Globalization And Human Welfare Essay

1742 words - 7 pages

International free trade has become the foundation of neoliberal globalization. The main organizations for carrying out free trade are World Trade Organization (WTO) established on 1995, International Monetary Fund (IMF) and World Bank (WB). The main aim was to promote development and trade. Trade has become the lens through which development is perceived, rather than the other way round . The concept of trade evolved right from Adam Smith and David Ricardo who introduced the concept of comparative advantage which compares the productiveness across countries. Here countries make use of their natural resources, climate, skills etc. According to Paul Krugman trade reflects arbitrary or temporary advantages resulting from economies of scale or shifting leads in close technological races. Thus comparative advantage can be created through technological innovations. Globalization is propelled by economics but shaped by politics; the same applies to free trade both in developed and developing countries. Since developed countries focuses on capital intensive goods and developing countries on labour intensive goods especially agricultural commodities, there is always a difference in ‘real’ terms. But developing countries like China, India, Korea has been shifting to manufactured and service products for exports since 1970’s. According to Paul Samuelson trade has a strong influence on income distribution, since wages are smaller for labour intensive goods and in low wage countries this has a major influence on the wages on high income countries when products are exported from low wage countries to high wage countries. But Paul Krugman states that this relationship cannot be quantified. When we look into the current global scenario income inequality through free trade has made impact on American middle class, where there has been a rise in unemployment and inequality. But resorting to protectionism will bring about negative consequences to developing countries that are export oriented.

Who are the real victims of globalization and free trade? Is it the workers who produce the cheap exports who are exploited for their labour in terms of low wages or is it the new poor who have lost their jobs due to the stagflation prevailing in the developed countries. When we analyze trade in terms of agriculture, investment, intellectual property rights we can see that the 1994 trade Agreement on Agriculture provided framework for the long term reform of agriculture trade and domestic policies, made a decisive move towards the objective of the increased market orientation in agricultural trade and advocated universal reductions in trade protection, farm subsidies and government intervention (WTO, 1994).
Agreement on Agriculture reconstructed food security as market relation, privileging corporate agriculture and putting small farmers at disadvantage. Here food security was subject to governance of market forces rather than social criteria . With the rising food...

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