States and Markets in the Era of Globalization
Embedded liberalism refers to a global economic system and the transnational political alignment association from the end of the Second World War (WW2) to the 1970s. Its existence as a system was to offer support to free trade combined with the freedom of the state to enhance their welfare provision and reduce unemployment through regulation of their economy. The free trade stricture was less consistent, the external value of currencies’ were maintained subordinately through stable prices, and the domestic employment levels raised policy concerns during the Victorian era. Globalization’s golden age tattered due to the increasingly unsustainable pressure from the growing democratization of political life nationally. The order of the international economy that was fragile was ultimately destroyed and undermined steadily by political life in the democratization quest at WW2.
In the U.S, the Keynesian state or the New Deal and the Social market economy or European social democracy reflected the realities of national politics due to the workable balance that struck and different forms established in other countries. The idea was to offer a grand social bargain to ensure an agreement for open markets in all social sectors and contain and share the social adjustment costs from the produce of the open market. The push for international liberalization through volatility moderation of transaction flows across borders and adjustment assistance, and safety nets and social investments provided by the government that sustained and enacted the compromise had a crucial role in ensuring its victory.
The most equitable and most prolonged expansion economy resulted from the grand bargain in the industrialized countries. The ’embedded liberalism’ was ineffective in many developing countries due to their lack of resources, political interest, international support, and institutional capacity, which did not allow them to enjoy the privilege of cushioning the domestic effects of being exposed to the market adversely (Ruggie 1982). Large parts of these developing countries have not exploited the globalization opportunities offered to sustain development and reduce poverty.
In January 1999, Kofi Annan informed the World Economic Forum by mentioning that “the challenge is to devise a similar compact on the global scale, to underpin the new global economy…protection, populism, nationalism ethnic chauvinism, fanaticism, and terrorism (Annan 2002).” At the national level, there is a government that can act on the common good. In contrast, there is none and the weak nature of the international institutions at a global level to compensate for the magnitude of institutional practices and social values shared by the embedded global market.
The equal distribution of benefits of globalization poses disparities between developed and developing countries as conceded by Horst Köhler, the IMF’s Managing Director, who said, “The disparities between the world’s richest and poorest nations are wider than ever (International Monetary Fund 2000).” Many parts of the developing countries in the world are at a disadvantage of being left behind entirely. Since commodity prices have steadily reduced, Africa is disadvantaged and is less integrated into the global economy currently than it did in the past. The measurement of income disparities among the world’s individuals different from countries has not either become worse or have not significantly improved over the past three decades and the rates of global poverty.
In global rulemaking, a growing imbalance triggers the backlash. The rules favor the expansion of the worldwide market and more enforceable and robust in the recent two decades like the trade dispute resolution or the intellectual property rights as portrayed in the World Trade Organization (WTO). The rules projected to promote social objectives that are equally valid, like human rights, poverty reduction, environmental quality, or labor standards, have become weak in some instances and lag. Social dislocation and economic instability can be brought about rampantly due to the people’s view of the unpredictable and unfamiliar forces vulnerable to globalization, like the 1997-1998 financial crisis in Asia.
There is an excellent risk of sovereignty and cultural integrity, and there is a worry of people’s jobs, the person in charge, and their drowned-out voices due to the arrival of globalization. Debates have raised concerns on the impact of globalization on the market forces in social embeddedness while focusing on its effects on public policies and expenditure, mainly in social safety net areas of accountability, identity, employment, and wage levels.
According to Ludger Schuknecht and Vito Tanzi (1997), spending has grown from 10.7% to 45.6% of the gross domestic product in 125 years due to Great Depression and the two world wars. Between 1960 and 1980, social expenditures for unemployment benefits, health, education, and pensions on an average scale doubled, thus dramatically expanding. There was a significant reduction in monetary flow and trade barriers by industrialized countries. The pattern between the increase in spending and a reduction in trade barriers and financial flows kept in the embedded liberalism compromise provided a definite amount of domestic compensation over the risks of attending huge international openness.
Geoffrey Garrett (1998) argues that irrespective of the integration of the market extend in differences, the social democracy thrived continuously through powerful parties’ left-of-center’ aligning with centralized and strong trade unions. Politics with a domestic coalition seemed to dominate the related rule and social expenditure outcomes than globalization. He further analyzes his statistics to outline an increase in total trade that affects government spending every year. He states that a similar result is produced when there is an international financial openness increase. Variation patterns are complex, with a small magnitude of changes across different market segments in certain countries.
In conclusion, individuals’ fear of issues to do with control, identity, economic losses, and risks results in anxiety on the idea of globalization. More so, industrialized countries seem to have gone through the1990s with an unraveling of domestic social nets, however not a disassembling. A bending question remains for the economy as to why globalization impacts high unemployment rates in Europe and wages in the U.S stagnate. The globalization era should be saved through the normative and intellectual framework by the policymakers to guide and explain the need for its existence to the society globally.
In the last few years, a tremendously high economic growth rate has been recorded in various East Asian countries, leading to remarkable advancements in the value of life. Countries such as China, Hong Kong, Korea, Japan, Thailand, Taiwan, Malaysia, and Singapore, also known as the Newly Industrialized Economies (NIEs), have had a rapid development that took the developed Western European States decades to achieve. According to research, in these societies, the dangerous poverty, and income disparity were practically eliminated by the miraculous economic revolution that dramatically enhanced quality (Page, 2016). They are currently known as the East Asian Miracle for the dramatic and rapid economic growth.
According to various studies, different policies and government support led to these economies’ successes. This paper, therefore, aims at discussing the multiple procedures, which include the economic policies, policies of education, and government policies and how they impacted the rapid economic growth in the eight Countries referred to as the miraculous East Asians.
Policies of education
It was highly believed that a workforce with moderately well-educated individuals would be a crucial element in the speedy export development of these countries. The education policy adopted in these regions was for both boys and girls. According to research, education and training provide a flexible and accomplished labor force (Carolan et al., 2013). Private earnings to funds in education are raised by high growth, leading to private initiatives encouragement. In these countries, maybe at the beginning, education was not considered a great deal compared to flexibility in the labor market and discipline. However, the moves that followed, up to the current situation, it became clear that without strong-based education, nothing was possibly going to be achieved.
On the other hand, education alone, according to studies, could not also catalyze strong export development. For example, the Philippines and Sri Lanka, with their high education achievements, had a very substandard growth rate until recently that they had a rapid growth export. This indicates that investing in high education alone without applying other strong measures would never be effective. As of 1990, both the 1st and the 2nd NIEs attained high education relative to their levels of income (Perkins 2013). Therefore, alongside the other policies, the adopted education policy laid a strong foundation for the eight East Asian countries’ miraculous growth.
Some approaches were common to all countries regarding economic policies, while other techniques differed from one country to another. The differences were observed in how governments played their roles and extraneous reserves in industrialization efforts. For example, Japan and Korea’s “picking winners” nationalistic philosophies concentrated on establishing and supporting their countrywide private corporations; Singapore did not believe in this policy and created its own, which focused on establishing a conducive business environment to attract foreign investments (Stiglitz and Yusuf 2021). On the other hand, some of these countries had no raw materials, and the only option was to import the raw materials for their survival, including crude oil. Also, other country’s small population was not good enough to support their industries. These and other more factors forced them to choose and follow the international economy, linking their economies more tightly to the worldwide marketplace more than other developing countries. On this, their option was the export-led policy for their fast growth. This idea spread in most parts of Africa and Latin America and is believed to be one of the policies that helped actualize the miracle.
Could there have been rapid economic success without authoritarian rulers and stable movements in these regions? Studies argue that technocrats are cloistered by controlling governments from the obligatory probable pressure by politicians, business interests, and civic collections, giving them room to implement long-term development agendas in industrialization’s progressive phase. They, therefore, had not to worry about political renaissances that are short-term. Consequently, other more studies argue that, contrary to democratic governments that are too broken, authoritarian governments are permitted fast decisions, which was necessary to achieve rapid economic growth. Despite the leaders of these states having little knowledge, they adopted these policies, got guidance from simple practicality, and implemented them, leading to rapid growth. Their financial results should not, therefore, be denied. For example, the government policy and collective disbursement on education led to the rise of an educated individual, who later played critical roles in realizing the rapid growth of the GDP.
Furthermore, their governments also provided them with a conducive environment essential for private investments and provided the necessary support required during the industrialization process. Consequently, the industrial policy of rent creation by the various governments through different instruments also raised manufacturing profitability compared to service; and agriculture in most cases. Therefore, if not for these government policies, the East Asian miracle could have never been achieved.
Other developing economies can emulate the East Asian development strategies. However, these economic administrations do not just independently grow; instead, they grow in and out of political, social, and established forces present in every society (Holzer, 2000). Various administrational patterns have emerged throughout the economies of modern markets. These patterns are shaped by the histories of different countries, social structural circumstances, cultural personalities, and political economies. East Asian counties, for example, developed group thinking, unique social concepts, and behavioral patterns that saw them succeed. They used institutional logics that are far different from those used by western countries. This led to rapid growth. It is also worthwhile to note that there were severe economic crises in these countries before all these happened, not forgetting extreme poverty. Therefore, their rapid economic growth acts as inspiration and should emulate other developing countries for their GDPs sakes.
East Asia’s economy has been one of the most successful and fast local thrifts worldwide. All started with the 19th Century reforms that resulted in what is currently known as the “economic miracles.” East Asia’s prominence results from its government policies, economic policies, and education policies adopted in these regions. Other developing economies can also emulate these policies. The strategies worked in East Asia; why not other countries? It’s all about making solid plans and implementing them. The developing economies should therefore know that it starts from any point to make a difference.
China is a capitalist state economically developed after many factories in china changed the toys into real mobile phones that are supplied all over the world. Capitalism started after the entrepreneurs started the businesses and allowed foreign investment into the early 1980s. China’s economy is the world’s largest economy due to its great success after it practiced capitalism and has the most significant more than 30 years in its economic growth. The economy is built on particular relationships and self-sustained society, and the state manages the means of production on economic activity as the state-owned enterprises. Capitalism involves:
- a price system
- wage labor to show the amount of work used
- private property away from the property owned by the competitive state markets for fair sales and competition in the business area
- the amount of capital that accumulates as a way of saving
- number of profits the country gets when involved in the activities
Therefore, the paper effectively discusses how china shows the superiority of the governance compared to the market, leading to capitalist development. The Chinese state has broad exposure in financial and commercial interests in operating in different levels of the government, leading to a large number of state-owned businesses than those owned privately by individuals worldwide, especially in Africa and on various occasions such as negotiations relationships (Hu et al., 2019). The Chinese state has changed to globalization, where it operates with international forms and has its other own made reforms to run the businesses. Unlike other countries whose significant interests are investing in Africa, the Chinese state lacks exposure to investing in Africa to globalization. Instead, there are many different versions of businesses depending on the origin of the business’s investor. However, by building good infrastructure and concrete forms of transport and communication, the Chinese have introduced technological forms to increase the available markets, such as building projects on the required time.
The Chinese have widely invested in countries in Africa despite its lack of coordination and diversity within the states in China and the other organizations situated in different globes such as Africa. Through business relations in Africa, the Chinese can fetch the resources needed to grow their economy. The Chinese business in Africa is contextual in that the state’s policy framework contains information and permeates the Chinese to go to Africa legally; the state has developed its vital agencies that support the Chinese into Africa.China has developed unprecedented diplomacy, the multilateral and bilateral that agrees to frequent visits of the Chinese into Africa, and the agreement of giving loans and technical assistance to the Africans and scholarships to practice African policy and going policy.
The government of Chinese has introduced policies and measures that support the Chinese to invest in Africa. For instance, the central policy banks, the China export and import bank have operations across Africa among other globes; hence the Chinese investment in African countries should give the necessary information to the Chinese firms (Zhang 2017, p.22). The policy going out policy supports them financially and gives them complete information on how to run the forms situated in other countries, and governs the proactive Chinese diplomacy. Its primary role is to support businesses with a great interest in the Chinese economy to invest in other countries. The 18th congress persuaded the Chinese to involve themselves in international cooperation by encouraging the Chinese entrepreneurs to venture into different countries. The entrepreneurs were to start businesses and investments such as land, joint, and merger, which would significantly lead to the development of their business firms in Africa. However, not all the firms were encouraged to go apart from those that achieved a specific criterion.
Chinas state of opportunism shows that it is more than state capitalism due to its ability to intervene and take complete control over an economy. By supporting the agriculture system in Africa by giving aid and support in different areas such as agricultural and medical aids, for instance, in Mozambique and Zimbabwe, China has controlled the economic activities in the two countries to get raw materials for its companies (Adams et al., 2005). For instance, Mozambique exports mineral resources to chin such as agricultural products, timber, and minerals, while the Chinese give infrastructure and have built constructions such as schools, hospitals, and roads and give loans to the African countries. Zimbabwe has also been in partnership with the Chinese by providing raw materials such as diamonds and platinum, agricultural products in exchange for loans, guarantees, and other financial support offered and maintained of communication technology. Chinese companies have widely grown from the support given by the two countries through the provision of raw materials and infrastructure. Through political visits between China and African countries, there has been the creation of ‘friendship farms’ encouraging the Chinese agricultural investors to venture into Africa. There is also an agreement that allows the Chinese to start their companies in the African countries after the contracts with the ministry of defense staff based on creating commercials and business places in the country.
China has a significant role in the world’s economy as it provides world stability through offering opportunities such as trade, national cooperation, national support through the offering of trade loans and construction of essential places such as hospitals and schools and promoting business. Chinas success is mainly contributed by foreign investments and domestic investments, and rapid growth in the country’s production and the commercials outside the country. Chinas economic system directs and guides all the economic activities taking place in the Chinese economy, and the government is responsible for managing the national economy of the country. Although it is the most successful economic wise, it faces an economic imbalance in the distribution of resources and a high population that negatively affects the national income.
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