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Fear of Globalization is Rising in the West

Jacob Funk Kirkegaard | Peterson Institute | May 2008

Once upon a time in the West, the notion of globalization brought to mind new commercial outlets, the international exchange of goods and new post-industrial job opportunities. Yet, the integration of highly populated emerging economies, China and India in particular, has modified the circumstances of both Europeans and Americans. Ever more people on either side of the Atlantic now associate globalization with redundancies, unemployment, and threats to the national economy. Governments are challenged to make sure the atmosphere does not disintegrate completely.

Globalization is no more than a continuous process driven by the technical innovations and the differentiated economic policies of individual governments. It is an integrative process that opens up new export markets. The integration of emerging economies as equal partners to developed countries creates a real global economy. Yet to the bourgeois middle class in the USA and Europe, the integrative dimension of globalization is ever less obvious in the light of the transfer of jobs, know-hows and wealth to upcoming states. While in those countries, the prospects for an economically secure life are increasing, they are declining in the West. Advantages such as the savings realized when purchasing goods and services, or lower interest rates are pushed into the background. Concerning the job market in particular, there is ambivalence as to how globalization is perceived: So long as new jobs are being created, globalization is "great" whereas when jobs are being shed, it is "completely inacceptable". The problem here is the following: while those who benefit from globalization are often largely dispersed, the negative consequences such as redundancies often occur concentrated in one region, something which amplifies how badly it is perceived.

While in Europe, basic reforms have already been initiated (the Agenda 2010 in Germany for instance) and while the European social system protects people from the worst consequences of globalization, an adequate safeguard system is missing in the USA. In the USA, social status is largely dependent on whether one has a job or not. Job loss therefore often has dramatic consequences. In the worst of cases, one is threatened with a life without health insurance. And the education system needs reforming too. The USA did not least succeed in rising to superpower-status because of an amazingly well educated workforce, thanks to which the country was well prepared for the global economy and the progressive liberalization of commerce. In the meantime, the share of people with a high level of education is stagnating (a similar scenario to Germany) while this share is growing in countries such as Canada, Japan and Korea. Only far-reaching political reforms can prevent the public perception of globalization growing into stark opposition to the process. But one thing is sure: the process itself can no longer be stopped!

This summary was prepared by the Atlantic Community editorial team from "Perceptions and Realities of Globalization," published here by the Peterson Institute for International Economics.

Related materials from the Atlantic Community:

• Hans F. Bellstedt: Bangalore and the Challenge of Inclusive Growth
• Parag Khanna: The Big Three: China, the US, and the EU
• Parag Khanna & Alpo Rusi: Europe's Century