The Social Dimensions of Globalization: Some Commentaries on Social Choice and Convergence

Abstract

Concerns have been raised about the erosion of social choice and the widening income disparities between rich and poor countries, two issues which are often linked. The essays in this part comment on several aspects of this nexus of issues.

Sovereignty & Social Choice under the Rules-Based Multilateral System concludes that, for rich countries, the scope to address distributional issues has not been reduced significantly by globalization. Trade rules do reach into domestic policy space; but the contractual nature of trade agreements, the deliberate pace of trade negotiations, and the essentially diplomatic character of dispute resolution, all mitigate the erosion of social choice in de facto and de jure terms.

Of Modular Economies and Social Contracts: Social Choice under Global Economic Competition concludes that, for poor countries, the situation is quite different. Reflecting special and differential treatment, weak implementation and non-enforcement, trade rules do not tend to impact very hard. However, due to the proliferation of failed states and financial crises, developing countries have all too often found themselves in the hands of their creditors - and thus effectively under the tutelage of the international financial institutions, which have actively used conditional provision of financing to leverage changes in domestic policy frameworks in a manner far more intrusive than the system of trade rules.

Supra-National Governance and the Developing Countries: Neither of Them nor for Them looks at the difficulty in transporting social choice considerations derived from the experience of rich countries, with well established democratic governance regimes, to poor countries. This essay concludes that there is no semblance of collective economic security built into the framework for the developing countries, which makes it extraordinarily important that developing countries buy into globalization on a “safety first” basis.

Explaining Global Income Disparities: The Usual Suspects Are Not Talking considers explanations for the large and persistent differences in incomes across continents, regions, and within countries - not to mention across ethnic and linguistic groups at each and every spatial level. It concludes that there are more questions than answers as regards the source of income disparities between rich and poor countries and argues that theories based on intrinsic characteristics of countries have not proven valid in application, suggesting systemic factors may be of importance in explaining trends.

On the Episodic Nature of Entry into and Exit from the “Convergence Club” considers the implications of the historical record which shows that the convergence club grew far more rapidly during the era of the international gold standard (1870-1914) and Bretton Woods (1940s to the early 1970s) than in the earlier era of 18th Century globalization (1820-1870) or the post-Bretton Woods era. It concludes that the "global monetary order", seems to matter. A link is drawn between observed trends of convergence and the behaviour of international prices.

Keywords: Globalization, convergence, global governance, sovereignty, social contract

JEL Classification: F02, F33, F50