Grade 9 Geography – Unit 2 Lesson 10
Trade
Foreign trade is the exchange or purchase of goods and/or services between
countries. Goods and services are either IMPORTED to or EXPORTED from a
country.
? IMPORT – Product or service that is brought into a country from another
country.
? EXPORT – Product or service produced in one country for sale in another
country.
In 2006, Canada spent about $220 billion on goods from other countries
(imports), and sold $254 billion worth of goods to other countries (exports).
Canadian exports exceeded imports. Thus, a TRADE SURPLUS existed.
? TRADE SURPLUS – situation in which a country has bought (imported) fewer
goods than they have sold (exported). (IMPORT < EXPORT)
? TRADE DEFICIT – Situation in which a country has bought more goods than
they have sold. (IMPORT > EXPORT)
Canadian Imports
? High technology products (e.g., computers, cameras and televisions from
many countries including Japan, Taiwan, South Korea, Germany, USA) .
? Motor vehicle parts from USA, Mexico and Japan
? Goods produced only in warmer climates (e,g., coffee, sugar, citrus fruits,
mahogany imported from countries nearer to the equator such as Kenya,
Columbia, Brazil and India)
? Low-cost goods (e.g., clothing, toys, books from countries where labour costs
are low such as China, India, Vietnam, Cambodia and Thailand)
? Business services (e.g., movies, fast food chains, Superbowl)
Canadian Exports
? Products based on our natural resources (e.g., lumber, metal ores, oil, fish,
live animals, grains, energy)
? Motor vehicles with most Canadian assembly plants located in Southwestern
Ontario
? Specialized manufactured goods (e.g., aircraft, electronics)
Protectionism
Canada places a tax on certain imported goods, called a TARIFF. When this
occurs, it becomes more expensive to buy products from other countries and
makes the purchase of Canadian goods more attractive. A tariff may encourage
buying Canadian-made products. Tariffs may protect the Canadian producers
? PROTECTIONISM – Policy of trying to protect the industries of a country by
having high tariffs.
?
TARIFF – Tax charged on good imported to Canada in order to protect
Canadian industries.
Free Trade
? FREE TRADE – Trade without tariff barriers.
Many countries around the world have decided that tariffs do not benefit their
country so they have entered into FREE TRADE AGREEMENTS:
? General Agreement on Tariffs and Trade (GATT)
?
North American Free Trade Agreement (NAFTA)
?
European Union (EU)
Globalization
? Globalization describes the ongoing global trend toward the freer flow of trade
and investment across borders and the resulting integration of the
international economy. In theory, globalization expands economic freedom
and spurs competition, and therefore, globalization should raise the
productivity and living standards of people in countries.
?
Does globalization work? From our vantage point, corporations have become
larger and richer. At the same time, the number of manufacturing jobs in
Canada has decreased as this type of work has moved to developing nations
with cheaper labour costs and lax environmental standards. Yet, it seems
poverty is increasing in the poorest nations while child labour is more
prevalent. We ask, “Do increased wages entice more children into the labour
force, or does the increased income from these wages allow adults, who
could not do so without the monetary contributions of their children, to
adequately take care of their families?”
Task
You are discussing globalization. You are given a report on either the merits or
the shortcomings o f globalization.
With your team
? Read the following information
? Prepare a short presentation highlighting your position
? Debate globalization
? Write a one-page summary describing your post-debate position on
globalization
Grade 9 Geography – Unit 2 Lesson 10 Globalization
Does Globalization Help the Poor?
Mander, J. , D. Baker and D. Korten. 2001. Does Globalization Help the Poor?
International Forum on Globalization. Volume 1(3).
http://www.thirdworldtraveler.com/Globalization/DoesGlobaliz_HelpPoor.html
During the past few years, we have heard steady proclamations emanating from the
advocates of economic globalization and leaders of the Bretton Woods institutions - the
World Bank, International Monetary Fund (IMF), World Trade Organization (WTO), et. al.
- that their deepest purpose in pushing economic globalization is to help the world's
poor. More specifically, they contend that removing barriers to corporate trade and
financial investments is the best path to growth, which they say offers the best chance to
lift the poor from poverty.
They also assert that the millions of people who have visibly opposed the economic
globalization model are harming the interests of the poor. Everyone should please back
off and leave it to corporations, bankers and global bureaucracies to do the planning and
solve the world's problems.
Such claims are routinely replayed in the media. A national columnist reports,
"Protesters are choking the only route out of poverty for the world's poor." In other
words, if the protests would stop, the IMF, the World Bank, the WTO, Nike and
Monsanto would save the day. Is this true? Are the interests of global corporations and
bureaucracies really aimed at helping the poor? Or do these institutions have other
primary motives?
WHO BENEFITS?
So far, almost all of the evidence from the past three decades (1970-2000) - the period
of economic globalization's most rapid ascendancy - shows that it is bringing exactly the
opposite outcome that its advocates claim. The evidence now comes nearly as much
from the proponents of globalization as its opposition.
Clearly, poverty and inequality are rapidly accelerating everywhere on earth. A 1999
report by the United Nations Development Program found that inequalities between rich
and poor within and among countries are quickly expanding, and that the global trading
and finance system is one of the primary causes.
Even the U.S. Central Intelligence Agency (CIA) confirms the United Nations' (UN)
conclusions, agreeing that globalization brings massive inequalities. The benefits of
globalization do not reach the poor, says the CIA, and the process inevitably brings
increased global protest and chaos.
Robert Wade of the London School of Economics, wrote in The Economist (2001),
"Global inequality is worsening rapidly...Technological change and financial liberalization
result in a disproportionately fast increase in the number of households at the extreme
rich end, without shrinking the distribution at the poor end...From 1988 to 1993, the
share of the world income going to the poorest 10 percent of the world's population fell
by over a quarter, whereas the share of the richest 10 percent rose by 8 percent."
Does Globalization Help the Poor?...2
The ideologies and rules of economic globalization - including free trade, deregulation,
privatization, and structural adjustment - have destroyed the livelihoods of millions of
people, often leaving them homeless, landless and hungry, while removing their access
to even the most basic public services such as health and medical care, education,
sanitation, fresh water, public transport, job training and the like. The record shows that
economic globalization makes things worse for the poor, not better.
Economic globalization has only proved to be successful in making global corporations
and a few elites wildly wealthy. For example, of the largest 100 economies in the world,
52 are now corporations. In what the UN describes as the "staggering concentration of
wealth among the ultrawealthy," total wealth controlled by people with assets of at least
$1 million nearly quadrupled from 1986 to 2000, from $7.2 trillion to $27 trillion. Even
with the dot-com crash and the current global financial slump, Merrill Lynch predicts that
wealth controlled by millionaires will continue to increase by 8 percent a year, reaching
$40 trillion by 2005.
Contrary to its claims, wealth generated by globalization does not trickle down. Rather,
the rules lock the wealth at the top, removing from governments and communities the
very tools necessary to redistribute wealth, protect domestic industries, workers, social
services, the environment, and sustainable livelihoods.
There are isolated instances where some improvement has been achieved among Third
World countries, over short periods. The Bretton Woods institutions love to trumpet
these examples. But the truth is that the benefits of this "growth" have been very shortlived. In any case, nearly all the benefits have gone to the elites in these countries, and
the chief executives of the global corporations at the hub of the process; executives
whose annual earnings are now astronomical, often in the tens or hundreds of millions of
dollars. All figures show that these discrepancies between top executives and ordinary
workers are rapidly growing.
Even among the so-called "poster children" of free trade, the "Asian Tigers" like Taiwan,
South Korea, Singapore and Malaysia, improvement has not come by assiduously
following the dictates of the Bretton Woods regimes - the IMF, World Bank, the WTO,
etc. - but often by doing the opposite of what the institutions prescribe. By at first
resisting the economic model pushed by Bretton Woods, some countries managed to
stay free of the volatility of export markets. But when they finally succumbed to heavy
pressures from the IMF and the World Bank, they found their glory days quickly
disappearing into the infamous Asian financial crisis (1997-1998), rooted directly in the
new rules of free trade for finance and global corporations.
Most poor countries, however, have not enjoyed much benefit from globalization. After
three decades of heavy IMF and World Bank medicines and less than a decade of WTO
policies, they have understood that globalization is selling a false promise. The policies
of the Bretton Woods institutions are not designed to benefit them, but to benefit rich
industrial countries and their global corporations. The question is this Do these
globalizing institutions know what they're doing? Or do they just blindly follow a failed
ideological model?
Does Globalization Help the Poor?...3
The worst case conclusion, which many now believe, is that the institutions surely do
know what they're doing and always have. They have an assignment to remove all
impediments to the free flow of global capital as it seeks to pry open the world's last
natural resource pools, markets, and cheap labor (and, to keep it cheap). To suggest
they do all this to help the poor is high cynicism.
THE CREATION OF POVERTY
Economic globalization policies as enforced by the World Bank, IMF, and the WTO
actually have far more to do with creating poverty than solving it. Free trade requires that
all countries adopt the same economic model, thus eliminating variations that might slow
down the smooth global operations of major corporations as they seek new resources,
markets and cheap labor. It is not efficient for global corporations when individual
nations are permitted their own expressions of what is best for their people via their own
democratic laws. These laws might be designed to protect resources and the
environment; or social services for the poor; or the rights of local workers; or they might
help struggling small businesses; or require foreign investors to keep their investment in
place for a time; or require that foreign investors include domestic partners. All such laws
are viewed as pesky impediments to corporate freedom. They have got to go.
The specific role of the WTO is to set homogenized global rules for all countries-one size
fits all-and to specifically challenge national environmental and social laws viewed as
obstacles to corporate free trade. Given that it was granted draconian enforcement
powers, the WTO can now impose harsh punishments on democratic nations that stray
from its rules. A past president of the WTO, Renato Ruggiero put it bluntly in 1998 The
WTO will be "the new constitution for a global economy." (Since Seattle, such
statements have not been repeated.)
STRUCTURAL ADJUSTMENT PROGRAMS
The World Bank and the IMF have their own powerful and dangerous instrument
Structural Adjustment Programs (SAPs). The infamous SAPs of the IMF, and so-called
"development" loans from the World Bank routinely come with harsh conditionalities that
require developing nations to abandon important domestic programs that serve the
population. These include education, health services and environmental programs,
which don't produce revenues to repay IMF and World Bank loans or interest. As the
IMF forces countries to downsize government agencies, the ranks of the unemployed
grow faster than the private sector can absorb them. IMF policies raise interest rates,
preventing small businesses from obtaining capital needed to expand or stay afloat,
which leads to further unemployment. Meanwhile, removing barriers to foreign
investment and trade, insisted upon by the IMF and enforced by the WTO, makes it
harder for local producers to compete against bigger, richer foreign businesses.
This system leaves countries utterly dependent upon market and pricing systems over
which they have no control. Meanwhile, they have given up the ability to determine their
own destinies. The greatest mystery of course is how any of the promoters of such rules
and conditions (among others) could possibly argue that these rules could help nations
rise from poverty. Clearly, this is a blueprint for dependency and poverty creation.
Does Globalization Help the Poor?...4
EXPORT-ORIENTED AGRICULTURE
Probably the most traumatic impacts of globalization policies - both in terms of povertycreation, and environmental devastation - have come with the forced shift of local
economies away from small-scale diversified agricultural models to the industrial export
model, directed by global corporations.
Nearly half of the world population, even today, lives directly on the land, growing food
for their families and communities. They emphasize growing staples and a mix of diverse
crops, and they replant with indigenous seed varieties that their communities have
developed over centuries. They have perfected their own fertilizers, crop rotations, and
pesticide management, and their communities share all elements of the local commons,
including seeds, water, and labor. Such systems have kept hundreds of millions of
people going for millennia.
Local self-sufficiency systems are anathema to global corporations and the
bureaucracies that serve them. In a global economic system, corporate profits primarily
come from increased processing activity, and global trading. So now we find
corporations including Archer Daniels Midland, Monsanto, and Cargill, among others,
spending tens of millions of dollars in public relations and advertising campaigns arguing
that small farmers are not "productive" enough to "feed the hungry world."
These campaigns run hand in hand with the investment and trade strategies and rules of
the WTO, the IMF, the World Bank and the U. S. government. All of these strongly favor
the entry of global corporations, which replaces local, diverse farming for self-reliance
with monocultures run by corporations.
An export-oriented system of agriculture favors high priced, high margin luxury export
items - flowers, potted plants, beef, shrimp, cotton, coffee, exotic vegetables - to be sent
to the already overfed countries. As for the people who used to live on the lands,
growing their own foods for their communities and for local markets, they are rapidly
being driven off their lands. People who once fed themselves become landless, jobless,
cashless, homeless, dependent and hungry. Self-sustaining communities disappear; still
intact cultures are decimated. This is as true in the United States as in the Third World.
The situation is absurd. Dependency and starvation replace self-sufficient livelihoods
and self-reliant nations; meanwhile global corporations get wealthy by shipping luxury
foods thousands of miles. Clearly, these corporations are not concerned about feeding
the hungry. That is only an advertising slogan. They are concerned about feeding
themselves.
THE ROOT OF THE PROBLEM: A FAILED IDEOLOGY
The IMF, World Bank and the WTO are pursuing what some have labeled "market
fundamentalism," an ideological commitment to two basic false principles:
? Economic growth and increased trade achieved through deregulation and
privatization automatically increases the wealth of communities and humanity, and
contributes toward a better future for all. In other words, what benefits corporations
benefits all.
? Increased foreign investment in Third World countries increases productive
capacities and development, adding to the well being of the poor. Neither of these
has proved true. What is true is that the system has added to the well being of the
corporations that have perpetuated it.
Does Globalization Help the Poor?...5
Most measures of "economic growth" such as Gross Domestic Product (GDP) and
Gross National Product (GNP) measure only increases in the market value of economic
production (i.e., the rate at which resources are converted to commodities, and that
other paid services and activities are performed). By such standards of measurement,
expansion of military hardware, prisons, wars, crime (and its prevention), as well as the
clear-cutting of forests, or building of toxic dumpsites are all made to seem positive as
they increase GNP and GDP. Meanwhile, unpaid household labor, care for the sick and
elderly, or self-sufficient food growing and distribution are not deemed positive results
because they don't get counted.
Such standards also contribute to the depletion of social and natural capital (nature)
which, as former World Bank economist Herman Daly has suggested, is the foundation
of all real wealth. In fact, export-driven globalization is the greatest single contributor to
the massive ecological crises of our time. Its emphasis on exponentially increased trade
and transport activity requires corresponding expansion of infrastructures - airports,
seaports, roads, rail-lines, pipelines, dams, electric grids; many of these in pristine
places, often on indigenous lands. Increased transport also uses drastically increased
fossil fuels adding to the problems of climate change, ozone depletion, and ocean and
air pollution. And an ever expanding economy requires the depletion of the last
resources on the planet; under free trade these are nearly always located in the global
South. One of the greatest injustices against southern countries is that they are net
resource exporters to the already rich North.
Indeed ecological degradation-forests, rivers, biodiversity-has the most devastating
impact on the poor; and resource depletion reduces livelihoods and creates poverty. So
economic growth is certainly not a measurement that benefits the poorest parts of the
world. In any case, depleting nature cannot serve anyone for much longer, even the rich,
who may be, as the late British financier James Goldsmith put it - "enjoying champagne
on the deck of the Titanic."
One can only conclude from this that the present system is fundamentally flawed, and
cannot be corrected by reforms at the margin. It must be changed to a very different
system, based on values and institutional relationships that place human beings and
nature above percentage returns on investment.
The Benefits of Globalization
source: The Benefits of Globalization. (Online) Available:
http://www.freetrade.org/issues/globalization.html
"Globalization" describes the ongoing global trend toward the freer flow of trade
and investment across borders and the resulting integration of the international
economy. Because it expands economic freedom and spurs competition,
globalization raises the productivity and living standards of people in countries
that open themselves to the global marketplace.
For less developed countries, globalization offers access to foreign capital, global
export markets, and advanced technology while breaking the monopoly of
inefficient and protected domestic producers. Faster growth, in turn, promotes
poverty reduction, democratization, and higher labor and environmental
standards.
While globalization may confront government officials with more difficult choices,
the result for their citizens is greater individual freedom. In this sense,
globalization acts as a check on governmental power that makes it more difficult
for governments to abuse the freedom and property of their citizens.
source: Samida, Dexter. May 2002. A Child’s Burden: Reducing Child Labour
by Increasing Trade. Fraser Forum. Fraser Institute. (Online). Available:
http://www.fraserinstitute.ca/
Child labour is an unfortunate part of the developed world’s history and a terrible
reality in many impoverished nations today. Fortunately, the prevalence of child
labour has been declining.
Contrary to this fact, many anti-child labour activists choose to use fiery rhetoric
against globalization rather than dispassionately analyze the available data to
determine what policies are best for children in the developing world. For
example, Linda Golodner, President of the National Consumers League, argues,
“The problem of child labour has grown along with the expansion of the global
marketplace.” Kailash Satyarthi, International Coordinator of the Global March
Against Child Labour states, “We are now experiencing an era of economic
gobalization, which creates the illusion of a global village, but when children
come together, without a common language, joined by their suffering as
labourers, this is a true global village.” There is no question that suffering occurs
in many, perhaps most, parts of our world. However, there is a serious question
whether rolling back global integration would help end or even reduce child
labour.
In their recent NBER Working Paper, Dartmouth College economists Eric
Edmonds and Nina Pavcnik note that “globalization may increase the wages paid
to working children or increase the earnings opportunities of children in poor
economies, thereby increasing child labour”. At the same time, family income
increases when wages rise in general. This can increase the parents’ ability to
pay for schooling and their family’s entire needs. Increased national income can
also have beneficial impacts on infrastructure and institutions, which could
increase access to educational opportunities for rural children.
The important question is this: Do increased wages entice more children into the
labour force, or does the increased income from these wages allow adults, who
could not do so without the monetary contributions of their children, to adequately
take care of their families? In their examination of Vietnam, Edmonds and
Pavcnik focused on the liberalization of the country’s rice export quo ta starting in
1993. Prior to that year, exports were restricted in order to maintain artificially low
rice prices. Consequently, rice prices rose as did wages paid to those working in
agriculture (both adults and children). From 1993 to 1998, the prevalence of
child labour decreased from 57 to 38 percent. This represented a 33 percent
decrease in the number of children working in only 5 years. Along with this trend,
the percentage of children who worked and also did not attend school declined.
In 1993, 18 percent of working children did not attend school. Five years later this
was down to 7 percent. Clearly, important changes have occurred. In order to
isolate the causes of these changes, Edmonds and Pavcnik looked statistically at
rice prices, average wages, land holdings, and school improvements in order to
explain changes in the prevalence of child labour. Their results suggest that
liberalization moved one million children out of child labour. The declines were
greatest for secondary-school-aged girls, who were consequently more likely to
attend school. The researchers’ conclusion is that increased income brought
about by liberalization enabled more parents to feed and educate their families
without requiring the money generated by their children’s labour.
Further helpful steps can be taken. Instead of attacking globalization and
liberalization, child labour opponents should embrace it. Liberalized trade
increases the speed at which income gaps vanish (Ben-David and Kimhi, 2000),
and more economically free nations grow faster than their more restricted
brethren (Gwartney and Lawson, 2001). Steps backward in the march of
globalization are steps backward in the fight against child labour. Globalization
can be the liberator of not only markets, but also of children.
Globalization - Merits
Meredith, Robyn and Suzanne Hoppough. 2007. Why Globalization is Good.
Forbes. (Online) Available:
http://www.forbes.com/free_forbes/2007/0416/064.html
Multinationals are trashed as exploiters of the poorest people on the planet.
Wrong, wrong, wrong.
A ragtag army of save-the-world crusaders has spent years decrying multinational
corporations as villains in the wave of globalization overwhelming the Third World. This
ominous trend would fatten the rich, further impoverish and oppress the poor and crush
local economies.
The business-bashing group Public Citizen argued as much in a proclamation signed by
almost 1,500 organizations in 89 countries in 1999. Whereupon hundreds of protesters
rioted outside a conference of the World Trade Organization in Seattle, shattering
windows, blocking traffic and confronting cops armed with tear gas and pepper spray.
Six hundred people were arrested.
Cut to 2007, and the numbers are in: The protesters and do-gooders are just plain
wrong. It turns out globalization is good--and not just for the rich, but especially for the
poor. The booming economies of India and China--the Elephant and the Dragon--have
lifted 200 million people out of abject poverty in the 1990s as globalization took off, the
International Monetary Fund says. Tens of millions more have catapulted themselves far
ahead into the middle class.
It is remarkable what a few container ships can do to make poor people better off.
In the next eight years, almost 1 billion people across Asia will take a Great Leap
forward into a new middle class. In China, middle-class incomes are set to rise threefold,
to $5,000, predicts Dominic Barton, a Shanghai managing partner for McKinsey & Co.
As the China-India revolution spreads, the ranks of the poor get smaller, not larger. In
the 1990s, as Vietnam's economy grew 6% a year, the number of people living in
poverty (42 million) fell 7% annually; in Uganda, when GDP growth passed 3%, the
number fell 6% per year, says the World Bank.
China unleashed its economy in 1978, seeding capitalism first among farmers newly
freed to sell the fruits of their fields instead of handing the produce over to Communist
Party collectives. Other reforms let the Chinese create 22 million new businesses that
now employ 135 million people who otherwise would have remained peasants like the
generations before them.
Foreign direct investment, the very force so virulently opposed by the do-gooders, has
helped drive China's gross domestic product to a more than tenfold increase since 1978.
Since the reforms started, $600 billion has flooded into the country, $70 billion of it in the
past year. Foreigners built hundreds of thousands of new factories as the Chinese
government built the coal mines, power grid, airports and highways to supply them.
As China built infrastructure, it created Special Economic Zones where foreign
companies willing to build modern factories could hire cheap labor, go years without
paying any taxes and leave it to government to build the roads and other infrastructure
they needed. All of that, in turn, drove China's exports from $970 million to $974 billion in
three decades. Those container loads make Americans better off, too. You can get a
Chinese DVD at Wal-Mart for $28, and after you do you will buy some $15 movies made
in the U.S.A.
Per-person income in China has climbed from $16 a year in 1978 to $2,000 now. Wages
in factory boomtowns in southern China can run $4 a day--scandalously low in the eyes
of the protesters, yet up from pennies a day a generation ago and far ahead of increases
in living costs.
Middle-class Chinese families now own TVs, live in new apartments and send their
children to private schools. Millions of Chinese have traded in their bicycles for
motorcycles or cars. McDonald's has signed a deal with Sinopec, the huge Chinese
gasoline retailer, to build drive-through restaurants attached to gas stations on China's
new roads.
Today, 254 Starbucks stores serve coffee in the land of tea, including one at the Great
Wall and another at the Forbidden Palace. (The latter is the target of protesters.) In
Beijing 54 Starbucks shops thrive, peddling luxury lattes that cost up to $2.85 a cup and
paying servers $6 for an 8-hour day. That looks exploitative until you peek inside a
nearby Chinese-owned teahouse where the staff works a 12-hour day for $3.75.
Says one woman, 23, who works for an international cargo shipper in Beijing: "My
parents were both teachers when they were my age, and they earned 30 yuan [$3.70] a
month. I earn 4,000 yuan ($500) a month, live comfortably and feel I have better
opportunities than my parents did."
Tony Ma, age 51, was an unwilling foot soldier in Mao's Cultural Revolution. During that
dark period from 1966 to 1976 universities were closed, and he was sent at age 16 to
work in a steel mill for $2 a month. He cut metal all day long for seven years and feared
he might never escape.
When colleges reopened, he landed a spot to study chemistry, transferred to the U.S.,
got a Ph.D. in biochemistry and signed on with Johnson & Johnson $45,000 a year.
Later he returned to the land he fled and now works for B.F. Goodrich in Hong Kong.
The young college grads in China today wouldn't bother immigrating to the U.S. for a job
that pays $45,000, he says--because now they have better opportunities at home.
Capitalism alone, however, isn't enough to remake Third World economies--globalism is
the key. A big reason India trails behind its bigger neighbor to the northeast in lifting the
lower classes is that, even after embracing capitalism, it kept barriers to the flow of
capital from abroad.
Thus 77% of Indians live on $2 a day or less, the Asian Development Bank says, down
only nine percentage points from 1990. A third of the population is illiterate. In 1980 India
had more of its population in urban centers than China did (23% versus 20% for China).
But by 2005 China had 41% in cities, where wages are higher; India's urbanites had
grown to only 29%.
Freed of British colonial rule in 1947 and scarred by its paternalistic effects, India initially
combined capitalism with economic isolationism. It thwarted foreign companies intent on
investing there and hampered Indian firms trying to sell abroad. This hurt Indian
consumers and local biz: A $100 Microsoft operating system got slapped with duties that
brought the price to $250 in India, putting imported software and computers further from
reach for most people and businesses. Meanwhile, the government granted workers
lavish job protections and imposed heavy taxes and regulations on employers.
Government jobs usually were by rote and paid poorly, but they guaranteed lifetime
employment. They also ensured economic stagnation.
Financial crisis struck in 1991. Desperate for cash, India flew a planeload of gold
reserves to London and began, grudgingly, to open its economy. Import duties were
lowered or eliminated, so India's consumers and companies could buy modern, foreign-
made goods and gear. Overseas firms in many industries were allowed to own their
subsidiaries in India for the first time since 1977. India all but banned foreign investment
until 1991. Since then foreign companies have come back, but not yet on the scale seen
in China. Foreign companies have invested $48 billion in India since 1991--$7.5 billion of
that just in the last fiscal year--the same amount dumped into China every six weeks. By
the mid-1990s the economy boomed and created millions of jobs.
By the late 1990s U.S. tech companies began turning to India for software design,
particularly in the Y2K crunch. The Indians proved capable and cheap, and the muchmaligned offshoring boom began. Suddenly Indian software engineers were
programming corporate America's computers. New college graduates were answering
America's customer service phone calls. Builders hired construction workers to erect
new high-rise buildings suddenly in demand as American and European firms rushed to
hire Indian workers.
The new college hires, whose older siblings had graduated without finding a job, tell of
surpassing their parents' salaries within five years and of buying cell phones, then
motorcycles, then cars and even houses by the time they were 30. All of that would have
been impossible had India failed to add globalization to capitalism.
Today, despite its still dilapidated airports and pothole-riddled highways, the lumbering
Elephant now is in a trot, growing more than 7% annually for the last decade. In 2005,
borrowing from the Chinese, India began a five-year, $150 billion plan to update its
roads, airports, ports and electric plants. India is creating free trade zones, like those in
China, to encourage exports of software, apparel, auto parts and more.
S.B. Kutwal manages the assembly line where Tata Motors builds Safari SUVs. He
remembers how, in the 1980s, people waited five years to buy a scooter and cars were
only for the rich. "Since we've liberated the economy, lots of companies have started
coming into India," says Kutwal. "People couldn't afford cars then. Now the buying power
is coming."
In Mumbai (formerly Bombay), Delhi, Bangalore and other big cities, shopping malls
have sprung up, selling everything from Levi's jeans to Versace. India still has raggedy
street touts, but when they tap on car windows at stoplights, instead of peddling cheap
plastic toys, they sell to the new India: copies of Vogue and House & Garden
magazines. Western restaurants are moving in, too: Domino's Pizza and Ruby Tuesday
's have come to India, and 107 McDonald's have sprung up, serving veggie burgers in
the land where cattle are sacred.
None of this gives pause to an entity called International Forum on Globalization. The
group declares that globalism's aim is to "benefit transnational corporations over
workers; foreign investors over local businesses; and wealthy countries over developing
nations. While promoters … proclaim that this model is the rising tide that will lift all
boats, citizen movements find that it is instead lifting only yachts."
"The majority of people in rich and poor countries aren't better off" since the World Trade
Organization formed in 1995 to promote global trade, asserts Christopher Slevin, deputy
director of Global Trade Watch, an arm of Ralph Nader's Public Citizen. "The breadth of
the opposition has grown. It's not just industrial and steel workers and people who care
about animal rights. It includes high-tech workers and the offshoring of jobs, also the
faith-based community."