Ep 2: Economic Globalisation: A Curse or a Blessing?

Welcome to this episode of the Global Talks Podcast, where we explore the complex topic of economic globalization. Is it a curse or a blessing? Joining us today is economist Jon Reiersen from USN School of Business. We will discuss what economic globalization means, its benefits, as well as its downsides. Tune in to learn how globalization impacts us all and how smart policies can help balance its effects. 

Suggestions for further readings:

 

Rodrik, D. 2018. Straight Talk on Trade: Ideas for a Sane Economy: Ideas for a Sane World Economy. Princeton: Princeton University Press.

 

Sandbu, M. 2020. The Economics of Belonging: A Radical Plan to Win Back the Left Behind and Achieve Prosperity for All. Princeton: Princeton University Press. 

 

Wolf, M. 2023. The Crisis of Democratic Capitalism. London: Allen Lane

What is Global talks?

A podcast that explores various topics and issues from an international or global perspective, based on the academic fields of USN School of Business.

Global Talks Podcast
Economic globalization: A Curse or a Blessing?

In this episode of the Global Talks Podcast series, we’ll explore the topic of economic globalization. What is economic globalization and what consequences does it bring?
Joining me today is Jon Reiersen, an economist from USN Business School. Welcome to the podcast, Jon!
A: Thank you – and thanks for having me.

Q: A good place to start is probably by asking: What does the term "economic globalization" actually mean?
A: Economic globalization refers to the increasing integration of national economies across the world – a process that involves international trade in addition to movement of capital, and labour across borders.
Most economists would say that economic globalization is driven mainly by improvements in technology, communication, and transportation.

Q: It is my impression that many people now express resistance or concern about the rise of economic integration and globalization. A recent example is Brexit in the UK. At the same time, my feeling is that economists are generally supportive of economic globalization. Could you explain why economists often view globalization positively?
A: The short answer is that most economist look at trade between countries as important for economic growth and prosperity. When countries trade with each other and focus on producing what they do relatively best, overall production increases, and everyone has the potential to benefit.
In addition, international trade fosters creativity, competition, innovation, and the spread of good ideas. So – in short, most economists support free trade between countries because this helps to make the overall pie bigger.

Q: This sounds promising, but why do we still see so much opposition to globalization and economic integration?
A: When economists are so positive towards international trade, they often tend to overlook the fact that while the overall gains from globalization may be large, there are groups that can end up as losers. Economic globalization brings both benefits and costs – and I think it’s fair to say that economists tend to highlight mainly the benefits.
A person who is more sceptical of globalization will probably emphasize other factors than those I just mentioned. He would perhaps focus on issues such as job losses and wage stagnation, cultural homogenization and loss of national identities, environmental degradation, the growing power of multinational corporations, and so on.

Q: You mentioned that economic globalization brings both gains and costs, and that some groups may end up losing out, even when the overall gains are positive. Can you elaborate on that?
A: Yes – economic globalization intensifies competition between countries and the effect may be that firms and industries that struggle to compete internationally may be forced to shut down.
This can hit local communities and workers very hard. People lose their jobs and income – and many see that their education and skills are becoming outdated. It is easy to understand that this can lead to social resistance

Q: Many people also seem to believe that the benefits of trade and economic globalization are concentrated in the hands of a small minority, leading to increased economic inequality, which in turn also fuels resistance to globalization? Do you agree?
A: Yes, I agree. Economic inequality increases in most countries around the world. But if we look at economic research it is not clear to what extent this rising inequality is directly caused by globalization. It's important to remember that the distribution of income in a society is influenced by many factors, including those that national governments still control. This includes tax policy, the design of welfare systems, education policy, wage bargaining processes, and much more.
In a globalized world, national policies still matter a lot. Globalization brings both gains and losses, but with sensible policies, I think we can get the best out of it.

Conclusion: With this optimistic note, it's time for us to wrap up. Thank you for listening.