How much do you know about globalization and its impact on the world economy?

Study Notes

The World Economic Forum in Davos in January 2017 saw a mood of anxiety, defensiveness and self-reproach among delegates.
The future of economic globalisation was shaken by political events including Brexit, the election of Donald Trump, and forthcoming elections in France and Germany.
The backlash against globalisation has fuelled political shifts in the US, UK and Europe.
Economists are now questioning the merits of globalisation.
In 1997, the Harvard economist Dani Rodrik published a book called Has Globalization Gone Too Far? that challenged the idea that growing free trade would be peacefully accepted.
Rodrik argued that the social cost of globalisation was high and consistently underestimated by economists.
The competition between workers in developing and developed countries helped drive down wages and job security for workers in developed countries.
The cost of greater “economic integration” would be greater “social disintegration”.
The backlash against globalisation has led to a wave of soul-searching among economists.
The political consequences of globalisation are likely to get worse unless something changes.
The anti-globalisation movement emerged in the 1990s, contesting the idea that globalisation was good, and highlighting the negative effects of free trade policies, especially in developing countries.
Proponents of globalisation responded with a flood of columns and books, defending the necessity of a more open global market economy.
Over time, the anti-globalisation movement lost ground, and a policy consensus settled in favour of globalisation.
However, in the wake of the financial crisis, economists who were once ardent proponents of globalisation have become some of its most prominent critics.
The crash, the crisis of the eurozone and the worldwide drop in the price of oil and other commodities combined to put a huge dent in global trade.
Since 2012, trade was growing at 3% a year – less than half the average of the previous three decades.
Many economists now concede that globalisation has produced inequality, unemployment and downward pressure on wages.
The rising distrust of the establishment has had highly visible political consequences, reflected in the rise of populist politicians and parties.
The opinion pages of prestigious newspapers have been filled with belated, rueful comments from the high priests of globalisation.
The volatile political scene reflects public anxiety over “the process that has come to be called ‘globalisation’”.
Larry Summers, former US Treasury Secretary, has shifted his stance on globalization and now advocates for "responsible nationalism."
Pursuing free trade has historically led to displacement, inequality, political chaos, populism, and retrenchment.
The global economy was rather globalized by the early 20th century, with European countries colonizing Asia and sub-Saharan Africa and turning their colonies into suppliers of raw materials for European manufacturers and markets for European goods.
The gold standard underpinned this convenient arrangement for imperial nations, with each national currency having an established gold value and exchange rates being fixed.
The prioritization of finance and trade over the welfare of people came to an end with the Great Depression, and the postwar trade system that followed allowed developing countries to protect their industries.
The Bretton Woods agreement and the General Agreement on Tariffs and Trade (Gatt) set the terms under which the new wave of globalization would take place.
Gatt allowed most countries to figure out their own economic objectives, within a somewhat international ambit.
From 1948 to 1990, world trade grew at an annual average of nearly 7%.
Gatt failed to cover many of the countries in the developing world, and they eventually created their own system, the United Nations conference on trade and development (UNCTAD).
Many countries in Latin America, the Middle East, Africa, and Asia adopted a policy of protecting homegrown industries by replacing imports with domestically produced goods under the UNCTAD rubric.
The benefits of globalization have been concentrated in a handful of Asian countries and the largest gains have gone to the top 1%.
The Washington consensus, a model involving loans from the IMF that were contingent on countries lowering trade barriers and privatizing nationally held industries, was bad for business and most countries did worse than before.
The backlash against globalization was not a surprise to many economists, including Dani Rodrik, who believed that we cannot pursue democracy, national determination, and economic globalization simultaneously.
Globalization has changed and developed into a more chaotic and unequal system than many economists predicted.
The gains from globalization have already been exploited and supply chains have already expanded.
Automation and the use of robots are expected to undermine the promise of a growing industrial workforce.
The political reaction to globalization bears possibilities of deep uncertainty and may lead to a fundamental and profound transformation of the world.
Politicians and economists are emphasizing the necessity of compensating those displaced by globalization with retraining and more robust welfare states.
Pro-free-traders have a history of cutting compensation.
The issue is that people are not trusting the centrists who are now promising compensation.

Description

Are you knowledgeable about the complexities of globalization and its impact on the global economy? Test your understanding with this quiz that delves into the history and consequences of globalization, from its origins in colonialism to the present-day backlash against it. Explore the arguments for and against globalization, the social and economic costs of the process, and the political consequences of its implementation. Sharpen your knowledge on the various viewpoints surrounding globalization and its future implications by taking this challenging quiz.