Branko Milanovic, "The Two Faces of Globalization"

by: Kimberly Wylie

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Branko Milanovic, "The Two Faces of Globalization"  2

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Branko Milanovic, "The Two Faces of Globalization"

I. In answering whether or not Milanovic’s (2003) ideas are correct that the dominant view of economists is that once certain preconditions are in place (′sound′ macro-policies, protection of property rights, etc.) ... the only thing a country needs to do is simply to open up its borders, reduce tariff rates, attract foreign capital, and in a few generations if not less, the poor will become rich, the illiterate will learn to read and write, and inequality will vanish as the poor countries catch up with the rich, (4) one must take into account how quickly popular opinion can change on a subject. I believe this was the dominant view of many economists, a short time ago, however, as the data continues to flow in on actual ‘real world’ results of globalization, more economists are realizing that it is not so simple.

The reasoning underlying the view that globalization, when properly implemented, is a wonderfully benevolent force in improving the world as a whole, may simply be because the data can be manipulated to produce these results, and we, in the richer geographic region, would love for it to be so. China is an excellent example of how globalization has been able to help the country as a whole in its economic prosperity. Milanovic maligns those economists who utilize this approach as ignoring certain factors, such as economic growth in spite of unreasonably high tariff rates, yet he also does not acknowledge the fact that those “certain pre-conditions” may simply erroneously contain lower tariff rates as a precursor to success.

Despite high tariff rates, thanks to lower overall costs of doing business, China has been able to compete globally in a variety of product and service industries. This is the true secret to why they’ve been successful. Exports, as well as partnerships in China with foreign businesses, have shown a consistent economic growth over the last decades, envied by even Western countries.

As Chinese citizens have begun the single most expansive migration from the fields to the cities of China, incomes have increased and new industries have begun to thrive. Prior to globalization, due to the small amount of arable land in the country, a majority of Chinese was barely able to farm enough food to feed their family, let alone sell over production for income. Today, these same families now hold jobs in growing industries and are able to purchase luxury items, such as automobiles, which in turn stimulates the economy even further, in a Keynesian Multiplier type effect. All of this is thanks to globalization.

If Milanovic is correct that this view is wrong, developing countries have little choice than to close their borders completely and turn to a socialistic approach to society, if they wish to create pure equality within their country. Of course this system too is flawed. Human nature throws a monkey wrench into the best-planned socialistic economies.

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