globalization and its effects on world population essay

Understanding Global Change

Discover why the climate and environment changes, your place in the Earth system, and paths to a resilient future.

Population growth

Population growth is the increase in the number of humans on Earth. For most of human history our population size was relatively stable. But with innovation and industrialization, energy, food , water , and medical care became more available and reliable. Consequently, global human population rapidly increased, and continues to do so, with dramatic impacts on global climate and ecosystems. We will need technological and social innovation to help us support the world’s population as we adapt to and mitigate climate and environmental changes.

World human population growth from 10,000 BC to 2019 AD. Data from: The United Nations

Human population growth impacts the Earth system in a variety of ways, including:

• Increasing the extraction of resources from the environment. These resources include fossil fuels (oil, gas, and coal), minerals, trees , water , and wildlife , especially in the oceans. The process of removing resources, in turn, often releases pollutants and waste that reduce air and water quality , and harm the health of humans and other species.
• Increasing the burning of fossil fuels for energy to generate electricity, and to power transportation (for example, cars and planes) and industrial processes.
• Increase in freshwater use for drinking, agriculture , recreation, and industrial processes. Freshwater is extracted from lakes, rivers, the ground, and man-made reservoirs.
• Increasing ecological impacts on environments. Forests and other habitats are disturbed or destroyed to construct urban areas including the construction of homes, businesses, and roads to accommodate growing populations. Additionally, as populations increase, more land is used for agricultural activities to grow crops and support livestock. This, in turn, can decrease species populations , geographic ranges , biodiversity , and alter interactions among organisms.
• Increasing fishing and hunting , which reduces species populations of the exploited species. Fishing and hunting can also indirectly increase numbers of species that are not fished or hunted if more resources become available for the species that remain in the ecosystem.
• Increasing the transport of invasive species , either intentionally or by accident, as people travel and import and export supplies. Urbanization also creates disturbed environments where invasive species often thrive and outcompete native species. For example, many invasive plant species thrive along strips of land next to roads and highways.
• The transmission of diseases . Humans living in densely populated areas can rapidly spread diseases within and among populations. Additionally, because transportation has become easier and more frequent, diseases can spread quickly to new regions.

Can you think of additional cause and effect relationships between human population growth and other parts of the Earth system?

Visit the burning of fossil fuels , agricultural activities , and urbanization pages to learn more about how processes and phenomena related to the size and distribution of human populations affect global climate and ecosystems.

Investigate

Learn more in these real-world examples, and challenge yourself to  construct a model  that explains the Earth system relationships.

• The Ecology of Human Populations: Thomas Malthus
• A Pleistocene Puzzle: Extinction in South America

Links to Learn More

• United Nations World Population Maps
• Scientific American: Does Population Growth Impact Climate Change?

Globalization: Definition, Benefits, Effects, Examples – What is Globalization?

• Publié le 21 January 2019
• Mis à jour le 25 March 2024

Globalization – what is it? What is the definition of globalization? Benefits and negative effects? What are the top examples of globalization? What famous quotes have been said about globalization?

What is Globalization? All Definitions of Globalization

A simple globalization definition.

Globalization means the speedup of movements and exchanges (of human beings, goods, and services, capital, technologies or cultural practices) all over the planet. One of the effects of globalization is that it promotes and increases interactions between different regions and populations around the globe.

• Related: Traveling Today And Tomorrow: Cities And Countries With More Travelers

An Official Definition of Globalization by the World Health Organization (WHO)

According to WHO , globalization can be defined as ” the increased interconnectedness and interdependence of peoples and countries. It is generally understood to include two inter-related elements: the opening of international borders to increasingly fast flows of goods, services, finance, people and ideas; and the changes in institutions and policies at national and international levels that facilitate or promote such flows.”

What Is Globalization in the Economy?

According to the Committee for Development Policy (a subsidiary body of the United Nations), from an economic point of view, globalization can be defined as: “(…) the increasing interdependence of world economies as a result of the growing scale of cross-border trade of commodities and services, the flow of international capital and the wide and rapid spread of technologies. It reflects the continuing expansion and mutual integration of market frontiers (…) and the rapid growing significance of information in all types of productive activities and marketization are the two major driving forces for economic globalization.”

• Related: Planet VS Economy: How Coronavirus Is Unraveling A Dysfunctional System

What Is Globalization in Geography?

In geography, globalization is defined as the set of processes (economic, social, cultural, technological, institutional) that contribute to the relationship between societies and individuals around the world. It is a progressive process by which exchanges and flows between different parts of the world are intensified.

Globalization and the G20: What is the G20?

The G20 is a global bloc composed by the governments and central bank governors from 19 countries and the European Union (EU). Established in 1999, the G20 gathers the most important industrialized and developing economies to discuss international economic and financial stability. Together, the nations of the G20 account for around 80% of global economic output, nearly 75 percent of all global trade, and about two-thirds of the world’s population.

G20 leaders get together in an annual summit to discuss and coordinate pressing global issues of mutual interest. Though economics and trade are usually the centerpieces of each summit’s agenda, issues like climate change, migration policies, terrorism, the future of work, or global wealth are recurring focuses too. Since the G20 leaders represent the “ political backbone of the global financial architecture that secures open markets, orderly capital flows, and a safety net for countries in difficulty”, it is often thanks to bilateral meetings during summits that major international agreements are achieved and that globalization is able to move forward.

The joint action of G20 leaders has unquestionably been useful to save the global financial system in the 2008/2009 crisis, thanks to trade barriers removal and the implementation of huge financial reforms. Nonetheless, the G20 was been struggling to be successful at coordinating monetary and fiscal policies and unable to root out tax evasion and corruption, among other downsides of globalization. As a result of this and other failures from the G20 in coordinating globalization, popular, nationalist movements across the world have been defending countries should pursue their interests alone or form fruitful coalitions.

How Do We Make Globalization More Just?

The ability of countries to rise above narrow self-interest has brought unprecedented economic wealth and plenty of applicable scientific progress. However, for different reasons, not everyone has been benefiting the same from globalization and technological change: wealth is unfairly distributed and economic growth came at huge environmental costs. How can countries rise above narrow self-interest and act together or designing fairer societies and a healthier planet? How do we make globalization more just?

According to Christine Lagarde , former President of the International Monetary Fund, “ debates about trade and access to foreign goods are as old as society itself ” and history tells us that closing borders or protectionism policies are not the way to go, as many countries doing it have failed.

Lagarde defends we should pursue globalization policies that extend the benefits of openness and integration while alleviating their side effects. How to make globalization more just is a very complex question that involves redesigning economic systems. But how? That’s the question.

Globalization is deeply connected with economic systems and markets, which, on their turn, impact and are impacted by social issues, cultural factors that are hard to overcome, regional specificities, timings of action and collaborative networks. All of this requires, on one hand, global consensus and cooperation, and on the other, country-specific solutions, apart from a good definition of the adjective “just”.

When Did Globalization Begin? The History of Globalization

For some people, this global phenomenon is inherent to human nature. Because of this, some say globalization begun about 60,000 years ago, at the beginning of human history. Throughout time, human societies’ exchanging trade has been growing. Since the old times, different civilizations have developed commercial trade routes and experienced cultural exchanges. And as well, the migratory phenomenon has also been contributing to these populational exchanges. Especially nowadays, since traveling became quicker, more comfortable, and more affordable.

This phenomenon has continued throughout history, notably through military conquests and exploration expeditions. But it wasn’t until technological advances in transportation and communication that globalization speeded up. It was particularly after the second half of the 20th century that world trades accelerated in such a dimension and speed that the term “globalization” started to be commonly used.

• Are we living oppositely to sustainable development?

Examples of Globalization (Concept Map)

Because of trade developments and financial exchanges, we often think of globalization as an economic and financial phenomenon. Nonetheless, it includes a much wider field than just flowing of goods, services or capital. Often referred to as the globalization concept map, s ome examples of globalization are:

• Economic globalization : is the development of trade systems within transnational actors such as corporations or NGOs;
• Financial globalization : can be linked with the rise of a global financial system with international financial exchanges and monetary exchanges. Stock markets, for instance, are a great example of the financially connected global world since when one stock market has a decline, it affects other markets negatively as well as the economy as a whole.
• Cultural globalization : refers to the interpenetration of cultures which, as a consequence, means nations adopt principles, beliefs, and costumes of other nations, losing their unique culture to a unique, globalized supra-culture;
• Political globalization : the development and growing influence of international organizations such as the UN or WHO means governmental action takes place at an international level. There are other bodies operating a global level such as NGOs like Doctors without borders  or Oxfam ;
• Sociological globalization : information moves almost in real-time, together with the interconnection and interdependence of events and their consequences. People move all the time too, mixing and integrating different societies;
• Technological globalization: the phenomenon by which millions of people are interconnected thanks to the power of the digital world via platforms such as Facebook, Instagram, Skype or Youtube.
• Geographic globalization: is the new organization and hierarchy of different regions of the world that is constantly changing. Moreover, with transportation and flying made so easy and affordable, apart from a few countries with demanding visas, it is possible to travel the world without barely any restrictions;
• Ecological globalization: accounts for the idea of considering planet Earth as a single global entity – a common good all societies should protect since the weather affects everyone and we are all protected by the same atmosphere. To this regard, it is often said that the poorest countries that have been polluting the least will suffer the most from climate change .

The Benefits of Globalization

Globalization has benefits that cover many different areas. It reciprocally developed economies all over the world and increased cultural exchanges. It also allowed financial exchanges between companies, changing the paradigm of work. Many people are nowadays citizens of the world. The origin of goods became secondary and geographic distance is no longer a barrier for many services to happen. Let’s dig deeper.

The Engine of Globalization – An Economic Example

The most visible impacts of globalization are definitely the ones affecting the economic world. Globalization has led to a sharp increase in trade and economic exchanges, but also to a multiplication of financial exchanges.

In the 1970s world economies opened up and the development of free trade policies accelerated the globalization phenomenon. Between 1950 and 2010, world exports increased 33-fold. This significantly contributed to increasing the interactions between different regions of the world.

This acceleration of economic exchanges has led to strong global economic growth. It fostered as well a rapid global industrial development that allowed the rapid development of many of the technologies and commodities we have available nowadays.

Knowledge became easily shared and international cooperation among the brightest minds speeded things up. According to some analysts, globalization has also contributed to improving global economic conditions, creating much economic wealth (thas was, nevertheless, unequally distributed – more information ahead).

Globalization Benefits – A Financial Example

At the same time, finance also became globalized. From the 1980s, driven by neo-liberal policies, the world of finance gradually opened. Many states, particularly the US under Ronald Reagan and the UK under Margaret Thatcher introduced the famous “3D Policy”: Disintermediation, Decommissioning, Deregulation.

The idea was to simplify finance regulations, eliminate mediators and break down the barriers between the world’s financial centers. And the goal was to make it easier to exchange capital between the world’s financial players. This financial globalization has contributed to the rise of a global financial market in which contracts and capital exchanges have multiplied.

Globalization – A Cultural Example

Together with economic and financial globalization, there has obviously also been cultural globalization. Indeed, the multiplication of economic and financial exchanges has been followed by an increase in human exchanges such as migration, expatriation or traveling. These human exchanges have contributed to the development of cultural exchanges. This means that different customs and habits shared among local communities have been shared among communities that (used to) have different procedures and even different beliefs.

Good examples of cultural globalization are, for instance, the trading of commodities such as coffee or avocados. Coffee is said to be originally from Ethiopia and consumed in the Arabid region. Nonetheless, due to commercial trades after the 11th century, it is nowadays known as a globally consumed commodity. Avocados , for instance, grown mostly under the tropical temperatures of Mexico, the Dominican Republic or Peru. They started by being produced in small quantities to supply the local populations but today guacamole or avocado toasts are common in meals all over the world.

At the same time, books, movies, and music are now instantaneously available all around the world thanks to the development of the digital world and the power of the internet. These are perhaps the greatest contributors to the speed at which cultural exchanges and globalization are happening. There are also other examples of globalization regarding traditions like Black Friday in the US , the Brazilian Carnival or the Indian Holi Festival. They all were originally created following their countries’ local traditions and beliefs but as the world got to know them, they are now common traditions in other countries too.

Why Is Globalization Bad? The Negative Effects of Globalization

Globalization is a complex phenomenon. As such, it has a considerable influence on several areas of contemporary societies. Let’s take a look at some of the main negative effects globalization has had so far.

The Negative Effects of Globalization on Cultural Loss

Apart from all the benefits globalization has had on allowing cultural exchanges it also homogenized the world’s cultures. That’s why specific cultural characteristics from some countries are disappearing. From languages to traditions or even specific industries. That’s why according to UNESCO , the mix between the benefits of globalization and the protection of local culture’s uniqueness requires a careful approach.

The Economic Negative Effects of Globalization

Despite its benefits, the economic growth driven by globalization has not been done without awakening criticism. The consequences of globalization are far from homogeneous: income inequalities, disproportional wealth and trades that benefit parties differently. In the end, one of the criticisms is that some actors (countries, companies, individuals) benefit more from the phenomena of globalization, while others are sometimes perceived as the “losers” of globalization. As a matter of fact, a recent report from Oxfam says that 82% of the world’s generated wealth goes to 1% of the population.

• Related: Globally, Business And Government Lack Trust, A New Survey Shows

The Negative Effects of Globalization on the Environment

At the same time, global economic growth and industrial productivity are both the driving force and the major consequences of globalization. They also have big environmental consequences as they contribute to the depletion of natural resources, deforestation and the destruction of ecosystems and loss of biodiversity . The worldwide distribution of goods is also creating a big garbage problem, especially on what concerns plastic pollution .

• How Air Pollution And Diabetes Kill Millions Every Year
• Changing Aircrafts’ Altitude To Reduce The Climatic Impact Of Contrails
• Are Avocados Truly Sustainable?

Globalization, Sustainable Development, and CSR

Globalization affects all sectors of activity to a greater or lesser extent. By doing so, its gap with issues that have to do with  sustainable development  and  corporate social responsibility  is short.

By promoting large-scale industrial production and the globalized circulation of goods, globalization is sometimes opposed to concepts such as resource savings, energy savings or the limitation of greenhouse gases . As a result, critics of globalization often argue that it contributes to accelerating climate change and that it does not respect the principles of ecology. At the same time, big companies that don’t give local jobs and choose instead to use the manpower of countries with low wages (to have lower costs) or pay taxes in countries with more favorable regulations is also opposed to the criteria of a CSR approach. Moreover, the ideologies of economic growth and the constant pursuit of productivity that come along with globalization, also make it difficult to design a sustainable economy based on  resilience .

On the other hand, globalization is also needed for the transitioning to a more sustainable world, since only a global synergy would really be able to allow a real ecological transition. Issues such as global warming indeed require a coordinated response from all global players: fight against CO2 emissions, reduction of waste, a transition to renewable energies . The same goes for ocean or air pollution, or ocean acidification, problems that can’t be solved without global action. The dissemination of green ideas also depends on the ability of committed actors to make them heard globally.

• What Are The Benefits Of Having A Network Of CSR Ambassadors?
• 5 Tips For Organizations To Develop Their CSR Strategy In 2020
• Top 10 Companies With The Best Corporate (CSR) Reputation In 2020

The Road From Globalization to Regionalization

Regionalization can also be analyzed from a corporate perspective. For instance, businesses such as McDonald’s or Starbucks don’t sell exactly the same products everywhere. In some specific stores, they consider people’s regional habits. That’s why the McChicken isn’t sold in India, whereas in Portugal there’s a steak sandwich menu like the ones you can get in a typical Portuguese restaurant.

Politically speaking, when left-wing parties are in power they tend to focus on their country’s people, goods and services. Exchanges with the outside world aren’t seen as very valuable and importations are often left aside.

• Related: Why Is It Important To Support Local And Small Businesses?

Globalization Quotes by World Influencers

Many world leaders, decision-makers and influential people have spoken about globalization. Some stand out its positive benefits and others focus deeper on its negative effects. Find below some of the most interesting quotes on this issue.

Politic Globalization Quotes

Globalization quote by the former U.S President Bill Clinton ??

No generation has had the opportunity, as we now have, to build a global economy that leaves no-one behind. It is a wonderful opportunity, but also a profound responsibility.

Globalization quote by Barack Obama , former U.S. president ??

Globalization is a fact, because of technology, because of an integrated global supply chain, because of changes in transportation. And we’re not going to be able to build a wall around that.

Globalization quote by Dominique Strauss-Kahn, former International Monetary Fund Managing Director ??

“We can’t speak day after day about globalization without at the same time having in mind that…we need multilateral solutions.”

Globalization quote by Stephen Harper , former Prime Minister of Canada ??

“We have to remember we’re in a global economy. The purpose of fiscal stimulus is not simply to sustain activity in our national economies but to help the global economy as well, and that’s why it’s so critical that measures in those packages avoid anything that smacks of protectionism.”

Globalization quote by Julia Gillard , Prime Minister of Australia ??

“My guiding principle is that prosperity can be shared. We can create wealth together. The global economy is not a zero-sum game.”

Other Globalization Quotes

Globalization quote by the spiritual leader Dalai Lama ??

“I find that because of modern technological evolution and our global economy, and as a result of the great increase in population, our world has greatly changed: it has become much smaller. However, our perceptions have not evolved at the same pace; we continue to cling to old national demarcations and the old feelings of ‘us’ and ‘them’.”

The famous German sociologist Ulrich Beck also spoke of globalization ??

“Globalization is not only something that will concern and threaten us in the future, but something that is taking place in the present and to which we must first open our eyes.”

Globalization quote by Bill Gates, owner and former CEO of Microsoft ??

“The fact is that as living standards have risen around the world, world trade has been the mechanism allowing poor countries to increasingly take care of really basic needs, things like vaccination.”

Globalization quote by John Lennon, member of the music band The Beatles ??

Imagine there’s no countries. It isn’t hard to do. Nothing to kill or die for. And no religion, too. Imagine all the people. Living life in peace. You, you may say I’m a dreamer. But I’m not the only one. I hope someday you will join us. And the world will be as one

Effects of Economic Globalization

Globalization has led to increases in standards of living around the world, but not all of its effects are positive for everyone.

Social Studies, Economics, World History

Bangladesh Garment Workers

The garment industry in Bangladesh makes clothes that are then shipped out across the world. It employs as many as four million people, but the average worker earns less in a month than a U.S. worker earns in a day.

Photograph by Mushfiqul Alam

Put simply, globalization is the connection of different parts of the world. In economics, globalization can be defined as the process in which businesses, organizations, and countries begin operating on an international scale. Globalization is most often used in an economic context, but it also affects and is affected by politics and culture. In general, globalization has been shown to increase the standard of living in developing countries, but some analysts warn that globalization can have a negative effect on local or emerging economies and individual workers. A Historical View Globalization is not new. Since the start of civilization, people have traded goods with their neighbors. As cultures advanced, they were able to travel farther afield to trade their own goods for desirable products found elsewhere. The Silk Road, an ancient network of trade routes used between Europe, North Africa, East Africa, Central Asia, South Asia, and the Far East, is an example of early globalization. For more than 1,500 years, Europeans traded glass and manufactured goods for Chinese silk and spices, contributing to a global economy in which both Europe and Asia became accustomed to goods from far away. Following the European exploration of the New World, globalization occurred on a grand scale; the widespread transfer of plants, animals, foods, cultures, and ideas became known as the Columbian Exchange. The Triangular Trade network in which ships carried manufactured goods from Europe to Africa, enslaved Africans to the Americas, and raw materials back to Europe is another example of globalization. The resulting spread of slavery demonstrates that globalization can hurt people just as easily as it can connect people. The rate of globalization has increased in recent years, a result of rapid advancements in communication and transportation. Advances in communication enable businesses to identify opportunities for investment. At the same time, innovations in information technology enable immediate communication and the rapid transfer of financial assets across national borders. Improved fiscal policies within countries and international trade agreements between them also facilitate globalization. Political and economic stability facilitate globalization as well. The relative instability of many African nations is cited by experts as one of the reasons why Africa has not benefited from globalization as much as countries in Asia and Latin America. Benefits of Globalization Globalization provides businesses with a competitive advantage by allowing them to source raw materials where they are inexpensive. Globalization also gives organizations the opportunity to take advantage of lower labor costs in developing countries, while leveraging the technical expertise and experience of more developed economies. With globalization, different parts of a product may be made in different regions of the world. Globalization has long been used by the automotive industry , for instance, where different parts of a car may be manufactured in different countries. Businesses in several different countries may be involved in producing even seemingly simple products such as cotton T-shirts. Globalization affects services, too. Many businesses located in the United States have outsourced their call centers or information technology services to companies in India. As part of the North American Free Trade Agreement (NAFTA), U.S. automobile companies relocated their operations to Mexico, where labor costs are lower. The result is more jobs in countries where jobs are needed, which can have a positive effect on the national economy and result in a higher standard of living. China is a prime example of a country that has benefited immensely from globalization. Another example is Vietnam, where globalization has contributed to an increase in the prices for rice, lifting many poor rice farmers out of poverty. As the standard of living increased, more children of poor families left work and attended school. Consumers benefit also. In general, globalization decreases the cost of manufacturing . This means that companies can offer goods at a lower price to consumers. The average cost of goods is a key aspect that contributes to increases in the standard of living. Consumers also have access to a wider variety of goods. In some cases, this may contribute to improved health by enabling a more varied and healthier diet; in others, it is blamed for increases in unhealthy food consumption and diabetes. Downsides Not everything about globalization is beneficial. Any change has winners and losers, and the people living in communities that had been dependent on jobs outsourced elsewhere often suffer. Effectively, this means that workers in the developed world must compete with lower-cost markets for jobs; unions and workers may be unable to defend against the threat of corporations that offer the alternative between lower pay or losing jobs to a supplier in a less expensive labor market. The situation is more complex in the developing world, where economies are undergoing rapid change. Indeed, the working conditions of people at some points in the supply chain are deplorable. The garment industry in Bangladesh, for instance, employs an estimated four million people, but the average worker earns less in a month than a U.S. worker earns in a day. In 2013, a textile factory building collapsed, killing more than 1,100 workers. Critics also suggest that employment opportunities for children in poor countries may increase negative impacts of child labor and lure children of poor families away from school. In general, critics blame the pressures of globalization for encouraging an environment that exploits workers in countries that do not offer sufficient protections. Studies also suggest that globalization may contribute to income disparity and inequality between the more educated and less educated members of a society. This means that unskilled workers may be affected by declining wages, which are under constant pressure from globalization. Into the Future Regardless of the downsides, globalization is here to stay. The result is a smaller, more connected world. Socially, globalization has facilitated the exchange of ideas and cultures, contributing to a world view in which people are more open and tolerant of one another.

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The State of Globalization in 2021

• Steven A. Altman
• Caroline R. Bastian

Trade, capital, and information flows have stabilized, recovered, and even grown in the past year.

As the coronavirus swept the world, closing borders and halting international trade and capital flows, there were questions about the pandemic’s lasting impact on globalization. But a close look at the recent data paints a much more optimistic picture. While international travel remains significantly down and is not expected to rebound until 2023, cross-border trade, capital, and information flows have largely stabilized, recovered, or even grown over the last year. The bottom line for business is that Covid-19 has not knocked globalization down to anywhere close to what would be required for strategists to narrow their focus to their home countries or regions.

Cross-border flows plummeted in 2020 as the Covid-19 pandemic swept the world, reinforcing doubts about the future of globalization. As we move into 2021, the latest data paint a clearer — and more hopeful — picture. Global business is not going away, but the landscape is shifting, with important implications for strategy and management.

• Steven A. Altman is a senior research scholar, adjunct assistant professor, and director of the DHL Initiative on Globalization at the NYU Stern Center for the Future of Management .
• CB Caroline R. Bastian is a research scholar at the DHL Initiative on Globalization.

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The Effect of Globalization on a World Culture Essay

Introduction, globalization and culture.

Scientific innovations and inventions have accelerated the growth of globalization. Nations can easily trade, socialize, share ideas, and assist each other in different spheres of life.

Improved international relations have enabled the movement of factors of production among nations with minimal barriers to trade. The cooperation has led to social, political, and economical globalization; although neither of the above three classifications of globalization have been fully attained, their effects can be felt in economic, political, and social spheres of life.

Critics of globalization appreciate that it has positive effect on economic wellbeing of countries. However they are quick to point out that globalization has high culture and identity loss/costs (Sheila 56). They are of the opinion that modernization has the potential of running roughshod over the world’s distinctive cultures and creates a single world which resembles a tawdry mall. This paper discuses the effect of globalization on a world culture.

Culture is the identity of people that any member adheres to. It has some defined attributes, some of them are written and others are not. The set way of operation that is governed by some cultural, communal, and societal goals assists in holding people together and creates a norm in the community.

When people trade, socialize or interact with each other in a way it has been enabled by globalization, there is the tendency that they will lose their identity and inherit a system of operation or a certain mode of conduct that is generally accepted by the community (in this instance, the word community has been used to refer to the larger global community created by globalization).

According to Tyler Cowen, modernization and cultural globalization have resulted into the growth of creativity, innovation, and invention among communities. When people interact, they tend to learn the other parties’ way of operation and the difference is likely to trigger some creative mind for the benefit of the two parties.

The above observation by Tyler Cowen can be interpolated either negatively or positively; from a positive angle, modernization has created a room for invention and innovation. On a negative note, the world is utilizing the differences it has as failing to create more differences that future generation is likely to run out of creative mind, as there will be lack of motivation in the form of current culture differences.

For example, in the 1950s, Cuban Music and Reggae was produced in Cuba with the target consumers as American Tourists who visited the country. In Cuba, the style of music was part of their tradition that the Americans loved to sing along. With diffusion of culture and more exposure, the style of music has been adopted by the Americans, and today it is played in modern clubs and bars.

Today, if a Cuban was to visit the United States, he or she was likely to feel accommodated by the structures as there are some similar attributes that he/she gets. In either French or German restaurants, a shopper is able to buy Sushi (Japanese foods consisting of cooked vinegared rice (shari) combined with other ingredients (neta)). Such a move shows how Japanese have been accommodated in both European countries (Sheila 256).

With cultural globalization, people of different cultures, ethnicities, nationalities, religions, and values find themselves in the same atmosphere where no one has the freedom to fully adhere or practice his culture. With such kind of setting, the most probable thing that can happen is people to develop a set of culture that will assist them transact business despite their differences.

The net result is a global culture; the effect and extent that global culture has gone in the world varied among nations and continents; developed countries have their culture more diffused and uniformity can be seen from their way of operation. In developing countries, there is a tendency of resistance to change the culture, but the force therein is strong. Efforts to change the culture of people are not deliberate, but they are necessitated by the prevailing condition in the world.

In contemporary business environments, organizations hire employees of different nationalities, ethnic backgrounds, cultural believes, intellectual capacity, and age. The nature and mix of employees calls for management to develop policies and management mechanisms that will gain from the differences in their human capital; to manage the diverse personnel, business leaders need to adopt international human resources management strategy (IHRM).

The policies that organizations embark on should entail policies that address diverse human resource issues; organization stands to benefit from diversity if the right management policies are set in place, but there is the risk that the differences create uniform business practice. With diffusion of cultures, management can enact some common human resource policies that cut across its diverse human capital. However, care should be exercised since chances of repellence in the event policies seem to be confronting with culture of people.

When managing human capital of different nationalities, businesses leaders should make policies that can assist in tapping their organization’s personnel’s intellectual capacity, as it grows their talents and skills. Culture is likely to affect people in different spheres, thus when companies have diverse human resources, they have to ensure that their programs are sensitive to the differences in culture and beliefs.

When working in different countries, management should never assume that the human management style adopted in the country is fully-effective and applicable to another country; they should take their time, understand what the other country’s employee value and consider best. Management gurus continue to offer insights of how culture and ethnicity of a people affect their performance in their works; they have suggested culture intelligence to assist organization handle their employees effectively regardless of their nationality.

When making business decisions, the culture and exposure that someone has is likely to affect the kind of decision that he is going to make; people who are exposed to the right materials through televisions, the internet, and print media are likely to make more informed decisions. With culture globalization, there has been exposure to different settings and information is available through the assistance of communication channels; the resultant community is an informed community that can make quality decisions for the exploitation of available resources effectively.

Differences in norms and culture among different ethnicity, nationalities, and communities has been a hindrance to effective trade, to some extent, the differences have acted as non tariff barriers that has hindered the development of trade.

When people interact and change their cultural beliefs to adopt a uniform set of beliefs, they are breaking the unseen barriers of trade and create a room for more business, ideas, equality, and economic development. For example, among the Muslims, Women had been regarded as inferior to men and they could hardly be allowed to take leadership positions.

With the interaction with Christians and getting their take on the same, there has been a wave in the community that has enabled them to seek leadership positions like men have. The above case has shown how culture globalization has created opportunities to different people and enabled women to get more opportunities. In the developed worlds, the state and position of the woman had been respected long before the same was done in developing worlds.

As the developed and developing countries trade among each other, the developing countries are getting into the system and women have started to have their positions in the communities. Gender differences has been minimized by globalization, there has been the reduction on gender differences among communities were human beings can now relate more as people not on gender grounds as the case had been when culture globalization was not adhered to.

The rights of girl child campaigns have gained roots in different countries as culture diffuses to reinforce and create awareness to the need to protect women and reduce gender differences that have prevailed among communities for a lengthy duration.

When people of different cultures interact, they develop the sense of togetherness and there are shared common interests that are developed; globalization has enabled the interaction, as well as sharing of ideas, opinions, view points and ways of doing things in a way that facilitates trade. Trade prevails better when the trading partners have some common values, attributes, and beliefs.

Culture globalization has enabled people to have the same perception and attitude towards similar products; with the similarity, peace and harmony in doing and handling issues have been developed. When there is peace and harmony, business and trade prevail effectively.

When people share culture, it means that when someone is in a geographical location different from his or hers, coping will be easy as there will be likelihood that the person will get something that is the same with what he or she beliefs.

For example, although the Chinese food is different from American food, a Chinese visiting the United States only need to establish the restaurant selling Chinese food as the nature and the diversity has been accepted by both the communities. Sales and marketers have much to benefit from globalized world, they can easily develop new formats and marketing strategies developed can be similar and message passed remains the same.

According to Benjamin Barber, one of the main challenges that have been brought about by globalization is culture borrowing and culture mimicry; with the borrowing and mimicry people have lost their sense of identity that someone can manage to treat his brother wrongly and hide under the new system of global culture.

Although culture globalization has not been fully attained, there are moves that indicate that its full operation cannot happen. In areas like religion (religion is an aspect of culture), changing people’s religious believes have been a challenge. The existence of some elements that can hardly change results to the notion of global culture being a mere statement by advocators of the integration, the situation cannot be attained.

Some industries in the globe exist because of differences in culture of people, for example, the tourism industry is much dependent on the cultural differences of people in different places. With culture diffusion, the industry is likely to suffer a huge blow.

In Kenya, the East African country whose tourism is the second earner of the foreign exchange has multicultural where the tourisms from different countries visit to enjoy and learn the diversity of the country’s population.

The move to global culture is thus likely to injure some industries while supporting others. Culture within communities is supported by generally agreed attributes that passes from one generation to another. The “nature of passing” of modern global culture is challenging as people or the global community has not set mechanisms to pass the culture, reinforce, or even punish offender.

To pass the global culture, the materials that young generation become exposed to modern methods of passing information like television, radio, the internet, peers, and written materials. When such materials have been used to pass culture, there are high chances that young generation will get reinforcement of culture which is not good. Global culture is more likely to be for the larger global community benefit, but rarely does it address issue of an individual.

With the structures and development of global culture, there cannot be said to have an effective method of culture reinforcement or a system to punish offender. This means that the culture is vulnerable to changes and hicks ups. Any small attribute or change in the global world is likely to shake the culture of the people since it’s not based on a strong foundation.

With globalization, companies can work in different parts of the world as multinationals; however they have to be sensitive to the nature of products, services, and structure of employees they deploy. Multinationals generally have three main methods to get their employees on board, they use a localization approach, expatriates approach, and a third country approach.

To maintain quality and quantity workforce, the management should ensure that they are aware of the culture of people and manage them effectively. The challenge that multinationals have is putting the notion that with culture globalization, there is uniformity, thus there is no need to have culture intelligence and culture awareness programs.

For example, Pepsi has been a major competitor in the American industry as its style is more American, however the brand has not maintained strong competitiveness in African countries since its style of marketing and sales fails to meet the needs of the continents culture. The above example shows how the notion of global culture has been mis-interpolated (Sheila 256).

Other than human resources, department maintaining qualified and efficient human capital at the most affordable cost possible, they have the role of ensuring they combine their human capital in a manner that will benefit the entire organization.

Diversity and difference in culture by itself offers an organization rich knowledge, opinions, values, and experience, with culture globalization such important attributes to business competitiveness are lost; before an organization decides to fill a certain vacancy in its system, the human resources should liaise with the departmental heads to know exactly the kind of qualification that are sort for, in some instances, the management may advice for some age gap, nationality, gender, and experience.

It is through effective recruitment that an organization can build an effective team that meets its personnel requirement needs. When enacting empowerment and motivational policies or schemes, the management should ensure that the diversity of its employees has been considered.

There are people who are generally team-players, others prefer individualism, and others are charismatic leaders. When making decision, it is important to consider the diversity. Management gurus has continually advised companies to have culture coaches when operating in a country they are not very sure of the nature and the culture of the people; with the coaches, they can develop orchestrate teams and make products that meet the requirement of customers in the country.

Diverse human resource can be biennial to an organization is managed effectively; failure to manage diversity effectively means exposure to risks. Management gurus have continued to support the use of culture intelligence and culture awareness programs to support the culture awareness within organizations; those companies that have undertaken the advice are doing better than those who have not.

Although cultural globalization has build strong operating base through which trade can prevail, it has brought some challenges to the world and the people in general. The lack of identity has resulted into sharing of values likely to dilute societal values and norms.

When the community lacks strong values that are maintained with a certain mechanism, the result is a disintegrated society were social evils are the order of the day. For example, in developed countries, one of the vises that the countries are dealing with is use of drugs and substance abuse by young people.

Although this is taken as a normal condition or social evil, psychologists have suggested that lack of strong values and low behavior standards by young people can be to blame. When the blame is further analyzed, it is seen that parents are not able to raise morally upright children as they have less regard to their cultural beliefs and practices which they consider to have been eroded by globalization.

With diffusion of cultures, there is less emphasis on family and societal values, parents and the community in general seem to ignore the need to maintain, pass and transfer culture to younger generations. When culture is not transferred, children are exposed to new global culture that might be different from the norm.

The results are the families that have low moral standards and which values are questionable. Generally, organizations require physical, human, and informational resources for their operation; business-leaders should realize that human capital is the most crucial capital their organizations have.

In a modern globalized world, organizations have diverse human capital; to manage the capital effectively, companies need to adopt international human resources management strategy. The strategy assists an organization benefit from its personnel diversity as it mitigates risks associated with a diverse workforce. With culture globalization the workforce seems to have the same ideologies an attributes that hinder creativity, innovation, and invention (Sheila 56-78).

Globalization has resulted into culture diffusion, culture sharing, and multiculturalism; the uniformity in culture facilitates trade among nations and promotes international relations and understanding.

However, multiculturalism has been blamed of dilution of people’s cultural values, norms, and virtues. Multiculturalism has also been challenged as a mere statement by business philosophers that will not be attained in the near future as family structures vary among different parts of the globe.

Sheila, Lucy. Globalization and Belonging: The Politics of Identity in a Changing World . London: Rowman & Littlefield, 2004.

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• Published: 03 August 2005

The health impacts of globalisation: a conceptual framework

• Maud MTE Huynen 1 ,
• Pim Martens 1 , 2 , 3 &
• Henk BM Hilderink 4  

Globalization and Health volume  1 , Article number:  14 ( 2005 ) Cite this article

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This paper describes a conceptual framework for the health implications of globalisation. The framework is developed by first identifying the main determinants of population health and the main features of the globalisation process. The resulting conceptual model explicitly visualises that globalisation affects the institutional, economic, social-cultural and ecological determinants of population health, and that the globalisation process mainly operates at the contextual level, while influencing health through its more distal and proximal determinants. The developed framework provides valuable insights in how to organise the complexity involved in studying the health effects resulting from globalisation. It could, therefore, give a meaningful contribution to further empirical research by serving as a 'think-model' and provides a basis for the development of future scenarios on health.

Introduction

Good health for all populations has become an accepted international goal and we can state that there have been broad gains in life expectancy over the past century. But health inequalities between rich and poor persist, while the prospects for future health depend increasingly on the relative new processes of globalisation. In the past globalisation has often been seen as a more or less economic process. Nowadays it is increasingly perceived as a more comprehensive phenomenon, which is shaped by a multitude of factors and events that are reshaping our society rapidly. This paper describes a conceptual framework for the effects of globalisation on population health. The framework has two functions: serving as 'think-model', and providing a basis for the development of future scenarios on health.

Two recent and comprehensive frameworks concerning globalisation and health are the ones developed by Woodward et al. [ 1 ], and by Labonte and Togerson [ 2 ]. The effects that are identified by Woodward et al. [ 1 ] as most critical for health are mainly mediated by economic factors. Labonte and Torgerson [ 2 ] primarily focus on the effects of economic globalisation and international governance. In our view, however, the pathways from globalisation to health are more complex. Therefore, a conceptual framework for the health effects of the globalisation process requires a more holistic approach and should be rooted in a broad conception of both population health and globalisation. The presented framework is developed in the following three steps: 1) defining the concept of population health and identifying its main determinants, 2) defining the concept of globalisation and identifying its main features and 3) constructing the conceptual model for globalisation and population health.

Population health

As the world around us is becoming progressively interconnected and complex, human health is increasingly perceived as the integrated outcome of its ecological, social-cultural, economic and institutional determinants. Therefore, it can be seen as an important high-level integrating index that reflects the state-and, in the long term, the sustainability-of our natural and socio-economic environments [ 3 ]. This paper primarily focuses on the physical aspects of population health like mortality and physical morbidity.

Our identification of the most important factors influencing health is primarily based on a comprehensive analysis of a diverse selection of existing health models (see Huynen et al [ 4 ] for more details). We argue that the nature of the determinants and their level of causality can be combined into a basic framework that conceptualises the complex multi-causality of population health. In order to differentiate between health determinants of different nature, we will make the traditional distinction between social-cultural, economic, environmental and institutional factors. These factors operate at different hierarchical levels of causality, because they have different positions in the causal chain. The chain of events leading to a certain health outcome includes both proximal and distal causes; proximal factors act directly to cause disease or health gains, and distal determinants are further back in the causal chain and act via (a number of) intermediary causes [ 5 ]. In addition, we also distinguish contextual determinants. These can be seen as the macro-level conditions shaping the distal and proximal health determinants; they form the context in which the distal and proximal factors operate and develop.

Subsequently, a further analysis of the selected health models and an intensive literature study resulted in a wide-ranging overview of the health determinants that can be fitted within this framework (Figure 1 and Table 1 ). We must keep in mind, however, that determinants within and between different domains and levels interact along complex and dynamic pathways to 'produce' health at the population level. Additionally, health in itself can also influence its multi-level, multi-nature determinants; for example, ill health can have a negative impact on economic development.

Multi-nature and multi-level framework for population health.

Globalisation

There is more and more agreement on the fact that globalisation is an extremely complex phenomenon; it is the interactive co-evolution of multiple technological, cultural, economic, institutional, social and environmental trends at all conceivable spatiotemporal scales. Hence, Rennen and Martens [ 6 ] define contemporary globalisation as an intensification of cross-national cultural, economic, political, social and technological interactions that lead to the establishment of transnational structures and the global integration of cultural, economic, environmental, political and social processes on global, supranational, national, regional and local levels. Although somewhat complex, this definition is in line with the view on globalisation in terms of deterritorialisation and explicitly acknowledges the multiple dimensions involved.

However, the identification of all possible health effects of the globalisation process goes far beyond the current capacity of our mental ability to capture the dynamics of our global system; due to our ignorance and interdeterminacy of the global system that may be out of reach forever [ 7 ]. In order to focus our conceptual framework, we distinguish-with the broader definition of globalisation in mind-the following important features of the globalisation process: (the need for) new global governance structures, global markets, global communication and diffusion of information, global mobility, cross-cultural interaction, and global environmental changes (Table 2 ) (see Huynen et al. [ 4 ] for more details).

Conceptual model for globalisation and health

We have identified (the need for) global governance structures, global markets, global communication and the diffusion of information, global mobility, cross-cultural interaction, and global environmental changes as important features of globalisation. Based on Figure 1 and Table 1 , it can be concluded that these features all operate at the contextual level of health determination and influence distal factors such as health(-related) policies, economic development, trade, social interactions, knowledge, and the provision of ecosystem goods and services. In turn, these changes in distal factors have the potential to affect the proximal health determinants and, consequently, health. Our conceptual framework for globalisation and health links the above-mentioned features of the globalisation process with the identified health determinants. This exercise results in Figure 2 .

Conceptual framework for globalisation and population health.

Figure 3 , subsequently, shows that within the developed framework, several links between the specific features of globalisation and health can be derived. These important links between globalisation and health are discussed in the following sections. It is important to note that Figure 3 primarily focuses on the relationships in the direction from globalisation to health. This does not mean, however, that globalisation is an autonomous process: globalisation is influenced by many developments at the other levels, although these associations are not included in the Figure for reasons of simplification. In addition, the only feedback that is included in Figure 3 concerns the institutional response. One also has to keep in mind that determinants within the distal level and within the proximal level also interact with each other, adding complexity to our model (see Huynen et al. 4 for more details and examples of important intralevel relationships).

Conceptual model for globalisation and population health.

Globalisation and distal health determinants

Figure 3 shows that the processes of globalisation can have an impact on all identified distal determinants (Figure 3 ; arrows 1–4). Below, the implications of the globalisation process on these distal determinants will be discussed in more detail.

Health(-related) policies

Global governance structures are gaining more and more importance in formulating health(-related) policies (Figure 3 ; arrow 1). According to Dodgson et al. [ 8 ], the most important organisations in global health governance are the World Health Organization (WHO) and the World Bank (WB). The latter plays an important role in the field of global health governance as it acknowledges the importance of good health for economic development and focuses on reaching the Millennium Development Goals [ 9 ]. The WB also influenced health(-related) policies together with the International Monetary Funds (IMF) through the Structural Adjustment Programmes (SAPs) (e.g. see Hong [ 10 ]). In order to give a more central role to pro-poor growth considerations in providing assistance to low-income countries, the IMF and WB introduced the Poverty Reduction Strategy approach in 1999 [ 11 ]. In addition, the policies of the World Trade Organization (WTO) are also increasingly influencing population health [ 10 , 12 – 14 ]. Fidler [ 15 ] argues that 'from the international legal perspective, the centre of power for global health governance has shifted from WHO to the WTO'. Opinions differ with regard to whether the WTO agreements provide sufficient possibilities to protect the population from the adverse (health) effects of free trade or not [ 16 ]. In 2002, the WTO ruled that the French ban on the import of all products containing asbestos was legal on health grounds, despite protests from Canada [ 17 , 18 ]. However, protecting citizens against health risks remains difficult, as health standards often need to be supported by sound scientific evidence before trade can be restricted (see e.g. the WTO ruling against the European trade barrier concerning hormone-treated meat [ 19 , 20 ]).

Another important development is the growing number of public-private partnerships for health, as governments increasingly attract private sector companies to undertake tasks that were formerly the responsibility of the public sector. At the global level, public-private partnerships are more and more perceived as a possible new form of global governance [ 12 ] and could have important implications for health polices, but also for health-related policies.

Economic development

Opinions differ with regard to the economic benefits of economic globalisation (Figure 3 ; arrow 2). On the one side, 'optimists' argue that global markets facilitate economic growth and economic security, which would benefit health. They base themselves on the results of several studies that argue that inequities between and within countries have decreased due to globalisation (e.g. see Frankel [ 21 ], Ben David [ 22 ], Dollar and Kraay [ 23 ]). Additionally, it is argued that although other nations or households might become richer, absolute poverty is reduced and that this is beneficial for the health of the poor [ 24 ]. On the other side, 'pessimists' are worried about the health effects of the exclusion of nations and persons from the global market. They argue that the risk of exclusion from the growth dynamics of economic globalisation is significant in the developing world [ 25 ]. In fact, notwithstanding some spectacular growth rates in the 1980's, especially in east Asia, incomes per capita declined in almost 70 countries during the same period [ 26 ]. Many worry about what will happen to the countries that cannot participate in the global market as successful as others.

Due to the establishment of global markets and a global trading system, there has been a continuing increase in world trade (Figure 3 ; arrow 2). According to the WTO, total trade multiplied by a factor 14 between 1950 and 1997 [ 27 ]. Today all countries trade internationally and they trade significant proportions of their national income; around 20 percent of world output is being traded. The array of products being traded is wide-ranging; from primary commodities to manufactured goods. Besides goods, services are increasingly being traded as well [ 28 ]. In addition to legal trade transactions, illegal drug trade is also globalising, as it circumvents national and international authority and takes advantage of the global finance systems, new information technologies and transportation.

Social interactions: migration

Due to the changes in the infrastructures of transportation and communication, human migration has increased at unprecedented rates (Figure 3 ; arrow 3) [ 28 ]. According to Held et al. [ 28 ] tourism is one of the most obvious forms of cultural globalisation and it illustrates the increasing time-space compression of current societies. However, travel for business and pleasure constitutes only a fraction of total human movement. Other examples of people migrating are missionaries, merchant marines, students, pilgrims, militaries, migrant workers and Peace Corps workers [ 28 , 29 ]. Besides these forms of voluntary migration, resettlement by refugees is also an important issue. However, since the late 1970s, the concerns regarding the economic, political, social and environmental consequences of migration has been growing and many governments are moving towards more restrictive immigration policies [ 30 ].

Social interactions: conflicts

The tragic terrorist attacks in New York and Washington D.C. in September 2001 fuelled the already ongoing discussions on the link between globalisation and conflicts. Globalisation can decrease the risk on tensions and conflicts, as societies become more and more dependent on each other due the worldwide increase in global communication, global mobility and cross-cultural interactions (Figure 3 ; arrow 3). Others argue that the resistance to globalisation has resulted in religious fundamentalism and to worldwide tensions and intolerance [ 31 ]. In addition, the intralevel relationships at the distal level play a very important role, because many developments in other distal factors that have been associated with the globalisation process are also believed to increase the risk on conflicts. In other words, the globalisation-induced risk on conflict is often mediated by changes in other factors at the distal level [ 4 ].

Social interactions: social equity and social networks

Cultural globalisation (global communication, global mobility, cross-cultural interaction) can also influence cultural norms and values about social solidarity and social equity (Figure 3 ; arrow 3). It is feared that the self-interested individualism of the marketplace spills over into cultural norms and values resulting in increasing social exclusion and social inequity. Exclusion involves disintegration from common cultural processes, lack of participation in social activities, alienation from decision-making and civic participation and barriers to employment and material sources [ 32 ]. Alternatively, a socially integrated individual has many social connections, in the form of both intimate social contacts as well as more distal connections [ 33 ]. On the other hand, however, the geographical scale of social networks is increasing due to global communications and global media. The women's movement, the peace movement, organized religion and the environmental movement are good examples of such transnational social networks. Besides these more formal networks, informal social networks are also gaining importance, as like-minded people are now able to interact at distance through, for example, the Internet. In addition, the global diffusion of radio and television plays an important role in establishing such global networks [ 28 ]. The digital divide between poor and rich, however, can result in social exclusion from the global civil society.

The knowledge capital within a population is increasingly affected by developments in global communication and global mobility (Figure 3 : arrow 3). The term 'globalisation of education' suggests getting education into every nook and cranny of the globe. Millions of people now acquire part of their knowledge from transworld textbooks, due to the supraterritoriality in publishing. Because of new technologies, most colleges and universities are able to work together with academics from different countries, students have ample opportunities to study abroad and 'virtual campuses' have been developed. The diffusion of new technologies has enabled researchers to gather and process data in no time resulting in increased amounts of empirical data [ 34 ]. New technologies have even broadened the character of literacy. Scholte [ 34 ] argues that 'in many line of work the ability to use computer applications has become as important as the ability to read and write with pen and paper. In addition, television, film and computer graphics have greatly enlarged the visual dimensions of communication. Many people today 'read' the globalised world without a book'. Overall, it is expected that the above-discussed developments will also improve health training and health education (e.g. see Feachem [ 24 ] and Lee [ 35 ]).

Ecosystem goods and services

Global environmental changes can have profound effects on the provision of ecosystem goods and services to mankind (Figure 3 ; arrow 4). The Intergovernmental Panel on Climate Change (IPCC) [ 36 ] concludes that it is expected that climate change can result in significant ecosystem disruptions and threatens substantial damage to the earth's natural systems. In addition, several authors have addressed the link between biodiversity and ecosystem functioning and it is agued that maintaining a certain level of biodiversity is necessary for the proper provision of ecosystem goods and services [ 37 – 40 ]. However, it is still unclear which ecosystem functions are primarily important to sustain our physical health. Basically, the following types of 'health functions' can be distinguished. First, ecosystems provide us with basic human needs like food, clean air, clean water and clean soils. Second, they prevent the spread of diseases through biological control. Finally, ecosystems provide us with medical and genetic resources, which are necessary to prevent or cure diseases [ 41 ].

Globalisation and proximal health determinants

Figure 3 shows that the impact of globalisation on each proximal health determinant is mediated by changes in several distal factors (Figure 3 ; arrows 5–12). The most important relationships will be discussed in more detail below. It is important to note that health policies and health-related policies can have an influence on all proximal factors (Figure 3 ; arrow 5).

Health services

Health services are increasingly influenced by globalisation-induced changes in health care policy (Figure 3 ; arrow 5), economic development and trade (Figure 3 : arrow 6), and knowledge (Figure 3 ; arrow 7), but also by migration (3: arrow 7). Although the WHO aims to assist governments to strengthen health services, government involvement in health care policies has been decreasing and, subsequently, medical institutions are more and more confronted with the neoliberal economic model. Health is increasingly perceived as a private good leaving the law of the market to determine whose health is profitable for investment and whose health is not [ 10 ]. According to Collins [ 42 ] populations of transitional economies are no longer protected by a centralized health sector that provides universal access to everyone and some groups are even denied the most basic medical services. The U.S. and several Latin American countries have witnessed a decline in the accessibility of health care following the privatisation of health services [ 43 ].

The increasing trade in health services can have profound implications for provision of proper health care. Although it is perceived as to improve the consumer's choice, some developments are believed to have long-term dangers, such as establishing a two-tier health system, movement of health professionals from the public sector to the private sector, inequitable access to health care and the undermining of national health systems [ 10 , 12 ]. The illegal trading of drugs and the provision of access to controlled drugs via the Internet are potential health risks [ 44 ]. In addition, the globalisation process can also result in a 'brain-drain' in the health sector as a result of labour migration from developing to developed regions.

However, increased economic growth is generally believed to enhance improvements in health care. Increased (technological) knowledge resulting from the diffusion of information can further improve the treatment and prevention of all kinds of illnesses and diseases.

Social environment

The central mechanism that links personal affiliations to health is 'social support,' the transfer from one person to another of instrumental, emotional and informational assistance [ 45 ]. Social networks and social integration are closely related to social support [ 46 ] and, as a result, globalisation-induced changes in social cohesion, integration and interaction can influence the degree of social support in a population (Figure 3 ; arrow 9). This link is, for example, demonstrated by Reeves [ 47 ], who discussed that social interactions through the Internet influenced the coping ability of HIV-positive individuals through promoting empowerment, augmenting social support and facilitating helping others. Alternatively, social exclusion is negatively associated with social support.

Another important factor in the social environment is violence, which often is the result of the complex interplay of many factors (Figure 3 ; arrows 5, 8 and 9). The WHO [ 48 ] argues that globalisation gives rise to obstacles as well as benefits for violence prevention. It induces changes in protective factors like social cohesion and solidarity, knowledge and education levels, and global violence prevention activities such as the implementation of international law and treaties designed to reduce violence (e.g. social protection). On the other hand, it also influences important risk factors associated with violence such as social exclusion, income inequality, collective conflict, and trade in alcohol, drugs or firearms.

Due to the widespread flow of people, information and ideas, lifestyles also spread throughout the world. It is already widely acknowledged and demonstrated that several modern behavioural factors such as an unhealthy diet, physical inactivity, smoking, alcohol misuse and the use of illicit drugs are having a profound impact on human health [ 49 – 52 ] (Table 3 ). Individuals respond to the range of healthy as well as unhealthy lifestyle options and choices available in a community [ 53 ], which are in turn determined by global trade (Figure 3 ; arrow 8), economic development (Figure 3 ; arrow 8) and social interactions (Figure 3 ; arrow 9).

Although the major chronic diseases are not transmittable via an infectious agent, the behaviours that predispose to these diseases can be communicated by advertising, product marketing and social interactions [ 54 ]. Global trade and marketing developments drive, for example, the nutrition transition towards diets with high proportions of salt, saturated fat and sugars [ 51 , 53 ]. Another example is the worldwide spread of tobacco consumption as transnational tobacco companies take advantage of the potential for growth in developing countries [ 51 , 55 ]. Additionally, the scale of cigarette smuggling poses a considerable global threat to the efforts to control tobacco consumption [ 44 ]. Illegal trade in illicit drugs poses similar problems. At the same time, the alcohol industry is almost as globalised as the tobacco industry [ 56 ].

However, health education can play a role in promoting healthy lifestyles by improving an individual's knowledge about the health effects of different lifestyle options (Figure 3 ; arrow 9). Besides health education, (global) policies can also directly discourage unhealthy behaviour by means of economic incentives (e.g. charging excise on tobacco) or other legislation (Figure 3 ; arrow 5).

Physical environment: infectious diseases pathogens

The spread of infectious diseases is probably one of the most mentioned health effects of globalisation and past disease outbreaks have been linked to factors that are related to the globalisation process (see e.g. Newcomb [ 57 ]). The recent outbreak of the Severe Acute Respiratory Syndrome (SARS) demonstrates the potential of new infectious diseases to spread rapidly in today's world, increasing the risk of a global pandemic. The combination of movement of goods (Figure 3 ; arrow 10) and people (Figure 3 ; arrow 11), and profound changes affecting ecosystem goods and services (Figure 3 ; arrow 12) all contribute to increased risk of disease spread [ 57 ]. For example, the globalisation of food production, trade and consumption has been associated with the increased spread and transmission of food born diseases [ 57 , 58 ]. Diseases like HIV/AIDS or hepatitis B can also spread through trade in infected biological products (e.g. blood) [ 44 ].

Enhanced knowledge and new technologies will improve the surveillance of infectious diseases and monitoring of antibiotic resistance [ 24 , 35 ] (Figure 3 ; arrow 11). Globalisation potentially increases the speed of responses in some cases. Wilson [ 29 ] states that responding to disease emergence requires a global perspective-both conceptually and geographically-as the current global situation favours the outbreak and rapid spread of infectious disease. As a result, the policies and actions undertaking by the WHO are becoming increasingly important in controlling infectious diseases at a global level (Figure 3 ; arrow 5). For instance, the WHO played a critical role in controlling SARS by means of global alerts, geographically specific travel advisories and monitoring [ 59 ].

Food trade has become an increasingly important factor with regard to food security worldwide (Figure 3 ; arrow 10). At present, however, the developed countries usually subsidise their agricultural sectors. Current liberalisation policies are expected to have profound implications on food trade and, subsequently food security [ 60 ]. Some argue that the resulting free trade will create access to better and cheaper food supplies via food imports and can stimulate more efficient use of the world's resources as well as the production of food in regions that are more suitable to do so [ 60 , 61 ]. Free trade permits food consumption to grow faster than domestic food production in countries where there are constraints on increasing the latter. Accelerated economic growth can also contribute to food security (Figure 3 ; arrow 10) [ 60 ]. Others, however, argue that the forces of globalisation in fact endanger food security (e.g. see Lang [ 62 ]) and that countries should strive to become more self-sufficient [ 60 ]. For many countries the increasing dependence on food imports goes hand in hand with a higher vulnerability to shocks arising in global markets, which can affect import capacity and access to food imports [ 60 ]. Many food insecure countries are not able to earn enough with exporting goods in order to pay for the needed food imports [ 63 ].

At the global level, there are increasing international efforts to achieve widespread food security (Figure 3 ; arrow 5). For instance, the right to adequate food is directly addressed in the 1966 International Covenant on Economic, Social and Cultural Rights. In 1996, the World Food Summit reaffirmed the right of everyone to have access to safe and nutritious food. In case of extreme food-insecurity and insufficient import capacity, food aid may be provided in order to supplement the scarce food imports. Globalisation can affect food security by enhancing the knowledge of foreign nations about the usefulness of food aid (Figure 3 ; arrow 11) [ 60 ].

Besides food trade, one can also deal with the mismatch between demand and supply by increasing food production in food-short regions. The globalisation process can increase food security by facilitating the worldwide implementation of better technologies and improved knowledge (e.g. irrigation technologies, research on genetically modified food) (Figure 3 ; arrow 11). At the same time, the natural resource base for food production is increasingly threatened (Figure 3 ; arrow 12). Finally conflicts are, of course, a threat to food security and it is expected that food security in sub-Saharan Africa, for example, will not increase without the establishment of political instability (Figure 3 ; arrow 11) [ 64 ].

The effects of globalisation are also raising concerns over water security. The current globalisation process is accompanied by privatisation policies affecting the provision of water [ 65 ] (Figure 3 ; arrow 5). Governments and international financial institutions promote privatisation, as they believe it will promote market competition and efficiency. However, others are less optimistic about the effects of privatisation. In fact, some cases show that prices and inequalities in access even rise [ 66 ]. It is also argued that water, with vital importance socially, culturally, and ecologically, 'cannot be protected by purely market forces' [ 65 ]. On a global scale, there are increasing efforts to set up global guidelines or policies with regard to fresh water (Figure 3 ; arrow 5), however none of the international declarations and conference statements requires states to actual meet individual's water requirements [ 67 ].

The virtual trade of water is also believed to be of increasing importance (Figure 3 ; arrow 10). The water that is used in the production process of a commodity is called the 'virtual water' contained in that commodity. Therefore, the increasing global trade of commodities is accompanied by an increasing global trade in virtual water. The global volume of virtual water embedded in crop and livestock products traded between nations is estimated to be 1400 billion cubic metres per year [ 68 ].

In addition, the globalisation process can increase water security by facilitating the worldwide implementation of better technologies and improved knowledge (Figure 3 ; arrow 11). At the same time, the natural resource base is increasingly threatened as, for example, global climate change and deforestation profoundly affect our ecosystems ability to provide us with sufficient and adequate fresh water (Figure 3 ; arrow 12).

Globalisation is causing profound and complex changes in the very nature of our society, bringing new opportunities as well as risks. In addition, the effects of globalisation are causing a growing concern for our health, and the intergenerational equity implied by 'sustainable development' forces us to think about the right of future generations to a healthy environment and a healthy life.

Despite some empirical research efforts indicating the links between the globalisation process and specific health impacts, the present weakness in empirical evidence on the multiple links between globalisation and health is still a problem [ 44 ]. The described conceptual framework could give a meaningful contribution to further empirical research by serving as a well-structured 'think-model' or 'concept map'. It clearly demonstrates that an interdisciplinary approach towards globalisation and health is required, which draws upon the knowledge from relevant fields such as, for example, medicine, epidemiology, sociology, political sciences, (health) education, environmental sciences and economics.

In addition, the exploration of possible future health impacts of different globalisation pathways by means of scenarios analysis could provide a useful contribution to the ongoing discussions on globalisation and health [ 4 ]. Scenarios can be described as 'plausible but simplified descriptions of how the future may develop, according to a coherent and internally consistent set of assumptions about key driving forces and relationships' [ 69 ]. Recent research showed, however, that the health dimension is largely missing in existing global scenarios [ 70 ]. The developed framework for globalisation and population health has contributed to the understanding of future health implications and the model is, therefore, considered to be a useful tool to structure future scenario studies on the health implications of the globalisation process.

To conclude, the framework provides valuable insights in how to organise the complexity involved in studying the health effects resulting from globalisation. We claim that our approach has several beneficial characteristics. First, it is embedded in a holistic approach towards globalisation; in this paper we perceive globalisation as an overarching process in which simultaneously many different processes take place in many societal domains. In addition, the conceptual framework is embedded in a holistic approach towards population health. As a result, our model explicitly visualises that globalisation affects the institutional, economic, social-cultural and ecological determinants of population health and that the globalisation process mainly operates at the contextual level, while influencing health through the more distal and proximal determinants.

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Acknowledgements

We would like to thank all colleagues at the International Centre for Integrative Studies (ICIS) and the Netherlands Environmental Assessment Agency (MNP-RIVM) for the fruitful discussions leading to this paper. This work is financially supported by MNP-RIVM within the project 'Population & Health'.

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Huynen, M.M., Martens, P. & Hilderink, H.B. The health impacts of globalisation: a conceptual framework. Global Health 1 , 14 (2005). https://doi.org/10.1186/1744-8603-1-14

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Trade and Globalization

How did international trade and globalization change over time? What is the structure today? And what is its impact?

By Esteban Ortiz-Ospina, Diana Beltekian and Max Roser

This page was first published in 2014 and last revised in April 2024.

On this topic page, you can find data, visualizations, and research on historical and current patterns of international trade, as well as discussions of their origins and effects.

Other research and writing on trade and globalization on Our World in Data:

• Is globalization an engine of economic development?
• Is trade a major driver of income inequality?

Related topics

Economic Growth

See all our data, visualizations, and writing on economic growth.

Economic Inequality

See all our data, visualizations, and writing on economic inequality.

See all our data, visualizations, and writing on migration.

See all interactive charts on Trade and Globalization ↓

Trade has changed the world economy

Trade has grown remarkably over the last century.

One of the most important developments of the last century has been the integration of national economies into a global economic system. This process of integration, often called globalization, has resulted in a remarkable growth in trade between countries.

The chart here shows the growth of world exports over more than the last two centuries. These estimates are in constant prices (i.e. have been adjusted to account for inflation) and are indexed at 1913 values.

The chart shows an extraordinary growth in international trade over the last couple of centuries: Exports today are more than 40 times larger than in 1913.

You can switch to a logarithmic scale under ‘Settings’. This will help you see that, over the long run, growth has roughly followed an exponential path.

The increase in trade has even outpaced economic growth

The chart above shows how much more trade we have today relative to a century ago. But what about trade relative to total economic output?

Over the last couple of centuries the world economy has experienced sustained positive economic growth , so looking at changes in trade relative to GDP offers another interesting perspective.

The next chart plots the value of traded goods relative to GDP (i.e. the value of merchandise trade as a share of global economic output).

Up to 1870, the sum of worldwide exports accounted for less than 10% of global output. Today, the value of exported goods around the world is around 25%. This shows that over the last hundred years, the growth in trade has even outpaced rapid economic growth.

Trade expanded in two waves

The first "wave of globalization" started in the 19th century, the second one after ww2.

The following visualization presents a compilation of available trade estimates, showing the evolution of world exports and imports as a share of global economic output .

This metric (the ratio of total trade, exports plus imports, to global GDP) is known as the “openness index”. The higher the index, the higher the influence of trade transactions on global economic activity. 1

As we can see, until 1800 there was a long period characterized by persistently low international trade – globally the index never exceeded 10% before 1800. This then changed over the course of the 19th century, when technological advances triggered a period of marked growth in world trade – the so-called “first wave of globalization”.

This first wave came to an end with the beginning of World War I, when the decline of liberalism and the rise of nationalism led to a slump in international trade. In the chart we see a large drop in the interwar period.

After World War II trade started growing again. This new – and ongoing – wave of globalization has seen international trade grow faster than ever before. Today the sum of exports and imports across nations amounts to more than 50% of the value of total global output. 2

Before the first wave of globalization, trade was driven mostly by colonialism

Over the early modern period, transoceanic flows of goods between empires and colonies accounted for an important part of international trade. The following visualizations provide a comparison of intercontinental trade, in per capita terms, for different countries.

As we can see, intercontinental trade was very dynamic, with volumes varying considerably across time and from empire to empire.

Leonor Freire Costa, Nuno Palma, and Jaime Reis, who compiled and published the original data shown here, argue that trade, also in this period, had a substantial positive impact on the economy. 3

The first wave of globalization was marked by the rise and collapse of intra-European trade

The following visualization shows a detailed overview of Western European exports by destination. Figures correspond to export-to-GDP ratios (i.e. the sum of the value of exports from all Western European countries, divided by the total GDP in this region). You can use “Settings” to switch to a relative view and see the proportional contribution of each region to total Western European exports.

This chart shows that growth in Western European trade throughout the 19th century was largely driven by trade within the region: In the period 1830-1900 intra-European exports went from 1% of GDP to 10% of GDP, and this meant that the relative weight of intra-European exports doubled over the period. However, this process of European integration then collapsed sharply in the interwar period.

After the Second World War trade within Europe rebounded, and from the 1990s onwards exceeded the highest levels of the first wave of globalization. In addition, Western Europe then started to increasingly trade with Asia, the Americas, and to a smaller extent Africa and Oceania.

The next graph, using data from Broadberry and O'Rourke (2010) 4 , shows another perspective on the integration of the global economy and plots the evolution of three indicators measuring integration across different markets – specifically goods, labor, and capital markets.

The indicators in this chart are indexed, so they show changes relative to the levels of integration observed in 1900. This gives us another perspective on how quickly global integration collapsed with the two World Wars. 5

The second wave of globalization was enabled by technology

The worldwide expansion of trade after the Second World War was largely possible because of reductions in transaction costs stemming from technological advances, such as the development of commercial civil aviation, the improvement of productivity in the merchant marines, and the democratization of the telephone as the main mode of communication. The visualization shows how, at the global level, costs across these three variables have been going down since 1930.

Reductions in transaction costs impacted not only the volumes of trade but also the types of exchanges that were possible and profitable.

The first wave of globalization was characterized by inter-industry trade. This means that countries exported goods that were very different from what they imported – England exchanged machines for Australian wool and Indian tea. As transaction costs went down, this changed. In the second wave of globalization, we are seeing a rise in intra -industry trade (i.e. the exchange of broadly similar goods and services is becoming more and more common). France, for example, now both imports and exports machines to and from Germany.

The following visualization, from the UN World Development Report (2009) , plots the fraction of total world trade that is accounted for by intra-industry trade, by type of goods. As we can see, intra-industry trade has been going up for primary, intermediate, and final goods.

This pattern of trade is important because the scope for specialization increases if countries are able to exchange intermediate goods (e.g. auto parts) for related final goods (e.g. cars).

Trade and trade partners by country

Above, we examined the broad global trends over the last two centuries. Let's now examine country-level trends over this long and dynamic period.

This chart plots estimates of the value of trade in goods, relative to total economic activity (i.e. export-to-GDP ratios).

These historical estimates obviously come with a large margin of error (in the measurement section below we discuss the data limitations); yet they offer an interesting perspective.

You can edit the countries and regions selected. Each country tells a different story. 7

In the next chart we plot, country by country, the regional breakdown of exports. India is shown by default, but you can edit the countries and regions shown.

When switching to displaying relative values under ‘Settings’, we see the proportional contribution of purchases from each region. For example, we see that more than a third of Indian exports went to Asian countries in recent decades.

This gives us an interesting perspective on the changing nature of trade partnerships. In India, we see the rising importance of trade with Africa—a pattern that we discuss in more detail below .

Trade around the world today

How much do countries trade, trade openness around the world.

The metric trade as a share of GDP gives us an idea of global integration by capturing all incoming and outgoing transactions of a country.

The charts shows that countries differ a lot in the extent to which they engage in trade. Trade, for example, is much less important to the US economy than for other rich countries.

If you press the play button on the map, you can see changes over time. This reveals that, despite the great variation between countries, there is a common trend: over the last couple of decades trade openness has gone up in most countries.

Exports and imports in real dollars

Expressing the value of trade as a share of GDP tells us the importance of trade in relation to the size of economic activity. Let's now take a look at trade in monetary terms – this tells us the importance of trade in absolute, rather than relative terms.

The chart shows the value of exports (goods plus services) in dollars, country by country.

The main takeaway here is that the trend towards more trade is more pronounced than in the charts showing shares of GDP. This is not surprising: most countries today produce more than a couple of decades ago , and at the same time they trade more of what they produce. 8

What do countries trade?

Trade in goods vs. trade in services.

Trade transactions include goods (tangible products that are physically shipped across borders by road, rail, water, or air) and services (intangible commodities, such as tourism, financial services, and legal advice).

Many traded services make merchandise trade easier or cheaper—for example, shipping services, or insurance and financial services.

Trade in goods has been happening for millennia , while trade in services is a relatively recent phenomenon.

In some countries services are today an important driver of trade: in the UK services account for around half of all exports; and in the Bahamas, almost all exports are services.

In other countries, such as Nigeria and Venezuela, services account for a small share of total exports.

Globally, trade in goods accounts for the majority of trade transactions. But as this chart shows, the share of services in total global exports has slightly increased in recent decades. 9

How are trade partnerships changing?

Bilateral trade is becoming increasingly common.

If we consider all pairs of countries that engage in trade around the world, we find that in the majority of cases, there is a bilateral relationship today: most countries that export goods to a country also import goods from the same country.

The interactive visualization shows this. 10 In the chart, all possible country pairs are partitioned into three categories: the top portion represents the fraction of country pairs that do not trade with one another; the middle portion represents those that trade in both directions (they export to one another); and the bottom portion represents those that trade in one direction only (one country imports from, but does not export to, the other country).

As we can see, bilateral trade is becoming increasingly common (the middle portion has grown substantially). However, many countries still do not trade with each other at all.

South-South trade is becoming increasingly important

The next visualization here shows the share of world merchandise trade that corresponds to exchanges between today's rich countries and the rest of the world.

The 'rich countries' in this chart are: Australia, Austria, Belgium, Canada, Cyprus, Denmark, Finland, France, Germany, Greece, Iceland, Ireland, Israel, Italy, Japan, Luxembourg, Netherlands, Norway, Portugal, Spain, Sweden, Switzerland, United Kingdom and the United States. 'Non-rich countries' are all the other countries in the world.

As we can see, up until the Second World War, the majority of trade transactions involved exchanges between this small group of rich countries. But this has changed quickly over the last couple of decades, and today, trade between non-rich countries is just as important as trade between rich countries.

In the past two decades, China has been a key driver of this dynamic: the UN Human Development Report (2013) estimates that between 1992 and 2011, China's trade with Sub-Saharan Africa rose from $1 billion to more than $140 billion. 11

The majority of preferential trade agreements are between emerging economies

The last few decades have not only seen an increase in the volume of international trade, but also an increase in the number of preferential trade agreements through which exchanges take place. A preferential trade agreement is a trade pact that reduces tariffs between the participating countries for certain products.

The visualization here shows the evolution of the cumulative number of preferential trade agreements in force worldwide, according to the World Trade Organization (WTO). These numbers include notified and non-notified preferential agreements (the source reports that only about two-thirds of the agreements currently in force have been notified to the WTO) and are disaggregated by country groups.

This figure shows the increasingly important role of trade between developing countries (South-South trade), vis-a-vis trade between developed and developing countries (North-South trade). In the late 1970s, North-South agreements accounted for more than half of all agreements – in 2010, they accounted for about one-quarter. Today, the majority of preferential trade agreements are between developing economies.

Trading patterns have been changing quickly in middle-income countries

An important change in the composition of exported goods in these countries has accompanied the increase in trade among emerging economies over the last half century.

The next visualization plots the share of food exports in each country's total exported merchandise. These figures, produced by the World Bank, correspond to the Standard International Trade Classification, in which 'food' includes, among other goods, live animals, beverages, tobacco, coffee, oils, and fats.

Two points stand out. First, the relative importance of food exports has substantially decreased in most countries since the 1960s (although globally, it has gone up slightly more recently). Second, this decrease has been largest in middle-income countries, particularly in Latin America.

Regarding levels, as one would expect, in high-income countries, food still accounts for a much smaller share of merchandise exports than in most low- and middle-income-countries.

Trade generates efficiency gains

The raw correlation between trade and growth.

Over the last couple of centuries, the world economy has experienced sustained positive economic growth , and over the same period, this process of economic growth has been accompanied by even faster growth in global trade .

In a similar way, if we look at country-level data from the last half century we find that there is also a correlation between economic growth and trade: countries with higher rates of GDP growth also tend to have higher rates of growth in trade as a share of output. This basic correlation is shown in the chart here, where we plot the average annual change in real GDP per capita, against growth in trade (average annual change in value of exports as a share of GDP). 12

Is this statistical association between economic output and trade causal?

Among the potential growth-enhancing factors that may come from greater global economic integration are: competition (firms that fail to adopt new technologies and cut costs are more likely to fail and be replaced by more dynamic firms); economies of scale (firms that can export to the world face larger demand, and under the right conditions, they can operate at larger scales where the price per unit of product is lower); learning and innovation (firms that trade gain more experience and exposure to develop and adopt technologies and industry standards from foreign competitors). 13

Are these mechanisms supported by the data? Let's take a look at the available empirical evidence.

Evidence from cross-country differences in trade, growth, and productivity

When it comes to academic studies estimating the impact of trade on GDP growth, the most cited paper is Frankel and Romer (1999). 14

In this study, Frankel and Romer used geography as a proxy for trade to estimate the impact of trade on growth. This is a classic example of the so-called instrumental variables approach . The idea is that a country's geography is fixed, and mainly affects national income through trade. So if we observe that a country's distance from other countries is a powerful predictor of economic growth (after accounting for other characteristics), then the conclusion is drawn that it must be because trade has an effect on economic growth. Following this logic, Frankel and Romer find evidence of a strong impact of trade on economic growth.

Other papers have applied the same approach to richer cross-country data, and they have found similar results. A key example is Alcalá and Ciccone (2004). 15

This body of evidence suggests trade is indeed one of the factors driving national average incomes (GDP per capita) and macroeconomic productivity (GDP per worker) over the long run. 16

Evidence from changes in labor productivity at the firm level

If trade is causally linked to economic growth, we would expect that trade liberalization episodes also lead to firms becoming more productive in the medium and even short run. There is evidence suggesting this is often the case.

Pavcnik (2002) examined the effects of liberalized trade on plant productivity in the case of Chile, during the late 1970s and early 1980s. She found a positive impact on firm productivity in the import-competing sector. She also found evidence of aggregate productivity improvements from the reshuffling of resources and output from less to more efficient producers. 17

Bloom, Draca, and Van Reenen (2016) examined the impact of rising Chinese import competition on European firms over the period 1996-2007 and obtained similar results. They found that innovation increased more in those firms most affected by Chinese imports. They also found evidence of efficiency gains through two related channels: innovation increased and new existing technologies were adopted within firms, and aggregate productivity also increased because employment was reallocated towards more technologically advanced firms. 18

Trade does not only increase efficiency gains

Overall, the available evidence suggests that trade liberalization does improve economic efficiency. This evidence comes from different political and economic contexts and includes both micro and macro measures of efficiency.

This result is important because it shows that there are gains from trade. But of course, efficiency is not the only relevant consideration here. As we discuss in a companion article , the efficiency gains from trade are not generally equally shared by everyone. The evidence from the impact of trade on firm productivity confirms this: "reshuffling workers from less to more efficient producers" means closing down some jobs in some places. Because distributional concerns are real it is important to promote public policies – such as unemployment benefits and other safety-net programs – that help redistribute the gains from trade.

Trade has distributional consequences

The conceptual link between trade and household welfare.

When a country opens up to trade, the demand and supply of goods and services in the economy shift. As a consequence, local markets respond, and prices change. This has an impact on households, both as consumers and as wage earners.

The implication is that trade has an impact on everyone. It's not the case that the effects are restricted to workers from industries in the trade sector; or to consumers who buy imported goods. The effects of trade extend to everyone because markets are interlinked, so imports and exports have knock-on effects on all prices in the economy, including those in non-traded sectors.

Economists usually distinguish between "general equilibrium consumption effects" (i.e. changes in consumption that arise from the fact that trade affects the prices of non-traded goods relative to traded goods) and "general equilibrium income effects" (i.e. changes in wages that arise from the fact that trade has an impact on the demand for specific types of workers, who could be employed in both the traded and non-traded sectors).

Considering all these complex interrelations, it's not surprising that economic theories predict that not everyone will benefit from international trade in the same way. The distribution of the gains from trade depends on what different groups of people consume, and which types of jobs they have, or could have. 19

The link between trade, jobs and wages

Evidence from chinese imports and their impact on factory workers in the us.

The most famous study looking at this question is Autor, Dorn and Hanson (2013): "The China syndrome: Local labor market effects of import competition in the United States". 20

In this paper, Autor and coauthors examined how local labor markets changed in the parts of the country most exposed to Chinese competition. They found that rising exposure increased unemployment, lowered labor force participation, and reduced wages. Additionally, they found that claims for unemployment and healthcare benefits also increased in more trade-exposed labor markets.

The visualization here is one of the key charts from their paper. It's a scatter plot of cross-regional exposure to rising imports, against changes in employment. Each dot is a small region (a 'commuting zone' to be precise). The vertical position of the dots represents the percent change in manufacturing employment for the working-age population, and the horizontal position represents the predicted exposure to rising imports (exposure varies across regions depending on the local weight of different industries).

The trend line in this chart shows a negative relationship: more exposure goes along with less employment. There are large deviations from the trend (there are some low-exposure regions with big negative changes in employment); but the paper provides more sophisticated regressions and robustness checks, and finds that this relationship is statistically significant.

This result is important because it shows that the labor market adjustments were large. Many workers and communities were affected over a long period of time. 21

But it's also important to keep in mind that Autor and colleagues are only giving us a partial perspective on the total effect of trade on employment. In particular, comparing changes in employment at the regional level misses the fact that firms operate in multiple regions and industries at the same time. Indeed, Ildikó Magyari found evidence suggesting the Chinese trade shock provided incentives for US firms to diversify and reorganize production. 22

So companies that outsourced jobs to China often ended up closing some lines of business, but at the same time expanded other lines elsewhere in the US. This means that job losses in some regions subsidized new jobs in other parts of the country.

On the whole, Magyari finds that although Chinese imports may have reduced employment within some establishments, these losses were more than offset by gains in employment within the same firms in other places. This is no consolation to people who lost their jobs. But it is necessary to add this perspective to the simplistic story of "trade with China is bad for US workers".

Evidence from the expansion of trade in India and the impact on poverty reductions

Another important paper in this field is Topalova (2010): "Factor immobility and regional impacts of trade liberalization: Evidence on poverty from India". 23

In this paper, Topalova examines the impact of trade liberalization on poverty across different regions in India, using the sudden and extensive change in India's trade policy in 1991. She finds that rural regions that were more exposed to liberalization experienced a slower decline in poverty and lower consumption growth.

Analyzing the mechanisms underlying this effect, Topalova finds that liberalization had a stronger negative impact among the least geographically mobile at the bottom of the income distribution and in places where labor laws deterred workers from reallocating across sectors.

The evidence from India shows that (i) discussions that only look at "winners" in poor countries and "losers" in rich countries miss the point that the gains from trade are unequally distributed within both sets of countries; and (ii) context-specific factors, like worker mobility across sectors and geographic regions, are crucial to understand the impact of trade on incomes.

Evidence from other studies

• Donaldson (2018) uses archival data from colonial India to estimate the impact of India’s vast railroad network. He finds railroads increased trade, and in doing so they increased real incomes (and reduced income volatility). 24
• Porto (2006) looks at the distributional effects of Mercosur on Argentine families, and finds this regional trade agreement led to benefits across the entire income distribution. He finds the effect was progressive: poor households gained more than middle-income households because prior to the reform, trade protection benefitted the rich disproportionately. 25
• Trefler (2004) looks at the Canada-US Free Trade Agreement and finds there was a group who bore "adjustment costs" (displaced workers and struggling plants) and a group who enjoyed "long-run gains" (consumers and efficient plants). 26

The link between trade and the cost of living

The fact that trade negatively affects labor market opportunities for specific groups of people does not necessarily imply that trade has a negative aggregate effect on household welfare. This is because, while trade affects wages and employment, it also affects the prices of consumption goods. So households are affected both as consumers and as wage earners.

Most studies focus on the earnings channel and try to approximate the impact of trade on welfare by looking at how much wages can buy, using as a reference the changing prices of a fixed basket of goods.

This approach is problematic because it fails to consider welfare gains from increased product variety, and obscures complicated distributional issues such as the fact that poor and rich individuals consume different baskets so they benefit differently from changes in relative prices. 27

Ideally, studies looking at the impact of trade on household welfare should rely on fine-grained data on prices, consumption, and earnings. This is the approach followed in Atkin, Faber, and Gonzalez-Navarro (2018): "Retail globalization and household welfare: Evidence from Mexico". 28

Atkin and coauthors use a uniquely rich dataset from Mexico, and find that the arrival of global retail chains led to reductions in the incomes of traditional retail sector workers, but had little impact on average municipality-level incomes or employment; and led to lower costs of living for both rich and poor households.

The chart here shows the estimated distribution of total welfare gains across the household income distribution (the light-gray lines correspond to confidence intervals). These are proportional gains expressed as a percent of initial household income.

As we can see, there is a net positive welfare effect across all income groups; but these improvements in welfare are regressive, in the sense that richer households gain proportionally more (about 7.5 percent gain compared to 5 percent). 29

Evidence from other countries confirms this is not an isolated case – the expenditure channel really seems to be an important and understudied source of household welfare. Giuseppe Berlingieri, Holger Breinlich, Swati Dhingra, for example, investigated the consumer benefits from trade agreements implemented by the EU between 1993 and 2013; and they found that these trade agreements increased the quality of available products, which translated into a cumulative reduction in consumer prices equivalent to savings of €24 billion per year for EU consumers. 30

Implications of trade’s distributional effects

The available evidence shows that, for some groups of people, trade has a negative effect on wages and employment opportunities; at the same time, it has a large positive effect via lower consumer prices and increased product availability.

Two points are worth emphasizing.

For some households, the net effect is positive. But for some households that's not the case. In particular, workers who lose their jobs can be affected for extended periods of time, so the positive effect via lower prices is not enough to compensate them for the reduction in earnings.

On the whole, if we aggregate changes in welfare across households, the net effect is usually positive. But this is hardly a consolation for the worse off.

This highlights a complex reality: There are aggregate gains from trade , but there are also real distributional concerns. Even if trade is not a major driver of income inequalities , it's important to keep in mind that public policies, such as unemployment benefits and other safety-net programs, can and should help redistribute the gains from trade.

Explaining trade patterns: Theory and Evidence

Comparative advantage, theory: what is 'comparative advantage' and why does it matter to understand trade.

In economic theory, the 'economic cost' – or the 'opportunity cost' – of producing a good is the value of everything you need to give up in order to produce that good.

Economic costs include physical inputs (the value of the stuff you use to produce the good), plus forgone opportunities (when you allocate scarce resources to a task, you give up alternative uses of those resources).

A country or a person is said to have a 'comparative advantage' if it can produce something at a lower opportunity cost than its trade partners.

The forgone opportunities of production are key to understanding this concept. It is precisely this that distinguishes absolute advantage from comparative advantage.

To see the difference between comparative and absolute advantage, consider a commercial aviation pilot and a baker. Suppose the pilot is an excellent chef, and she can bake just as well, or even better than the baker. In this case, the pilot has an absolute advantage in both tasks. Yet the baker probably has a comparative advantage in baking, because the opportunity cost of baking is much higher for the pilot.

The freely available economics textbook The Economy: Economics for a Changing World explains this as follows: "A person or country has comparative advantage in the production of a particular good, if the cost of producing an additional unit of that good relative to the cost of producing another good is lower than another person or country’s cost to produce the same two goods."

At the individual level, comparative advantage explains why you might want to delegate tasks to someone else, even if you can do those tasks better and faster than them. This may sound counterintuitive, but it is not: If you are good at many things, it means that investing time in one task has a high opportunity cost, because you are not doing the other amazing things you could be doing with your time and resources. So, at least from an efficiency point of view, you should specialize on what you are best at, and delegate the rest.

The same logic applies to countries. Broadly speaking, the principle of comparative advantage postulates that all nations can gain from trade if each specializes in producing what they are relatively more efficient at producing, and imports the rest: “do what you do best, import the rest”. 31

In countries with a relative abundance of certain factors of production, the theory of comparative advantage predicts that they will export goods that rely heavily upon those factors: a country typically has a comparative advantage in those goods that use its abundant resources. Colombia exports bananas to Europe because it has comparatively abundant tropical weather.

Is there empirical support for comparative-advantage theories of trade?

The empirical evidence suggests that the principle of comparative advantage does help explain trade patterns. Bernhofen and Brown (2004) 32 , for instance, provide evidence using the experience of Japan. Specifically, they exploit Japan’s dramatic nineteenth-century move from a state of near complete isolation to wide trade openness.

The graph here shows the price changes of the key tradable goods after the opening up to trade. It presents a scatter diagram of the net exports in 1869 graphed in relation to the change in prices from 1851–53 to 1869. As we can see, this is consistent with the theory: after opening to trade, the relative prices of major exports such as silk increased (Japan exported what was cheap for them to produce and which was valuable abroad), while the relative price of imports such as sugar declined (they imported what was relatively more difficult for them to produce, but was cheap abroad).

Trade diminishes with distance

The resistance that geography imposes on trade has long been studied in the empirical economics literature – and the main conclusion is that trade intensity is strongly linked to geographic distance.

The visualization, from Eaton and Kortum (2002), graphs 'normalized import shares' against distance. 33 Each dot represents a country pair from a set of 19 OECD countries, and both the vertical and horizontal axes are expressed on logarithmic scales.

The 'normalized import shares' in the vertical axis provide a measure of how much each country imports from different partners (see the paper for details on how this is calculated and normalized), while the distance in the horizontal axis corresponds to the distance between central cities in each country (see the paper and references therein for details on the list of cities). As we can see, there is a strong negative relationship. Trade diminishes with distance. Through econometric modeling, the paper shows that this relationship is not just a correlation driven by other factors: their findings suggest that distance imposes a significant barrier to trade.

The fact that trade diminishes with distance is also corroborated by data on trade intensity within countries. The visualization here shows, through a series of maps, the geographic distribution of French firms that export to France's neighboring countries. The colors reflect the percentage of firms that export to each specific country.

As we can see, the share of firms exporting to each of the corresponding neighbors is the largest close to the border. The authors also show in the paper that this pattern holds for the value of individual-firm exports – trade value decreases with distance to the border.

Institutions

Conducting international trade requires both financial and non-financial institutions to support transactions. Some of these institutions are fairly obvious (e.g. law enforcement); but some are less obvious. For example, the evidence shows that producers in exporting countries often need credit in order to engage in trade.

The scatter plot, from Manova (2013), shows the correlation between levels in private credit (specifically exporters’ private credit as a share of GDP) and exports (average log bilateral exports across destinations and sectors). 35 As can be seen, financially developed economies – those with more dynamic private credit markets – typically outperform exporters with less evolved financial institutions.

Other studies have shown that country-specific institutions, like the knowledge of foreign languages, for instance, are also important to promote foreign relative to domestic trade. 36

Increasing returns to scale

The concept of comparative advantage predicts that if all countries had identical endowments and institutions, there would be little incentive for specialization because the opportunity cost of producing any good would be the same in every country.

So you may wonder: why is it then the case that in the last few years, we have seen such rapid growth in intra-industry trade between rich countries?

The increase in intra-industry between rich countries seems paradoxical under the light of comparative advantage because in recent decades we have seen convergence in key factors, such as human capital , across these countries.

The solution to the paradox is actually not very complicated: Comparative advantage is one, but not the only force driving incentives to specialization and trade.

Several economists, most notably Paul Krugman, have developed theories of trade in which trade is not due to differences between countries, but instead due to "increasing returns to scale" – an economic term used to denote a technology in which producing extra units of a good becomes cheaper if you operate at a larger scale.

The idea is that specialization allows countries to reap greater economies of scale (i.e. to reduce production costs by focusing on producing large quantities of specific products), so trade can be a good idea even if the countries do not differ in endowments, including culture and institutions.

These models of trade, often referred to as “New Trade Theory”, are helpful in explaining why in the last few years we have seen such rapid growth in two-way exchanges of goods within industries between developed nations.

In a much-cited paper, Evenett and Keller (2002) show that both factor endowments and increasing returns help explain production and trade patterns around the world. 37

You can learn more about New Trade Theory, and the empirical support behind it, in Paul Krugman's Nobel lecture .

Measurement and data quality

There are dozens of official sources of data on international trade, and if you compare these different sources, you will find that they do not agree with one another. Even if you focus on what seems to be the same indicator for the same year in the same country, discrepancies are large.

Such differences between sources can also be found in rich countries where statistical agencies tend to follow international reporting guidelines more closely.

There are also large bilateral discrepancies within sources: the value of goods that country A exports to country B can be more than the value of goods that country B imports from country A.

Here we explain how international trade data is collected and processed, and why there are such large discrepancies.

What data is available?

The data hubs from several large international organizations publish and maintain extensive cross-country datasets on international trade. Here's a list of the most important ones:

• World Bank Open Data
• WTO Statistics
• UN Comtrade
• UNCTAD World Integrated Trade Solutions

In addition to these sources, there are also many other academic projects that publish data on international trade. These projects tend to rely on data from one or more of the sources above, and they typically process and merge series in order to improve coverage and consistency. Three important sources are:

• The Correlates of War Project . 38
• The NBER-United Nations Trade Dataset Project .
• The CEPII Bilateral Trade and Gravity Data Project . 39

How large are the discrepancies between sources?

In the visualization here, we compare the data published by several of the sources listed above, country by country, from 1955 to today.

For each country, we exclude trade in services, and we focus only on estimates of the total value of exported goods, expressed as shares of GDP. 40

As this chart clearly shows, different data sources often tell very different stories. If you change the country or region shown you will see that this is true, to varying degrees, across all countries and years.

Constructing this chart was demanding. It required downloading trade data from many different sources, collecting the relevant series, and then standardizing them so that the units of measure and the geographical territories were consistent.

All series, except the two long-run series from CEPII and NBER-UN, were produced from data published by the sources in current US dollars and then converted to GDP shares using a unique source (World Bank).

So, if all series are in the same units (share of national GDP) and they measure the same thing (value of goods exported from one country to the rest of the world), what explains the differences?

Let's dig deeper to understand what's going on.

Why doesn't the data add up?

Differences in guidelines used by countries to record and report trade data.

Broadly speaking, there are two main approaches used to estimate international merchandise trade:

• The first approach relies on estimating trade from customs records , often complementing or correcting figures with data from enterprise surveys and administrative records associated with taxation. The main manual providing guidelines for this approach is the International Merchandise Trade Statistics Manual (IMTS).
• The second approach relies on estimating trade from macroeconomic data , typically National Accounts . The main manual providing guidelines for this approach is the Balance of Payments and International Investment Position Manual (BPM6), which was drafted in parallel with the 2008 System of National Accounts of the United Nations (SNA 2008). The idea behind this approach is to record changes in economic ownership. 41

Under these two approaches, it is common to distinguish between 'traded merchandise' and 'traded goods'. The distinction is often made because goods simply being transported through a country (i.e., goods in transit) are not considered to change a country's stock of material resources and are hence often excluded from the more narrow concept of 'merchandise trade'.

Also, adding to the complexity, countries often rely on measurement protocols developed alongside approaches and concepts that are not perfectly compatible to begin with. In Europe, for example, countries use the 'Compilers guide on European statistics on international trade in goods'.

Measurement error and other inconsistencies

Even when two sources rely on the same broad accounting approach, discrepancies arise because countries fail to adhere perfectly to the protocols.

In theory, for example, the exports of country A to country B should mirror the imports of country B from country A. But in practice this is rarely the case because of differences in valuation. According to the BPM6, imports, and exports should be recorded in the balance of payments accounts on a ' free on board (FOB) basis', which means using prices that include all charges up to placing the goods on board a ship at the port of departure. Yet many countries stick to FOB values only for exports, and use CIF values for imports (CIF stands for 'Cost, Insurance and Freight', and includes the costs of transportation). 42

The chart here gives you an idea of how large import-export asymmetries are. Shown are the differences between the value of goods that each country reports exporting to the US, and the value of goods that the US reports importing from the same countries. For example, for China, the figure in the chart corresponds to the “Value of merchandise imports in the US from China” minus the “Value of merchandise exports from China to the US”.

The differences in the chart here, which are both positive and negative, suggest that there is more going on than differences in FOB vs. CIF values. If all asymmetries were coming from FOB-CIF differences, then we should only see positive values in the chart (recall that, unlike FOB values, CIF values include the cost of transportation, so CIF values are larger).

What else may be going on here?

Another common source of measurement error relates to the inconsistent attribution of trade partners. An example is failure to follow the guidelines on how to treat goods passing through intermediary countries for processing or merchanting purposes. As global production chains become more complex, countries find it increasingly difficult to unambiguously establish the origin and final destination of merchandise, even when rules are established in the manuals. 43

And there are still more potential sources of discrepancies. For example differences in customs and tax regimes, and differences between "general" and "special" trade systems (i.e. differences between statistical territories and actual country borders, which do not often coincide because of things like 'custom free zones'). 44

Even when two sources have identical trade estimates, inconsistencies in published data can arise from differences in exchange rates. If a dataset reports cross-country trade data in US dollars, estimates will vary depending on the exchange rates used. Different exchange rates will lead to conflicting estimates, even if figures in local currency units are consistent.

A checklist for comparing sources

Asymmetries in international trade statistics are large and arise for a variety of reasons. These include conceptual inconsistencies across measurement standards and inconsistencies in the way countries apply agreed-upon protocols. Here's a checklist of issues to keep in mind when comparing sources.

• Differences in underlying records: is trade measured from National Accounts data rather than directly from custom or tax records?
• Differences in import and export valuations: are transactions valued at FOB or CIF prices?
• Inconsistent attribution of trade partners: how is the origin and final destination of merchandise established?
• Difference between 'goods' and 'merchandise': how are re-importing, re-exporting, and intermediary merchanting transactions recorded?
• Exchange rates: how are values converted from local currency units to the currency that allows international comparisons (most often the US-$)?
• Differences between 'general' and 'special' trade system: how is trade recorded for custom-free zones?
• Other issues: Time of recording, confidentiality policies, product classification, deliberate mis-invoicing for illicit purposes.

Many organizations producing trade data have long recognized these factors. Indeed, international organizations often incorporate corrections in an attempt to improve data quality.

The OECD's Balanced International Merchandise Trade Statistics , for example, uses its own approach to correct and reconcile international merchandise trade statistics. 45

The corrections applied in the OECD's 'balanced' series make this the best source for cross-country comparisons. However, this dataset has low coverage across countries, and it only goes back to 2011. This is an important obstacle since the complex adjustments introduced by the OECD imply we can't easily improve coverage by appending data from other sources. At Our World in Data we have chosen to rely on CEPII as the main source for exploring long-run changes in international trade, but we also rely on World Bank and OECD data for up-to-date cross-country comparisons.

There are two key lessons from all of this. The first lesson is that, for most users of trade data out there, there is no obvious way of choosing between sources. And the second lesson is that, because of statistical glitches, researchers and policymakers should always take analyses of trade data with a pinch of salt. For example, in a recent high-profile report , researchers attributed mismatches in bilateral trade data to illicit financial flows through trade mis-invoicing (or trade-based money laundering). As we show here, this interpretation of the data is not appropriate, since mismatches in the data can, and often do arise from measurement inconsistencies rather than malfeasance. 46

Hopefully, the discussion and checklist above can help researchers better interpret and choose between conflicting data sources.

Interactive charts on Trade and Globalization

The openness index, when calculated for the world as a whole, includes double-counting of transactions: When country A sells goods to country B, this shows up in the data both as an import (B imports from A) and as an export (A sells to B).

Indeed, if you compare the chart showing the global trade openness index and the chart showing global merchandise exports as a share of GDP , you find that the former is almost twice as large as the latter.

Why is the global openness index not exactly twice the value reported in the chart plotting global merchandise exports? There a three reasons.

First, the global openness index uses different sources. Second, the global openness index includes trade in goods and services, while merchandise exports include goods but not services. And third, the amount that country A reports exporting to country B does not usually match the amount that B reports importing from A.

We explore this in more detail in our measurement section below .

Klasing and Milionis (2014), one of the sources in the chart, published an additional set of estimates under an alternative specification. Similarly, for the period 1960-2015, the World Bank's World Development Indicators published an alternative set of estimates similar but not identical to those included from the Penn World Tables (9.1). You find all these alternative overlapping sources in this comparison chart .

Leonor Freire Costa, Nuno Palma, and Jaime Reis (2015) – The great escape? The contribution of the empire to Portugal's economic growth, 1500–1800 Leonor Freire Costa Nuno Palma Jaime Reis European Review of Economic History, Volume 19, Issue 1, 1 February 2015, Pages 1–22, https://doi.org/10.1093/ereh/heu019

Broadberry and O'Rourke (2010) - The Cambridge Economic History of Modern Europe: Volume 2, 1870 to the Present. Cambridge University Press.

Integration in the goods markets is measured here through the 'trade openness index', which is defined by the sum of exports and imports as a share of GDP. In our interactive chart you can explore trends in trade openness over this period for a selection of European countries.

Broadberry and O'Rourke (2010) - The Cambridge Economic History of Modern Europe: Volume 2, 1870 to the Present. Cambridge University Press. The graph depicts the “evolution of three indicators measuring integration in commodity, labor, and capital markets over the long run. Commodity market integration is measured by computing the ratio of exports to GDP. Labor market integration is measured by dividing the migratory turnover by population. Financial integration is measured using Feldstein–Horioka estimators of current account disconnectedness.”

We also have the same chart but showing imports .

We also have the same chart, but showing imports .

This interactive chart shows trade in services as a share of GDP across countries and regions.

This chart was inspired by a chart from Helpman, E., Melitz, M., & Rubinstein, Y. (2007). Estimating trade flows: Trading partners and trading volumes (No. w12927). National Bureau of Economic Research.

We also have the same data, but as a stacked-area chart .

There are different ways of capturing this correlation. I focus here on all countries with data over the period 1945-2014. You can find a similar chart using different data sources and time periods in Ventura, J. (2005). A global view of economic growth. Handbook of economic growth, 1, 1419-1497. Online here .

The textbook The Economy: Economics for a Changing World explains this in more detail.

Frankel, J. A., & Romer, D. H. (1999). Does trade cause growth? American Economic Review, 89(3), 379-399.

Alcalá, F., & Ciccone, A. (2004). Trade and productivity . The Quarterly Journal of Economics, 119(2), 613-646.

There are many papers that try to answer this specific question with macro data. For an overview of papers and methods see: Durlauf, S. N., Johnson, P. A., & Temple, J. R. (2005). Growth econometrics. Handbook of economic growth, 1, 555-677.

Pavcnik, N. (2002). Trade liberalization, exit, and productivity improvements: Evidence from Chilean plants . The Review of Economic Studies, 69(1), 245-276.

Bloom, N., Draca, M., & Van Reenen, J. (2016). Trade induced technical change? The impact of Chinese imports on innovation, IT and productivity. The Review of Economic Studies, 83(1), 87-117. Available online here .

You can read more about these economic concepts, and the related predictions from economic theory, in Chapter 18 of the textbook The Economy: Economics for a Changing World .

David, H., Dorn, D., & Hanson, G. H. (2013). The China syndrome: Local labor market effects of import competition in the United States . American Economic Review, 103(6), 2121-68.

It's important to mention here that the economist Jonathan Rothwell wrote a paper suggesting these findings are the result of a statistical illusion. Rothwell's critique received some attention from the media , but Autor and coauthors provided a reply , which I think successfully refutes this claim.

Magyari, I. (2017). Firm Reorganization, Chinese Imports, and US Manufacturing Employment . US Census Bureau, Center for Economic Studies.

Topalova, P. (2010). Factor immobility and regional impacts of trade liberalization: Evidence on poverty from India . American Economic Journal: Applied Economics, 2(4), 1-41.

Donaldson, D. (2018). Railroads of the Raj: Estimating the impact of transportation infrastructure . American Economic Review, 108(4-5), 899-934.

Porto, G (2006). Using Survey Data to Assess the Distributional Effects of Trade Policy. Journal of International Economics 70 (2006) 140–160.

Trefler, D. (2004). The long and short of the Canada-US free trade agreement . American Economic Review, 94(4), 870-895.

See: (i) Feenstra, R. C., & Weinstein, D. E. (2017). Globalization, markups, and US welfare . Journal of Political Economy, 125(4), 1040-1074. (ii) Fajgelbaum, P. D., & Khandelwal, A. K. (2016). Measuring the unequal gains from trade . The Quarterly Journal of Economics, 131(3), 1113-1180.

Atkin, David, Benjamin Faber, and Marco Gonzalez-Navarro. "Retail globalization and household welfare: Evidence from Mexico." Journal of Political Economy 126.1 (2018): 1-73.

In the paper, Atkin and coauthors explore the reasons for this and find that the regressive nature of the distribution is mainly due to richer households placing higher weight on the product variety and shopping amenities on offer at these new foreign stores.

Berlingieri, G., Breinlich, H., & Dhingra, S. (2018). The Impact of Trade Agreements on Consumer Welfare—Evidence from the EU Common External Trade Policy. Journal of the European Economic Association.

Nobel laureate Paul Samuelson (1969) was once challenged by the mathematician Stanislaw Ulam: "Name me one proposition in all of the social sciences which is both true and non-trivial." It was several years later than he thought of the correct response: comparative advantage. "That it is logically true need not be argued before a mathematician; that is is not trivial is attested by the thousands of important and intelligent men who have never been able to grasp the doctrine for themselves or to believe it after it was explained to them."

(NB. This is an excerpt from https://www.wto.org/english/res_e/reser_e/cadv_e.htm)

Bernhofen, D., & Brown, J. (2004). A Direct Test of the Theory of Comparative Advantage: The Case of Japan. Journal of Political Economy, 112(1), 48-67. doi:1. Retrieved from http://www.jstor.org/stable/10.1086/379944 doi:1

Eaton, J., & Kortum, S. (2002). Technology, geography, and trade. Econometrica, 70(5), 1741-1779.

Crozet, M., & Koenig, P. (2010). Structural Gravity Equations with Intensive and Extensive Margins. The Canadian Journal of Economics / Revue Canadienne D'Economique, 43(1), 41-62. Retrieved from http://www.jstor.org/stable/40389555

Manova, Kalina. "Credit constraints, heterogeneous firms, and international trade." The Review of Economic Studies 80.2 (2013): 711-744.

Melitz, J. (2008). Language and foreign trade. European Economic Review, 52(4), 667-699.

Evenett, S. J., & Keller, W. (2002). On theories explaining the success of the gravity equation . Journal of Political Economy, 110(2), 281-316.

For more information on how the COW trade datasets were constructed see: (i) Barbieri, Katherine, and Omar M. G. Omar Keshk. 2016. Correlates of War Project Trade Data Set Codebook, Version 4.0. Available at http://correlatesofwar.org and (ii) Barbieri, Katherine, Omar M. G. Keshk, and Brian Pollins. 2009. TRADING DATA: Evaluating our Assumptions and Coding Rules. Conflict Management and Peace Science, 26(5): 471–491.

Further information on CEPII's methodology can be found in their working paper .

The chart includes series labeled by the sources as 'merchandise trade' and 'goods trade'. As we explain below, part of the asymmetries in trade data comes from the fact that, although 'merchandise' and 'goods' are equivalent in the dictionary, these two terms often measure related but different things.

For example, if there is no change in ownership (e.g. a firm exports goods to its factory in another country for processing, and then re-imports the processed goods) the manual says that statistical agencies should only record the net difference in value. You can find more details about this in an OECD Statistics Briefing .

This issue is actually also a source of disagreement between National Accounts data and customs data. You can read more about it in this report: Harrison, Anne (2013) FOB/CIF Issue in Merchandise Trade/Transport of Goods in BPM6 and the 2008 SNA, Twenty-Fifth Meeting of the IMF Committee on Balance of Payments Statistics, Washington, D.C .

Precisely because of the difficulty that arises when trying to establish the origin and final destination of merchandise, some sources distinguish between national and dyadic (i.e. 'directed') trade estimates.

For more details about general and special trade see the Eurostat glossary .

The OECD approach consists of four steps, which they describe as follows: "First, data are collected and organized, and imports are converted to FOB prices to match the valuation of exports. Secondly, data are adjusted for several specific large problems known to drive asymmetries. Presently these include “modular” adjustments for unallocated and confidential trade; for exports by Hong Kong, China; for Swiss non-monetary gold; and for clear-cut cases of product misclassifications. The list of modules is expected to grow over time. In the third step, adjusted data are balanced using a “Symmetry Index” that weights exports and imports. As the final step, the data are also converted to Classification of Products by Activity (CPA) products to better align with National Accounts statistics, such as in national Supply-Use tables." You can read more about it here . In addition to the OECD, other sources also use corrections. The IMF's DOTS dataset, for example, uses a 6 percent rule for converting import valuations (in CIF) into export values (in FOB). More information can be found in the IMF's (2018) working paper on 'New Estimates for Direction of Trade Statistics'.

For more details on this see Forstater, M. (2018) Illicit Financial Flows, Trade Misinvoicing, and Multinational Tax Avoidance: The Same or Different? , CGD Policy Paper 123.

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The impact of economic, social, and political globalization and democracy on life expectancy in low-income countries: are sustainable development goals contradictory?

• Published: 18 January 2021
• Volume 23 , pages 13508–13525, ( 2021 )

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• Arif Eser Guzel   ORCID: orcid.org/0000-0001-5072-9527 1 ,
• Unal Arslan 1 &
• Ali Acaravci 1  

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The 17 Sustainable Development Goals announced by the United Nations are important guides for the development processes of developing countries. However, achieving all of these goals is only possible if the goals are consistent with each other. It has been observed in the literature that possible contradictions between these goals are ignored. Therefore, the main purpose of this study is to investigate whether two sustainable development goals (SDGs) of the UN are contradictory or supporting each other in low-income countries. These SDGs are “Good Health and Well-Being” (SDG3) and “Partnerships for the Goals” (SDG17). For this purpose, the role of globalization and democracy in life expectancy is empirically investigated in 16 low-income countries over the period 1970–2017. While globalization has been used as an indicator of the partnership between countries, democracy has been used as an indicator of accountability and cooperation between governments and societies. According to estimations of the continuous-updated fully modified (CUP-FM) and bias-adjusted ordinary least squares (BA-OLS), globalization and its subcomponents such as economic, social, and political globalization affect life expectancy positively. Democracy also increases life expectancy in those countries. The GDP per capita is also used as a control variable. Our results show that a higher level of per capita income is positively associated with higher levels of life expectancy. In conclusion, no contradiction was found between SDG3 and SDG17 in those countries. Achieving a healthier society requires economic, social, and political integration between governments and societies.

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1 Introduction

The main problem of economics is to increase economic development and social welfare. Increasing the social welfare level is a complex process that depends on economic and non-economic factors. Achieving economic development or increasing the level of welfare depends on achieving and sustaining the main objectives in political, economic, and social areas. Today, development is no longer a process that can be realized through policies implemented by governments alone. It requires cooperation between governments and societies. While cooperation between different countries requires globalization in the economic, social, and political fields, democracy is the way to ensure cooperation between governments and societies.

Health is one of the most important indicators of social welfare. Besides being one of the indicators of development, it is one of the determinants of human capital formation which is necessary for economic development. Individuals living in developed countries live a healthier life compared to those living in less developed countries. While the differences between the levels of development of countries determine the health conditions, at the same time, improvement of public health paves the way for economic development. Healthy people have higher opportunities to earn a higher income than unhealthy people. Individuals with higher incomes can benefit from better nutrition and access to health services. Therefore, economic development and improvement of health conditions represent a two-way process. In this context, the determination of the variables that will enable the achievement of the goal of a healthier society is especially important in explaining the economic differences between developing countries and developed countries. Because of its importance, health-related goals have an important place both among the Millennium Development Goals (MDGs) and the Sustainable Development Goals (SDGs) announced by the United Nations.

The world leaders with the support of international funding organizations announced the Millennium Declaration in September 2000 at the United Nations Headquarters in New York. They committed their nations to a new international partnership to achieve some development targets having with the final deadline of 2015. The Millennium Development Goals (MDGs) consist of 8 goals, 21 targets, and 60 related indicators covering a wide spectrum of development areas such as “End Poverty and Hunger (MDG 1),” “Universal Education (MDG 2),” “Gender Equality (MDG 3),” “Child Health (MDG 4),” “Maternal Health (MDG 5),” “Combat HIV/AIDS (MDG 6),” “Environmental Sustainability (MDG 7),” and “Global Partnership (MDG 8).” As we see, three of the goals are directly associated with the health status of the people. In the deadline of 2015, according to “Health in 2015: From MDGs to SDGs” report of the World Health Organization (WHO), there are improvements in health-related targets such as child health, maternal health, and combat with HIV/AIDS. Globally, HIV, tuberculosis, and malaria targets have been met. Also, the child mortality rate was reduced by 53% and maternal mortality by 43% (WHO 2016 ). On a global view, although health-related problems are largely resolved, the situation is not as good for low-income countries. As shown in Fig.  1 , significant differences exist between developing countries and developed countries in achieving health-related goals.

Source Halisçelik and Soytas (2015)

World Bank Income Groups’ MDGs Index Values in 2015.

According to MDGs, indexes in the context of health status show that the goals desired in terms of health are not attained in low-income countries compared to other income groups. After the deadline of MDGs, the United Nations has announced 17 SDGs, and “Good Health and Well-Being” takes its place as the third goal. Since achieving these goals requires the cooperation of countries and societies, “Partnership for the Goals” is determined as the seventeenth SDG. According to the United Nations ( 2019 ), the main indicators of global partnerships are trade, foreign direct investments, remittances, financial integration technology transfers, data monitoring and accountability, internet usage, and political integration among countries. In our study, while globalization is used as a proxy indicator of global cooperation, democracy is an indicator of cooperation between societies and governments. Democracy also refers to accountability levels of governments.

Globalization can simply be defined as the process of international integration which has economic, social, and political dimensions (Dreher 2006 ). Many countries have adapted to this process and have enjoyed the welfare effects of globalization by implementing necessary economic and institutional transformation. However, some countries still suffer from poor adaption to global markets. According to the KOF Globalization Index published by the Swiss Economic Institute ( 2020 ), low-income countries have the lowest globalization level compared to other income groups. They also suffer from bad health conditions such as low life expectancy, communicable diseases, and high mortality rates according to MDG indexes given above. At this point, the literature is divided into two parts. The first one blames globalization and argues that poverty and as a result of this, low life expectancy derives from the inequality created by globalization itself (Buss 2002 ). The second group mostly focuses on the benefits of free trade, capital mobility, and technology transfers (Rao and Vadlamannati 2011 ). The low-income countries also suffer from low institutional quality in the context of democracy and political rights. According to Freedom House’s list of electoral democracies, the countries without electoral democracy are mostly the low-income countries in the Middle East, North Africa, Sub-Saharan Africa, and Southeast Asia (Freedom House 2019 ).

The main question of our study is to determine whether the problem of low life expectancy in low-income countries is due to the low levels of globalization and weak political institutions in these countries. To answer this question, the role of economic, social, and political globalization and democracy in life expectancy in those countries is empirically investigated. This study provides several contributions to previous literature. First, we provide a new perspective in the context of sustainable development goals. Previous studies mostly focused on how to achieve SDGs, while possible conflicts between the goals were mostly ignored especially in the context of health. Such conflicts between sustainable development goals in the literature have mostly focused on the impact of economic growth and globalization on the sustainable environment (Ulucak and Bilgili 2018 ; Zafar et al. 2019a ). Those studies are mostly addressed the relationship between SDG7, SDG8, SDG13, and SDG17 (Zafar et al. 2019b ). To the best of our knowledge, it is the first study that investigates the relationship between SDG3 and SDG17. It is also important to examine this relationship in low-income countries since they still suffer from low levels of life expectancy, less adaptation to globalization, and poor democratic institutions compared to other income groups. Previous works mostly provide global evidence, while only a few studies focus on less developed countries. Achieving these 17 goals put forward by the United Nations at the same time is possible only if these goals do not conflict with each other. Second, empirical works in previous literature consist of traditional estimation methods called first-generation tests. In the analysis of panel data, the estimators considering cross-sectional dependence are called the second-generation estimators. Cross-sectional dependency simply refers to the situation when the shock that occurs in one country affects other countries as well. The source of this problem encountered in panel data analysis is the economic, financial, and political integration among countries (Menyah et al. 2014 ). The ignorance of cross-sectional dependence results in biased and inconsistent estimates and wrong inferences (De Hoyos and Sarafidis 2006 ; Chudik and Pesaran 2013 ). Low-income countries are mostly African countries where there is a rising trend in terms of integration to global markets and institutions (Beck et al. 2011 ). Using estimation techniques that consider cross-sectional dependence in those countries prevents misleading results. As the literature is divided into two parts about the effects of globalization on human well-being, fresh evidence via robust estimation methods is required in order to provide proper policy implications. To fill this gap, our work provides second-generation estimations.

2 Literature review

To improve the health conditions of a country, the welfare of the poor should be improved as well. Poverty is detrimental to access to health services. Therefore, the positive impact of globalization on health first emerged with its positive effects on economic growth (Labonté et al. 2009 : 10). The effects of globalization on growth were mostly driven by free trade, international specialization, technology transfers, knowledge spillovers, and competitive markets. It also offers broader opportunities for entrepreneurs and paves the way for innovation (Grossman and Helpman 2015 : 101). As expected, poverty rates significantly reduced in the last two decades because of the integration of developing economies to global markets (Harrison 2006 ). When trade liberalization and income increases are considered together, people's access to treatments and medications can be easier and life expectancy may be prolonged. However, we should consider other possibilities in the context of spreading communicable diseases. As Deaton ( 2004 ) mentioned before, access to cheap and easy travel can increase the rate of spread of communicable diseases. Migration is also another fact to take into account. Particularly rising sexual tourism and migrant sex workers increase the spread of sexually transmitted diseases such as HIV/AIDS. But today there are improved treatment methods to solve these problems. Even HIV-infected people can survive with antiretroviral therapy, and it also reduces sexual transmission of the infection (Dollar 2001 ; Cohen et al. 2011 ). Due to the high cost of advanced drugs as in the case of antiretroviral therapy, it should be accepted that people in low-income countries will have trouble accessing the drugs (Buss 2002 ). There are approaches known as the unequal exchange that globalization increases inequality among countries and that developed countries are more profitable from the globalization process (Love, 1980 ). It may also increase domestic income inequality. There are a few studies that came with the conclusion that globalization rises inequality (Dreher and Gaston 2008 ; Ha 2012 ), but Bergh and Nilsson ( 2010 ) suggested a different perspective. Due to extensive R&D investments and scientific activities, developed countries can find new treatment methods and supply advanced drugs. The only way to access that knowledge and these drugs are trade and integration between developed and underdeveloped countries. Globalization can play an important role in improving the health conditions of low-income countries to the extent that it can provide these linkages. One should also notice that wider markets and higher returns are important factors that motivate entrepreneurs. Buss ( 2002 ) claimed that the intellectual property rights of advanced drugs belong to private firms in developed countries, and because of the strong protection of property rights, less developed countries have trouble accessing them. However, rising global human rights became an important step to advance public health issues against economic concerns in the trade of pharmaceutical products.

The human rights approach focuses on how globalization affected disadvantaged people worldwide (Chapman 2009 ). It is an important instrument in the suppression of the inequality created by economic globalization. Because of the pressure on the government about human rights, disadvantaged people are becoming able to meet their basic human needs. The role of political globalization on this point is forcing governments to adopt global institutions. It increases the number of international organizations in which a country is a member. This makes governments more accountable in the global area and forcing them to pay attention to protect human rights. Gelleny and McCoy ( 2001 ) also claimed that integration among countries leads to political stability. Therefore, governments' tendency to violate human rights in order to maintain their power becomes lesser. Moreover, as social dimensions of globalization expand and communication opportunities among people in different countries increase, the possibility of human rights violations being discovered by other people increases (Dreher et al. 2012 ). Governments that know the international sanctions required by these violations have to be more cautious against human rights violations. Social globalization also provides cultural integration among the world’s people, and it changes lifestyles and consumption patterns worldwide. The consequences of this change can have positive and negative effects. First, increased urban population and sedentary lifestyles may enhance prepared food consumption and reduce daily movements which result in rising obesity and diabetes (Hu 2011 ). Second, although rapidly increasing consumption options and diversity are known as welfare indicators, they also can cause stress which is known as an important determinant of many diseases both psychological and physical (Cutler et al. 2006 ). Third, due to knowledge spillovers and communication technology, people can learn about healthy nutrition and protection from communicable diseases. Thus, unhealthy but traditional consumption patterns and lifestyles may change. These days we experience the coronavirus epidemic and we see once again the importance of globalization. Countries are aware of infectious diseases in different parts of the world in a very short time and can take measures to stop the spread of the virus. The changes created by social and political globalization play a major role in this emergence. Social globalization enables people in very remote areas of the world to communicate with each other, while political globalization forces governments to be transparent about infectious diseases.

With economic globalization, increased economic activity may lead to urbanization. One may think about unhealthy conditions of an urban area such as environmental degradation, air and water pollution, higher crime rates, and stress which reduce life expectancy. However, according to Kabir ( 2008 ), people living in an urban area can benefit from improved medical care, easy access to pharmacy, and to the hospitals that use higher technology. They can also get a better education and can enjoy better socioeconomic conditions.

Democracy can be considered as another determinant of life expectancy. In order to solve the health problems of the poor, people should draw the attention of the government. Sen ( 1999 ) claimed that the instrumental role of democracy in solving problems is enabling people to express and support their claims. Thus, the attention of politicians can be attracted to the problems of the poor. Politicians who have never tasted poverty do not have the urge to take action against the problems of the poor at the right time. Another linkage can be established through accountability (Besley and Kudamatsu 2006 ). In democracies, governments have an obligation to account to citizens for what purposes the resources were used. Thus, resources can be allocated to solve important public issues such as quality of life, communicable diseases, and mortality.

Compared to theoretical discussions, previous literature provides a lack of empirical evidence. Barlow and Vissandjee ( 1999 ) examined the determinants of life expectancy with cross-sectional data available in 1990 for 77 developed and developing countries. According to regression results, per capita income, literacy rate, and lower fertility are important determinants of life expectancy while living in a tropical area decreasing it. Another finding in this study shows that health expenditures in those countries failed to increase life expectancy. Following this study, Or ( 2000 ) analyzed the determinants of health outcomes in 21 industrialized OECD countries covering the period 1970–1992. This study presents gender-specific estimates separately for men and women. Fixed effects estimation results reveal a significant negative relationship between public health expenditure and women's premature death. The relationship also occurs for men, while GDP per capita dropped from the regression model due to high collinearity. Furthermore, GDP per capita and the proportion of white-collar workers reduce premature death for both men and women, while alcohol consumption increases it.

Franco et al. ( 2004 ) analyzed the impact of democracy on health utilizing political rights data of 170 countries. Empirical results show that people living in democracies enjoy better health conditions such as longer life expectancy, better maternal health, and lower child mortality. Following this, Besley and Kudamatsu ( 2006 ) investigated the nexus between democracy and health outcomes utilizing panel data from the 1960s to the 2000s. In their study, they used life expectancy at birth and child mortality variables for 146 countries as indicators of health outcomes. According to results, democracy has a positive and significant effect on life expectancy at birth and it also reduces child mortality. Safaei ( 2006 ) also investigated the impact of democracy on life expectancy and adult and child mortality rates with the data of 32 autocratic, 13 incoherent, and 72 democratic countries. According to the OLS estimation results, improving democratic institutions increases life expectancy and reduces child and adult mortality rates. Another finding of the study is that socioeconomic factors such as income, education, and access to health care services are important determinants of health status.

Owen and Wu ( 2007 ) found a positive relationship between trade openness and health outcomes using a panel of 219 countries. Health outcome measures of this study are infant mortality and life expectancy. Trade openness is one of the most important dimensions of globalization.

Kabir ( 2008 ) analyzed the determinants of life expectancy in 91 developing countries. Empirical results obtained are the opposite of the expected. According to results, per capita income, literacy rate, per capita health expenditure, and urbanization have no significant impact on life expectancy. On the other hand, the number of physicians has a positive and significant impact on life expectancy, while malnutrition reduces it. As a dummy variable, living in Sub-Saharan Africa is another factor that reduces life expectancy due to communicable diseases like HIV, malaria, etc.

Bergh and Nilsson ( 2010 ) used a panel of 92 countries in the period 1970–2005 to investigate the relationship between globalization and life expectancy. They used social, political, and economic globalization data separately, and the results show a significant positive effect of economic globalization on life expectancy at birth. But no significant relationship was found between social globalization, political globalization, and life expectancy. They also used average years of education, urban population, the number of physicians, and nutrition as control variables and the effect of economic globalization was still positive and significant.

Welander et al. ( 2015 ) examined the effects of globalization and democracy on child health in their panel data analysis for 70 developing countries covering the period 1970–2009. According to the results, globalization significantly reduces child mortality. In addition, democracy improves child health and it also increases the beneficial effects of globalization on child health. Following this study, Tausch ( 2015 ) analyzed the role of globalization in life expectancy in 99 countries. The results of OLS estimates show that globalization leads to inequality, and therefore, it reduces health performance in terms of life expectancy and infant mortality. These results are contradictory to positive views on the role of globalization in public health. However, in 19 of 99 countries, globalization increases public health performance. Ali and Audi ( 2016 ) also analyzed the role of globalization in life expectancy in Pakistan. According to ARDL estimation results, life expectancy is positively associated with higher levels of globalization. Another study on the Pakistan case proposed by Alam et al. ( 2016 ) concluded that foreign direct investment and trade openness which are important indicators of economic globalization affects life expectancy positively.

Patterson and Veenstra ( 2016 ) concluded that electoral democracies provide better health conditions compared to other countries. Their analysis includes annual data from 168 countries covering the period 1960–2010. Empirical results show democracy has a significant positive impact on life expectancy and it reduces infant mortality.

In their recent study, Shahbaz et al. ( 2019 ) investigated the impact of globalization, financial development, and economic growth on life expectancy. The authors used nonlinear time series analysis methods utilizing the data of 16 Sub-Saharan African countries over the period 1970–2012. Their results show that globalization, financial development, and economic growth affect life expectancy positively in 14 of 16 Sub-Saharan African countries.

The previous literature provides a lack of evidence in the context of globalization, democracy, and life expectancy relationship. There are also methodological weaknesses in previous empirical studies. First, it can be observed that previous studies are mostly based on traditional estimation methods. Second, the panel data analyses are based on the first-generation estimators that assume cross-sectional independence. This assumption is hard to satisfy due to integration among countries. In addition, ignoring the cross-sectional dependence results in inconsistent estimations. Particularly in empirical work in the context of globalization which refers to economic, political, and cultural integration among countries, considering the cross-sectional dependence becomes more important. Therefore, in order to make a methodological contribution to previous literature, we used second-generation panel time series methods considering cross-sectional dependence.

3 Methodology and data

According to the United Nations, achieving sustainable development goals requires global cooperation and partnership. Therefore, “partnerships for goals” has taken its place as the 17th sustainable development target. However, it was emphasized that some sub-goals should be realized in order to reach this goal. These include improving international resource mobility, helping developing countries to attain debt sustainability, promoting the transfer of information and technology between developed and developing countries, an open and rule-based free trade system, encouraging public–private and civil society partnerships, increasing transparency and accountability, and high quality and reliable data (United Nations 2019 ). In our empirical work, economic, social, and political globalization and democracy variables were used as proxies of the subcomponents of SDG17. In addition, the life expectancy at birth variable that mostly used in related literature as a proxy of health status and well-being, it is used in our study as a proxy of SDG3. In this study, we investigated the role of globalization and democracy in life expectancy in 16 low-income countries. Footnote 1 Following Barlow and Vissandjee ( 1999 ) and ( 2000 ), GDP per capita is used as a control variable in order to mitigate omitted variable bias. Our dataset is covering the period 1970–2017. Following the related literature, we present our model as follows:

where lex is life expectancy at birth which refers to the average number of years a newborn is expected to live. Life expectancy at birth data is provided by World Bank ( 2019 ) World Development Indicators. Life expectancy at birth indicates the number of years a newborn infant would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its life. The dataset is consisting of a weighted average of collected data from several co-founders. In Eq.  1 , X refers to the KOF Globalization Index developed by Dreher ( 2006 ). This index has been used in previous literature as a proxy of SDG17 (Saint Akadiri et al. 2020 ). The current version of the data published by the Swiss Economic Institute is revised by Gygli et al. ( 2019 ). The globalization variables are between 0–100, and 100 refers to the highest globalization level. In our analysis, we used subcomponents of globalization index such as economic (EC), social (SOS), and political (POL) globalization in addition to overall globalization (GLB). Due to high collinearity, the effects of different types of globalization are analyzed separately. Models 1, 2, 3, and 4 represent the estimations with overall, economic, social, and political globalization indexes, respectively. The democracy variable ( dem ) is provided from the Polity IV project dataset (Marshall and Jaggers 2002 ). While the increases in this indicator represent a more democratic regime, the decreases represent a more autocratic regime. Finally, gdp is real GDP per capita (constant 2010 $) and it is provided from World Bank World Development Indicators. All variables transformed to the logarithmic form except democracy due to negative values. In the estimation of the model, the panel data analysis methods are used.

3.1 Cross-sectional dependence

Traditional panel data methods are based on the assumption that no cross-sectional dependence exists among cross section units. However, this assumption is hard to satisfy due to rising economic, social, and political integration between countries. The estimations do not take this process into account may cause inconsistent results. Such results may also lead to incorrect inferences (Chudik and Pesaran, 2013 ). The existence of cross-sectional dependence in variables and the error term is obtained from the model analyzed with Pesaran ( 2004 ) \({\text{CD}}_{{{\text{LM}}}}\) and Pesaran et al. ( 2008 ) bias-adjusted LM test. These techniques are robust whether N > T and T > N. Therefore, \({CD}_{LM}\) and bias-adjusted LM ( \({LM}_{adj})\) tests are found to be appropriate and their test statistics can be calculated as follows:

Equation  2 shows the calculation of Pesaran ( 2004 ) \({CD}_{LM},\) and Eq.  3 is Pesaran et al. ( 2008 ) bias-adjusted LM test statistic. \({V}_{Tij}\) , \({\mu }_{Tij}\) , and \({\widehat{\rho }}_{ij},\) respectively, represent variance, mean, and the correlation between cross section units. The null and alternative hypothesis for both test statistics; \({H}_{0}\) : No cross-sectional dependence exist; \({H}_{1}\) : Cross-sectional dependence exist.

In the selection of stationarity tests and long-run estimators, the existence of cross-sectional dependence will be decisive. If the null of no cross-sectional dependence is rejected, second-generation methods that assume cross-sectional dependence should be used in order to provide unbiased and consistent estimation results.

3.2 Slope homogeneity

Pesaran and Yamagata ( 2008 ) proposed a method to examine slope heterogeneity in panel data analysis based on the Swamy ( 1970 )’s random coefficient model.

The calculation of the test statistic of Swamy’s model is given in Eq.  4 .

In Eq.  4 , \({\stackrel{\sim }{\beta }}_{i}\) and \({\overbrace{\beta }}_{WFE},\) respectively, indicate the parameters obtained from pooled OLS and weighted fixed effects estimation, while \({M}_{T}\) is the identity matrix. The test statistic obtained from Swamy’s model is improved by Pesaran et al. ( 2008 ) as follows:

where \(\stackrel{\sim }{S}\) is the Swamy test statistic and k is a number of explanatory variables. \({\stackrel{\sim }{\Delta }}_{adj}\) is a bias-adjusted version of \(\stackrel{\sim }{\Delta }\) . \({\stackrel{\sim }{Z}}_{it}\) =k and \(Var\left({\stackrel{\sim }{Z}}_{it}\right)=2k(T-k-1)/T+1\) . The null and alternative hypothesis for both test statistics is given below.

The rejection of the null hypothesis shows that slope coefficients of Eq. 1 are heterogeneous. In the selection of panel data estimation methods, the results of those preliminary analysis are taken into account.

3.3 Unit root test

Pesaran ( 2006 ) suggested a factor modeling approach to solve the cross-sectional dependency problem. This approach is simply based on adding cross-sectional averages to the models as proxies of unobserved common factors. The Cross-sectionally Augmented Dickey–Fuller (CADF) unit root test developed by Pesaran ( 2007 ) is based on that factor modelling approach. This method is an augmented form of Augmented Dickey–Fuller (ADF) regression with lagged cross-sectional average and its first difference to deal with cross-sectional dependence (Baltagi, 2008 : 249). This method considers the cross-sectional dependence and can be used, while N > T and T > N. The CADF regression is:

\({\stackrel{-}{y}}_{t}\) is the average of all N observations. To prevent serial correlation, the regression must be augmented with lagged first differences of both \({y}_{it}\) and \({\stackrel{-}{y}}_{t}\) as follows:

After the calculation of CADF statistics for each cross section ( \({CADF}_{i}\) ), Pesaran ( 2007 ) calculates the CIPS statistic as average of CADF statistics.

If the calculated CIPS statistic exceeds the critical value, it means that the unit root hypothesis is rejected. After the preliminary analysis of unit root, the existence of a long-run relationship between the variables in our model will be investigated via Westerlund and Edgerton ( 2007 ) cointegration test. After this, the long-run coefficients will be estimated using the continuous-updated fully modified (CUP-FM) estimator developed by Bai and Kao ( 2006 ) and Bias-adjusted OLS estimator developed by Westerlund ( 2007 ).

3.4 Cointegration test and long-run relationship

In this study, the cointegration relationship was investigated by Westerlund and Edgerton ( 2007 ) LM bootstrap test. This method considers cross-sectional dependence and provides robust results in small samples (Westerlund and Edgerton, 2007 ). This method is based on the following equation

where \({n}_{ij}\) is an independent and identically distributed process with zero mean and var( \({n}_{ij})\) = \({{\sigma }_{i}}^{2}\) . Westerlund and Edgerton ( 2007 ) suggested following LM test in order to test the null of cointegration

where \({S}_{it}\) is partial sum process of the fully modified estimate of \({z}_{it}\) and \({\widehat{w}}_{i}^{-2}\) is the estimated long-run variance of \({u}_{it}\) conditional on \(\Delta {x}_{it}^{^{\prime}}\) . If the calculated LM statistic is below the critical value, the null of cointegration will be accepted. The critical values will be provided using the bootstrap method in order to prevent cross-sectional dependence.

In the estimation of long-run coefficients, the CUP-FM estimator was used and this method is based on the following regression

where \({\widehat{\lambda }}_{i}^{^{\prime}}\) refers to the estimated factor loadings and \(\hat{y}_{{i,t}}^{ + } = y_{{i,t}} - \left( {\lambda _{i} ^{\prime } \hat{\Omega }_{{F \in i}} + \hat{\Omega }_{{\mu \in i}} } \right)\hat{\Omega }_{{ \in i}}^{{ - 1}} {{\Delta }}x_{{i,t}}\) indicates the transformation of the dependent variable for endogeneity correction. According to Bai and Kao ( 2006 ), CUP-FM estimator is robust under cross-sectional dependence. However, the assumption that the number of common factors (k) is known cannot be satisfied in practice (Westerlund, 2007 ). Therefore, Westerlund ( 2007 ) suggested a bias-adjusted estimator (BA-OLS) following the methodology of Bai and Kao ( 2006 ) except in the context of determining the number of common factors. The author suggested the estimation of k using an information criterion as

where \(IC\left(k\right)\) is the information criterion. In this study, we determined the number of common factors via the Bayesian information criterion (BIC) as follows.

In the equation above, V(k) is the estimated variance of \({\widehat{u}}_{it}\) based on k factors. By minimizing the BIC, we obtain \(\widehat{k}\) . Westerlund ( 2007 ) showed that the estimation of k provides better results compared to CUP-FM estimator assuming k is known. Both of the estimators require cointegrated variables in the long run.

3.5 Empirical results and discussion

The results of Pesaran ( 2004 ) \({CD}_{LM}\) and Pesaran et al. ( 2008 ) bias-adjusted LM tests are given in Table 1 .

The results given in Table 1 show that the null of no cross-sectional dependence is rejected at 1% according to both \({CD}_{LM}\) and \({LM}_{adj}\) test statistics in all variables. In addition, in the error terms obtained from models 1, 2, 3, and 4 the null of no cross-sectional dependence is rejected at 1%. These results show that the methods to be used in the analysis of the stationarity of the variables and the determination of the long-run relationship should consider the cross-sectional dependence.

The results of homogeneity tests developed by Pesaran and Yamagata ( 2008 ) are given in Table 2 . According to the results, the null of homogeneity is accepted at %1 in all models. Therefore, estimators assume parameter homogeneity are used in our analysis.

After the preliminary analysis of cross-sectional dependence, the CADF unit root test developed by Pesaran ( 2007 ) is found to be appropriate for our model because of its robustness under cross-sectional dependence. The results of the CADF unit root test are given in Table 3 .

In the analysis of unit root, constant and trend terms are both considered at level, while only constant term is added at first difference. Maximum lag level is determined as 3, while optimum lag level is determined by F joint test from general to particular. According to results, the null of unit root is accepted for all variables, while calculated CIPS statistics of first-differenced variables exceed 1% critical value. All variables have a unit root, and their first differences are stationary ( \({I}_{1})\) . Therefore, in order to determine the existence of a long-run relationship, we applied Westerlund and Edgerton ( 2007 ) panel cointegration test. This method considers cross-sectional dependence and can be used, while the series are integrated in the same order. The results are shown in Table 4 .

Constant and trend are both considered in the analysis of cointegration, and critical values are obtained from 5000 bootstrap replications. The results show that the null of cointegration is accepted for all models. There is a long-run relationship between life expectancy, globalization, democracy, and GDP per capita. After determining the cointegration relationship, we estimated long-run coefficients utilizing CUP-FM and BA-OLS estimators proposed by Bai and Kao ( 2006 ) and Westerlund ( 2007 ), respectively.

The long-run estimation results given in Table 5 show that overall, economic, social, and political globalization are positively associated with life expectancy at 1% significance level according to both CUP-FM and BA-OLS estimators. The results show that a 1% increase in globalization index increases life expectancy %0.014 and %0.015 according to CUP-FM and BA-OLS estimators, respectively. The impact of economic, social and political globalization indexes is 0.013%, 0.011%, and 0.015% according to CUP-FM estimation results while 0.014%, 0.012%, and 0.017% according to both estimators, respectively.

Our results confirms the findings of Owen and Wu ( 2007 ), Ali and Audi ( 2016 ), and Shahbaz et al. ( 2019 ) who found a positive relationship between globalization and life expectancy. Our empirical work also supports the evidence of Bergh and Nilsson ( 2010 ) in terms of positive effect of economic globalization on life expectancy. While the authors found no significant impact of social and political globalization on life expectancy, our results show that life expectancy is positively associated with both social and political globalization. The results we found contradict Tausch ( 2015 )’s evidences in 80 of 99 countries. However, according to his results, in 19 of 99 countries, globalization affects health positively. When these countries are examined, it is seen that 14 of them are countries in the low and lower-middle income groups. In this sense, it can be said that the evidence we found for low-income countries is in line with the author's evidence. As Dreher ( 2006 ) mentioned, despite its possible inequality effects, the net effect of globalization on development is mostly positive and our empirical work supports that idea. The effect of democracy on life expectancy is also positive and significant at 1% which confirms the findings of Franco et al. ( 2004 ) and Besley and Kudamatsu ( 2006 ). In electoral democracies, people living in poverty and suffering from health problems can easily attract the attention of policymakers compared to autocracies. This leads to the reallocation of resources to solve the primary problems of the society. In the context of sustainable development goals, our results show that there is no conflict between SDG3 (good health and well-being) and SDG17 (partnerships for the goals). The improvement of the health conditions of the poor countries depends on global partnership and economic, social, and political integration among countries. In addition, democracy is an important tool in achieving the goal of a healthy society, as it fosters accountability, transparency, and partnership between governments and the societies they rule. As stated in the introduction section, low-income countries show low performance in terms of health-related sustainable development goals, and their connections with global markets are weak compared to other countries. At the same time, democratic institutions are not developed. Our work supports the idea that in order to achieve SDG3, global partnership and democracy are required.

The GDP per capita that used as a control variable has a positive impact on life expectancy at a 1% level. These results support the evidence of Barlow and Vissandjee ( 1999 ), Or ( 2000 ), and Shahbaz et al. ( 2019 ). Individuals living in countries with high per capita income are expected to have higher welfare and have a longer life expectancy (Judge, 1995 ). In low-income countries where people still suffer from having difficulty in meeting basic human needs, increasing per capita income may lead to better nutritional status, easier access to advanced treatment methods and technology.

4 Conclusion

In this study, the effects of globalization and democracy on life expectancy are empirically investigated in low-income countries. While globalization and democracy indexes are used as proxy indicators of “Partnerships for the Goals (SDG 17),” life expectancy used a proxy of “Good Health and Well-Being (SDG 3).” With this, it is aimed to examine the existence of contradiction between those SDGs. In the estimation of the long-run relationship between the variables, second-generation panel data analysis methods that consider cross-sectional dependency are used. According to the results, the globalization index and its subcomponents such as economic, social, and political globalization are important instruments to achieve a healthier society. In addition, higher levels of democracy lead to higher levels of life expectancy. Finally, GDP per capita growth improves health status of countries.

The findings obtained from our study show that economic, social, and political integration of countries and democracy accelerate the process of achieving a healthier society. Therefore, it is seen that SDG3 and SDG17 targets are compatible with each other. In order to achieve SDG3, economic, social, and political integration between countries should be encouraged and democratic institutions should be improved. Policy makers should remove the barriers on globalization, and they should promote participation on international organizations and public–private and civil society partnerships.

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Guzel, A.E., Arslan, U. & Acaravci, A. The impact of economic, social, and political globalization and democracy on life expectancy in low-income countries: are sustainable development goals contradictory?. Environ Dev Sustain 23 , 13508–13525 (2021). https://doi.org/10.1007/s10668-021-01225-2

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Introduction, the context and larger social processes, the second image reversed and dis-embedded liberalism, national responses to globalisation, conclusion: theoretical, methodological and practical implications, disclosure statement, notes on contributor.

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Globalisation and public policy: bridging the disciplinary and epistemological boundaries

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Iftikhar Lodhi, Globalisation and public policy: bridging the disciplinary and epistemological boundaries, Policy and Society , Volume 40, Issue 4, December 2021, Pages 522–544, https://doi.org/10.1080/14494035.2021.1987137

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Globalisation, the ever increasing economic and socio-political international interactions, poses challenges to public policy theory and practice. This paper aims to (a) draw an outline of a discussion and research agenda for theorizing the policy process under globalisation, by (b) identifying some theoretical consensus across disciplines and epistemological paradigms. The literature shows a consensus on ‘constrained’ state thesis and that globalisation affects all states through structural pressures as well as the neoliberal discourse. However, policy outcomes vary across states depending on their position in the international power structure and domestic adjustment costs. The paper concludes that policy studies shall focus on the changing functions and organisational forms of the state and explicitly incorporate domestic–international interactions into the theories of the policy process.

Globalisation, the ever increasing economic and socio-political international interactions, poses challenges to public policy theory and practice. This paper systematically reviews the select literature on globalisation and its effects on the policy process and outcomes. The aim is to identify some theoretical consensus across disciplines and paradigms and to draw an outline of a research agenda for theorizing the policy process under globalisation. Such an interdisciplinary and inter-paradigm discussion within Policy Studies (PS) is called for and timely (Farrell & Newman, 2014 ; John, 2018 ).

Globalisation has brought to the fore fundamental contradictions of the modern state and capitalism, what Rodrik ( 2012 ) termed ‘globalisation paradox’. The trilemma is generated because only two of the following three can be reasonably achieved; (a) economic integration of the state into the world economy, (b) consequent challenges to policy sovereignty of the state, and (c) democratic socio-political demands of the citizens of states. From a political economy perspective, globalisation has grown at the cost of state sovereignty and democratic demands of its citizens for the most part of the post-Cold-War era. From a public policy perspective, policy making is continuously being shifted downwards, outwards, and upwards under devolution, privatisation/deregulation, and internationalisation, respectively (Bevir & Hall, 2011 ; Jessop, 1993 ; Peters,, 1994 ). In other words, the state is transforming, from a political and territorial vanguard of a community of people to an organising and steering manager of an internationalised economy under the competitive logic of global capitalist production.

In that, we observe a simultaneous working of seemingly contradictory trends such as the fragmentation of some (industrial, labour, social policy, decentralisation, privatisation, and devaluation of public administration) and the integration of other socio-political and economic functions (security, growth and competitiveness, fiscal austerity, and international regulatory standards) of the state (Cerny & Prichard, 2017 ; Jessop, 2013 ). Take, for example, the widespread notion of the retreat or hollowing out of the state, on the one hand, and protests against the increasing state encroachment upon every sphere of life, on the other. The rational-legal legitimacy of the state was boosted, if not replaced, by its capacity to ensure positive freedoms and social welfare in the post-war period. Under this social contract, the modern state has expanded and deepened its grip on society and individuals and yet at the same time it seems to be increasingly failing to deliver on its foundational political and economic promises of liberty, justice, and welfare (Przeworski, 2010 ).

Even if we exclude the developing and liberal developed states where welfare regimes were not very strong to begin with, the traditional welfare states are moving more towards innovation, flexibility, and competition compared with their erstwhile commitment to social solidarity (Howlett & Ramesh, 2006 ; Steinmo, 2002 ; Streeck, 2012 ; Thelen, 2012 ). Consequently, real wages have stagnated, inequality has been growing, and labour-supporting institutions have been under stress while capital has gained vast government support over the past three decades. A significant proportion of the population losses in the global competition and turns to nationalist, populist, and protectionist movements (Milner, 2019 ). The backlash against globalisation that we are witnessing across Europe and the United States, is an attempt to bring the state back in as a vanguard of a political community instead of a mere manager of internationalised economy.

In the above context, the task for policy students and practitioners, still adhering to Lasswell’s ( 1971 ) ideals of ‘policy orientation’, is to fully grasp the extent and expanse of these larger social processes in which their practice and inquiry is embedded. Since we conceive ‘policy science’ as a problem-solving activity and ‘policy movement’ as a vocation to speak truth to power (Wildavsky, 1979 ), it shall not matter at what level of the government or through what kind of policy instruments problems are addressed. However, what matters is that how problems (and solutions) are structured and whose truths prevail on what grounds. Both these inquiries warrant an interdisciplinary approach, one that fully appreciates positivist and interpretivist contributions. However, the domestic and international interactions and their impact on the policy process remains weakly, if at all, incorporated in the theories of the policy process. Policy scholars acknowledge that the literature is ‘still at an early stage’ of theorizing about the national and international interactions (Ramesh, Howllet, & Perl, 2009 , p. 77; Howlett, McConnell, & Perl, 2017 ). The literature ‘is struggling to produce systematic and cumulative knowledge’ with regard to globalisation and its impacts on the policy process (Dunlop & Radaelli, 2013 , p. 600; John, 2018 ).

Historically, International Relations (IR), International Political Economy (IPE), and Comparative Political Economy (CPE) have been more attentive to growing national and international interactions than Policy Studies (PS). While some fundamental debates continue within and between these disciplines, the scholars largely agree that globalisation is changing the nature of the policy process and putting pressures on domestic institutions. Despite such overlaps between their areas of inquiry, there is very little systematic dialogue between PS and IR/IPE/CPE while scholars from both ends have acknowledged a need to learn from each other (Andreatta & Koenig-Archibugi, 2010 ; Caporaso, 1997 ; John, 2018 ; Walt, 2011 ). Furthermore, epistemological divides have deepened over the years. Interestingly, there is a greater cross-referencing and learning within the same epistemological camps across disciplines rather than the other way round. Nevertheless, there are also calls from scholars on both sides to bridge the epistemological divide and develop a common language (Checkel, 1997 ; King, Keohane, & Verba, 1994 ; Shapiro & Wendt, 2005 ; Walker, 2010 ).

The paper aims to bridge these disciplinary and paradigmatic divides by identifying some consensus and drawing contours of the future discussion and research in policy studies with regard to globalisation and its impacts on the policy process. The next section describes the context of the debate and the larger social processes at play. The third section discusses the various ways in which globalisation is affecting the state and policy process. The fourth section discusses the varied ways, and reasons, in which various states have responded to the similar challenges posed by globalisation. The concluding section identifies theoretical, methodological, and practical implications of the contemporary developments and sets the direction for further discussion and research.

There is a plethora of modern literature spanning over half a century that deals with economic interdependence and its consequences. It would have been a Herculean task to review this literature with any level of detail. Therefore, the approach adopted here is more modest, that is to review few of the seminal works in IR, IPE, CPE, and PS (see a list in supplementary materials). The review was followed by a search of key terms in the Social Science Citation Index (SSCI). I limited the search to ‘title’ only as including abstract/keywords brings about thousands of results. The search terms included (globalisation OR globalization) AND (10 research terms given in the Table 1 ).

Summary of the literature assembled

I divide the literature around two substantial theoretical questions; one, what are the sources and consequences of globalisation for states, second, if states don’t respond to the pressures of globalisation in similar ways then what are the sources of these variations. The former is largely a subject matter of IR/IPE and the latter of CPE. I further divide the literature around epistemological dispositions, that is, positivism (in the Popperean sense) and constructivism. The main difference between the two in this context is an emphasis on exogenous and structural variables by the former and on endogenous and process variables by the latter. Table 1 also subjectively classifies the literature into disciplinary and paradigmatic categories and their conclusion on the nature of the state and how the policy process is being affected, structural pressures or discourse.

The bourgeoisie, by the rapid improvement of all instruments of production, by the immensely facilitated means of communication, draws all, even the most barbarian, nations into civilisation … It compels all nations, on pain of extinction, to adopt the bourgeois mode of production; it compels them to introduce what it calls civilisation into their midst, i.e., to become bourgeois themselves. In one word, it creates a world after its own image.

While Marx appreciated the highly productive and positive role played by capitalism in the development, he also highlighted the dark side of its mechanisms, that is, ever increasing commodification of labour and social relations, stratification, exploitation and inequality, and booms and busts. This line of thinking continues to influence scholars today. A substantial literature offers theoretical fine tuning and empirical evidence to support this argument (Cox, 1987 ; Esping-Andersen, 1996 ; Strange, 1996 ). Marx further speculated that organised labour would eventually bring in a revolution, taking control of the commanding heights of the economy and distributing its fruits equitably. The state would wither away under workers solidarity and a deliberative global governance structure would take birth; and that would be the end of history as we know it. The task of the revolutionary movement (akin to the policy movement) was to prepare a theoretically informed and analytically equipped elite vanguard party that would lead and serve the working classes. One finds quite close parallels in the above and the policy movement narrative of Dewey ( 1927 ) and Lasswell ( 1971 ) (for a discussion on how Dewey’s pragmatism inspired Lasswell’s policy orientation see (Torgerson, 2017 )).

In his seminal work The Public and Its Problem , Dewey ( 1927 [1984]) seems to be heavily influenced by the Socialist movement and its tactics. Like Marx and Lenin, he also believes that the task of ‘enlightening’ the public falls on the shoulders of experts (with a commitment to pragmatism, science, and democracy). He urges intellectuals to learn propaganda techniques to educate the public against the propaganda of conservative and socialist movements. However, unlike the Bolshevik democratic centralism, Dewey favours a direct dialogue between the public and the intellectuals. Nevertheless, both Dewey’s pragmatist and Lenin’s socialist movement allude to lesser intellect and false consciousness of masses, and the critical role of intellectuals in educating and leading the public although towards different ends.

The second view is offered by globalism and its proponents (Carpio, 2019 ; Friedman, 2000 ) that is a mirror image of Marxist thought. Globalists also contend that the march of history is inevitable and is largely fuelled by exogenous developments in technologies. The efforts to resist globalisation (or reverting back to nationalism and protectionism) are futile at best and counterproductive at worst. According to Fukuyama ( 1992 , 2004 ), there is no other option for the transition and developing countries but to embrace liberal capitalism and democracy under the Western leadership; the end of the Cold-War is ‘the end of history’, his retort to Marx. Others in the Western world are not so sure about the second and third world regimes, mostly non-democratic with state or crony capitalism. As a result, both hyper neoliberals and neoconservatives in the Western world argue for forceful regime change, enforcement of democratic norms and opening up of the hitherto closed economies (Kagan, 2008 ; Mead, 2005 ). In fact, a cursory look at the statements by the Clinton and Bush administrations show a significant influence of this thinking. According to this school, since the international system is anarchic, a liberal democratic powerful state, like the USA, can play the role of a benign hegemon monitoring and enforcing global regimes, as it has been doing in the post-War period (Ikenberry, 2011 ; Kindleberger, 1981 ; Ruggie, 1983 ). Again what we find here is the concept of a global vanguard elite that would lead the world towards liberal democratic capitalist society, by persuasion when they can and by force when they must (to use Clinton’s words).

Huntington ( 1993 , p. 51) puts it succinctly, ‘the West won the world not by the superiority of its ideas or values or religion … but rather by its superiority in applying organised violence. Westerners often forget this fact’. Owen ( 2010 ), in his seminal work of over 200 historical cases, shows that global powerful actors have always interfered to change domestic regimes and institutions in other states, whenever these regimes were not in line with their perceived material and ideological interests. Nevertheless, it’s not only the application of force by powerful global actors but also coercion, inducement, persuasion, and more importantly structural power that influences and often shapes domestic institutions and politics of other states (Drezner, 2007 ; Tilly, 1990 ), what (Gourevitch, 1978 ) calls the second image reversed analysis.

The emphasis on propaganda (or ‘discourse’ to use a modern and neutral term) to persuade masses is present in both Marxist and Liberal ideologies. Similarly, one finds tendencies towards the use of coercion, and even violence, in both movements. As I discuss in the following passages, this point is relevant and critical since the modern discourse on governance uses a language that reflects free market mores of competition and individualism more than the values of social solidarity. For example, the neoliberal discourse is epitomised in the adages, ‘greed is good’ or ‘society does not exist only individuals do’, used by the highest political authorities across the world.

Finally, there is a moderate and mainstream view of globalisation that appreciates its benefits and drawbacks. It is the mainstream view of globalisation that is going through crisis and begging new thinking and alternative pathways (Evans, 2008 ; Rodrik, 2012 ; Stiglitz, 2006 ). The contending debates continue within this camp about international regimes, a multipolar world, global governance, and democratic participation and accountability. The works of Keynes on global policy laid the foundations of the post-War international political economic order, the Bretton Woods agreement, what Ruggie ( 1982 ) called embedded liberalism. The main tenants of this architecture included encouraging free flow of goods and capital, albeit with clauses allowing governments to regulate as they deemed appropriate. Countries were free to regulate their domestic industry and labour markets. A fixed exchange rate regime with dollar as reserve currency pegged to gold ensured stability and certainty in the system. In this international order till the 1970s, the International Monetary Fund (IMF) provided credits for economies facing current account deficits and the World Bank offered credit for infrastructure development.

The move away from the post-War embedded liberalism began in the 1970s with the Vietnam War, oil crisis, and a growing American balance of payments deficit due to the recovering Japanese and European economies. The USA unilaterally unpegged the dollar from gold which eventually gave way to the floating exchange rate regimes. The lack of economic growth in countries following the socialist central-planning with varied degrees, state-ownership, import-substitution, welfare regimes, along with ineffective and increasingly corrupt public administration further weakened the confidence in governments across the developing world (Beckert, 2020 ). The few small Asian economies, that registered impressive economic growth and transformation in this era, managed to do so by emphasising active government coordination of the economy, fiscal austerity, promotion of exports, and an adherence to general open market principles. The so-called Asian miracle, in fact, became poster child for the promotion of liberal markets.

Furthermore, the intellectual expansion of neoclassical economics into social sciences, including public administration and public discourse, bolstered the capitalist demand for the state to be at the service of capital and free markets. The then British Prime Minister Thatcher and American President Reagan promoted and put these ideas into practice, what came to be known as the Washington consensus or neoliberalism (Monbiot, 2016 ). The IMF and WB began to promote the neoliberal policies under their structural adjustment programs, such as, privatisation and deregulation, free flow of capital and goods, market determined exchange rates, central banks focusing on inflation instead of employment, and fiscal austerity measures mainly affecting social spending (Hall, 1993 ). After the end of the cold-war, countries across the world embraced in droves (voluntarily or under coercion). While few countries with strong export capacity benefited from these policies, majority of the countries witnessed growing inequality, unemployment, and the balance of payment crisis (Evans, 2008 ; Kuttner, 2018 ; Piketty, 2017 ; Rodrik, 2012 ; Stiglitz, 2002 ).

The socio-political consequences of these economic transformations have been more damaging (Metcalf, 2017) ). The Left political parties have embraced neoclassical ideas of economic growth and labour movements have weakened across the world because the Left ‘was unable to articulate an entirely convincing critique of economic growth based on the global market and … of neoliberalism’ (Grugel & Riggirozzi, 2018 ). Some pockets of the Left pushed back, particularly in Latin America of the 2000s, so much so that some authors claimed it a ‘strike back’ by the Left and it raised some short-lived hopes for the Left across the world (Petras, 2000 ). Nevertheless, the Left resistance is retreating everywhere including in Latin America (Panayotakis, 2020 ; Storey, 2008 ). The Right wing political parties are ascending with ever more assertive nationalism across the world (Carpio, 2019 ; Milner, 2019 ). These trends vindicate the thesis of social embeddedness of markets by Keynes ( 1963 ) and Polanyi ( 1944 ). The thesis indicates that if markets become the driving force without any regard for socio-political sensitivities, it gives rise to nationalism and fascism.

The manner in which scholars conceptualise the state impinge on their understanding of the origins of national interest and identities and how states shape or resist neoliberal globalisation. Traditionally, the state has been conceived in three ways. One, the Aristotelian or Hegelian structural concept of the state as the final stage of institutional evolution, an ontologically given entity independent of and often competing with other domestic and global societal groups and institutions (Krasner, 2009 ; Skocpol, Evans, Rueschemeyer, & Skocpol, 1985 ; Tilly, 1985 ). Second, the Lockean (and to a certain extent Marxist) concept of the state as an arena or an instrument where societal groups compete for influence on policy (Dahl, 1961 ; Przeworski, 1985 , 2003 ). A third view attributes ‘embedded autonomy’ to the state, where the state mediates conflict between various groups but its preferences and functions change according to the changing power relations within the society (Esping-Andersen, 1990 ; Evans, 1995 ; Thelen, 2012 ). We can trace back many of the intra- and inter-disciplinary theoretical debates to these ontological positions.

For neorealists, states are an ontological given and therefore the primary actors in world politics. States can be treated as rational unitary actors and domestic institutions and politics can be ignored (Waltz, 2000 ). The state preferences, survival and security, are exogenous while the anarchic structure of the international system takes on a causal explanatory power for international interactions, that is, states continuously balance power (or threat perceptions) against one another (Walt, 1988 ). The outcomes of international interactions are then a function of the distribution of power in the system. According to these scholars, globalisation is led by states and has no significant consequences for states, not for major powers at least (Mearsheimer, 1995 , 2001 ; Waltz, 2008 ).

However, even assuming that the broader scope of the theory is the great power-security competition (high politics), three objections can be raised. First, neorealism does not sufficiently address the fact that there is no one dimension of power that guarantees influence across issue areas including war (Guzzini, 2000 ). Secondly, the security apparatus requires resources, which in most cases cannot be generated in isolation, hence security policies of states may not be isolated from broader international political economic interactions. Finally, power inequalities among states are so great that a large part of international interactions is essentially hierarchical not anarchic (Gilpin, 2001 ; Krasner, 2009 ). Strange ( 1996 ) conceptualises power as structural position in the global political economy instead of mere material capabilities. It means the capacity to extend or deny access to security, technology, capital, and information. More importantly, a state in a structurally superior position shapes the paths to security, capital, technology, and knowledge that other states can adopt (Drezner, 2007 ). These states are also pioneers in emerging transnational issue areas so they supply international institutions and late-comers and less powerful states need to comply if they want to participate in the global marketplace.

Liberals, on the other hand, treat the state as an arena controlled by various groups and state policies reflect their interests and ideas (Moravcsik, 1997 ; Przeworski, 1985 ). For Keohane ( 2002 , 2012 ) states’ can be treated as rational unitary actors and their main interest is to maximise gains from international cooperation. International institutions reduce transaction costs by providing information, monitoring, and enforcement, hence there is a demand of international institutions. However, there are three main problems with this analysis. First, the supply of international institutions is costly and poses a free rider problem (Bates, 1988 ). As long as the benefits to the suppliers of institutions are significantly greater than costs, the institutions are likely to function well but would not function otherwise. Secondly, global policy is rife with distributional conflicts because states, at least major powers, also care about relative not merely absolute gains from cooperation (Grieco, 1993 ; Mearsheimer, 1995 ). Finally, the rational unitary actor in this analysis only cares about ‘the shadow of the future’ (Axelrod and Keohane 1985 ; Lake, 2010 ), because by definition rationality does not, and should not, care about the past. But the domestic institutions that require adjustments to ‘benefit’ from international exchange are often frozen in history and pose huge political costs, particularly in democratic countries. Moravcsik ( 2003 ) attempts to rescue the liberal theory by arguing that the state reflects aggregated preferences of primarily its dominant domestic constituency, which now increasingly has transnational interests and networks.

In that, the primary causal factors underlying globalisation are exogenous technological changes and inherent tendencies of the capitalist production process to put structural pressures on domestic economies and consequently socio-political institutions. Consequently, globalisation makes those participating in the process richer than those who shut their doors to it (Frieden & Rogowski, 1996 ). The exogenous decrease in costs and increase in rewards of international exchange benefits certain factors and sectors in an economy at the cost of others (Rodrik, 2012 ). Since globalisation empowers capital by giving it an ‘exit’ option (Hirschman, 1970 ), governments respond to the policy preferences of capital owning classes (Drezner, 2001 , 2003 ; Fimreite & Per, 2009 ; Przeworski & Wallerstein, 1988 ; Weishaupt, 2008 ). The capitalist class in states that have greater international structural power asserts itself in domestic policy making and abroad through the state (Brooks, 2005 ; Scholte, 2008 ; Shepsle, 2006 ; Slaughter, 2004 ). Globalisation also impact different sectors within a country differently. For example, tradeable sectors may become more powerful as compared to non-tradeable sectors hence acquiring more political voice. Consequently, we observe a semi-automatic process of marginal adjustments leading to harmonisation and convergence in various policy areas and organisational forms across the world (Drezner, 2001 ; Knill, 2005 ; Linares, Santos, & Ventosa, 2008 ; Simmons & Elkins, 2004 ).

Besides structural pressures, globalisation affects the policy process by creating international regimes, norms, and discourses. The impact of the neoliberal discourse is the most difficult part to empirically verify. Powerful capitalist states are embedded in the web if international and transnational alignments of coalitions and they develop ‘by dialogue and consent common rules and institutions … common interest in maintaining these arrangements’ (Watson, 2009 , p. 11). According to constructivists, common values are primarily internalised norms and ideas (Ruggie, 2007 ). Wendt ( 1992 ) argues that the common understanding and convergent expectations emerge from the ‘intersubjective conception of the process in which identities and interests are endogenous to interaction’. These scholars argue that international regimes do not merely influence state behaviour (while keeping interests exogenous, as in the case of neorealism), but shape and reshape interests and identities (Barnett & Finnemore, 2004 ).

Other scholars are sceptical about the notions of ‘common values and intersubjective persuasion’ and contend that there are various channels through which powerful states exercise influence (Gourevitch, 2002 ). The three main channels of influence include direct coercion, indirect exercise of structural power, and through hegemony in rule making and norms propagation (Drezner, 2007 ). Cox and Schechter ( 2002 ) extend the analysis of modern production to demonstrate that it shifts the attendant policy, organisational, and ideological paradigms in favour of global capital at the cost of people. Applying the Gramscian concept of hegemony of discourse, they demonstrate that structural power translates into hegemony over organisational and ideological forms and consequently to the diffusion of these forms and ideologies to other countries, what some call soft law or power (Nye, 2011 ).

Take few examples, the discourse on new public management or network governance exemplifies the market mores. The citizen becomes a customer and the public servant a manager or an organizer. The discourse on economic growth does not include a mother’s labour into GDP but if the same mother works and hires a nanny (assuming the net economic impact is zero and socio-psychological costs are positive) then the economy seems to be growing. The discourse on taxation and spending portrays a false choice between higher social security with higher taxes and lower social security with lower taxes. The OECD tool ‘compare your income’ ( https://www.oecd.org/statistics/compare-your-income.htm ) asks your preferences for taxation. If you happen to indicate a preference for lower taxes on lowest strata, the next question offers you to choose spending cuts from unemployment, housing, pension, healthcare, and education. It never mentions defence, government waste, subsidies to the big business, and taxes on externalities, etc. The tools’ users, so conditioned, are unlikely to realise that it’s a false choice. For a detailed discussion on how neoliberal thinking has penetrated the public and social spheres, see (Eagleton-Pierce & Knafo, 2020 ;Metcalf, 2017 ).

Similarly, the term ‘global policy’ is often used interchangeably with global governance (Rosenau & Czempiel, 1992 ). It is a global market place where ideas and norms are generated, experiences are shared, and recommendations are made for more formal action (Stone & Moloney, 2019 ). The global policy discourse changes the dynamics of the national policy process. For its critics, global governance or policy represents a neoliberal political agenda where problems and solutions originate from a narrow set of interests and ideologically motivated actors without democratic mechanisms of participation and accountability (Davis, 2012 ; Plehwe, Walpen, & Gisela, 2007 ).

The previous section identified a relative consensus in the literature on the constraining effects of globalisation through structural pressures and neoliberal discourses. There is also a relative consensus on treating the state as embedded in national society and international power structures. Nevertheless, not all states respond to these pressures in similar ways, even if they generally show a commitment to the neoliberal discourse. Since globalisation requires domestic policy adjustments, these may be reflected in changing policy objectives, preferences for policy instruments, or institutional change. Capital demands reduction in costs of production and lax regulations, Labour, on the other hand, demands more protection against downward pressure on wages, social and job securities and overall living standards. Similarly, tradeable and internationally competitive sectors benefits from greater openness while non-tradeable and/or internationally uncompetitive sectors would demand protections and subsidies. Therefore, the precise impact of globalisation on policy depends on the structure of domestic economy and institutions.

Domestic institutions may ‘block’ international price signals and changes in domestic interest group policy preferences may not immediately translate into actual policy or institutional change (Frieden, Lake, & Schultz, 2010 ; Frieden & Martin, 2003 ; Keohane & Milner, 1996 ; Singer, 2004 ). The embedded state institutions in more or less democratic societies tend to mediate between competing interests and find compromises instead of making complete swings (Pierson, 2001 , 2004 ; Poulantzas, 2014 ; Rueschemeyer & Skocpol, 1996 ). The more number of veto-players in the political system the more difficult to transform interest group policy preferences into policies (Tsebelis, 2002 ; Zohlnhöfer, 2009 ). Therefore, the precise nature of policy and institutional change depends on the nature of domestic institutions. The amenability of domestic institutions also depends on their origins as historical social contracts or politically contingent marriages of convenience. The latter being more malleable than the former.

Take, for example, the 1973 international oil crisis and varying responses to it by six developed countries. Katzenstein ( 1977 ) identifies three distinct domestic arrangements (Anglo-Saxon, Japanese, and European) responsible for different responses and explains them with reference to state–business relations and the extent of policy-networks bringing the public and private actors together. Basing his analysis on major works in comparative politics, Katzenstein links the emergence of these domestic structures to two interlinked historical developments, that is, earlier class compromises during the transformations from feudal to industrial production and the attendant state-building projects that broadly characterised the state-society social contract.

Similarly, Esping-Andersen ( 1990 ) focuses on the domestic welfare policies in developed capitalist countries and their historical origins along the same theoretical lines. The novelty of this analysis lies in its concrete theoretical criteria for classifying state–society relations along the degree of commodification of labour, stratification (or social solidarity) of society, and coordination of economic activity. The liberal regimes score higher on the first two and lower on the third while corporatist regimes score lower on the first two and higher on the third. The evolution of these differing social contracts then ascribed to historical class struggles and compromises.

However, both of these seminal works ignore the role of international structures and foreign political forces in the evolution of domestic institutions (Drezner, 2007 ; Gourevitch, 2002 ). Although Katzenstein alludes to some extent, he does not take the argument to its logical conclusion, that is, the change in energy policies of those countries shaped by the international oil crisis created attendant interest groups and institutions that continue to influence their policies today. Furthermore, some scholars have questioned theoretical and empirical bases of the claim that national institutions reflect class struggles. Instead, they argue that national institutions dealing with labour and social policies were often results of cross-class coalitions and political contingencies (Paster, 2009 ; Swenson, 2011 ; Thelen, 2014 ). The organised employers’ associations are a necessary condition for greater coordinated economic activity with regard to labour and social policy (Martin & Swank, 2004 ; Thelen & Kume, 2006 ). The state can only develop social solidarity and welfare regimes when employers’ are organised and there exists no class antagonism rather integration towards state-building (Streeck, Jerschina, & Gorniak, 1992 ).

Hall and Soskice ( 2001 ) offer a slightly modified ‘varieties of capitalism’ framework by ignoring the historical origins of domestic institutions, particularly class compromises or nation-building projects, and solely focusing on business firms and institutional forms of coordination; another sign of the rise of economic thinking in social sciences. Nevertheless, they classify developed capitalist states into same categories, liberal and coordinated economies. The coordinated economies are often found to be welfare states with strong social solidarity dimension compared to liberal economies. The main problem with the varieties of capitalism framework is its lack of theoretical, and by extension empirical, specification and dynamic analysis (Hay, 2020 ). In author’s own words, ‘we do not yet have good measures for the character of co-ordination, the concept at the heart of the analysis’ (Hall & Gingerich, 2009 ). Unlike its predecessors, the framework is unable to shed light either on the historic origins or future directions of liberal and coordinated economies in the face of globalisation. Its substantive claim is that various forms of capitalism are equally efficient in their own ways and that globalisation is unlikely to lead to convergence. The claim has not found empirical support as many coordinated economies have gone through extensive liberalisation and deregulation of their economies (Pierre, 2015 ).

Much of the debate about the impact of globalisation has revolved around the retrenchment of the welfare state. There are two main competing hypotheses in this regard (Bowles & Wagman, 1997 ; Esping-Andersen, 1996 ; Rodrik, 1998 ). First, the compensation hypothesis posits that welfare states are likely to increase social spending to compensate the losers from global competition and deregulation or in some cases may isolate their economies. In both cases, states are likely to compromise on sustained economic growth due to increasing spending and decreasing revenues. Second, the competition hypothesis posits that states are likely to decrease taxation, deregulate labour markets, and retrench social obligations in order to be internationally competitive.

The empirical evidence remains inconclusive (Garrett & Mitchell, 2001 ; Kittel & Winner, 2005 ; Thelen, 2014 ). The results of pooled large-N studies change substantially depending on the time dimension and inclusion or exclusion of certain countries. For example, almost all studies that include data after the 2007 financial crisis or developing and transition economies find support for compensation hypothesis or no relation between globalisation and welfare spending (Meinhard & Potrafke, 2012 ; Yay & Aksoy, 2018 ). The reasons are understandable. The welfare spending decreased in the 1990s and increased after the dotcom crash then increased again after the financial crisis. There is very little empirical discussion on developing countries, where by the logic of compensation thesis the social expenditure shall go up, but we do not observe increases in social spending across developing countries (Potrafke, 2019 ). Because the base line for welfare coverage has been very low and family/community have been the primary sources of social security. These societies are also less sensitive to growing inequality as long as absolute poverty is on decline, given the large numbers of poor and a small middle class. Furthermore, while studies looking at social expenditure alone find weak or no evidence of retrenchment, studies looking at the coverage across population, sectors, or industries find strong evidence of retrenchment (Streeck, 2010 ; Thelen, 2014 ). A fine tuning of dependent and independent variables further complicates things and offers such a nuanced picture that it becomes theoretically meaningless (Jeong, 2013 ; Onaran & Boesch, 2014 ). The only empirical consensus in this literature is that (a) inequality has grown across the board with growing globalisation (Auguste, 2018 ; Crouch, 2019 ; Mayhew & Wills, 2019 ), and (b) there is no support for competition hypothesis, that is a race to the bottom, but only in certain liberal and developing countries to a certain extent (Busemeyer & Garritzmann, 2019 ; Yay & Aksoy, 2018 ).

The case studies, however, show that the coverage of social benefits has declined as a result of growing stringent eligibility criteria, less generous unemployment and pension benefits, and decreased coverage of unionised collective bargaining; all of which might or might not have been caused by globalisation (Hay, 2006 ). The welfare states have increasingly introduced co-payments and cost control measures for social services (Streeck, 2012 ). Take, for example, the case of Active Labour Market programs (ALMPs), which mainly focus on training and match-making instead of employment creation and unemployment benefits are increasingly linked to the participation in these programs (Eagleton-Pierce & Knafo, 2020 ).

In short, it is not necessarily the quantitative changes in welfare expenditure that a researcher shall be concerned about but overall qualitative changes in the state–society relationship. Nevertheless, be it class compromises, state-building projects, or political contingencies as the sources of contemporary welfare state institutions, globalisation endangers them all by bringing in competition and deregulation that puts these generations old social contracts under stress (Zunz, Schoppa, & Hiwatari, 2002 ). As a result, globalisation can either bring the labour movements back by fanning the flames of class antagonism or mobilise societies around nationalism. In the contemporary world, both currents are visible, although the tide seems to be in favour of nationalism across the world (particularly in the USA, Europe, India, and China) given the weakness of the left to articulate a coherent vision as discussed in the previous section.

The above survey of the literature helps us in identifying the contours of future discussions and directions of research. My first point of contention is that there is a greater realisation among scholars that traditional divisions between political and economic and foreign and domestic policy are a hurdle in our comprehensive understanding of the modern political economy ( Figure 1 ). There are efforts to develop synthesis across IR/IPE and CPE and calls for PS scholars to incorporate those insights in their work (Culpepper, 2017 ; Keohane, 2009 ; Menz, 2017 ). Are taxation, trade, labour, energy, climate, monetary, fiscal, health, and education policies are economic or political issues? Do they come under foreign or national policy umbrella? There are no such boundaries in the practice of public policy then why shall there be disciplinary boundaries. Policy studies (PS) being inherently multidisciplinary shall understand this more than any other discipline.

The important issues encompass all four disciplines

Secondly, neither the state is retreating nor it continues to be autonomous but it is increasingly constrained as a consequence of globalisation. However, since states are embedded in global power structures and domestic societies, the effects of globalisation vary depending upon their position in the global power structures and the character of domestic economy and political institutions ( Figure 2 ). The level of sensitivity (and incentives to adopt or adjust) increases with an increase in the international to domestic-transactions ratio. The domestic adjustment costs are higher if the welfare oriented socio-political institutions are historically strong and well established (Class compromise thesis). The adjustment costs are lower if the socio-political institutions are liberal/weak (Contingent governing coalition’s thesis) and/or a large portion of the workforce is shielded from global competitive pressures.

Conceptual schema of the strategic environment of a state

Theoretically and methodologically, to what extent a state is adopting or adjusting can be specified with reference to their commitments to society or markets. Explicit attempts to balance between three conflicting goals of economic efficiency, social justice, and individual liberty (Keynes, 1963 ) are signs of adjustments. An explicit neglect of social justice and positive liberties are signs of adopting to the logic of markets. In that Esping-Anderson’s framework of level of commodification of labour and stratification of society remains the cornerstone of such analysis. This analytic framework can be complemented, rather than replaced, with the varieties of capitalism framework, that is, coordination of economic activity by markets or the state. The spending on social expenditure and inequality indicators may offer a first cut for analysis in this regard. But a more sophisticated analysis shall identify qualitative or quantitative measures that can ascertain as to how much an individual is at the mercy of competitive markets, broken family systems, and community relations. The state may step in directly or enact policies that promote family and community care networks.

Finally, the large-scale reforms, which have occurred since the end of the Cold War across the world, are extensive and expansive in their reach. A liberal may see these developments as improvements in overall welfare and efficiency, even if inequality may increase (Cazurrra, Alvaro, & Pedersen, 2017 ). A Marxist, on the other hand, may see these adjustments as a retrenchment of the welfare gains won during the historical class struggles (Pontusson & Weisstanner, 2018 ). Yet other scholars may see these transitions as mere changes in policy instruments without substantial changes in policy goals (Howlett & Ramesh, 2006 ).

However, effectiveness and efficiency of these market-oriented substantive policy and organisational designs is rarely questioned or put to rigorous empirical tests. Furthermore, this author fails to find studies in mainstream academia seriously and systematically questioning the modern policy and organisational forms’ relationship with democratic rights of citizens, equity of access, and their impact on positive and negative freedoms. Take, for example, the out sourcing of prisons and wars, or privatisation of public utilities or health and education systems, we do not have any conclusive evidence of better service delivery or efficiency gains. Nevertheless, it would be incorrect to assume that either the public or the private sector are inherently better placed in creating public value, a point well established by the economic theory and public choice; ownership does not matter. It is the neoliberal discourse that has made us believe in the efficiency of markets. In order to hold the private sector accountable, states require greater regulatory, monitoring, and enforcement capacity, which particularly is lacking in the developing world. The transaction cost economics tells us that hierarchies are actually better placed in organizing activities characterised by high transaction costs. We do not have comparative analysis of bureaucratic inefficiencies and regulatory transaction costs.

Besides structural pressures that change interest group policy preferences, globalisation through the neoliberal governance discourse also influences the national policy process. Two factors can be identified as channels of influence from the international arena to domestic policies and organisational forms. Firstly, international institutions are ascribed for a large part of policy diffusion either through coercive means or simply providing information, training, and funding. The literature reviewed describes in detail how the neoliberal hegemony in the global governance discourse provides national policy actors advice, that is, the neoliberal ‘solutions’ to the old problems.

In conclusion, the issue of globalisation and its impacts on the policy process has been conspicuously absent from the PS literature. There seems to be multiple tribes within policy studies that continue to follow their own research agenda without any cross fertilisation or any attempts on synthesis. For example, the word globalisation or any detailed treatment of international and transnational influences on the policy process are absent in the recent reviews of the two most cited framework; Multiple Streams and Advocacy Coalition (Howlett et al., 2017 ; Pierce, Peterson, Jones, Garrard, & Theresa, 2017 ; Ritter, Hughes, Lancaster, & Hoppe, 2018 ; Weible & Schlager, 2016 ). Similarly, policy diffusion, learning and transfer literature demonstrate very little cross communication (Dolowitz & Marsh, 2012 ; Evans, 2017 ; Gilardi, 2016 ; Rose, 2004 ). Furthermore, a particular problem with these studies is the misspecification of dependent variable, as to what (and why it) is being adopted, transferred, learned or diffused. Is it policy outputs, instruments, organisational forms, objectives, or outcomes? What are the channels? We can infer from the above discussions that structural pressures and the discourses are responsible for policy diffusion. Diffusion can occur in isomorphism or through transfer or learning.

The new theoretical and research agenda that this paper aims to put forward would require, as a first step, the dialogue between the theories of the policy process and diffusion (including transfer, learning, emulation, and adoption) around few questions:

What is the role of international and transnational actors and processes in:

Advocacy coalitions formation, strengthening, or weakening

Formation of problem, solution, and political streams?

Influencing the interests and ideas of advocacy coalitions and policy entrepreneurs?

What are the main channels of diffusion, learning, or transfer

If diffusion, learning, or transfer are power neutral concepts (as much of the literature treats them to be) then why don’t we see these currents flowing from South and East to North and West?

A majority of papers reviewed here fall under the positivist and quantitative category dealing with large-N cases while an over a third fall under constructivist and qualitative small-N case studies. The former are often concerned with policy outcomes and structural explanatory variables while the latter are often concerned with the process and political variables. Both of these approaches are usefull for future research agenda. Since a thin definition of science describes scientific inquiry as ‘a systematic activity of organizing patterned observations’ (Marsh & Stoker, 2010 , p. 11). By this definition, the mere assertions that ‘ideas matter’ or ‘all research is theory laden’ does not make the two paradigms incommensurate. For positivism only claims that objective regularities and causal relations exist that can be observed and deduced. The thick descriptions of the policy process of learning, change in coalition belief systems, and entrepreneurs’ activities in a globalised world would be useful to generate hypotheses and qualitative data. The colleagues on the quantitative side then can easily transform this data to test those hypotheses in large-N studies. It is my contention that besides the structural pressures, it is the power of process and discourse that is responsible for the diffusion of neoliberalism.

No potential conflict of interest was reported by the author.

Dr. Lodhi is an Assistant Professor of Public Policy at the Graduate School of Public Policy, Nazarbayev University, Kazakhstan. Prior to his current position he has taught at the Higher School of Economics, Moscow and the Lee Kuan Yew School of Public Policy, National University of Singapore. His teaching and research interests include international and comparative political economy with a particular focus on collective action problem and energy and climate policy

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