RESPONSE TO ARTICLE: The False Promise of Financial Liberalization

By definition, globalization is the freeing of flow of trade and investments across the countries in the world and the gradual integration of the international economy. Many economic experts suppose globalization can raise productivity throughout the globe and increase the living standards of people through the expansion of economic freedom as this would create competition. In addition, globalization promises the access to foreign capital and advanced technology which would result in an accelerated economic growth, potentially reducing poverty, as well as increasing the standards of living in less developed countries. Globalization also promises individuals greater freedom, allowing them to have more liberty to speak in today's society.

However, most of the promises that globalization ought to have fulfilled are not seen in action today. It is tough to find countries which have experienced economic growth as a result of the freeing of capital flows. Furthermore, many emerging markets have experienced a decrease in investment rates. China, for an example, probably a notable role model by now for most emerging economies, has experienced a phenomenal rapid economic growth. It has consistently avoided huge surges of capital inflows and is thus able to maintain high domestic currencies, which explains why it has a huge surplus of finances as its profitability and investments are kept high. Even in countries such as Argentina and Brazil, there has been a comfortable amount of surplus in recent records.

Undoubted are the dangers of globalization. The integration of world economies could result in a country’s economy being more vulnerable to the impact on other economies. The financial crisis in Southeast Asia in 1997 is a good example. Beginning in the debt-ridden economy of Thailand, the financial crisis spread to economies of South Korea, Indonesia, Malaysia, Hong Kong and the Philippines. Eventually, the financial crisis rocked the global economy. This projects how the globalized economy could be so volatile.

Despite that, there are evidential materials that point towards how globalization has aided the world. Through the developments that come with globalization, the percentage of people in developing countries throughout the globe who live below US $1 per day has halved in just twenty years, and there are also massive improvements in these developing economies and also the reduction of barriers to trade and investments, which could in turn lead to further economic improvements through foreign investments.

Also, the life expectancy has doubled in the developing world and infant mortality has decreased in every developing region in the world. Globalization has also brought about a dramatic increase in democracy, from almost no nation with universal suffrage in the 1900s to 62.5% of all nations in year 2000.

Overall, it is inappropriate to baselessly condemn the idea and concepts of globalization because there are many areas in which globalization has brought about useful developments. China still had to depend on the world to a certain extent of foreign investments, and without the tools of globalization-such as the internet, the use of ships, air-craft or even cars, China would not even be close to her current position on the global stage today.

PANG YI XIAN.