Three decades of globalisation: Which countries won, which lost?

Abstract

K E Y W O R D Scapital flows, economic integration, globalisation, marginalisation, trade | 1077 GUNTER aNd WILCHER shed more light on possible explanations for why some countries have been drivers of globalisation, while others have been marginalised. The last section provides some conclusions. | BRIEF REVIEW OF THE LITERATUREThough trade has been considered an engine of growth since at least Adam Smith, there have been doubts if all countries benefit from international trade. Given that the arguments and literature of trade optimists are relatively well known, 2 this literature review focuses on more critical contributions about the benefits of trade, especially for the developing countries, using a historical perspective.There is a long literature related to unequal economic relations between developing and industrialised countries dating back to the middle of the twentieth century grounded in so-called dependency theory built on Marxist theories of exploitive imperialist relations between the European and the non-European world. Building on a perceived unfair international order, a set of proposals was made during the 1970s by various developing countries, which supported by the United Nations Conference on Trade and Development (UNCTAD) led to a United Nations (1974) General Assembly Resolution declaring the establishment of a New International Economic Order (NIEO). 3 Examining the trade policies of the European Community (EC) towards the African, Caribbean and Pacific (ACP) countries, Agarwal, Dippl, and Langhammer (1985) concluded that the trade marginalisation of the ACP countries has been due largely to the overall economic stagnation of many ACP countries, specific barriers inhibiting ACP export performance, including droughts and desertification, plant and animal diseases, high transportation costs, expensive and often inadequate telecommunications, as well as the impact of oil price increases. Following up on the evolution of EC-ACP trade, Cosgrove (1994) concluded that additional factors for the trade marginalisation of ACP countries have been the high incidence of HIV/AIDS in Africa as well as an erosion of specific trade preferences since the mid-1980s.Examining shares of world trade, investment and output, Collier (1995) shows that sub-Saharan Africa was more marginalised in 1994 than at any time in the previous 50 years. He examines four possible explanations for this marginalisation: insufficient reform, insufficient scale, the high-risk environment and weakness of agencies of restraint. Based on a 1994 survey of 150 firms, which had either invested or were interested in investing in five African countries, Collier concludes that the most serious deterrent for investment was political and policy uncertainty, followed by fears of policy reversal, fear of expropriation (including failure of the legal system to protect private agents from government) and the risk of breach of contract (which is in effect a failure of the judiciary to create an environment in which contracts are respected). Ng an...

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