Autonomy vs Globalization

Globalization

The term globalization is used for sectors and industries that gradually move away from a particular state or territory and the resources it offers. The main reasons for this are public policies, regulations, customer preferences, and level of technological progress which vary by country. The fact that national economies have opened up, coupled with economic liberalization, contributes to further loss of autonomy. Policies toward economic liberalization include privatization, financial deregulation, and fiscal decentralization. But globalization is not only limited to national economies and production processes. It also refers to the ever increasing interactions at the global level, including exchanges of ideas and cultural practices, movement of people and migration, and the political domain. World or global politics is an umbrella term for international nonprofit organizations, intergovernmental organizations, international agreements, and state governments.

Proponents argue that globalization forces help developing countries improve quality of life now that they have access to international markets. This means that they can produce and export products at competitive prices. Free trade and economic liberalization mean fewer barriers to trade such as government subsidies, value added taxes, tariffs, and others. Given that domestic companies are forced to compete with businesses headquartered in other countries, they are quick to improve efficiency and quality and to reduce costs. This means that customers are offered higher quality products and services. Free trade has also resulted in increasing specialization whereby states focus on products that can be produced more efficiently. This is beneficial for states because it means increased levels of output. The opening up of economies also means that companies are quick to implement new technologies, and the result is better quality products and further technological advances. Liberalization is beneficial for consumers in other ways. Now they have access to a host of goods produced around the world.

Autonomy

Critics point out to the fact that globalization results in the erosion of boundaries, loss of autonomy in decision making, and the decline of the nation-state. Furthermore, while developing countries benefit from having access to global markets, developed countries lose jobs to countries with a cheap labor force. Companies that operate in developed countries may either move to low-labor countries or cut pay for domestic workers. Critics also argue that multinational companies contribute to the mismanagement and depletion of natural resources and offer inadequate working conditions and low wages. In some developing countries, companies use child labor to lower production costs. They often work in inadequate and inhumane conditions, and health and work safety is not a priority. What is more, while multinational companies previously focused mostly on production and commerce, today they are increasingly entering the political domain and influencing decision making. Wealthy individuals and large corporations have a say in politics and lobby for favorable policies and regulations.

Critics also highlight the fact that globalization has led to a huge income gap, and the poor are doomed to a cycle of poverty while the rich have become super rich. In a world in which most countries have implemented value added taxes, the rich have the means to access production equipment and resources which the poor cannot afford to buy. And while supporters argue that globalization results in further technological advances, critics point out that technologies that have been developed in industrialized countries can be easily stolen or copied by companies in developing countries.

Diseases also spread across borders because of migration flows, movement of people, and travel for leisure and business. With open borders, there is a higher risk that a disease will spreads around the world. Today people have the unique chance to travel freely and increasingly do so. They get exposed to viruses and bacteria that their immune systems have not been exposed to. Travel-related diseases have become more common as well, including diseases such as hepatitis, malaria, and sexually transmitted diseases.

Finally, critics warn that globalization will lead to loss of identity. People identify themselves with their family, community, ethnical origins, nationality, and state. Loss of identity would mean loss of traditions, ways of living, culture, crafts, and folklore.

Globalization has its fierce critics (state-centric theorists) and supporters (retreat theorists), and there are good reasons for this. Global processes have a huge impact on states and local economies and how we live and see the world. Canada has actively supported free trade, economy liberalization, and multicultural policies, and questions arise about the unintended effects.

What Canadians Think about Finance

Canadians feel that technological advances that came with countries opening up are good for the economy and the world in general. Some 68 percent believe that globalization processes have improved the standard of living in many corners around the world. The majority also believes that trade agreements, the Internet, and technological advances have a beneficial effect on Canada’s economy. According to 47 percent of people, immigration has a negative impact on the economy, and half of the respondents hold the view that AI and automation are harmful to Canada’s economy.

One of the main challenges for Canada to overcome is its over-dependence on trade with the U.S. Trade diversification is the solution that many would welcome. At present, the U.S. is the largest export market of Canada and in light of this, it is essential that Canada pursues a path of further liberalization and trade agreements with other countries. Trade liberalization is also important considering that tariffs cost Canada about $5 billion a year. The vast share of tariffs paid is on products imported from Trans-Pacific Partnership countries, China, and other Asian countries.

Trade Liberalization and Finance

Today, globalization takes different forms, including cultural, social, and economic and brings both challenges and benefits. And while the recent economic crisis slowed down the pace, Canada still ranks 13th on the Globalization Index. Top ranking countries also include Switzerland, Sweden, the Netherlands, Austria, and Belgium. The index is based on indications such as political cooperation, free exchange of ideas and information, capital movement, free trade, investment volume.

It does not come as a surprise that Canada ranks 13th. The country already signed the Comprehensive and Free Trade Agreement with Europe to cut tariffs, strengthen economic ties, and make it easier to export services and products. In fact, Canada has signed 11 agreements, among which the Canada – Columbia Free Trade Agreement, North American Free Trade Agreement, and others. One of the main reasons is that Canada’s economy relies on trade, and a report by the World Bank shows that the share of trade in the economy is whooping 65 percent.

Globalization and Finance

Retreat theorists also argue in favor of globalization and further liberalization in light of the fact that Canada has a mid-size economy that relies on free trade. State-centric theorists, on the other hand, question whether national companies can compete in an ever globalizing, technology-driven, and digital world. They also question Canada’s ability to attract multinational corporations and foreign capital.

Proponents also point to the fact that it is essential to liberalize policies on multinational production and attract foreign capital. The provisions of the Investment Canada Act are seen as highly restrictive by many. In fact, supporters of liberalization argue that the Act is more restrictive than policies and regulations adopted in other OECD countries. This is especially true for telecommunications, distribution, and transportation and increases costs for multinational investors. Other aspects of Canada’s economic policy may also benefit from liberalization and reform. Interprovincial barriers, for example, have a negative effect on economic competitiveness. Reforms will benefit trade in many ways, and higher trade volumes will help reduce price levels, increase incomes, and improve efficiency and productivity.