of market restrictions, is at odds with other empirical regularities, especially on trade politics. 2 While Baker ( 2003 , 2005 ) documents that support for free trade in Latin America is driven by consumption effects, voters in other countries—and in particular in the most open countries—appear unaware of, and unmoved by, some of the benefits of market liberalization, especially when it comes to diffuse gains like the price effects of liberalization ( Hiscox 2006 ; Naoi and Kume 2015 ; Bearce and Moya 2020 ). The low salience of trade issues in elections further casts doubt on some aspects of voter- and public goods-driven models ( Guisinger 2009 ), as do findings that many voters evaluate liberalization on non-material dimensions, including nationalism and in-group favoritism, or are driven by social networks rather than economic self-interest ( Tsygankov 2000 ; Mansfield and Mutz 2009 ; Ahlquist, Clayton, and Levi 2014 ; Pandya and Venkatesan 2016 ; Guisinger 2017 ; Mutz and Kim 2017 ; Mansfield, Mutz, and Brackbill 2019 ).

Moreover, there is little evidence that policymakers liberalize markets with an eye toward price effects. Tariffs are highest on those products where tariffs have the largest price effects. In democracies in particular, price considerations do not appear to drive trade liberalization: Tariffs are higher on consumption products than on other products, and this effect is strongest in democracies. Democratization, in turn, has smaller effects on tariff reductions for consumption products than for other goods, suggesting that price effects and consumer interests do not explain trade liberalization( Betz and Pond 2019 ). Moreover, early forms of democratization in India led to protectionism, not free trade ( Gaikwad and Casler 2019 ).

On the one hand, these findings might be interpreted as evidence of collective action problems and informational asymmetries ( Rho and Tomz 2017 ), which could be remedied if voters were more informed. Such an argument also explains different political dynamics across trade and capital account liberalization, based on differences in relative political salience ( Brooks and Kurtz 2007 ).

On the other hand, these findings raise questions about the political forces that drive liberalization: if voters are unaware of the benefits of liberalization and frequently opposed to it, why would accountable and representative policymakers implement liberalization? The belief, based on economic models, that voters should value liberalization, and that any resistance to liberalization could be overcome with better information and more redistribution, led parts of this literature to underestimate the costs of liberalization for societies and the eventual resistance this might cause. The severity of the backlash to liberalization in advanced countries over the past decade, driven by the often persistent costs of liberalization ( Autor, Dorn, and Hanson 2013 ; Colantone and Stanig 2018 ), has caught parts of this literature by surprise.

The contrast with more critical approaches to liberalization—which question, for example, the motives behind neoliberal reform agendas in the 1990s—is also pronounced. Focusing on the discourse over liberalization, Fairbrother (2010) observes that policymakers tend to focus on the benefits for producers, rather than for consumers and societies overall, which raises doubts over explanations that view liberalization as driven by public good considerations. And while liberalization can have substantial economic benefits, the distribution of those benefits is at times biased against voters as employees ( Dean 2016 ) and toward high-income countries with high-quality market institutions ( Wade 2010 ; Levchenko 2007 ).

Additionally, capital account liberalization can impose substantial constraints on governments, partially offsetting the gains ( Lindblom 1977 ; Andrews 1994 ). While liberalization can have attributes of a public good, making societies better off overall, it may come at the cost of giving up other public goods, such as policy autonomy ( Li and Smith 2002 ; Arel-Bundock 2017 ) or environmental protection ( Bechtel, Bernauer, and Meyer 2012 ). The public goods character of liberalization may be undermined if the policy constraints imposed by liberalization benefit political elites that fear redistribution in the future ( Pond 2018a ). Perhaps surprisingly, liberalization of migrant flows can reduce constraints on policymakers, by allowing potential political dissidents to leave ( Hirschman 1970 ; Gehlbach 2006 ; Clark, Golder, and Golder 2017 ; Sellars 2018 ). Liberalization also may necessitate public spending to maintain support for openness, putting dual strains on governments ( Flores and Nooruddin 2016 ; Bastiaens and Rudra 2018 ). Others have emphasized multinational corporations (MNCs), especially from the US and Western Europe, as the prime beneficiaries of liberalization, often in opposition to consumers and voter groups ( Young 2016 ). As we note in the next section, the turn toward firm-level accounts of liberalization in recent years led to a new convergence between American- and British-style IPE.

Liberalization as a Private Good

A second view of liberalization, reaching back at least to Schattschneider (1935) , emphasizes the distributional conflict created by trade and capital account liberalization. Drawing on theories of comparative advantage, a large part of this literature focuses on whether the political cleavages over these policies fall along class lines, following the Heckscher-Ohlin model, or along industry lines, following the Ricardo-Viner model ( Schattschneider 1935 ; Rogowski 1987a ; Frieden 1991 ). Which of the two cleavages is more prevalent at any given point in time can be explained by differences in factor mobility ( Hiscox 2002 ; Ladewig 2006 ): when labor is mobile across sectors, the Heckscher-Ohlin model provides a better explanation of political conflict. Immigration can also be viewed through this lens, where restrictions benefit unskilled labor in developed countries, but hurt unskilled labor in developing countries ( Milanovic 2011 ).

These models explain several empirical patterns in the liberalization of trade and capital accounts. For example, whether industries are able to block liberalization depends on their geographic features. Political influence is largest for industries that are dispersed across electoral districts but concentrated geographically (Busch and Reinhardt 1999 , 2005 ), and this effect in turn depends on a country’s electoral rules ( McGillivray 2004 ; Rickard 2012 ). In a class-based model, partisanship moves to the forefront: if political parties align with economic classes, the support of left-wing parties for liberalization depends on whether labor is a relatively abundant or scarce factor ( Quinn and Inclan 1997 ; Li and Smith 2002 ; Milner and Judkins 2004 ; Pinto 2013 ). Similar arguments apply to democratic institutions, which should reduce the political influence of capital owners, relative to labor, in driving trade and capital account liberalization ( Milner and Kubota 2005 ; Kono 2006 ; Pandya 2014 ). Some work emphasizes how these theories interact with the global spread of ideas ( Quinn and Toyoda 2007 ; Steinberg, Nelson, and Nguyen 2018 ).

When explaining trade liberalization, and in contrast to models of trade liberalization as a public good, many of these models implicitly build on the norm of reciprocity. Reciprocity, together with most favored nation and national treatment, is one of the key elements underlying the General Agreement on Tariffs and Trade (GATT) and the WTO and most preferential trade agreements. With reciprocal trade agreements, export-oriented factor owners, industries, or firms support liberalization at home when it gives them access to markets abroad ( Bailey, Goldstein, and Weingast 1997 ; Gilligan 1997a ; Pahre 2008 ; Betz 2017 ). This form of issue linkage has overcome some of the most entrenched resistance to liberalization, such as that from the agricultural sector in many countries ( Davis 2004 ). 3

Mirroring developments in other subfields of political science, international political economy has increasingly turned to more granular theories and data. Over the past two decades, economists have documented that few individual firms engage in international economic transactions, that the gains from openness are concentrated on these firms, and that liberalization induces substantial reallocations across firms within industries ( Bernard and Jensen 1999 ; Melitz 2003 ; Bernard et al. 2007 ; Goldberg and Pavcnik 2007 ; Freund and Pierola 2015 ; Bernard et al. 2018 ). This led to a surge of interest in individual-level and firm-level accounts of liberalization.

These studies point to substantial differences across firms within industries, rather than differences across industries or across classes. Firms differ in production technologies, access to inputs from abroad, and access to production networks, and as a consequence differ in their ability to engage with foreign markets: only the largest and most productive firms can afford the fixed costs of entering foreign markets and establishing global production networks, resulting in concentrated gains from trade and capital account liberalization. Moreover, the gains from liberalization are not only concentrated on few firms, but on firms that have political influence.

Plouffe (2015) provides an early overview of a firm-based model of trade politics. Subsequent work elaborated several implications. Within-industry conflict and firm-level lobbying for trade liberalization are more pronounced in industries with higher levels of intra-industry trade ( Madeira 2016 ), challenging a more harmonious view of intra-industry trade (for a review see, e.g., Gilligan 1997b ). Other work has built on a firm-based model to explain the creation and management of supply chains ( Dallas 2015 ), intra-industry divisions in public position-taking ( Osgood 2016 ), firm attitudes ( Plouffe 2017 ), lobbying for trade liberalization ( Kim 2017 ), and the institutional sources of trade policy ( Betz 2017 ). Early precursors to these studies are Milner (1988b) , who emphasizes the international ties of individual firms within industries as a source of opposition to protectionism, and Chase (2004b) , who documents that smaller firms are more protectionist than larger firms and relates these differences to cross-country differences in trade policy. The contrast between the liberalization of tariffs and non-tariff barriers is emphasized by Gulotty (2020) . Because only the largest firms can overcome the fixed costs created by non-tariff barriers (such as adjusting to new labeling requirements), the very firms that tend to benefit from, and drive, the liberalization of tariffs also support restrictions in the form of non-tariff barriers.

Recent work also builds on firm-based models to explain capital account liberalization, for example with different financing constraints across firms ( Leiteritz 2012 ; Danzman 2019 ). This understanding of the drivers of liberalization also speaks to some of the dynamics of liberalization over time: once a market is sufficiently competitive, governments have little reason to maintain barriers to international trade and capital flows, facilitating a “juggernaut” effect toward further liberalization ( Hathaway 1998 ; Rajan and Zingales 2003 ; Brooks 2004 ; Baldwin and Robert-Nicoud 2008 ; Pond 2018b ), but also increasing the resistance to initial attempts at liberalization ( Davis 2015 ).

Fusing the granularity of trade policy with a firm-based model in the context of trade agreements reverses the collective action arguments outlined above: liberalization not only provides diffuse gains for the public, but also concentrated gains for individual, politically powerful firms—which leads to new implications for the institutional theories of liberalization outlined in the previous section ( Goldstein and Gulotty 2014 ; Betz 2017 ; Betz and Pond 2019 ). Liberalization, from the perspective of a firm-based model, need not be driven by a higher regard for voter interests or the insulation of policymakers from special interests. Consistent with the growing discontent with liberalization among citizens in developed countries, liberalization may happen not because of, but despite, what citizens and societal groups prefer. Firms may lobby for the liberalization of trade and capital accounts, but they are not doing the bidding of voters in providing public goods—the shape that liberalization takes differs in its timing, in its product coverage, in its trade partners, and in its choice of policy instruments from what voters may have preferred. The largest firms emerge as the main beneficiaries of the liberalization of trade and capital accounts, and of the international rules that have contributed to that liberalization.

The gains from liberalization for individual firms, and the role of individual firms in IPE, has always had a prominent place in British-style IPE ( Stopford, Strange, and Henley 1991 ; Strange 1996 ; Cohen 2008 ; Rutland 2013 ). The turn to firm-based models has thus resulted in a new alignment in themes between American- and British-style IPE, and a growing consensus that trade and capital account liberalization during the twentieth century were shaped by large, politically powerful firms, sometimes in opposition to voters. Additionally, the content of liberalization efforts appears to be tilted toward powerful Western countries and their “domestic” MNCs ( Wade 2010 ). The imbalance between countries is also evident in the dispute settlement body of the WTO, although it appears that the rule-based system of the dispute settlement body has reduced at least some of the power asymmetries between countries ( Sattler and Bernauer 2011 ).

Driven by advances in transportation and information technology, production processes are now not only geographically separated from the location of consumers, but the different stages of production have also disintegrated across firms and across countries ( Baldwin 2016 ). The emphasis on the largest firms as the beneficiaries of openness thus moved MNCs, global production processes, and global supply chains, which featured prominently in earlier literature ( Vernon 1971 ; Moran 1978 ; Cox 1987 ; Milner 1988 a ; Milner and Yoffie 1989 ; Goodman and Pauly 1993 ), back to the forefront in explaining liberalization: in addition to exporting and import-competing firms, importing firms play an important role in the politics over trade and capital account liberalization. This has the potential to substantially reshape political responses to external financial conditions ( Jensen, Quinn, and Weymouth 2015 ; Weldzius 2020 ), patterns of trade liberalization (Manger 2005 , 2012 ; Baccini, Dür, and Elsig 2018 ; Anderer, Dür, and Lechner 2020 ), and the role of individual firms in the creation and governance of international economic flows ( Dallas 2015 ; Gaubert and Itskhoki 2018 ).

Viewing liberalization as a private good also offers a framework for understanding the timing and the shape of liberalization. Diffusion explains liberalization by spreading the perception that liberalization is a public good, as discussed in the previous section. Diffusion also accounts for liberalization, however, through competition effects. If firms from other countries gain access to new markets—through capital account and trade liberalization—it puts domestic firms at a relative disadvantage. Thus, liberalization between pairs of countries, by discriminating against outsiders, triggers demands for liberalization by firms located in those outsiders: they seek to prevent a deterioration in relative terms for their firms’ exports ( Dür 2010 ) and for their firms’ investment ( Manger 2009 ).

Liberalization among groups of countries, most prominently in the European Union (EU), implies a relative increase in market restrictions for firms from outside the arrangement ( Limão 2006 ). This aspect of regionalism is frequently by design, because it helps governments build political coalitions ( Chase 2004a ). Whether regionalism provides a “stumbling block” or a “stepping stone” to further liberalization remains a largely open question ( Mansfield and Milner 1999 ). Multilateralism itself is subject to similar challenges ( Goldstein et al. 2000 ). Gowa and Hicks (2012) show how governments have used the most favored nations clause in a discriminatory fashion, creating private goods for individual countries. Even in the relatively legalized environment of the WTO’s dispute settlement body, governments frequently strike settlements that disadvantage third countries ( Kucik and Pelc 2016 ). Moreover, trade barriers by foreign governments are more likely to get challenged if they impose concentrated costs: trade disputes that provide public goods across countries are less readily initiated, shaping patterns of liberalization across countries and across products ( Johns and Pelc 2018 ).

That liberalization can also have protectionist undertones is a common theme in a larger body of literature on how governments liberalize. Governments typically do not liberalize their markets across the board. They tailor tariffs to individual products and drive up the variance in tariff rates across products ( Goldstein and Gulotty 2015 ; Kim 2017 ; Betz 2017 , 2019 ), insert content requirements that limit the scope of liberalization ( Chase 2008b ), target trade liberalization toward some countries but not others ( Kono 2008 ; Barari, Kim, and Wong 2020 ), limit migration for low-skilled but not high-skilled workers ( Peters 2015 ), and open their capital accounts toward investment inflows but restrict outflows ( Pond 2018c ). These forms of partial liberalization facilitate the creation of political coalitions and may help governments accommodate competing demands. But they also open room for arbitrage, corruption, and evasion. The resulting policy complexity may ultimately depress the effects of liberalization efforts, in some environments intentionally so ( Wu 2020 ).

The redistributive character of liberalization also motivates a growing body of literature that seeks to understand the relationship between different policy choices. With open capital accounts, exchange rate movements have clear implications for domestic groups: currency appreciation aids consumers and importing firms, but hurts import-competing firms and exporting firms ( Frieden 1991 ). Consequently, currency appreciation is associated with an increase in both protectionist demands at home ( Broz and Werfel 2014 ) and attempts to remove trade barriers abroad ( Betz and Kerner 2016a ). Conversely, where trade agreements restrict a government’s trade policy choices, monetary policy autonomy becomes more attractive to governments ( Copelovitch and Pevehouse 2013 ). Notably, Jensen, Quinn, and Weymouth (2015) show how the presence of MNCs, as politically powerful importing firms, breaks the otherwise clear link between external financial conditions and trade policy.

Recent work looks more comprehensively at the relationship between trade liberalization, capital account liberalization, and migration policy. Once trade and capital account liberalization allowed US firms to produce goods abroad and import them back to the US, firms no longer required low-cost labor within the US ( Peters 2014 ). This resulted in less support for open immigration policies from firms, increased influence of nativist forces, and more restrictive immigration policy. Thus, the liberalization of trade and capital flows substitutes for the liberalization of migration. These findings point to the need to consider the relationship between different dimensions of liberalization, and how governments address competing demands over liberalization. Examples include the inclusion of labor rights and environmental standards in trade agreements, which may be interpreted as a form of non-tariff barrier to reduce the extent of de facto liberalization ( Lechner 2016 ) and which may substitute for compensatory government spending ( Bastiaens and Postnikov 2020 ).

New areas of overlap between different research traditions emerge in questions about the mass politics over liberalization and the role of material interests in explaining voter attitudes. The emphasis on production networks and modes of production in British IPE, most prominently articulated by Cox (1987) , is increasingly mirrored in work that is more closely aligned with American IPE as well. It is well established that highly educated voters in the US tend to be more supportive of trade liberalization. This may be interpreted as evidence of a factor-based model ( Scheve and Slaughter 2001 ). Yet, contrasting with a factor-model, but consistent with research on the distributional consequences of trade liberalization based on firm-based models and in models that emphasize the skill-bias in international trade ( Goldberg and Pavcnik 2007 ; Bustos 2011 ), similar empirical patterns are evident in Argentinean surveys ( Ardanaz, Murillo, and Pinto 2013 ). This finding suggests that mass attitudes may be better explained by the skill bias inherent in trade and capital account liberalization ( Li and Smith 2002 ; Menendez, Owen, and Walter 2018 ; Palmtag, Rommel, and Walter 2020 ). Recent work also examines the role of individual occupations in explaining attitudes over liberalization. Occupations that require few context-specific skills can be relocated abroad relatively easily, creating new cleavages over liberalization based on occupation, which cut across industry and class lines ( Chase 2008a ; Owen and Johnston 2017 ; Owen 2017 ).

Education may also shape attitudes by providing individuals with information about the gains from trade and through socialization, which explains voter attitudes toward both trade ( Hainmueller and Hiscox 2006 ) and migration ( Hainmueller and Hiscox 2007 ; Hainmueller, Hiscox, and Margalit 2015 ). That voters may have limited knowledge of the distributional consequences of liberalization suggests that they are susceptible to informational cues, socialization effects, and framing effects ( Hiscox 2006 ; Ahlquist, Clayton and Levi 2014 ; Naoi and Kume 2015 ; Rho and Tomz 2017 ; Bearce and Moya 2020 ). Consequently, the discourse over liberalization matters for building support for liberalization. Blending constructivist approaches with firm-based models of trade, Skonieczny (2018) documents how pro-trade firms use national identity narratives, rather than arguments about material gains, to shape public support for trade liberalization. In part driven by recent elections in the US and the UK, this research agenda suggests new questions not just about who supports liberalization, but the ideological sources and the cohesion of political coalitions. How individual firms and interest groups succeed in building public support for trade liberalization, sometimes in opposition to (perceived) material interests, is a question of increasing political relevance.

Journal Articles

In this review article, we developed two frameworks for understanding liberalization, stressing either the public- or private-good effects of liberalization. In doing so, we attempted to bridge many divisions in IPE. Nevertheless, the conventional wisdom expects a divide between American- and British-style IPE: American IPE is oriented toward abstract theory and generalizability across cases, as well as economic methodologies and identification of causal effects. British IPE alternatively emphasizes deep understandings of subject matter in relatively few units and is more open to exploring topics, like power, intentions, and hierarchy, that might challenge traditional forms of empirical inference (see Cohen 2008 for a discussion of the development of both traditions).

To evaluate the extent of division in the literature, we tasked two graduate students to collect the literature on “liberalization” in International Organization ( IO ), frequently associated with American-style IPE, and Review of International Political Economy ( RIPE ), representing the British tradition. 4 They collected 352 articles, 212 from RIPE and 140 from IO , from 2000 to 2019. They then coded each article depending on the topic, emphasis of the study, and the methods used.

The topics we identified are trade, capital, migration, or globalization. Globalization captures studies that consider the drivers of increased integration, writ large, rather than any specific type of economic flow—the vast majority are studies of trade and capital liberalization. We fit each article into a single category; the categories are thus mutually exclusive.

Figure 1 depicts the share of articles in each issue area over time for both IO and RIPE . The overwhelming majority of the studies in both journals emphasize trade or capital flows only. Migration seems slightly more common in IO while studies of globalization as a broad phenomenon appear more commonly in RIPE . This is consistent with a general emphasis on power, hierarchy, and the constraints posed by international economic integration in the British tradition ( Strange 1996 ).

We then coded the papers by the methodology used, including qualitative, quantitative, formal models, or experimental designs. 5 Because a single paper could use multiple different methods, these categories are not mutually exclusive. Figure 2 depicts the share of articles using each method over time. Consistent with anecdotal claims, there seems to be a preference for quantitative methods in IO and for qualitative methods in RIPE —although quantitative methods are becoming increasingly common in both journals. Formal and experimental approaches to liberalization are relatively uncommon.

Finally, we attempted to identify the emphasis in each study. We coded whether each study emphasized the role of the US, MNCs or firms, policy autonomy, state power, ideas, and whether a concern for (causal) identification was mentioned. 6 Any one study could again fit into multiple categories, for example using an instrumental variables approach to explore the influence of US MNCs in eroding state autonomy. Figure 3 depicts the trends in emphasis over time. The largest differences appear over power and identification. Articles in RIPE more frequently reference power while articles in IO are more likely to discuss the identification strategy—consistent with the perception that American IPE has moved toward research that addresses smaller questions in a rigorous way. The influence of firms over liberalization appears earlier in RIPE than in IO .

Some other differences between the different research traditions stand out. In contrast to main themes in British IPE, American IPE frequently shies away from normative assessments—despite its reliance on frameworks from economics, a discipline heavily reliant on normative comparisons like “welfare analysis.” American IPE also tends to take existing institutions and power structures as given, rather than questioning their legitimacy or origins.

At the same time, we perceive increasing areas of overlap between British and American IPE. Some of these are driven by methodological innovations, which have allowed American IPE to approach topics usually more central to British IPE. The emergence of text analysis allows for the quantitative assessment of language and discourse; similarly, network models and increasingly granular data made the relations between actors, a central issue in British IPE, amenable to quantitative analyses by those in the tradition of American IPE. Put (perhaps too) simply, by being able to measure things that were previously not quantifiable, those working in American IPE can now address topics that were previously the purview of British IPE. Overlap also arises from policy debates and on substantive grounds, such as the concern with globalization backlash and the often substantial adjustment costs to liberalization.

Share of articles in IO and RIPE, by topic.

Share of articles in IO and RIPE, by method.

The share of articles in IO and RIPE, by emphasis.

We oriented our discussion around theoretical models that view liberalization as driven by its broad benefits and as a public good, or driven by the gains for individual groups and as a private good. These distinct views of liberalization also suggest avenues for future research which align with current themes in both British and American IPE.

First, a growing body of work examines the relationships between different policy instruments. This literature points to questions about why governments choose specific “bundles” of policies, and liberalize one dimension but not another dimension. More generally, how governments liberalize their markets and how different types of liberalization are connected with each other remains a topic of increasing importance. One aspect here is the distributional consequences of liberalization, where the literature typically builds on theories of comparative advantage, driven by classes, industries, or firms. But just as importantly, understanding how the discourse over liberalization matters for the acceptance and legitimacy of a government’s policy choice becomes increasingly important for understanding political coalitions over liberalization and the differences across issue areas.

Second, a distinction similar to that between private goods and public goods emerges at the flipside of liberalization: the regulation of domestic markets. Especially when it comes to financial market regulations, the line between prudential regulation and predatory regulation is thin. Whether policies are intended to ensure market stability or to protect market incumbents is difficult to ascertain, but matters both for the distributive consequences of these policies and their normative assessment. Similarly, as we noted above, a growing body of literature examines the dual nature of government policies, which may be liberalizing on some dimensions but protectionist on others. For example, the recent United States-Mexico-Canada Agreement, which updates NAFTA, raises North America-specific content requirements. A framework that pits liberalization against protectionism has difficulty acknowledging the dual nature of such policy reforms.

Third, the concentration of the gains from open markets on individual firms suggest new challenges. For example, Freund and Pierola (2015) report that in a sample of 32 countries, the five largest firms on average account for nearly a third of a country’s exports. These activities by individual firms are on a sufficiently large scale that they shape a country’s comparative advantage in the aggregate. What accounts for the emergence of these successful firms, and what explains differences in the integration of individual firms into global supply chains, remains relatively little understood. Moreover, some of that market concentration is driven by liberalization; but large firms also have an easier time competing on international markets with other firms. Societies, and ultimately governments, will have to find a balance between the market power of individual firms, which may make them competitive on international markets, and their political power at home. This trade-off is especially challenging in the context of MNCs, which may be viewed as “national champions” but have a large share of their economic activity abroad.

Despite their difference in emphases, British and American IPE remain united by attempts to understand political processes around the liberalization of cross-border economic flows—who supports liberalization, when we observe liberalization, and how liberalization takes shape. And in that, both research traditions address topics central to the social sciences more broadly: the role of states, non-state actors, and order in politics; the political control of territorial borders and cross-border transactions; and the role of power, norms, and ideas in politics. Thus, both British and American IPE seem to take a problem-driven approach, although they may differ in both the problems they identify as important and in how they approach these problems in practice. British IPE, in general, appears more willing to focus on a case or a question stemming from an event that we do not understand well, and is thus able to engage with both policy events and dramatic events more swiftly and critically. American IPE, meanwhile, tends to raise questions that address changes “at the margin,” reflecting perhaps their reliance on economic models, and questions that are raised by shortcomings of existing work and within the confines of existing theoretical frameworks. As we noted in the previous section, we see increasing areas of overlap between these two traditions, both in substance and methodology. We hope to continue to see work that advances our understanding of important topics and that transcends barriers in geography or methodology.

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We neglect other important aspects of liberalization, particularly the consequences of liberalization—e.g., creating backlash ( Margalit 2011 ; Frieden 2019 ), new forms of interdependence ( Farrell and Newman 2016 ), revenue shortfalls ( Bastiaens and Rudra 2018 ), opportunities for government intervention ( D’Costa 2009 ; Sierra 2019 ), or new regulatory challenges ( Büthe and Mattli 2011 ).

Even leading advocates of trade liberalization have suggested that the case for capital account liberalization is much less clear-cut from an economic perspective ( Bhagwati 2004 ).

Trade agreements now frequently include a set of non-trade issues, including investment regulations, which has altered the political coalitions around these agreements ( Manger 2009 ; Lechner 2016 ).

The graduate students searched for any articles that included the following terms: “restriction,” “liberalization,” “openness,” “tariff,” “barrier,” “capital,” “trade,” or “migration.” They then limited the articles to those that explain economic liberalization or restrictions. One student coded all resulting IO articles and the first 79 RIPE articles; the other coded the first 200 RIPE articles and the most relevant 83 IO articles. Most of their codings (the binary codings in particular) accorded perfectly.

Studies are coded as using experimental designs if the researcher was able to randomly assign treatment. Natural or quasi experiments are excluded. These would frequently be captured by the identification coding discussed below.

We employ a liberal definition of concern for identification challenges, e.g., a Granger causality test, inclusion of specific controls, or lagging independent variables is sufficient—as long as the justification is to find causal identification. Instrumental variables, natural experiments, or regression discontinuity are also included. Our objective is not to assess the quality of the identification strategy.

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Globalization

Covering a wide range of distinct political, economic, and cultural trends, the term “globalization” remains crucial to contemporary political and academic debate. In contemporary popular discourse, globalization often functions as little more than a synonym for one or more of the following phenomena: the pursuit of classical liberal (or “free market”) policies in the world economy (“economic liberalization”), the growing dominance of western (or even American) forms of political, economic, and cultural life (“westernization” or “Americanization”), a global political order built on liberal notions of international law (the “global liberal order”), an ominous network of top-down rule by global elites (“globalism” or “global technocracy”), the proliferation of new information technologies (the “Internet Revolution”), as well as the notion that humanity stands at the threshold of realizing one single unified community in which major sources of social conflict have vanished (“global integration”). Globalization is a politically-contested phenomenon about which there are significant disagreements and struggles, with many nationalist and populist movements and leaders worldwide (including Turkey’s Recep Erdoğan, Hungary’s Viktor Orbán, and former US President Donald Trump) pushing back against what they view as its unappealing features.

Fortunately, recent social theory has formulated a more precise concept of globalization than those typically offered by politicians and pundits. Although sharp differences continue to separate participants in the ongoing debate about the term, most contemporary social theorists endorse the view that globalization refers to fundamental changes in the spatial and temporal contours of social existence, according to which the significance of space or territory undergoes shifts in the face of a no less dramatic acceleration in the temporal structure of crucial forms of human activity. Geographical distance is typically measured in time. As the time necessary to connect distinct geographical locations is reduced, distance or space undergoes compression or “annihilation.” The human experience of space is intimately connected to the temporal structure of those activities by means of which we experience space. Changes in the temporality of human activity inevitably generate altered experiences of space or territory. Theorists of globalization disagree about the precise sources of recent shifts in the spatial and temporal contours of human life. Nonetheless, they generally agree that alterations in humanity’s experiences of space and time are working to undermine the importance of local and even national boundaries in many arenas of human endeavor. Since globalization contains far-reaching implications for virtually every facet of human life, it necessarily suggests the need to rethink key questions of normative political theory.

1. Globalization in the History of Ideas

2. globalization in contemporary social theory, 3. the normative challenges of globalization, other internet resources, related entries.

The term globalization has only become commonplace in the last three decades, and academic commentators who employed the term as late as the 1970s accurately recognized the novelty of doing so (Modelski 1972). At least since the advent of industrial capitalism, however, intellectual discourse has been replete with allusions to phenomena strikingly akin to those that have garnered the attention of recent theorists of globalization. Nineteenth and twentieth-century philosophy, literature, and social commentary include numerous references to an inchoate yet widely shared awareness that experiences of distance and space are inevitably transformed by the emergence of high-speed forms of transportation (for example, rail and air travel) and communication (the telegraph or telephone) that dramatically heighten possibilities for human interaction across existing geographical and political divides (Harvey 1989; Kern 1983). Long before the introduction of the term globalization into recent popular and scholarly debate, the appearance of novel high-speed forms of social activity generated extensive commentary about the compression of space.

Writing in 1839, an English journalist commented on the implications of rail travel by anxiously postulating that as distance was “annihilated, the surface of our country would, as it were, shrivel in size until it became not much bigger than one immense city” (Harvey 1996, 242). A few years later, Heinrich Heine, the émigré German-Jewish poet, captured this same experience when he noted: “space is killed by the railways. I feel as if the mountains and forests of all countries were advancing on Paris. Even now, I can smell the German linden trees; the North Sea’s breakers are rolling against my door” (Schivelbusch 1978, 34). Another young German émigré, the socialist theorist Karl Marx, in 1848 formulated the first theoretical explanation of the sense of territorial compression that so fascinated his contemporaries. In Marx’s account, the imperatives of capitalist production inevitably drove the bourgeoisie to “nestle everywhere, settle everywhere, and establish connections everywhere.” The juggernaut of industrial capitalism constituted the most basic source of technologies resulting in the annihilation of space, helping to pave the way for “intercourse in every direction, universal interdependence of nations,” in contrast to a narrow-minded provincialism that had plagued humanity for untold eons (Marx 1848, 476). Despite their ills as instruments of capitalist exploitation, Marx argued, new technologies that increased possibilities for human interaction across borders ultimately represented a progressive force in history. They provided the necessary infrastructure for a cosmopolitan future socialist civilization, while simultaneously functioning in the present as indispensable organizational tools for a working class destined to undertake a revolution no less oblivious to traditional territorial divisions than the system of capitalist exploitation it hoped to dismantle.

European intellectuals have hardly been alone in their fascination with the experience of territorial compression, as evinced by the key role played by the same theme in early twentieth-century American thought. In 1904, the literary figure Henry Adams diagnosed the existence of a “law of acceleration,” fundamental to the workings of social development, in order to make sense of the rapidly changing spatial and temporal contours of human activity. Modern society could only be properly understood if the seemingly irrepressible acceleration of basic technological and social processes was given a central place in social and historical analysis (Adams 1931 [1904]). John Dewey argued in 1927 that recent economic and technological trends implied the emergence of a “new world” no less noteworthy than the opening up of America to European exploration and conquest in 1492. For Dewey, the invention of steam, electricity, and the telephone offered formidable challenges to relatively static and homogeneous forms of local community life that had long represented the main theatre for most human activity. Economic activity increasingly exploded the confines of local communities to a degree that would have stunned our historical predecessors, for example, while the steamship, railroad, automobile, and air travel considerably intensified rates of geographical mobility. Dewey went beyond previous discussions of the changing temporal and spatial contours of human activity, however, by suggesting that the compression of space posed fundamental questions for democracy. Dewey observed that small-scale political communities (for example, the New England township), a crucial site for the exercise of effective democratic participation, seemed ever more peripheral to the great issues of an interconnected world. Increasingly dense networks of social ties across borders rendered local forms of self-government ineffective. Dewey wondered, “How can a public be organized, we may ask, when literally it does not stay in place?” (Dewey 1927, 140). To the extent that democratic citizenship minimally presupposes the possibility of action in concert with others, how might citizenship be sustained in a social world subject to ever more astonishing possibilities for movement and mobility? New high-speed technologies attributed a shifting and unstable character to social life, as demonstrated by increased rates of change and turnover in many arenas of activity (most important perhaps, the economy) directly affected by them, and the relative fluidity and inconstancy of social relations there. If citizenship requires some modicum of constancy and stability in social life, however, did not recent changes in the temporal and spatial conditions of human activity bode poorly for political participation? How might citizens come together and act in concert when contemporary society’s “mania for motion and speed” made it difficult for them even to get acquainted with one another, let alone identify objects of common concern? (Dewey 1927, 140).

The unabated proliferation of high-speed technologies is probably the main source of the numerous references in intellectual life since 1950 to the annihilation of distance. The Canadian cultural critic Marshall McLuhan made the theme of a technologically based “global village,” generated by social “acceleration at all levels of human organization,” the centerpiece of an anxiety-ridden analysis of new media technologies in the 1960s (McLuhan 1964, 103). Arguing in the 1970s and 1980s that recent shifts in the spatial and temporal contours of social life exacerbated authoritarian political trends, the French social critic Paul Virilio seemed to confirm many of Dewey’s darkest worries about the decay of democracy. According to his analysis, the high-speed imperatives of modern warfare and weapons systems strengthened the executive and debilitated representative legislatures. The compression of territory thereby paved the way for executive-centered emergency government (Virilio 1977). But it was probably the German philosopher Martin Heidegger who most clearly anticipated contemporary debates about globalization. Heidegger not only described the “abolition of distance” as a constitutive feature of our contemporary condition, but he linked recent shifts in spatial experience to no less fundamental alterations in the temporality of human activity: “All distances in time and space are shrinking. Man now reaches overnight, by places, places which formerly took weeks and months of travel” (Heidegger 1950, 165). Heidegger also accurately prophesied that new communication and information technologies would soon spawn novel possibilities for dramatically extending the scope of virtual reality : “Distant sites of the most ancient cultures are shown on film as if they stood this very moment amidst today’s street traffic…The peak of this abolition of every possibility of remoteness is reached by television, which will soon pervade and dominate the whole machinery of communication” (Heidegger 1950, 165). Heidegger’s description of growing possibilities for simultaneity and instantaneousness in human experience ultimately proved no less apprehensive than the views of many of his predecessors. In his analysis, the compression of space increasingly meant that from the perspective of human experience “everything is equally far and equally near.” Instead of opening up new possibilities for rich and multi-faceted interaction with events once distant from the purview of most individuals, the abolition of distance tended to generate a “uniform distanceless” in which fundamentally distinct objects became part of a bland homogeneous experiential mass (Heidegger 1950, 166). The loss of any meaningful distinction between “nearness” and “distance” contributed to a leveling down of human experience, which in turn spawned an indifference that rendered human experience monotonous and one-dimensional.

Since the mid-1980s, social theorists have moved beyond the relatively underdeveloped character of previous reflections on the compression or annihilation of space to offer a rigorous conception of globalization. To be sure, major disagreements remain about the precise nature of the causal forces behind globalization, with David Harvey (1989 1996) building directly on Marx’s pioneering explanation of globalization, while others (Giddens 19990; Held, McGrew, Goldblatt & Perraton 1999) question the exclusive focus on economic factors characteristic of the Marxist approach. Nonetheless, a consensus about the basic rudiments of the concept of globalization appears to be emerging.

First, recent analysts associate globalization with deterritorialization , according to which a growing variety of social activities takes place irrespective of the geographical location of participants. As Jan Aart Scholte observes, “global events can – via telecommunication, digital computers, audiovisual media, rocketry and the like – occur almost simultaneously anywhere and everywhere in the world” (Scholte 1996, 45). Globalization refers to increased possibilities for action between and among people in situations where latitudinal and longitudinal location seems immaterial to the social activity at hand. Even though geographical location remains crucial for many undertakings (for example, farming to satisfy the needs of a local market), deterritorialization manifests itself in many social spheres. Business people on different continents now engage in electronic commerce; academics make use of the latest Internet conferencing equipment to organize seminars in which participants are located at disparate geographical locations; the Internet allows people to communicate instantaneously with each other notwithstanding vast geographical distances separating them. Territory in the sense of a traditional sense of a geographically identifiable location no longer constitutes the whole of “social space” in which human activity takes places. In this initial sense of the term, globalization refers to the spread of new forms of non-territorial social activity (Ruggie 1993; Scholte 2000).

Second, theorists conceive of globalization as linked to the growth of social interconnectedness across existing geographical and political boundaries. In this view, deterritorialization is a crucial facet of globalization. Yet an exclusive focus on it would be misleading. Since the vast majority of human activities is still tied to a concrete geographical location, the more decisive facet of globalization concerns the manner in which distant events and forces impact on local and regional endeavors (Tomlinson 1999, 9). For example, this encyclopedia might be seen as an example of a deterritorialized social space since it allows for the exchange of ideas in cyberspace. The only prerequisite for its use is access to the Internet. Although substantial inequalities in Internet access still exist, use of the encyclopedia is in principle unrelated to any specific geographical location. However, the reader may very well be making use of the encyclopedia as a supplement to course work undertaken at a school or university. That institution is not only located at a specific geographical juncture, but its location is probably essential for understanding many of its key attributes: the level of funding may vary according to the state or region where the university is located, or the same academic major might require different courses and readings at a university in China, for example, than in Argentina or Norway. Globalization refers to those processes whereby geographically distant events and decisions impact to a growing degree on “local” university life. For example, the insistence by powerful political leaders in wealthy countries that the International Monetary Fund (IMF) or World Bank recommend to Latin and South American countries that they commit themselves to a particular set of economic policies might result in poorly paid teachers and researchers as well as large, understaffed lecture classes in São Paolo or Lima; the latest innovations in information technology from a computer research laboratory in India could quickly change the classroom experience of students in British Columbia or Tokyo. Globalization refers “to processes of change which underpin a transformation in the organization of human affairs by linking together and expanding human activity across regions and continents” (Held, McGrew, Goldblatt & Perraton 1999, 15). Globalization in this sense is a matter of degree since any given social activity might influence events more or less faraway: even though a growing number of activities seems intermeshed with events in distant continents, certain human activities remain primarily local or regional in scope. Also, the magnitude and impact of the activity might vary: geographically removed events could have a relatively minimal or a far more extensive influence on events at a particular locality. Finally, we might consider the degree to which interconnectedness across frontiers is no longer merely haphazard but instead predictable and regularized (Held, McGrew, Goldblatt & Perraton 1999).

Third, globalization must also include reference to the speed or velocity of social activity. Deterritorialization and interconnectedness initially seem chiefly spatial in nature. Yet it is easy to see how these spatial shifts are directly tied to the acceleration of crucial forms of social activity. As we observed above in our discussion of the conceptual forerunners to the present-day debate on globalization, the proliferation of high-speed transportation, communication, and information technologies constitutes the most immediate source for the blurring of geographical and territorial boundaries that prescient observers have diagnosed at least since the mid-nineteenth century. The compression of space presupposes rapid-fire forms of technology; shifts in our experiences of territory depend on concomitant changes in the temporality of human action. High-speed technology only represents the tip of the iceberg, however. The linking together and expanding of social activities across borders is predicated on the possibility of relatively fast flows and movements of people, information, capital, and goods. Without these fast flows, it is difficult to see how distant events could possibly posses the influence they now enjoy. High-speed technology plays a pivotal role in the velocity of human affairs. But many other factors contribute to the overall pace and speed of social activity. The organizational structure of the modern capitalist factory offers one example; certain contemporary habits and inclinations, including the “mania for motion and speed” described by Dewey, represent another. Deterritorialization and the expansion of interconnectedness are intimately tied to the acceleration of social life, while social acceleration itself takes many different forms (Eriksen 2001; Rosa 2013). Here as well, we can easily see why globalization is always a matter of degree. The velocity or speed of flows, movements, and interchanges across borders can vary no less than their magnitude, impact, or regularity.

Fourth, even though analysts disagree about the causal forces that generate globalization, most agree that globalization should be conceived as a relatively long-term process . The triad of deterritorialization, interconnectedness, and social acceleration hardly represents a sudden or recent event in contemporary social life. Globalization is a constitutive feature of the modern world, and modern history includes many examples of globalization (Giddens 1990). As we saw above, nineteenth-century thinkers captured at least some of its core features; the compression of territoriality composed an important element of their lived experience. Nonetheless, some contemporary theorists believe that globalization has taken a particularly intense form in recent decades, as innovations in communication, transportation, and information technologies (for example, computerization) have generated stunning new possibilities for simultaneity and instantaneousness (Harvey 1989). In this view, present-day intellectual interest in the problem of globalization can be linked directly to the emergence of new high-speed technologies that tend to minimize the significance of distance and heighten possibilities for deterritorialization and social interconnectedness. Although the intense sense of territorial compression experienced by so many of our contemporaries is surely reminiscent of the experiences of earlier generations, some contemporary writers nonetheless argue that it would be mistaken to obscure the countless ways in which ongoing transformations of the spatial and temporal contours of human experience are especially far-reaching. While our nineteenth-century predecessors understandably marveled at the railroad or the telegraph, a comparatively vast array of social activities is now being transformed by innovations that accelerate social activity and considerably deepen longstanding trends towards deterritorialization and social interconnectedness. To be sure, the impact of deterritorialization, social interconnectedness, and social acceleration are by no means universal or uniform: migrant workers engaging in traditional forms of low-wage agricultural labor in the fields of southern California, for example, probably operate in a different spatial and temporal context than the Internet entrepreneurs of San Francisco or Seattle. Distinct assumptions about space and time often coexist uneasily during a specific historical juncture (Gurvitch 1964). Nonetheless, the impact of recent technological innovations is profound, and even those who do not have a job directly affected by the new technology are shaped by it in innumerable ways as citizens and consumers (Eriksen 2001, 16).

Fifth, globalization should be understood as a multi-pronged process, since deterritorialization, social interconnectedness, and acceleration manifest themselves in many different (economic, political, and cultural) arenas of social activity. Although each facet of globalization is linked to the core components of globalization described above, each consists of a complex and relatively autonomous series of empirical developments, requiring careful examination in order to disclose the causal mechanisms specific to it (Held, McGrew, Goldblatt & Perraton 1999). Each manifestation of globalization also generates distinct conflicts and dislocations. For example, there is substantial empirical evidence that cross-border flows and exchanges (of goods, people, information, etc.), as well as the emergence of directly transnational forms of production by means of which a single commodity is manufactured simultaneously in distant corners of the globe, are gaining in prominence (Castells 1996). High-speed technologies and organizational approaches are employed by transnationally operating firms, the so-called “global players,” with great effectiveness. The emergence of “around-the-world, around-the-clock” financial markets, where major cross-border financial transactions are made in cyberspace at the blink of an eye, represents a familiar example of the economic face of globalization. Global financial markets also challenge traditional attempts by liberal democratic nation-states to rein in the activities of bankers, spawning understandable anxieties about the growing power and influence of financial markets over democratically elected representative institutions. In political life, globalization takes a distinct form, though the general trends towards deterritorialization, interconnectedness across borders, and the acceleration of social activity are fundamental here as well. Transnational movements, in which activists employ rapid-fire communication technologies to join forces across borders in combating ills that seem correspondingly transnational in scope (for example, the depletion of the ozone layer), offer an example of political globalization (Tarrow 2005). Another would be the tendency towards ambitious supranational forms of social and economic lawmaking and regulation, where individual nation-states cooperate to pursue regulation whose jurisdiction transcends national borders no less than the cross-border economic processes that undermine traditional modes of nation state-based regulation. Political scientists typically describe such supranational organizations (the European Union, for example, or United States-Mexico-Canada Agreement, or USMCA) as important manifestations of political and legal globalization. The proliferation of supranational organizations has been no less conflict-laden than economic globalization, however. Critics insist that local, regional, and national forms of self-government are being supplanted by insufficiently democratic forms of global governance remote from the needs of ordinary citizens (Maus 2006; Streeck 2016). In contrast, defenders describe new forms of supranational legal and political decision as indispensable forerunners to more inclusive and advanced forms of self-government, even as they worry about existing democratic deficits and technocratic traits (Habermas 2015).

The wide-ranging impact of globalization on human existence means that it necessarily touches on many basic philosophical and political-theoretical questions. At a minimum, globalization suggests that academic philosophers in the rich countries of the West should pay closer attention to the neglected voices and intellectual traditions of peoples with whom our fate is intertwined in ever more intimate ways (Dallmayr 1998). In this section, however, we focus exclusively on the immediate challenges posed by globalization to normative political theory.

Western political theory has traditionally presupposed the existence of territorially bound communities, whose borders can be more or less neatly delineated from those of other communities. In this vein, the influential liberal political philosopher John Rawls described bounded communities whose fundamental structure consisted of “self-sufficient schemes of cooperation for all the essential purposes of human life” (Rawls 1993, 301). Although political and legal thinkers historically have exerted substantial energy in formulating defensible normative models of relations between states (Nardin and Mapel 1992), like Rawls they typically have relied on a clear delineation of “domestic” from “foreign” affairs. In addition, they have often argued that the domestic arena represents a normatively privileged site, since fundamental normative ideals and principles (for example, liberty or justice) are more likely to be successfully realized in the domestic arena than in relations among states. According to one influential strand within international relations theory, relations between states are more-or-less lawless. Since the achievement of justice or democracy, for example, presupposes an effective political sovereign, the lacuna of sovereignty at the global level means that justice and democracy are necessarily incomplete and probably unattainable there. In this conventional realist view of international politics, core features of the modern system of sovereign states relegate the pursuit of western political thought’s most noble normative goals primarily to the domestic arena (Mearsheimer 2003.) Significantly, some prominent mid-century proponents of international realism rejected this position’s deep hostility to international law and supranational political organization, in part because they presciently confronted challenges that we now typically associate with intensified globalization (Scheuerman 2011).

Globalization poses a fundamental challenge to each of these traditional assumptions. It is no longer self-evident that nation-states can be described as “self-sufficient schemes of cooperation for all the essential purposes of human life” in the context of intense deterritorialization and the spread and intensification of social relations across borders. The idea of a bounded community seems suspect given recent shifts in the spatio-temporal contours of human life. Even the most powerful and privileged political units are now subject to increasingly deterritorialized activities (for example, global financial markets or digitalized mass communication) over which they have limited control, and they find themselves nested in webs of social relations whose scope explodes the confines of national borders. Of course, in much of human history social relations have transcended existing political divides. However, globalization implies a profound quantitative increase in and intensification of social relations of this type. While attempts to offer a clear delineation of the “domestic” from the “foreign” probably made sense at an earlier juncture in history, this distinction no longer accords with core developmental trends in many arenas of social activity. As the possibility of a clear division between domestic and foreign affairs dissipates, the traditional tendency to picture the domestic arena as a privileged site for the realization of normative ideals and principles becomes problematic as well. As an empirical matter, the decay of the domestic-foreign frontier seems highly ambivalent, since it might easily pave the way for the decay of the more attractive attributes of domestic political life: as “foreign” affairs collapse inward onto “domestic” political life, the insufficiently lawful contours of the former make disturbing inroads onto the latter (Scheuerman 2004). As a normative matter, however, the disintegration of the domestic-foreign divide probably calls for us to consider, to a greater extent than ever before, how our fundamental normative commitments about political life can be effectively achieved on a global scale. If we take the principles of justice or democracy seriously, for example, it is no longer self-evident that the domestic arena is the exclusive or perhaps even main site for their pursuit, since domestic and foreign affairs are now deeply and irrevocably intermeshed. In a globalizing world, the lack of democracy or justice in the global setting necessarily impacts deeply on the pursuit of justice or democracy at home. Indeed, it may no longer be possible to achieve our normative ideals at home without undertaking to do so transnationally as well.

To claim, for example, that questions of distributive justice have no standing in the making of foreign affairs represents at best empirical naivete about economic globalization. At worst, it constitutes a disingenuous refusal to grapple with the fact that the material existence of those fortunate enough to live in the rich countries is inextricably tied to the material status of the vast majority of humanity residing in poor and underdeveloped regions. Growing material inequality spawned by economic globalization is linked to growing domestic material inequality in the rich democracies (Falk 1999; Pogge 2002). Similarly, in the context of global warming and the destruction of the ozone layer, a dogmatic insistence on the sanctity of national sovereignty risks constituting a cynical fig leaf for irresponsible activities whose impact extends well beyond the borders of those countries most directly responsible. Global warming and ozone-depletion cry out for ambitious forms of transnational cooperation and regulation, and the refusal by the rich democracies to accept this necessity implies a failure to take the process of globalization seriously when doing so conflicts with their immediate material interests. Although it might initially seem to be illustrative of clever Realpolitik on the part of the culpable nations to ward off strict cross-border environmental regulation, their stubbornness is probably short-sighted: global warming and ozone depletion will affect the children of Americans who drive gas-guzzling SUVs or use environmentally unsound air-conditioning as well as the future generations of South Africa or Afghanistan (Cerutti 2007). If we keep in mind that environmental degradation probably impacts negatively on democratic politics (for example, by undermining its legitimacy and stability), the failure to pursue effective transnational environmental regulation potentially undermines democracy at home as well as abroad.

Philosophers and political theorists have eagerly addressed the normative and political implications of our globalizing world. A lively debate about the possibility of achieving justice at the global level pits representatives of cosmopolitanism against myriad communitarians, nationalists, realists, and others who privilege the nation-state and moral, political, and social ties resting on it (Lieven 2020; Tamir 2019). In contrast, cosmopolitans tend to underscore our universal obligations to those who reside faraway and with whom we may share little in the way of language, custom, or culture, oftentimes arguing that claims to “justice at home” can and should be applied elsewhere as well (Beardsworth 2011; Beitz 1999; Caney 2006; Wallace-Brown & Held 2010). In this way, cosmopolitanism builds directly on the universalistic impulses of modern moral and political thought. Cosmopolitanism’s critics dispute the view that our obligations to foreigners possess the same status as those to members of particular local and national communities of which we remain very much a part. They by no means deny the need to redress global inequality, for example, but they often express skepticism in the face of cosmopolitanism’s tendency to defend significant legal and political reforms as necessary to address the inequities of a planet where millions of people a year die of starvation or curable diseases (Miller 2007; 2013; Nagel 2005). Nor do cosmopolitanism’s critics necessarily deny that the process of globalization is real, though some of them suggest that its impact has been grossly exaggerated (Kymlicka 1999; Nussbaum et al . 1996; Streeck 2016). Nonetheless, they doubt that humanity has achieved a rich or sufficiently articulated sense of a common fate such that far-reaching attempts to achieve greater global justice (for example, substantial redistribution from the rich to poor) could prove successful. Cosmopolitans not only counter with a flurry of universalist and egalitarian moral arguments, but they also accuse their opponents of obscuring the threat posed by globalization to the particular forms of national community whose ethical primacy communitarians, nationalists, and others endorse. From the cosmopolitan perspective, the tendency to favor moral and political obligations to fellow members of the nation-state represents a misguided and increasingly reactionary nostalgia for a rapidly decaying constellation of political practices and institutions.

A similar divide characterizes the ongoing debate about the prospects of democratic institutions at the global level. In a cosmopolitan mode, Daniele Archibugi (2008) and the late David Held (1995) have argued that globalization requires the extension of liberal democratic institutions (including the rule of law and elected representative institutions) to the transnational level. Nation state-based liberal democracy is poorly equipped to deal with deleterious side effects of present-day globalization such as ozone depletion or burgeoning material inequality. In addition, a growing array of genuinely transnational forms of activity calls out for correspondingly transnational modes of liberal democratic decision-making. According to this model, “local” or “national” matters should remain under the auspices of existing liberal democratic institutions. But in those areas where deterritorialization and social interconnectedness across national borders are especially striking, new transnational institutions (for example, cross-border referenda), along with a dramatic strengthening and further democratization of existing forms of supranational authority (in particular, the United Nations), are necessary if we are to assure that popular sovereignty remains an effective principle. In the same spirit, cosmopolitans debate whether a loose system of global “governance” suffices, or instead cosmopolitan ideals require something along the lines of a global “government” or state (Cabrera 2011; Scheuerman 2014). Jürgen Habermas, a prominent cosmopolitan-minded theorist, has tried to formulate a defense of the European Union that conceives of it as a key stepping stone towards supranational democracy. If the EU is to help succeed in salvaging the principle of popular sovereignty in a world where the decay of nation state-based democracy makes democracy vulnerable, the EU will need to strengthen its elected representative organs and better guarantee the civil, political, and social and economic rights of all Europeans (Habermas 2001, 58–113; 2009). Representing a novel form of postnational constitutionalism, it potentially offers some broader lessons for those hoping to save democratic constitutionalism under novel global conditions. Despite dire threats to the EU posed by nationalist and populist movements, Habermas and other cosmopolitan-minded intellectuals believe that it can be effectively reformed and preserved (Habermas 2012).

In opposition to Archibugi, Held, Habermas, and other cosmopolitans, skeptics underscore the purportedly utopian character of such proposals, arguing that democratic politics presupposes deep feelings of trust, commitment, and belonging that remain uncommon at the postnational and global levels. Largely non-voluntary commonalities of belief, history, and custom compose necessary preconditions of any viable democracy, and since these commonalities are missing beyond the sphere of the nation-state, global or cosmopolitan democracy is doomed to fail (Archibugi, Held, and Koehler 1998; Lieven 2020). Critics inspired by realist international theory argue that cosmopolitanism obscures the fundamentally pluralistic, dynamic, and conflictual nature of political life on our divided planet. Notwithstanding its pacific self-understanding, cosmopolitan democracy inadvertently opens the door to new and even more horrible forms of political violence. Cosmpolitanism’s universalistic normative discourse not only ignores the harsh and unavoidably agonistic character of political life, but it also tends to serve as a convenient ideological cloak for terrible wars waged by political blocs no less self-interested than the traditional nation state (Zolo 1997, 24).

Ongoing political developments suggest that such debates are of more than narrow scholarly interest. Until recently, some of globalization’s key prongs seemed destined to transform human affairs in seemingly permanent ways: economic globalization, as well as the growth of a panoply of international and global political and legal institutions, continued to transpire at a rapid rate. Such institutional developments, it should be noted, were interpreted by some cosmopolitan theorists as broadly corroborating their overall normative aspirations. With the resurgence of nationalist and populist political movements, many of which diffusely (and sometimes misleadingly) target elements of globalization, globalization’s future prospects seem increasingly uncertain. For example, with powerful political leaders regularly making disdainful remarks about the UN and EU, it seems unclear whether one of globalization’s most striking features, i.e., enhanced political and legal decision-making “beyond the nation state,” will continue unabated. Tragically perhaps, the failure to manage economic globalization so as to minimize avoidable inequalities and injustices has opened the door to a nationalist and populist backlash, with many people now ready to embrace politicians and movements promising to push back against “free trade,” relatively porous borders (for migrants and refugees), and other manifestations of globalization (Stiglitz 2018). Even if it seems unlikely that nationalists or populists can succeed in fully halting, let alone reversing, structural trends towards deterritorialization, intensified interconnectedness, and social acceleration, they may manage to reshape them in ways that cosmopolitans are likely to find alarming. Whether or not nationalists and populists can successfully respond to many fundamental global challenges (e.g., climate change or nuclear proliferation), however, remains far less likely.

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Globalization and liberalization: the impact on developing countries

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Summary This paper analyzes the impact of globalization on developing countries over the last several decades. The first section examines the components and mechanisms of globalization. The second turns to financial globalization –considered to be the most important aspect of a multifaceted process– and looks in more detail at the changing trends in finance for developing countries. The third analyzes the impact of the new pattern of finance in terms of growth, equity, and government autonomy. The concluding section offers policy recommendations for making globalization a more positive force. Four basic arguments are developed in the paper with respect to the impact of financial globalization. First, globalization has increased the capital available to developing countries, which potentially increases their ability to grow faster than if they had to rely exclusively on their own resources. Not all capital flows contribute equally to growth, however; short-term flows and the purchase of existing assets are less valuable than investment in new facilities. At the same time, the increasing mobility of capital can also lead to greater volatility, which is very costly for growth. Second, capital flows are unequally distributed by region and country, thus skewing the patterns of growth. There is also an unequal distribution of capital within countries by geographic area, sector, type of firm, and social group, creating a division between winners and losers. Third, government attempts to extract the benefits from the globalization of capital, while limiting the costs, is more possible than usually thought. The source of many problems is local rather than global, and the experience of several countries indicates that 'Heterodox' policies can be followed. Finally, policy changes at the global, regional, and national levels could improve the picture just sketched out.

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Globalization and Economic Growth

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Ishak Demir 7 , 10 ,
Mehmet Canakci 8 &
Taha Egri 9

Part of the book series: Encyclopedia of the UN Sustainable Development Goals ((ENUNSDG))

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Demir, I., Canakci, M., Egri, T. (2021). Globalization and Economic Growth. In: Leal Filho, W., Azul, A.M., Brandli, L., Lange Salvia, A., Wall, T. (eds) Decent Work and Economic Growth. Encyclopedia of the UN Sustainable Development Goals. Springer, Cham. https://doi.org/10.1007/978-3-319-71058-7_90-1

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globalization and liberalization

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Women in Developing Countries: Globalization, Liberalization, and Gender Equality Essay (Critical Writing)

Globalization, liberalization, and issues of gender equality have brought both positive and negative results to women in developing countries. The past two decades have witnessed a tremendous impact on the lives of women in developing countries due to globalization. By definition, globalization is the complex political, cultural, economic, and geographic procedures in which the mobility of ideas, capital, discourses, people, and organizations has adapted a global form (Bachus and Foerster, 2005).

When critically analyzed, globalization and liberalization have been found to advance the world’s social-economic ills, especially in developing countries. The two concepts directly impact gender equality, or lack of it, in developing countries.

These poor countries are encouraged to unlock their economies to global trade with a fake promise that they will prosper and develop faster by embracing free trade. Instead of prospering, they are coerced to open up their boundaries to multinationals and foreign investors through the signing of various trade agreements like the North America Free Trade Agreement (NAFTA). The foreign investors take full advantage of the readily available cheap labor found in budding countries. A huge proportion of the cheap labor consists mainly of women who are poorly educated and deprived economically. To reduce labor costs, the foreign investors intentionally hire the women thus condemning them to perpetual poverty and misery (Murray, 2005).

Women are considered to be docile workers, ready to obey the demands of production at any cost. In most cases, they are preferred over their male counterparts by multinationals. This is because of their socialization and cultural upbringing. Cultural influences continued to control the stratification of employment in developing countries, with roles such as garment assembly being thrown to women by the investors.

The advantage of this is that it has brought a soaring demand for employment chances for women in the developing world. This has brought an immediate change in the social structure of the societies involved. It has brought a sense of independence to women. However, in the same vein, poverty has been feminized by these multinationals in that, they pay the women so little to make a positive transformation of their lives (Bachus and Foerster, 2005).

Scholars and economists have agreed that globalization and liberalization of developing countries have created both winners and losers. Women in these countries have been the major casualties. This is because the processes failed to pay attention to the gender-differentiated influences of changes occasioned by international trade policies and agreements. Globalization and liberalization may have opened up new trade and job opportunities for women in developing countries.

Nevertheless, poor women from these countries lack the necessary skills, resources, and technology to take advantage of such incentives. Those that are recruited to the openings brought forth by globalization are underpaid because they lack the necessary knowledge. Women in developing countries are further made vulnerable by the fluctuations of basic commodities that often accompany the liberalized trade (McGill, 2004).

Owing to issues of gender, the voices of women in developing countries are never heard when it comes to the creation of trade agreements and policies or in their negotiations. Due to culture, issues of drawing up trade agreements and policies are left to men. This again has disadvantaged the women when it comes to globalization and liberalization. The majority of women in the developing world are not given the slightest chance to express their feelings or issues affecting them as countries pursue the globalization agenda (McGill, 2004).

Globalization and liberalization have caused gender inequality to increase in developing nations, especially in Africa. This is because more prestigious and well-paying vacancies go out to men while women are accommodated in the periphery of these multinationals. They perform more difficult and labor-intensive duties but they are paid the least. This widens the gap between women and men in the social stratification system (Baliamoune-Lutz, 2007).

Significant gender disparities and differences have been noted when it comes to participation in drafting the various treaties governing globalization in developing countries. For example, women have been left out in the decision-making processes thus are negatively affected by the globalization and liberalization processes more than men (Engaging in globalization, 1999).

In conclusion, it can be said that globalization has continued to affect the social life of women in developing countries. Though it has given women some sense of financial independence, it continues to affect them negatively due to the influence of structural adjustment programs and policies. Some of these policies have advanced gender inequalities (Ganguly-Scrase, 2003)

Works cited

Bachus, N., and Foerster, A. The Effects of Globalization on Women in Developing Nations . 2005. Pace University. Web.

Baliamoune-Lutz, M. “ Globalization and Gender Inequality: Is Africa Different. ” Journal of African Economies , Vol. 16, No. 2, pp. 301-348 (2007). Web.

Engaging in globalization: Implications for Gender Relations . 1999. Economic and Social Commission for Western Asia. Web.

Ganguly-Scrase, R. “Paradoxes of Globalization, Liberalization, and Gender Equality.” Gender and Society , vol. 17, no. 4, pp. 544-566 (2003). Web.

McGill, J. Trade Liberalization: Pain or Gain. 2004. Asian Development Bank. Web.

Murray, J. “The Double Edge of Globalization: The advancement and Marginalization of Women in Asian and African Economies.” Journal of International studies . 2005. Web.

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IvyPanda. (2021, September 25). Women in Developing Countries: Globalization, Liberalization, and Gender Equality. https://ivypanda.com/essays/how-globalization-liberalization-and-gender-equality-issues-has-affected-women-in-developing-countries/

"Women in Developing Countries: Globalization, Liberalization, and Gender Equality." IvyPanda , 25 Sept. 2021, ivypanda.com/essays/how-globalization-liberalization-and-gender-equality-issues-has-affected-women-in-developing-countries/.

IvyPanda . (2021) 'Women in Developing Countries: Globalization, Liberalization, and Gender Equality'. 25 September.

IvyPanda . 2021. "Women in Developing Countries: Globalization, Liberalization, and Gender Equality." September 25, 2021. https://ivypanda.com/essays/how-globalization-liberalization-and-gender-equality-issues-has-affected-women-in-developing-countries/.

1. IvyPanda . "Women in Developing Countries: Globalization, Liberalization, and Gender Equality." September 25, 2021. https://ivypanda.com/essays/how-globalization-liberalization-and-gender-equality-issues-has-affected-women-in-developing-countries/.

Bibliography

IvyPanda . "Women in Developing Countries: Globalization, Liberalization, and Gender Equality." September 25, 2021. https://ivypanda.com/essays/how-globalization-liberalization-and-gender-equality-issues-has-affected-women-in-developing-countries/.

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Essay On Globalisation

Globalisation Essay

500+ words essay on globalisation.

Globalisation can be defined as a process of integration of the Indian economy with the world economy. Globalisation has been taking place for the past hundred years, but it has sped up enormously over the last half-century. It has increased the production and exchange of goods and services. Globalisation is a positive outcome of privatisation and liberalisation. Globalisation is primarily an economic process of interaction and integration associated with social and cultural aspects. It is said to be an outcome of different policies to transform the world towards greater interdependence and integration. To explain, in other words, Globalisation is a concept or method of interaction and union among people, corporations, and governments universally.

The top five types of globalisation are:

1. Cultural globalisation

2. Economic globalisation

3. Technological globalisation

4. Political globalisation

5. Financial globalisation

Impact of Globalisation on the Indian Economy

After urbanisation and globalisation, we can witness a drastic change in the Indian economy. The government-administered and established economic policies are imperative in planning income, investment, savings, and employment. These economic policies directly influence while framing the basic outline of the Indian economy.

Indian society is critically impacted by cross-culture due to globalisation, and it brought changes in different aspects of the country in terms of political, cultural, economic and social.

However, the main factor is economic unification which contributes maximum to a country’s economy into an international economy.

Advantages of Globalisation

Labour access: Due to globalisation, nations can now access a broader labour pool. If there is any shortage of knowledgeable workers in any developing nation, they can import labour from other countries. On the other hand, wealthier countries get an opportunity to outsource their low-skill work to developing nations with a low cost of living to reduce the cost of goods sold and move those savings to the customers.

High standard of living: After Globalisation, the Indian economy and the standard of living have increased. The change can be observed in the purchasing behaviour of an individual, especially those associated with foreign companies. Hence, most cities are upgraded with a better standard of living and business development.

Resource Access : The primary reason for trade is to gain access to the resources of other countries. It would have been impossible to produce or manufacture luxurious goods if the flow of resources across countries was not permissible—for example, Smartphones.

Impact of Globalisation

Globalisation in terms of economy is associated with the development of capitalism. The introduction of Globalisation has developed economic freedom and increased the living standard worldwide. It has also fastened up the process of offshoring and outsourcing. Due to outsourcing, transnational companies got an opportunity to exploit medium and small-sized enterprises intensively at a low price worldwide. As a kind of economic venture, outsourcing has increased, in recent times, because of the increase in quick methods of communication, especially the growth of information technology (IT).

Privatization of public utilities and goods, such as security, health, etc., are also impacted by Globalisation. Other goods, such as medicines or seeds, are considered economic goods and have been integrated into recent trade agreements.

This essay on Globalisation will help students to understand the concept more accurately. Students can also visit our BYJU’S website to get more CBSE Essays , question papers, sample papers, etc.

Frequently Asked Questions on Globalisation Essay

What are the benefits of globalisation.

Globalisation gives countries access to foreign cultures and technological innovation from more advanced countries. It provides improved living standards to people. The global exposure it gives has resulted in the emergence of new talent in multiple fields.

What are the main elements of globalisation?

Principle elements of globalisation are international trade, foreign investment, capital market flows, labour migration, and diffusion of technology.

What are the different types of globalisation?

Political, economic and cultural globalisation are the main types of globalisation.

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Essay on Globalization and development

To date, economic globalization has become one of the major trends in the global economy, which is manifested in the constant expansion of economic relations between states. The transnational-corporations (TNCs) play a significant role in the processes of globalization and are considered to be a critical factor in the global economy. Thus, the topic concerning the impact of economic globalization and the rise of the transnational-corporations (TNCs) on the developing world is of great interest to the study and is recognized to be very relevant.

The nature of economic globalization

The impact of economic globalization on the developing world cannot be overstated. As stated by Soomro, Nasar-ul-eman and Aziz (2012: 605) ‘the economic activity of producing goods and services and distributing them throughout world without any barriers of quotas’ is widely known as economic globalization. In fact, economic globalization is one of the regularities of the world development that is immeasurably increased in comparison with the integration and interdependence of the economies of various countries. It ‘means change in actual flows and restrictions imposed by the regulatory institutions in the country’ (Soomro, Nasar-ul-eman and Aziz, 2012: 606). In addition, it is associated with the formation of economic space, where the branch structure, the exchange of information and technology, and the geographic distribution of productive forces are determined taking into account the global situation, and the economic ups and downs acquire a planetary scale. The growing economic globalization is reflected in a sharp increase in the magnitude of capital movements, faster rise in international trade compared to the gross domestic product (GDP), the emergence global financial markets that are open a week around the clock. Created over the last decade, information systems immeasurably strengthened the ability of financial capital to the rapid movement that includes, at least potentially, the capacity to destroy the sustainable economic systems.

Factors driving economic globalization

Scientific and technological progresses, economic liberalization (the development of the market system) and changes in the political system at the national and international scale greatly contributed to the accelerated development of the processes of economic globalization. In fact, scientific and technological progresses globalize the world economy through the development of transport, communication and information technologies. The rapid introduction of information technology played a key role in the development of technological progresses. The development ‘in the technology of transportation and communication have reduced the costs of transporting goods, services, and factors of production and of communicating economically useful knowledge and technology’ (Mussa, n.d.: para. 2). The introduction of digital processing technologies and convergence (integration) of means of communications and computer technology allows us to transport huge amounts of information in the shortest possible time and at a low cost. The development of telecommunications has had a huge effect on the globalization of the production sector.

Thanks to the proliferation of the Internet and communication technologies, many countries almost completely reoriented their traditional production and engineering work in the field of information technology. The development of mass media and technology’s impact on people’s mass consciousness has led to this information revolution. Information technologies give the opportunity to profoundly restrict people’s mass consciousness. Information technologies first made an impact on people’s consciousness profitable from a commercial point of view. The second factor driving economic globalization is the liberalization of the economy. It follows from the general ideology and practice of economic liberalism that has demonstrated efficacy in Western countries, and later in a number of new industrialized countries. The third factor driving economic globalization is the transformation of the political system on a national and international scale. Firstly, it is the democratization of the political system in most developed countries based on freedoms of human rights, stability, external openness and liberal forms of competition. Secondly, it is related to changes in the geopolitical situation in the world (the global ideological and political confrontation, the development process of political dialogue, political integration, etc.).

Thirdly, strengthening the political unipolarity of the world also greatly contributed to economic globalization. Thus, economic globalization is a complex and contradictory process. On the one hand, it facilitates the economic interaction between states, creates the conditions for countries to access the advanced achievements of mankind, ensures resource savings, stimulates the world’s progress, and changes ‘the picture of World Economy, by increasing the cross-border trade, exchanges of currency, free flow of Capital, movement of people and flow of information’ (Akram, et al., 2011: 291). On the other hand, economic globalization has numerous negative consequences: strengthening the peripheral model of the economy, the loss of its resources to countries outside the ‘golden billion’, the ruin of small businesses, declining living standards, growing inequality across nations, environmental deteriorations, etc. (Singh, 2013). Hence, making the benefits of globalization available to the maximum number of people is one of the problems facing the whole world community.

The rise of the transnational-corporations

The rise of the transnational-corporations (TNCs) is a predefined process. As a result, transnational corporations (TNCs) have become a main driving force of economic globalization. Transnational corporations are ‘any enterprise that undertakes foreign direct investment, owns or controls income-gathering assets in more than one country, produces goods or services outside its country of origin, or engages in international production’ (Westaway, 2012: 65). Today, transnational-corporations are the most flexible organizations that greatly support economic globalization. Multinational corporations are a powerful economic force that binds the national economy and determines the economic development of the countries and the world as a whole. Furthermore, global, regional and intergovernmental agreements are very important elements that affect the development of corporations. The influence of transnational corporations in the global economy, regardless of their level of development increases. Indeed, foreign direct investment is an important mechanism through which savings are transferred from the advanced industrialized countries to the developing ones since they have the low savings. Transnational corporations are an important means of technology transfer and management experience in many industrial countries. Most of the countries that host corporate affiliates in its territory approve their activities and even compete with each other to attract foreign direct investments. Large company experience allows staff to organize the production and coordination of activities more effectively than, for instance, the leaders of the host country. Corporations are able to displace the domestic producers out of business. This occurs due to increased competition in the domestic market. The use of best management practices and modern technology allows a corporation to set the price lower than local firms, thereby driving them out of business. Also, the production of various goods and services from the imported component displaces the local suppliers. In addition, transnational corporations are beneficial in the fact that they engage the most advanced applications and technologies…and…have by far the largest geographical scale and scope in their data processing operations” (Roche, 1996: 130).

Hence, it is possible to point out that activities of transnational corporations greatly support economic globalization. However, their impact on the economies of developing countries is not always positive. Currently, the elements that support the placement of multinationals are as follows: 1) expanding the market; and 2) progressive migration of capital and technology from countries with high wages to other countries that are more favorable to corporations. There are many favorable factors that have a positive impact on transnational corporations. Corporations can migrate across national borders. The process is easy in those countries where the national border management is minimal. Given the dominance of their politics, economics and technology, it is not surprising that most of the corporations are involved in the most serious environmental crises in the world.

Countries can use special tools in order to monitor transnational corporations, to close national boundaries, or to implement the harmonization of national policies with the activities of corporations in order to support civil active groups for better living standards and environmental protection practices. Indeed, ‘greater access to developed country markets and technology transfer promised to improve productivity and increase living standards’ (Singh, 2013: 2).

The main feature of TNCs is global operations. As a result, the world market is very crucial to TNCs. Therefore, the expansion of TNCs is actually performed internationally. This is explained by the fact that TNCs are actually organized based on the type of state: the distribution of goods and services are concentrated in a few hands. The essential characteristics of transnational corporations are supranational activities that have an impact on all the quality processes in their host countries, primarily economic and political ones, which create and manage the supranational bonds and relationships. This fact allows them to follow their own economic line. A typical feature of ‘transnational economy’ is a contrast between the well-being of large TNCs and serious difficulties of the country as a whole: the unsustainable development of inflation, unemployment, etc. Hence, the economic growth of transnational corporations increases a confrontation between labor and capital.

TNCs and globalization of the world economy

Nowadays, transnational corporations are not only understood as a platform on which the economy of developed economy is actually based, but also as a major multinational group, including many overseas branches of production, research, supply and marketing that are the main force of the world economy. In such a case, TNCs are a determining factor in deciding the fate of a country in the international system of economic relations. Active production, investment and business activities allow TNCs to perform the function of the international regulation of the production and distribution of products.

The host country as a whole benefits from inward investments. The broad involvement of foreign capital flows using TNCs helps to reduce unemployment in the country. Companies that produce globally competitive products and focus mainly on exports, largely contribute to the strengthening of foreign trade positions of the whole country. Benefits that are subject to legal foreign firms are not limited by the quantitative indicators. The activities of TNCs force the local companies’ administration to make adjustments to the technological process, to spend more time on training and retraining of workers, and to pay more attention to product quality, design, and consumer properties. Also, the new technologies, new kinds of products, new management styles, using all the best practices of foreign businesses are often one of the major tools that benefit TNCs as a whole. However, it should be noted that along with the positive aspects of the functioning of TNCs in the world economy and international economic relations, there are numerous negative impacts on the economy of the countries where they operate: a) opposition to the implementation of economic policies of those states where TNCs operate, b) violation of the law of the host countries. Thus, by manipulating the transfer pricing policy, the subsidiaries of TNCs operating in different countries, skillfully evade the national norms and regulations sheltering income from taxation by transferring them from one country to another, c) the establishment of monopoly prices that are prejudicial to the interests of developing countries, and d) higher inequality (Herkenrath and Bornschier, 2003).

Globalization as a multifactorial phenomenon is characterized by the globalization of financial markets, the internationalization of corporate strategies, the international transfer of technologies, the transformation of consumer behavior, and the internationalization of the regulatory capacity of national economies. In return, international corporations are considered to be direct participants in the entire spectrum of global economic relations. TNCs, on the one hand, are the product of the developing economic relations. However, on the other hand, they are powerful mechanisms that greatly influence the world economy. Hence, actively working on international economic relations, TNCs form new relationships in the global world.

Based on the above-mentioned information, it is possible to conclude that direct international manufacturing business associations grounded on the international movement of capital flows are one of the main factors in the world economy. The rapid growth of foreign direct investment, the output process of division of labor outside the firm, industry and national borders is accompanied by giant international scientific and industrial complexes with branches in different countries and on different continents. TNCs transform the global economy into the international production with the help of providing the acceleration of technological and scientific progresses in all its directions: product quality, production efficiency, new forms of management, enterprise management.

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