Globalization

Topics

Globalization: An overview
Globalization: Defined
Types of Globalization
History of Globalization

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Globalization: Present and Future Trends

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Pros and Cons of Globalization

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Slowbalisation
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Examples of Globalized Institutions
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Globalization and Pakistan

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Globalization: An Overview
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"Globalization" is a historical process, the result of human innovation and

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technological progress. It refers to the increasing integration of economies

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around the world, particularly through the movement of goods, services, and
capital across borders. The term sometimes also refers to the movement of
people (labor) and knowledge (technology) across international borders. There
are also broader cultural, political, and environmental dimensions of
globalization.
The term "globalization" began to be used more commonly in the 1980s,
reflecting technological advances that made it easier and quicker to complete
international transactions—both trade and financial flows. It refers to an
extension beyond national borders of the same market forces that have operated
for centuries at all levels of human economic activity—village markets, urban
industries, or financial centers.

There are countless indicators that illustrate how goods, capital, and people, have
become more globalized.
The value of trade (goods and services) as a percentage of world GDP increased
from 42.1 percent in 1980 to 62.1 percent in 2007.
Foreign direct investment increased from 6.5 percent of world GDP in 1980 to
31.8 percent in 2006.

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The stock of international claims (primarily bank loans), as a percentage of world

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GDP, increased from roughly 10 percent in 1980 to 48 percent in 2006.

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The number of minutes spent on cross-border telephone calls, on a per-capita

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basis, increased from 7.3 in 1991 to 28.8 in 2006.
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The number of foreign workers has increased from 78 million people (2.4 percent
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of the world population) in 1965 to 191 million people (3.0 percent of the world
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population) in 2005.
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The growth in global markets has helped to promote efficiency through

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competition and the division of labor—the specialization that allows people and
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economies to focus on what they do best. Global markets also offer greater
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opportunity for people to tap into more diversified and larger markets around the
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world. It means that they can have access to more capital, technology, cheaper
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imports, and larger export markets. But markets do not necessarily ensure that
the benefits of increased efficiency are shared by all. Countries must be prepared
to embrace the policies needed, and, in the case of the poorest countries, may
need the support of the international community as they do so.
The broad reach of globalization easily extends to daily choices of personal,
economic, and political life. For example, greater access to modern technologies,
in the world of health care, could make the difference between life and death. In
the world of communications, it would facilitate commerce and education, and
allow access to independent media. Globalization can also create a framework for
cooperation among nations on a range of non-economic issues that have cross-
border implications, such as immigration, the environment, and legal issues. At
the same time, the influx of foreign goods, services, and capital into a country can
create incentives and demands for strengthening the education system, as a
country's citizens recognize the competitive challenge before them.
Perhaps more importantly, globalization implies that information and knowledge
get dispersed and shared. Innovators—be they in business or government—can
draw on ideas that have been successfully implemented in one jurisdiction and
tailor them to suit their own jurisdiction. Just as important, they can avoid the
ideas that have a clear track record of failure. Joseph Stiglitz, a Nobel laureate and
frequent critic of globalization, has nonetheless observed that globalization "has
reduced the sense of isolation felt in much of the developing world and has given

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many people in the developing world access to knowledge well beyond the reach

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of even the wealthiest in any country a century ago."

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International Trade
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A core element of globalization is the expansion of world trade through the
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elimination or reduction of trade barriers, such as import tariffs. Greater imports

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offer consumers a wider variety of goods at lower prices, while providing strong
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incentives for domestic industries to remain competitive. Exports, often a source

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of economic growth for developing nations, stimulate job creation as industries

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sell beyond their borders. More generally, trade enhances national

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competitiveness by driving workers to focus on those vocations where they, and

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their country, have a competitive advantage. Trade promotes economic resilience

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and flexibility, as higher imports help to offset adverse domestic supply shocks.
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Greater openness can also stimulate foreign investment, which would be a source
of employment for the local workforce and could bring along new technologies—
thus promoting higher productivity.
Restricting international trade—that is, engaging in protectionism—generates
adverse consequences for a country that undertakes such a policy. For example,
tariffs raise the prices of imported goods, harming consumers, many of which
may be poor. Protectionism also tends to reward concentrated, well-organized
and politically-connected groups, at the expense of those whose interests may be
more diffuse (such as consumers). It also reduces the variety of goods available
and generates inefficiency by reducing competition and encouraging resources to
flow into protected sectors.
Developing countries can benefit from an expansion in international trade.
Ernesto Zedillo, the former president of Mexico, has observed that, "In every case
where a poor nation has significantly overcome its poverty, this has been
achieved while engaging in production for export markets and opening itself to
the influx of foreign goods, investment, and technology." And the trend is clear. In
the late 1980s, many developing countries began to dismantle their barriers to
international trade, as a result of poor economic performance under protectionist
polices and various economic crises. In the 1990s, many former Eastern bloc
countries integrated into the global trading system and developing Asia—one of

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the most closed regions to trade in 1980—progressively dismantled barriers to

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trade. Overall, while the average tariff rate applied by developing countries is

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higher than that applied by advanced countries, it has declined significantly over

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the last several decades. PP
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Source: https://www.imf.org/external/np/exr/ib/2008/053008.htm
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Globalization: Defined
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► Globalization is viewed as a long-term process rather than a phenomenon that

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emerged in the last decades or even century. It is an old phenomenon started

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since civilization began communicating and interacting with one another via
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different means.
► Globalization is a commutative process since the time of maritime exploration
and adventures, salve trade colonization and exchange of labor and capital inputs,
whether forced or voluntary.
► Globalization emerges from technological revolution that started near the end
of previous century which culminated into the present explosion of information
technological that is-called “Brain Industry”. The new “knowledge industry” and
the interconnected dynamic webs are vital enhancing globalization in recent
years.
► Globalization is seen as an outcome of the new economic order, the end of the
Cold War, growth and prosperity as former “Central Intelligence Agency” head”
George Bush” declared. The failure of the former Soviet Union, East Germany, and
order command economies encouraged proponents of international free trade
and international financial actions.
On the other hand, a decade after, as multilateral agencies and international
economic cooperation organizations have permanently established free trade
agreements and undertook new financial treaties to a considerable number of
individuals, non-Governmental Organizations (NGOs), and social movements have
declared the negative socioeconomic destruction by globalization, especially in
the light of last Asian and Russian currency crises.

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► “Globalization is a commutative, cumulative process. This process is being

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institutionalized and assisted by an international policy of “Openness” and

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enforced by international agreements on trade and capital movements. So,
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globalization reduces governments traditional role in managing their states”.
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Globalization is the process of growing economic interdependence of countries in

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the international economy. This occurs through increasing the volume and variety
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of cross-border trade in goods and services, higher international financial flows,

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more rapid diffusion of technology and institutional linkages between firms in

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different countries.
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► Globalization is not only an economic phenomenon it comprises political,

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social, and cultural aspects. An example is the global TVs networks, internet etc.
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and satellites, which can end by affecting cultural traditions.

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Progress in computing and telecommunication technologies which reduced the

costs of processing and exchanging information were considered the main causes
for globalization.
Source: https://www1.aucegypt.edu/src/globalization/Definitions.htm

Types of Globalization:
Following are the types of globalization:
 1. Financial Globalization
2. Economic Globalization
3. Technological Globalization
4. Political Globalization
5. Cultural Globalization
6. Ecological Globalization
7. Sociological Globalization

Financial globalization:
Interconnection of the world’s financial systems e.g. stock markets

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More of a connection between large cities than of nations

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Example: What happens in Asian markets affects the North American markets.

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Economic Globalization: PP
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A worldwide economic system that permits easy movement of goods, production,

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capital, and resources (free trade facilitates this)

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Example: NAFTA, EU, Multinational corporations

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Technological Globalization:
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The connection between nations through technology such as television, radio,

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telephones, internet, etc.

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Was traditionally available only to the rich but is now far more available to the
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poor.
Political Globalization:
Countries are attempting to adopt similar political policies and styles of
government in order to facilitate other forms of globalization
e.g. move to secular governments, free trade agreements, etc
Cultural Globalization:
Merging or “watering down” of the world’s cultures e.g. food, entertainment,
language, etc.
Heavily criticized as destructive of local culture
e.g. The Simpsons are shown in over 200 countries
Ecological Globalization:
Seeing the Earth as a single ecosystem rather than a collection of separate
ecological systems because so many problems are global in nature e.g.
International treaties to deal with environmental issues like biodiversity, climate
change or the ozone layer, wildlife reserves that span several countries
Sociological Globalization:
A growing belief that we are all global citizens and should all be held to the same

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standards – and have the same rights

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e.g. the growing international ideas that capital punishment is immoral and that

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women should have all the same rights as men.

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Source: https://schoolworkhelper.net/types-of-globalization/
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History of Globalization:
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Silk roads (1st century BC-5th century AD, and 13th-14th centuries AD)
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People have been trading goods for almost as long as they’ve been around. But as
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of the 1st century BC, a remarkable phenomenon occurred. For the first time in
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history, luxury products from China started to appear on the other edge of the
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Eurasian continent – in Rome. They got there after being hauled for thousands of
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miles along the Silk Road. Trade had stopped being a local or regional affair and
started to become global.
That is not to say globalization had started in earnest. Silk was mostly a luxury
good, and so were the spices that were added to the intercontinental trade
between Asia and Europe. As a percentage of the total economy, the value of
these exports was tiny, and many middlemen were involved to get the goods to
their destination. But global trade links were established, and for those involved,
it was a goldmine. From purchase price to final sales price, the multiple went in
the dozens. The Silk Road could prosper in part because two great empires
dominated much of the route. If trade was interrupted, it was most often because
of blockades by local enemies of Rome or China. If the Silk Road eventually closed,
as it did after several centuries, the fall of the empires had everything to do with
it. And when it reopened in Marco Polo’s late medieval time, it was because the
rise of a new hegemonic empire: the Mongols. It is a pattern we’ll see throughout
the history of trade: it thrives when nations protect it, it falls when they don’t.
Spice routes (7th-15th centuries)
The next chapter in trade happened thanks to Islamic merchants. As the new
religion spread in all directions from its Arabian heartland in the 7th century, so
did trade. The founder of Islam, the prophet Mohammed, was famously a
merchant, as was his wife Khadija. Trade was thus in the DNA of the new religion

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and its followers, and that showed. By the early 9th century, Muslim traders

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already dominated Mediterranean and Indian Ocean trade; afterwards, they

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could be found as far east as Indonesia, which over time became a Muslim-

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majority country, and as far west as Moorish Spain.
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The main focus of Islamic trade in those Middle Ages were spices. Unlike silk,
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spices were traded mainly by sea since ancient times. But by the medieval era
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they had become the true focus of international trade. Chief among them were
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the cloves, nutmeg and mace from the fabled Spice islands – the Maluku islands
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in Indonesia. They were extremely expensive and in high demand, also in Europe.
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But as with silk, they remained a luxury product, and trade remained relatively
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low volume. Globalization still didn’t take off, but the original Belt (sea route) and
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Road (Silk Road) of trade between East and West did now exist.
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Age of Discovery (15th-18th centuries)

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Truly global trade kicked off in the Age of Discovery. It was in this era, from the
end of the 15th century onwards, that European explorers connected East and
West – and accidentally discovered the Americas. Aided by the discoveries of the
so-called “Scientific Revolution” in the fields of astronomy, mechanics, physics
and shipping, the Portuguese, Spanish and later the Dutch and the English first
“discovered”, then subjugated, and finally integrated new lands in their
economies.
The Age of Discovery rocked the world. The most (in)famous “discovery” is that of
America by Columbus, which all but ended pre-Colombian civilizations. But the
most consequential exploration was the circumnavigation by Magellan: it opened
the door to the Spice islands, cutting out Arab and Italian middlemen. While trade
once again remained small compared to total GDP, it certainly altered people’s
lives. Potatoes, tomatoes, coffee and chocolate were introduced in Europe, and
the price of spices fell steeply.
Yet economists today still don’t truly regard this era as one of true globalization.
Trade certainly started to become global, and it had even been the main reason
for starting the Age of Discovery. But the resulting global economy was still very
much siloed and lopsided. The European empires set up global supply chains, but
mostly with those colonies they owned. Moreover, their colonial model was
chiefly one of exploitation, including the shameful legacy of the slave trade. The

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empires thus created both a mercantilist and a colonial economy, but not a truly

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globalized one.

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First wave of globalization (19th century-1914)
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This started to change with the first wave of globalization, which roughly occurred
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over the century ending in 1914. By the end of the 18th century, Great Britain had
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started to dominate the world both geographically, through the establishment of

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the British Empire, and technologically, with innovations like the steam engine,
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the industrial weaving machine and more. It was the era of the First Industrial
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Revolution.
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The “British” Industrial Revolution made for a fantastic twin engine of global
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trade. On the one hand, steamships and trains could transport goods over
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thousands of miles, both within countries and across countries. On the other
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hand, its industrialization allowed Britain to make products that were in demand
all over the world, like iron, textiles and manufactured goods. “With its advanced
industrial technologies,” the BBC recently wrote, looking back to the era, “Britain
was able to attack a huge and rapidly expanding international market.”
The resulting globalization was obvious in the numbers. For about a century,
trade grew on average 3% per year. That growth rate propelled exports from a
share of 6% of global GDP in the early 19th century, to 14% on the eve of World
War I. As John Maynard Keynes, the economist, observed: “The inhabitant of
London could order by telephone, sipping his morning tea in bed, the various
products of the whole Earth, in such quantity as he might see fit, and reasonably
expect their early delivery upon his doorstep.”
And, Keynes also noted, a similar situation was also true in the world of investing.
Those with the means in New York, Paris, London or Berlin could also invest in
internationally active joint stock companies. One of those, the French Compagnie
de Suez, constructed the Suez Canal, connecting the Mediterranean with the
Indian Ocean and opened yet another artery of world trade. Others built railways
in India, or managed mines in African colonies. Foreign direct investment, too,
was globalizing.
While Britain was the country that benefited most from this globalization, as it

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had the most capital and technology, others did too, by exporting other goods.

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The invention of the refrigerated cargo ship or “reefer ship” in the 1870s, for

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example, allowed for countries like Argentina and Uruguay, to enter their golden

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age. They started to mass export meat, from cattle grown on their vast lands.
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Other countries, too, started to specialize their production in those fields in which
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they were most competitive.

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But the first wave of globalization and industrialization also coincided with darker
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events, too. By the end of the 19th century, the Khan Academy notes, “most
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[globalizing and industrialized] European nations grabbed for a piece of Africa,

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and by 1900 the only independent country left on the continent was Ethiopia”. In
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a similarly negative vein, large countries like India, China, Mexico or Japan, which
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were previously powers to reckon with, were not either not able or not allowed to
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adapt to the industrial and global trends. Either the Western powers put
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restraints on their independent development, or they were otherwise

outcompeted because of their lack of access to capital or technology. Finally,
many workers in the industrialized nations also did not benefit from globalization,
their work commoditized by industrial machinery, or their output undercut by
foreign imports.
The world wars
It was a situation that was bound to end in a major crisis, and it did. In 1914, the
outbreak of World War I brought an end to just about everything the burgeoning
high society of the West had gotten so used to, including globalization. The ravage
was complete. Millions of soldiers died in battle, millions of civilians died as
collateral damage, war replaced trade, destruction replaced construction, and
countries closed their borders yet again.
In the years between the world wars, the financial markets, which were still
connected in a global web, caused a further breakdown of the global economy
and its links. The Great Depression in the US led to the end of the boom in South
America, and a run on the banks in many other parts of the world. Another world
war followed in 1939-1945. By the end of World War II, trade as a percentage of
world GDP had fallen to 5% – a level not seen in more than a hundred years.
Second and third wave of globalization
The story of globalization, however, was not over. The end of the World War II

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marked a new beginning for the global economy. Under the leadership of a new

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hegemon, the United States of America, and aided by the technologies of the

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Second Industrial Revolution, like the car and the plane, global trade started to

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rise once again. At first, this happened in two separate tracks, as the Iron Curtain
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divided the world into two spheres of influence. But as of 1989, when the Iron
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Curtain fell, globalization became a truly global phenomenon.

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In the early decades after World War II, institutions like the European Union, and
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other free trade vehicles championed by the US were responsible for much of the
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increase in international trade. In the Soviet Union, there was a similar increase in
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trade, albeit through centralized planning rather than the free market. The effect
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was profound. Worldwide, trade once again rose to 1914 levels: in 1989, export
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once again counted for 14% of global GDP. It was paired with a steep rise in
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middle-class incomes in the West.

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Then, when the wall dividing East and West fell in Germany, and the Soviet Union
collapsed, globalization became an all-conquering force. The newly created World
Trade Organization (WTO) encouraged nations all over the world to enter into
free-trade agreements, and most of them did, including many newly independent
ones. In 2001, even China, which for the better part of the 20th century had been
a secluded, agrarian economy, became a member of the WTO, and started to
manufacture for the world. In this “new” world, the US set the tone and led the
way, but many others benefited in their slipstream.
At the same time, a new technology from the Third Industrial Revolution, the
internet, connected people all over the world in an even more direct way. The
orders Keynes could place by phone in 1914 could now be placed over the
internet. Instead of having them delivered in a few weeks, they would arrive at
one’s doorstep in a few days. What was more, the internet also allowed for a
further global integration of value chains. You could do R&D in one country,
sourcing in others, production in yet another, and distribution all over the world.
The result has been a globalization on steroids. In the 2000s, global exports
reached a milestone, as they rose to about a quarter of global GDP. Trade, the
sum of imports and exports, consequentially grew to about half of world GDP. In
some countries, like Singapore, Belgium, or others, trade is worth much more

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than 100% of GDP. A majority of global population has benefited from this: more

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people than ever before belong to the global middle class, and hundred of

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millions achieved that status by participating in the global economy.

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Globalization 4.0
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That brings us to today, when a new wave of globalization is once again upon us.
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In a world increasingly dominated by two global powers, the US and China, the
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new frontier of globalization is the cyber world. The digital economy, in its infancy
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during the third wave of globalization, is now becoming a force to reckon with
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through e-commerce, digital services, 3D printing. It is further enabled by artificial

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intelligence, but threatened by cross-border hacking and cyberattacks.

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At the same time, a negative globalization is expanding too, through the global
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effect of climate change. Pollution in one part of the world leads to extreme
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weather events in another. And the cutting of forests in the few “green lungs” the
world has left, like the Amazon rainforest, has a further devastating effect on not
just the world’s biodiversity, but its capacity to cope with hazardous greenhouse
gas emissions.
But as this new wave of globalization is reaching our shores, many of the world’s
people are turning their backs on it. In the West particularly, many middle-class
workers are fed up with a political and economic system that resulted in
economic inequality, social instability, and – in some countries – mass
immigration, even if it also led to economic growth and cheaper products.
Protectionism, trade wars and immigration stops are once again the order of the
day in many countries.
As a percentage of GDP, global exports have stalled and even started to go in
reverse slightly. As a political ideology, “globalism”, or the idea that one should
take a global perspective, is on the wane. And internationally, the power that
propelled the world to its highest level of globalization ever, the United States, is
backing away from its role as policeman and trade champion of the world.
It was in this world that Chinese president Xi Jinping addressed the topic
globalization in a speech in Davos in January 2017. “Some blame economic
globalization for the chaos in the world,” he said. “It has now become the

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Pandora’s box in the eyes of many.” But, he continued, “we came to the

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conclusion that integration into the global economy is a historical trend. [It] is the

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big ocean that you cannot escape from.” He went on the propose a more inclusive

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globalization, and to rally nations to join in China’s new project for international
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trade, “Belt and Road”.
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It was in this world, too, that Alibaba a few months later opened its Silk Road
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headquarters in Xi’an. It was meant as the logistical backbone for the e-commerce
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giant along the new “Belt and Road”, the Paper reported. But if the old Silk Road
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thrived on the exports of luxurious silk by camel and donkey, the new Alibaba
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Xi’an facility would be enabling a globalization of an entirely different kind. It

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would double up as a big data college for its Alibaba Cloud services.
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Technological progress, like globalization, is something you can’t run away from, it
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seems. But it is ever changing.

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Source: https://www.weforum.org/agenda/2019/01/how-globalization-4-0-fits-
into-the-history-of-globalization/

Globalization: Present and Future Trends

Globalization has impacted people and communities across the globe and has
significantly influenced sustainable development. Fueled by fast-paced changes in
technology and the increased mobility of goods, services, capital and labor, over
the past decades globalization has greatly changed economies, societies and the
natural environment and has made our world more interconnected than ever
before.

These trends have presented a wealth of opportunities. Globalization and

increased economic interdependence have accompanied -- and facilitated -- rapid
economic growth in many countries and regions, helping world GDP grow from
around 50 trillion USD in 2000 to 75 trillion USD in 2016. Yet, globalization has
also presented significant challenges, including an uneven distribution of its
benefits and costs.
“To ensure that globalization can be leveraged to support inclusive economic

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growth and sustainable development, it is essential to analyze the current system

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as well as emerging trends to devise policy solutions addressing them,” said Liu

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Zhenmin, UN DESA’s Under-Secretary-General, as he introduced the Secretary-

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General’s new report “Fulfilling the promise of globalization: advancing
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sustainable development in an interconnected world.”
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Speaking before the UN General Assembly’s Second Committee on 13 October

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2017, Mr. Liu highlighted three mega-trends related to globalization: “Shifts in

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production and labor markets; rapid advances in technology; and climate

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change.” These trends are expected to shape and influence our future.
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The first mega-trend refers to the impact that production changes have had on
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labor markets, including through outsourcing and mechanization, which have

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spurred job losses, particularly in manufacturing sectors. These trends in labor

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markets are associated with higher rates of income inequality, which has
increased in a majority of countries across the globe.
The second mega-trend is closely connected to the first, as it relates to the fast-
moving development and advancement of new technologies, including in
information and communications and artificial intelligence, that have also
affected the world of work. While these innovations can act as catalysts for
sustainable development, countries that do not have access to them are at risk of
being left behind.
Globalization and its effect on climate change is the third emerging mega-trend.
The report highlights that many trends closely linked to globalization, including
economic activity, lifestyle changes and urbanization, all have an impact on our
environment and may contribute to climate change.

“The report of the Secretary-General emphasizes that globalization can be a

powerful driver of economic growth, but to achieve sustainable development,
globalization must work for all,” Mr. Liu said, stressing also that “global
agreements can play a key role in strengthening the benefits of globalization.”
Such global agreements are already in place with the 2030 Agenda for Sustainable
Development, the Addis Ababa Action Agenda on Financing for Development and
the Paris Agreement on climate change. Mr. Liu described them as “a normative

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action plan to address many of the challenges associated with globalization.”

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Mr. Liu underlined the need to localize global agreements to better respond to

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the challenges that globalization poses in different contexts and stressed the role
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“It is suggested that the United Nations should continue to support Member
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States in devising country-specific policy approaches to manage globalization in

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the pursuit of the 2030 Agenda,” Mr. Liu said.

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Source: https://www.un.org/fr/desa/new-globalization-report-three-mega-
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Pros and cons of Globalization:

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A story in the Washington Post said “20 years ago globalization was pitched as a
strategy that would raise all boats in poor and rich countries alike. In the U.S. and
Europe consumers would have their pick of inexpensive items made by people
thousands of miles away whose pay was much lower than theirs. And in time
trade barriers would drop to support even more multinationals expansion and
economic gains while geo political cooperation would flourish.”
There is no question that globalization has been a good thing for many developing
countries who now have access to our markets and can export cheap goods.
Globalization has also been good for multi-national corporations and Wall Street.
But globalization has not been good for working people (blue or white collar) and
has led to the continuing deindustrialization of America.

Globalization is a complicated issue. It is necessary to evaluate the pros and cons

before drawing any conclusions.
Pros
Supporters of globalization argue that it has the potential to make this world a
better place to live in and solve some of the deep-seated problems like
unemployment and poverty.

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28
1. Free trade is supposed to reduce barriers such as tariffs, value added taxes,

10
subsidies, and other barriers between nations. This is not true. There are still

59
04
many barriers to free trade. The Washington Post story says “the problem is that

03
the big G20 countries added more than 1,200 restrictive export and import
#
PP
measures since 2008
A
TS

2. The proponents say globalization represents free trade which promotes global
A
H

economic growth; creates jobs, makes companies more competitive, and lowers
W
LI

prices for consumers.

A
N

3. Competition between countries is supposed to drive prices down. In many

A
SS

cases this is not working because countries manipulate their currency to get a
A
H

price advantage.
K
LI
A

4. It also provides poor countries, through infusions of foreign capital and

M

technology, with the chance to develop economically and by spreading

prosperity, creates the conditions in which democracy and respect for human
rights may flourish. This is an ethereal goal which hasn’t been achieved in most
countries
5. According to supporters of globalization and democracy should go hand in
hand. It should be pure business with no colonialist designs.
6. There is now a worldwide market for companies and consumers who have
access to products of different countries.
7. Gradually there is a world power that is being created instead of
compartmentalized power sectors. Politics is merging and decisions that are being
taken are actually beneficial for people all over the world. This is simply a
romanticized view of what is actually happening.
8. There is more influx of information between two countries, which do not have
anything in common between them.
9. There is cultural intermingling and each country is learning more about other
cultures.
10. Since we share financial interests, corporations and governments are trying to
sort out ecological problems for each other. – True, they are talking more than

4
28
trying.

10
59
11. Socially we have become more open and tolerant towards each other and

04
03
people who live in the other part of the world are not considered aliens. True in
#
many cases.
PP
A
TS

12. Most people see speedy travel, mass communications and quick
A

dissemination of information through the Internet as benefits of globalization.

H
W
LI

13. Labor can move from country to country to market their skills. True, but this
A

can cause problems with the existing labor and downward pressure on wages.
N
A
SS

14. Sharing technology with developing nations will help them progress. True for
A
H

small countries but stealing our technologies and IP have become a big problem
K
LI

with our larger competitors like China.

A
M

15. Transnational companies investing in installing plants in other countries

provide employment for the people in those countries often getting them out of
poverty.
16. Globalization has given countries the ability to agree to free trade agreements
like NAFTA, South Korea Korus, and the TPP. True but these agreements have cost
the U.S. many jobs and always increase our trade deficit
Cons
• The general complaint about globalization is that it has made the rich richer
while making the non-rich poorer. “It is wonderful for managers, owners and
investors, but hell on workers and nature.”
• Globalization is supposed to be about free trade where all barriers are
eliminated but there are still many barriers. For instance161 countries have value
added taxes (VATs) on imports which are as high as 21.6% in Europe. The U.S.
does not have VAT.
• The biggest problem for developed countries is that jobs are lost and
transferred to lower cost countries.” According to conservative estimates by
Robert Scott of the Economic Policy Institute, granting China most favored nation

4
status drained away 3.2 million jobs, including 2.4 million manufacturing jobs. He

28
10
pegs the net losses due to our trade deficit with Japan ($78.3 billion in 2013) at

59
896,000 jobs, as well as an additional 682,900 jobs from the Mexico –U.S. trade-

04
03
deficit run-up from 1994 through 2010.”
#
PP
• Workers in developed countries like the US face pay-cut demands from
A
TS

employers who threaten to export jobs. This has created a culture of fear for
A
H

many middle-class workers who have little leverage in this global game
W
LI

• Large multi-national corporations have the ability to exploit tax havens in other
A
N

countries to avoid paying taxes.

A
SS

• Multinational corporations are accused of social injustice, unfair working

A
H

conditions (including slave labor wages, living and working conditions), as well as
K
LI

lack of concern for environment, mismanagement of natural resources, and

A
M

ecological damage.
• Multinational corporations, which were previously restricted to commercial
activities, are increasingly influencing political decisions. Many think there is a
threat of corporations ruling the world because they are gaining power, due to
globalization.
• Building products overseas in countries like China puts our technologies at risk
of being copied or stolen, which is in fact happening rapidly
• The anti-globalists also claim that globalization is not working for the majority of
the world. “During the most recent period of rapid growth in global trade and
investment, 1960 to 1998, inequality worsened both internationally and within
countries. The UN Development Program reports that the richest 20 percent of
the world's population consume 86 percent of the world's resources while the
poorest 80 percent consume just 14 percent. “
• Some experts think that globalization is also leading to the incursion of
communicable diseases. Deadly diseases like HIV/AIDS are being spread by
travelers to the remotest corners of the globe.
• Globalization has led to exploitation of labor. Prisoners and child workers are
used to work in inhumane conditions. Safety standards are ignored to produce
cheap goods. There is also an increase in human trafficking.

4
28
• Social welfare schemes or “safety nets” are under great pressure in developed

10
countries because of deficits, job losses, and other economic ramifications of

59
04
globalization.

03
#
Globalization is an economic tsunami that is sweeping the planet. We can’t stop it
PP
A

but there are many things we can do to slow it down and make it more equitable.
TS
A

What is missing?
H
W
LI

Leadership – We need politicians who are willing to confront the cheaters. One of
A

our biggest problems is that 7 of our trading partners manipulate their currencies
N
A
SS

to gain unfair price advantage which increases their exports and decreases their
A

imports. This is illegal under WTO rules so there is a sound legal basis to put some
H
K

kind of tax on their exports until they quit cheating.

LI
A
M

Balanced Trade – Most of our trading partners can balance their trade budgets
and even run a surplus. We have not made any effort to balance our trade budget
and have run a deficit for more than 30 years resulting in an $11 trillion deficit.
The trade deficit is the single biggest job killer in our economy, particularly
manufacturing jobs. We need the government to develop a plan to begin to
balance our trade deficit even though this is not a political priority in either party.
Trade Agreements – Both the NAFTA and the South Korean Korus trade
agreements might have been good for Wall Street and the multi-national
corporations but they eliminated jobs in America and expanded our trade deficit.
The upcoming Trans Pacific Trade Agreement will do the same thing and Congress
should not fast track this bad agreement for a dozen reasons.
Enforcing the rules – China ignores trade rules and WTO laws with reckless
abandon. Besides currency manipulation they subsidize their state-owned
companies to target our markets, and provide funding to their state-owned
companies that dump their products in America. They also steal our technologies,
sell counterfeit versions of our products, and impose tariffs and other barriers
anytime they want - as we do nothing to stop them. China does not deserve to be
on our most favored nation list and we need to tax their exports to us until they
stop these illegal activities.

4
What is good for third world countries, like Kenya, or countries with tremendous

28
10
growth, like China, has not been good for American workers. Globalization is

59
deindustrializing America as we continue to outsource both manufacturing blue

04
03
collar and white-collar jobs. Supporters of globalization have made the case that it
#
PP
is good because it has brought low priced imported goods, but they have not
A

matched the decline of wages in the middle class and will not offset the loss of
TS
A

many families’ wage jobs

H
W

Globalization is like being overwhelmed by a snow avalanche. You can’t stop it –

LI
A

you can only swim in the snow and hope to stay on top. I would like to make the
N
A

argument that the US should try a lot harder to swim in the snow and stay on top.
SS
A

We can’t stop globalization but there are many policies and strategies we can use
H

to make it more equitable. We can enforce the trade laws, force the competition
K
LI

to play by the same rules, and stop giving our competitors the tools (technology
A
M

and R& D) to ultimately win the global war.

Source: https://www.forbes.com/sites/mikecollins/2015/05/06/the-pros-and-
cons-of-globalization/?sh=6ec67ec6ccce

Slowbalisation – Is globalization slowing down?

Slowbalisation – a phenomena which involves a slowing down of the pace of
global integration.
In recent decades globalization has become so dominant, that we often assume
the process is never-ending. Between 1970 and 2008, world exports as a share of
GDP rose from 13% to 31%, and it seemed that globalization was an unstoppable
force.
However, since 2008, something unexpected has happened. Exports as a share of
GDP has flatlined and even started to fall. Other metrics show a similar fate, a fall
in global bank loans, foreign direct investment has fallen quite sharply and
multinationals share of profit has decreased.
Covid has further brought into question more aspects of globalization, such as
international travel.

4
28
Of course, we still live in a very globalized world, and other metrics such as –

10
internet use, and international phone call measurements, globalization continues

59
04
to intensify. But, in terms of trade and the movement of people, we may have

03
reached peak globalization.
#
PP
A

What factors are behind the slowdown in globalization?

TS
A

Gains from lower costs reached. From the 1960s, we saw a very sharp fall in
H
W

transport costs, due to processes such as containerization, this made trade much
LI
A

more profitable, but these ‘easy’ gains have been largely exhausted. Now
N
A

transport faces higher costs from rising fossil fuel prices.

SS
A

Improved technology. With labor-intensive industries there is a very clear

H
K

incentive for firms to move production to countries with significantly lower costs.
LI
A

In the past, manufacturing firms in the US and Europe had a strong incentive to
M

move manufacturing off-shore. However, as manufacturing processes become

increasingly automated, labor costs will become a smaller share of total costs. In
the future manufacturing will not rely on cheap, plentiful labor, but a more skilled
workforce able to manage technology. Therefore, the need to ship goods halfway
around the world will not be there. Already there are examples of ‘reshoring’
Between 2008 and 2017, US manufacturing has created 16,000 jobs through
reshoring.
Relative decline of manufacturing to services. As incomes rise, we tend to see
higher growth for income elastic services rather than goods. For example, as
incomes rise, we spend more on beauty treatments, going out for restaurant
meals and personal services. These services cannot obviously be imported from
across the world in the same way goods are. Therefore, more of our income is
going on local services compared to international goods.
Changing consumer preferences. In the past, many manufactured goods were
identical. A firm would produce millions of goods on a large scale. However, the
modern consumer is increasingly demanding a much more personalized product.
Thirty years ago, if you wanted a chair, you would buy what you are given. But
now a consumer can choose between 20-30 variations of color and features. This
means firms have an incentive to move production closer to where consumers
live. If you have to wait three months for a shipping container to arrive from Asia,
it is too long – consumer preferences may have changed. Successful firms will be

4
28
based close to their retail market so that the highly individual products can be

10
59
delivered quickly.

04
03
Higher tariffs. Free trade has created winners and losers. Overall, there is a net
#
PP
economic welfare gain, but often the losers have been more visible, creating
A

political pressure. Populists such as Trump have responded by placing higher

TS
A

tariffs on goods – challenging the assumption that tariffs would always fall. It is
H
W

not just tariffs, but regional blocks are increasingly splintering on issues such as
LI

regulation, privacy requirements and tax policy.

A
N
A

Environmental concerns. In the past decade, environmental concerns such as the

SS
A

global imprint of products have become increasingly important. Consumers are

H

increasingly wary about buying goods, which are imported from the other side of
K
LI

the world, and are willing to pay a premium for goods and food sourced locally.
A
M

Firms are also responding to this pressure by making some efforts to source
locally.
Carbon taxes. Another factor that may feature in the future is higher taxes on
carbon emissions which will increase the costs for airplane use and global
shipping. Of course, the industry may find more environmentally friendly methods
of transport, but electric engines are harder to use for shipping and planes.
Multinational firms have found their limits. Multinational firms have often found
that global expansion is not without risks. If the multinational doesn’t understand
the local market, it can fail to replicate its domestic success. One example, Tesco
and Marks and Spencers set up in France but failed to win over the French
shopper and they had to retreat.
Globalization isn’t declining its changing
Another way of looking at the situation is that globalization is still occurring but it
is changing. Rather than growth through trade of goods, we are seeing a growth
in the diffusion of ideas, technology and some services. 10 years ago, if you
wanted a print designer, you would find someone local, but now it is just as easy
to employ a designer in Brazil or India.
Covid has led to a slowdown in international travel, but we are still meeting with
people around the world through Zoom and Skype.

4
28
10
20 years ago, we bought computers, but now we spend more on data storage,

59
apps and pdfs. This data storage and web-traffic is very much a global industry.

04
03
Also, whilst trade in goods has flatlined, it is still just under 30% of GDP. Some
#
PP
industries, like car and steel manufacture, have such significant economies of
A
TS

scale, it is hard to envisage anything other than the global supply chains we see
A

now.
H
W
LI

Source: https://www.economicshelp.org/blog/166776/economics/slowbalisation-
A

is-globalisation-slowing-down/
N
A
SS
A
H
K

Examples of Globalized Institutions:

LI
A
M

Asian Development Bank

ADB assists its members, and partners, by providing loans, technical assistance,
grants, and equity investments to promote social and economic development.
The website provides access to statistical data External and publications.
Bank of International Settlements
The mission of BIS is to serve central banks in their pursuit of monetary and
financial stability, to foster international cooperation in those areas and to act as
a bank for central banks. The website offers access to research publications,
speeches, statistical data and more.
International Finance Corporation
IFC, part of the World Bank Group, is the largest global development institution
focused on the private sector in developing countries.
International Migration Institute (IMI)
"The International Migration Institute (IMI) aims to advance new thinking of
migration as an intrinsic part of global change and development. This is achieved
through promoting research, generating new data, and publishing IMI’s working
paper series. IMI is based at the University of Amsterdam's Institute for Social
Science Research (AISSR) and regroups a network of research fellows from around
the world."

4
28
10
International Monetary Fund

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04
The International Monetary Fund (IMF) is an organization of 189 countries,

03
working to foster global monetary cooperation, secure financial stability, facilitate
#
PP
international trade, promote high employment and sustainable economic growth,
A
TS

and reduce poverty around the world.

A
H

Organization for Economic Co-operation and Development (OECD)

W
LI

OECD is an international organization of 37 member countries with a goal of

A
N

finding solution to a range of social, economic and environmental challenges. The

A
SS

website offers country and topical information as well as data and statistics.
A
H
K

United Nations
LI
A
M

The United Nations website offers information on a range of issues that transcend
national boundaries. UN databases are listed in the Databases section of this
guide.
The World Bank Group
The World Bank website offers research publications and statistical data. World
Bank Open Data External and Open Knowledge Repository External are freely
available.
World Economic Forum: Strategic Intelligence
Provides analysis and discussion of the issues and forces driving transformational
change across economies, industries, and global issues.
World Health Organization
World Health Organization offers information and data on global health and
global pandemics. WHO's Global Health Observatory covers health indicators by
country, and offers maps on major health topics, publications, and data search.

Globalization and Pakistan:

Globalization, by definition, is the integration and democratization of the world's

4
28
culture, economy, and infrastructure through transnational investment, rapid

10
proliferation of communication and information technologies, and the impacts of

59
04
free-market on local, regional and national economies.

03
#
The phenomenon of globalization has created a dichotomy of perception dividing
PP
A

the world into plethora of apprehensions and appreciations due to the intense
TS

velocity which the information about people, products, nature, environment,

A
H

politics and economy disperses across borders, across countries and nations
W
LI

creating virtually one world into a global village. Here the golden words of late Dr.
A

Mahbub ul Haq provides the true vision:

N
A
SS

"Globalization is no longer an option, it is a fact. Developing countries have either

A
H

to learn to manage it far more skillfully, or simply drown in the global cross
K
LI

currents."
A
M

Globalization is multidimensional and impacts all aspects of life– economic social,

cultural and political. Globalization in production and labor markets is leading to
increasing outsourcing of parts, components, and services. The drive towards
market liberalization has rapidly accelerated the pace of globalization during the
past decade.
Theoretically
• Globalization opens up markets and ensures competition
• Removes inefficiencies and leading to greater growth.
• Ensures specialization takes place in areas of comparative advantage.
• For labor abundant economies this means increased employment as well as
growth.
CAUSES OF GLOBALIZATION
The origin of globalization can be traced back till the 16th century when the West
started to explore and discover for the new worlds and continents, bringing the
English to India in form of East India Company, there first multinational was born
for us and the rest is recorded history. The process of global economic integration
was perpetrated at the behest of World War II and the first Great Depression,
when the leaders of Britain and the US fumbled with the idea of reconstructing
the war-torn world monetary system with a focus on favoring free of capital

4
internationally, turn endure a liberal, capitalist world at the end of war to counter

28
10
the shadows of Socialism and Marxism. To promote the new monetary world

59
order, a conference was convened in July 1944, at Bretton Woods, New

04
03
Hampshire, to create the world's most powerful institutions: the International
#
PP
Bank for Reconstruction and Development (the World Bank), and the
A

Internationally Monetary Fund (IMF). With the development of international

TS
A

financial markets in 1970s and the debt crisis of developing countries, several
H
W

developing countries opted for stabilization and structural adjustment programs,

LI

to qualify for the loans from IMF and WB. The first IMF/WB Structural Adjustment
A
N

Loan (SAL) was given to Turkey, in the backdrop of appropriate market-oriented

A
SS

policies, accompanied with conditionalities, in 1980. These programs in a nutshell

A
H

were aimed at liberalization of developing-countries markets. The reforms and

K
LI

conditionalities imposed laid basic foundation to open economies to steer the

A

mechanism of economic integration giving birth to the most controversial of all

M

among international organizations, the World Trade Organization.

ECONOMIC OVERVIEW OF PAKISTAN
Economic Growth is a wild horse; it needs to be tamed to serve the real interests
of the society. If the horse misbehaves in some societies, leading to deprivation of
many human lives, then the fault is not of the horse but the rider. Economic
growth is essential in poor societies — but even more is its structure and
distribution.
----Dr. Mahbub ul Haq (Late)
Pakistan is a mixed economy consisting of a public sector domination of major
sectors of the economy, which is changing very quickly under the freer market
agenda of WTO making the role of government to minimum level under the
globalization policies guided by World Bank and IMF. Although with the growing
awareness among the intelligentsia of the country about the core issues of
development not being address appropriately yet we have seen the growth role
of institutions of globalization mentoring the economic direction of the country.
In the preview of economic sanctions imposed on Pakistan in 1998, political
instability, state-of-war with India, and most importantly the 11th September
Crisis has not been able to hamper the country which these events have the
potential. Economic growth remained mixed, in a year when many other Asian

4
countries were recording negative growth. Inflation did not accelerate

28
10
significantly, as was anticipated by most external forecasters. The current account

59
04
deficit declined further, so that Pakistan's short-run balance of payments position

03
remained viable once lending by the IMF and World Bank was resumed and debt
#
PP
had been rescheduled by the London and Paris Clubs. Complacency would
A
TS

nonetheless be out of place. Exports have been declining, normal capital inflows
A

have almost dried up, and the country's weak credibility and policy uncertainties
H
W

have discouraged foreign direct investment in particular and productive

LI

investment in general. Pakistan is the only country in South Asia that has recorded
A
N

a lower rate of growth in the 1990s than in the preceding decades. Suspension of
A
SS

the convertibility of the foreign currency deposits, and the London and Paris Club
A
H

rescheduling, were essential in the short run, but they will tend nevertheless to
K
LI

compromise Pakistan's ability to borrow internationally for years to come. The

A
M

social indicators — literacy, mortality, fertility, and poverty — remain poor, even
for a country with Pakistan's per capita income, and the squeeze on the budgets
of the provincial governments suggests that this is unlikely to improve much in
the short run. The country clearly faces a difficult challenge in reviving its
economy and in achieving a level of social standards in which it can begin to take
pride.
PAKISTAN’S EXPERIENCE WITH GLOBALIZATION
Pakistan liberalized its economy as part of the structural adjustment
conditionalities of the IMF program and World Bank lending. Pakistan’s expansion
in trade has not been as spectacular as that of some of the fast globalizers.
Pakistan’s exports merchandize exports have not kept pace with that of the rest
of the world.
Pakistan’s experience with globalization between 1990 and 2002 has not been
great. Pakistan’s share in the world merchandize exports has fallen from 0.16 to
0.15. China’s share in world merchandize exports went up from 1.80 to 5.04.
Malaysia’s share in world merchandize exports has increased from 0.85 to 1.44

PAKISTAN’S TRADE SECTOR

While the size of the trade sector relative to GDP has grown from about 28
percent in 1980 to about 31 percent in 2003 it has been subject to large year to

4
28
10
year variations.

59
04
The trade sector has on an average grown only slightly faster than the growth of

03
the economy. The overall growth of the economy and the social sector
#
PP
development indicators, particularly for the decade of 1990s, do not show any
A
TS

significant gains from the liberalization process. Poverty which was declining till
A

the early 1990s started to increase thereafter till the end of the decade. The
H
W

increase in the openness of the economy did not translate significantly into any
LI
A

enhancement of growth and subsequent decline in poverty

N
A
SS

Pakistan’s trade sector did not grow significantly during the 1990s despite the
A

liberalization because of
H
K
LI

• narrow range of export markets and export products;

A
M

• modest short-term demand responsiveness for major

Pakistan export categories;
• small foreign direct investment in tradable sectors;
• anti-export bias in the trade policies of Pakistan;
• inadequate infrastructure in certain potential growth sectors;
• absence of trade risk mitigation structure to support the entry of new exporters
and
• inadequate development of non-traditional markets
GROWTH RATE OF EXPORTS AND IMPORTS
GLOBALIZATION AND RE-INDUSTRIALIZATION IN PAKISTAN
Originating from free-trade doctrine, some opinions claim that Pakistan, under
globalization, should forget about possibilities of a new wave for industrialization
altogether. Though controversial, the claim also argues that the East Asian ‘Gang
of Four’ days are over, and globalization - meaning flow of foreign direct
investment (FDI) and openness - will determine whether the country can
industrialize or not. Such arguments also advise that Pakistan should try to attract
FDI through the policies of liberalization, deregulation, and privatization. Most
importantly, the government has to be cut-to-size and be kept out of markets in

4
the process.

28
10
However, on the opposite side, forceful voices originate from at least two

59
04
quarters, which at a certain level are mutually supportive approaches to long-

03
term economic development. Broadly speaking, one is new institutionalize
#
PP
political economy and the second is new growth and new trade theory
A
TS

The moral of the story is that industrialization under globalization for long-term
A
H
W

economic development is too important an activity to be left to blind forces of FDI

LI

and openness.
A
N
A

All three sectors, first (government), second (business), and third (civil society)
SS

must work together towards achieving national development objectives and

A
H

strengthen national institutions. Each sector can contribute a set of competitive

K
LI

advantages.
A
M

GDP GROWTH RATE

Pakistan’s experience also shows that in the decade of 1990s, significant trade
liberalization was accompanied by a steady decline in the GDP growth rate, from
6.1% in the 1980s to 4.5% in the 1990s. Similarly, wide-ranging policy changes and
incentives to encourage foreign investment did not lead to any significant
increase in investment, apart from larger investment in the private power sector
in the mid-1990s in response to a very attractive incentive package. In fact, overall
investment declined from about 19% of the GDP in 1989-90 to only 15% in 1999-
2000. Even on the export front, the trade performance has not been satisfactory.
Despite substantial reduction in tariff rates, removal of virtually all non-tariff
barriers and successive devaluations of the currency (leading to an annual
depreciation of about 10% in the exchange rate, from Rs 24 in 1990 to Rs 60 per
dollar in 2000), the growth in exports in the 1990s was only 4.5% per annum,
compared to 19% in the 1970s and 8.5% in the 1980s.

GROWTH RATES OF GNP PER CAPITA

Real Gross National Product (GNP) per capita is a useful aggregate measure of
annual income per person, net of growth in population and prices. Data shows
that in 1947 real GNP per capita was Rs. 1,476 which has multiplied three and a
half fold to Rs. 5,128 in 2001. In other words, an average Pakistani today

4
28
commands purchasing power that is three and half times greater than in 1947

10
[Social Development in Pakistan, Annual Review, 2001] in constant prices of 1980-

59
04
81.

03
#
FOREIGN TRADE AND INVESTMENT LIBERALIZATION
PP
A
TS

Import liberalization in Pakistan has been a rather gradual process, as exemplified

A

by the gentle downward trend in the average import tariff rate.

H
W
LI

The decline in import duties as a revenue source can be seen from the fact that
A

their contribution to total taxes has fallen from 50.4% in 1987-88 to 15.9% in
N
A
SS

2000-01 [Social Development in Pakistan, Annual Review, 2001].

A
H

CAPITAL FLOWS
K
LI
A

FDI involves the long-term interest of one entity resident in one economy in an
M

enterprise resident in an economy other than that of the foreign investor (United
Nations Conference on Trade and Development [UNCTA], 1998). FDI had shown a
16 percent growth during the post 1988 decade.
1977-78 to1987-88 1988-89 to1998-99
Growth in FDI
(US $ million) - 16.0
DEGREE OF OPENNESS
The degree of openness has increased; both exports and imports have been
contributing factors [Kemal, 2001]. However, the drawback is that the degree of
openness has widened the balance of payment deficits, and this problem will
continue unless third world country like Pakistan is provided enhanced access to
the international market.
IMPACT OF WTO ON PAKISTAN
Pakistan like any developing country rely on foreign aid on one end, and the
whatever is earned through exports in terms of foreign exchange, the major
chunk is paid back to the international lenders leaving little room and money for
the drastic economic growth cycle to be ignited. In addition, with the appreciation

4
of dollar, or devaluation of local currency the standard of living of an American

28
10
may increase as the Pakistani goods become cheaper from him or her, but for

59
Pakistan this devaluation hits directly the purchasing power of a common man

04
03
burring into the vicious cycle of poverty.
#
PP
The implications to adopt the free liberalization under WTO has many pros and
A
TS

cons but until now there has been no comprehensive study to capitulate the total
A
H

impact in economic terms focusing overall and individual sectors of the economy
W

in particular. WTO demands open market access for foreign goods and services in
LI
A

the local market without any discrimination by creation of tariff or non-tariff

N
A

barriers. Pakistan is also required to provide a Most Favored Nation (MFN) status
SS
A

to all trading partners which means non-discriminatory treatment among the

H

members implying on any imports or exports origination from respective

K
LI

countries. Pakistan under IMF conditionality and structural adjustment program

A
M

Pakistan has to reduce its tariff from 65% to 30% gradually, and WTO also
requires the same.
Several WTO agreements have a direct bearing on Pakistan efforts, some
examples are:
Rationalizing the Tariff Structure
Some Progress has been made but the focus for trade liberalization during the
next one to three years should be on reducing tariff dispersion, increasing
transparency, making indirect taxes trade neutral, and closing loopholes in
exemptions
The Agreement on Agriculture provides significant opportunities for Protecting
Food and Livelihood Security and Rural Development Opportunities through the
designation of Special Products and Special Safeguard Mechanisms.
We have not been able to take advantage of Pakistan’s Agricultural potential in
Trade because of
• Inadequate Research
• Structural problems within Pakistan's agri-food economy;
• Barriers encountered in accessing export markets; and
• Competition from other countries' exporters.

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Implications for Pakistan of Abolishing the Textile and Clothing Export

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04
• The overall short run impact of MFA abolition will be positive on the textiles

03
sector and negative on clothing.
#
PP
• This will result from the improvements in efficiency of its resource allocation
A
TS

and in world market prices outweighing the loss of quota rents

A
H
W

Despite liberalization/WTO there are several challenges to increased market

LI

access:
A
N
A

• exceptionally high tariffs on the products of the export interests of the

SS
A

developing economies;
H
K

• tariff escalation impacting adversely the exports of value added products;

LI
A
M

• subsidies on agriculture sector,

• indiscriminate use of anti-dumping and countervailing duties, etc.
The Biggest Constraint is significant absence of capacity to analyze the emerging
issues in WTO agreements and the implications for Pakistan. The general
knowledge of the Agreement and its provisions is high among officials, traders
and non-governmental organizations. However, detailed practical understanding
of the Agreements and the consequences, particularly for market access, is
lacking.
Maximizing Gains from the WTO
Very few institutions are in Pakistan where different stake holders can interact on
the WTO issues. Most of the positions taken on WTO issues in Pakistan lack an
empirical research basis and are most often based on assumptions. A clear policy
perspective emerging through consultations is necessary before the country
commits itself to any position at the international level.
And before it does any of the above
Most important barriers to globalization are “institutional and jurisdictional
discontinuities” and the diversity of national institutional arrangements and not
traditional border-type measures such as import tariffs, quantitative restrictions,
and restrictions on the flow of foreign capital. Elimination of these discontinuities,

4
especially those in the area of labor mobility can provide large benefits

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SOME IMPORTANT LESSONS

59
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03
Pakistan’s experience with economic liberalization has thrown up some important
#
lessons and criteria to judge whether or not such liberalization would lead to
PP
A

higher economic growth. These can be summarized as follows:

TS
A

* Unless the initial conditions and the international economic environment are
H
W

favorable to attract foreign investment and to utilize the opportunities created by

LI
A

tariff and market reforms, these can become counter-productive. In the case of
N
A

Pakistan, the reform process, launched in early 1991 coincided with economic
SS

sanctions imposed by the US from October 1990 as a result of Pakistan’s unclear

A
H

policy and by all G7 countries in June 1998, following the nuclear tests. Lower
K
LI

Tariffs weeded out some of the uneconomic industries and slowed down the
A
M

industrial growth rate, but due to sanctions and recurrent political instability, this
loss was not compensated by new investment in value added sectors.
* The speed and sequencing of reforms must be carefully orchestrated. If tariffs
are reduced drastically before expanding the tax base and improving tax
administration, revenues will fall, thus accentuating the fiscal problems. Similarly,
financial sector reforms to raise interest rates for government borrowing should
follow and not precede sustained reductions in public sector expenditures
because higher cost of borrowing does not automatically lead to lower
expenditures.
* All the components of globalization do not move in the same direction. While
there is free flow of information and capital, labor movement is restricted. Even in
trade, high tech products are traded freely, but simple manufactures like textile
and leather goods continue to be protected and agricultural trade is heavily
distorted by huge subsidies provided by the US, Europe and Japan ($390 billion in
the year 2000). In such an unlevel playing field, countries like Pakistan, which are
primarily dependent on agricultural or textile exports, cannot benefit much from
globalization. In fact, successive devaluations lead to a progressive depreciation in
export prices and therefore lower exports.
* Excessive reliance on demand management, at a time when the process of
growth is being adversely affected by several non-economic factors, can further

4
28
slowdown the pace of economic growth. With the reduction of tariffs, revenues

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59
from custom duties in Pakistan declined from 6% of GDP in 1989-90 to only 2.2%

04
in 1999-2000. The reduction in tariffs also led to closure of many industrial units,

03
#
which were previously functioning under heavy protection. This not only slowed
PP
down the rate of industrial growth from an average of 8% in the 1980s to 3.9% in
A
TS

the 1990s, but also led to a corresponding decline in revenues from excise duties
A
H

and sales tax.

W
LI

CONCLUSION
A
N
A

Pakistan's economic performance since integration with the global economy can
SS
A

be characterized by an increase in GDP growth rates, decline in import duties, an

H

increase in FDI during the post 1988 decade, a sharp increase in openness leading
K
LI

to a deteriorating balance of payments situation and continued high levels of

A
M

poverty and unemployment. As globalization involves enterprises and workers of

nearly all the world's countries in the goods as well as in the service sector.
Consequently, the majority of the world's labor force is experiencing the effects of
international competition.
There is need for a coordinated and collaborative effort among the South Asian
countries to expand trade in the region. Pakistan needs to diversify its exports
base and shift from primary agricultural products to more value added and
industrial products. Privatization will have to be placed at the top of the
Government agenda. Pakistan should increase exports not only to earn more
foreign exchange but also to join the world community in globalization. Similarly,
direct foreign investment is crucial for resource mobilization. It is therefore,
strongly recommended that the government of Pakistan must attract foreign
direct investment by giving them various incentives. Furthermore, financial depth
is also playing crucial role in the overall development of the country. It is
important that we should strengthen our financial sector for capital flow. Of
course, political stability is crucial for economic development of the country.
Few beneficial articles on the topic:
https://ishrathusain.iba.edu.pk/speeches/New/How_is_Pakistan.pdf
https://www.jstor.org/stable/41261192
https://pide.org.pk/research/the-impact-of-globalisation-on-economic-growth-of-

4
pakistan/

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59
04
03
#
PP
A
TS
A
H
W
LI
A
N
A
SS
A
H
K
LI
A
M