The last 60 years of the twentieth century may very well be seen as including some of the fastest and widest reaching changes ever to occur in human history. The main driver of these changes has been the idea of Globalisation. Globalisation can be defined simply as the decrease in the political and macroeconomic barriers which prevent a free flow of ideas, products, labour, and money between countries. It is a retreat from the traditional idea of a nation state, and a progress towards a more homogenous world.
Globalisation is often cited in an economic context, and indeed, economics has been, and remains, the main driver of the global movement. In the new world of globalisation, a business has access to a far larger number of markets and supply networks. Businesses can purchase supplies, assemble a product, and resell to a market, with all three operations in different time zones. Globalisation is seen as lifting less developed nations out of poverty, as foreign direct investment lifts the national earning, and invests infrastructure, educational resources, and increased skill sets to the economy.
To support the advance of Globalisation, many governments have made extensive policy decisions, including signing free trade agreements with neighbouring allies, removing restrictive tariffs and barriers to market entry, and improving international relationships between countries to enable ease of trade.
Legal and regulatory bodies, such as the IMF, the World Bank, and others have historically supported Globalisation, and seek to establish a cross border legal and appeals system which will support the international growth of foreign investment.
While businesses, governments, and world leaders may enthusiastically support and promote Globalisation, there also exists a strong and vocal opposing force which views Globalisation as breaking down national identity and sovereignty. The critics range from the nationalistic to the xenophobic to the academic. In their view, Globalisation is a tool of corporate bodies to gain greater power over state’s interests, and that the poorer and middle classes are the real losers. At times, these opposing world views have violently clashed, such as the infamous “Battle of Seattle”, and the Melbourne riots.
It is beyond dispute that Globalisation affects all citizens of a state, and that there will be a segment of the population that will not experience a benefit from Globalisation. National interests do become supplanted by regional or global interests. This paper seeks to analyse the rise of Globalisation in the Asia Pacific region and the future direction of the region. It also seeks to identify some of the criticisms of the Global movement, as well as the definite benefits gained by Globalisation.
Finally the author makes the argument that Globalisation is both a pacifying and an inflammatory position between nations. Globalisation can be used as a weapon by an aggressive state, giving states another offensive method rather than armed conflict.
Breaking down of Trade Barriers:
In a speech in 2008, former Prime Minister Kevin Rudd stated that in our international dealings with the Asia Pacific region, “we need a strong system of global and regional relationships and institutions to underpin stability.
We also have to make sure that the open, rules-based system of global trade is maintained and expanded. It is the system that has underwritten our prosperity, just as it has underwritten the prosperity of the region”.
By saying this, Mr Rudd was referring to one of the principal tenants of globalisation; lowered trade barriers between nations. Traditionally, countries have existed primarily on a protectionist basis. Protectionism is the belief that Governments should enact policies which “restrict or restrain international trade, often done with the intent of protecting local businesses and jobs from foreign competition. Typical methods of protectionism are import tariffs, quotas, subsidies or tax cuts to local businesses and direct state intervention”. Protectionism is seen as a method of ensuring that local industries remain competitive by raising the barriers of entry for competing foreign firms. Examples of protectionism are seen in almost every major economy, even those which openly advocate a free trade and globalist approach. Australia engaged in protectionist policy until recently by subsidising the local automotive industry. Both the United States and France engage in trade subsidies of local agricultural products to increase their competitiveness.
The long term effects of a protectionist policy approach are debated, however the majority view of the Globalists is that protectionism and government intervention in the market creates both inefficiencies of either an excess or shortage in the economy of the protected item. As a result of the Global Financial Crisis, protectionism gained new life, however. Governments, supported by demands of their citizens, turned to protectionism as a method of supporting threatened local industries. Economists were alarmed at this trend, citing the example of the Great Depression of the 1930s. During the Great Depression, the United Stated in particular withdrew from global trade and isolated itself behind protectionism. Many economists believe that this isolation both increased the severity and duration of the depression. It is proposed that the reason the Global Financial Crisis did not become a new Great Depression was due to the concerted efforts of organisations such as the World Trade Organisation to encourage nations to uphold free trade.
Proponents of the Globalist idea point to the apparent benefits of lessening trade barriers between nations.
The Business Argument:
From a business point of view, decreased trade barriers mean greater access to a wide variety of markets, both for supply and sale of goods. The modern business can now trade with the world, equally completing with a home grown business in another country. Profits can be increased by utilising lower cost labour or products in a foreign market, which in turn are translated into savings for the consumer.
For the consumer, it is also a benefit to have access to the world’s markets with ease. One of the accompanying drivers of globalisation, communication, enables buyers to inform themselves as to the best value of quality of product they desire.
In a global marketplace, businesses are also able to open up new income streams, including foreign currency trading, international investments, and export financing.
The Development Argument:
In a 2001 report, the International Monetary Fund stated that “contrary to popular beliefs, increased trade has strongly encouraged growth and poverty reduction and has contributed to narrowing the gaps between rich and poor worldwide.”.
The paper analysed 24 countries which experienced globalisation since the 1980s. This list included well known examples such as China, Thailand, Argentina, and India. The IMF paper found that out of the three groups of countries, “Rich” countries, “Nonglobalizers”, and “Globalizers”, the 24 countries which experimented with globalisation experienced far greater average GDP growth in the 1980s and 1990s than any other group.
This growth rate accelerated from 1.4% in the 1960s to over 5% in the 1990s. Out of the 24 countries surveyed, 18 experienced real growth in per capita GDP.
The Moral Argument:
A more simple argument has also been presented in support of a breakdown in trade barriers. This argument simply states that protectionism provides an unfair advantage to one industry over another, creating an inefficient market place. A global market place should require all participants to trade and transact on their own merits and on an equal footing.
The Asia Pacific region has been a classic example of the rise of cross border trade. In the 1960s to 1980s, economic growth in the Pacific Region was fuelled by a post-war Japan and the rise of the Asian Tigers, Hong Kong, Taiwan, South Korea, and Singapore, who experienced gradual trade liberalisation. In the 1980s, and 1990s, the economic rise of China began to dominate the Asia Pacific region, leading to what some called “open regionalism”. This open regionalism gave way to a dramatic rise in Free Trade Agreements in the Asia Pacific region.
There have been calls to amalgamate these free trade agreements, of which Australia is a signatory to a number, into a giant free trade zone, covering 50% of the world’s economic output. After the failure of the Doha round of trade talks, calls were made to implement this Asia Pacific Free Trade Area to both revitalize APEC and foster integration within Asia Pacific.
Globalisation and National Identity:
As briefly discussed previously, globalisation definitely has its detractors. One of the major arguments against globalisation is that nations may lose their national and cultural identity and that ultimately nationalistic interests will suffer.
Critics argue that if nationalism and protectionist policies are abandoned, foreign investment in the country will supplant local business interests, with traditionally locally controlled and owned companies being controlled by international interests. This is seen as leading to a loss of jobs in the country, as businesses outsource manufacturing operations and services to a cheaper labour market. Combined with this, critics see foreign imports as being of less quality than locally produced products.
Opponents of Globalisation often adhere to a patriotic and nationalist view of society, opposing extensive immigration into their country, and either a “Westernisation” or “Islamisation” of their country. While Australian nationalists may condemn an decrease in “Western” culture and values in their country, nationalists in Malaysia or Indonesia may decry an increase in Western values and culture.
Various nations in the Asia Pacific Region have reacted to the threat to national identity by Globalisation in different ways.
Australia’s response has been to accept Globalisation and free trade eagerly in public policy. Prime Minister Rudd sought to strengthen economic and political ties with Asia, particularly with China while he was in office. This goal is being carried on by Prime Minister Julia Gillard, as evidenced by her recent statements at the G20 summit urging world leaders to embrace free trade and reject protectionism.
At a grassroots level of society, however, Australians have traditionally been wary of multiculturalism and Globalisation. In a 2003 survey, the Australian population was seen as being divided in response to questions such as “Should Australia increase economic ties with Asia” and “Should Australia increase cultural and political ties with Asia”. The final conclusion by the authors of the survey was “…Australians are comparatively ‘closed’ to globalisation on key subjective and objective measures, and Australian attitudes to global engagement are shaped by respondents economic security and views about the effect an open economy on jobs…Overall we find that many Australians are wary of greater economic, political, and cultural engagement.”
China, on the other hand, while being the economic superpower of the Asia Pacific region, has openly stated that the first national priority is to protect national interests, economic, cultural, and political. China is determined to maintain these, even at the expense of armed conflict.
Case Study: ASX and the National Interest
The previous merger bid between ASX Limited (ASX) and Singapore Exchange Limited (SGX) is a perfect example of the challenges faced by globalisation and the benefits which can be experienced from it.
In October 2010, the ASX and the SGX announced a proposed $8.4 billion merger to create the premier international exchange in Asia Pacific to “enable customers globally to capitalise on listing, trading, clearing and settlement opportunities created through the expanded platforms, leveraging on the importance of Asia Pacific as the driver of global growth”.
The proposed merger would provide customers to access over 2,700 listed companies, including over 200 Chinese listings. In addition, the merger would create the world’s second largest base on institutional investors and the second largest cluster of resource companies.
The ASX enthusiastically identified a number of benefits to Australia’s national interest from this merger.
The first benefit of the merger is the establishment of Australia as a leading financial services hub in the Asia Pacific. Many Asian countries are seen as being eager for foreign investment opportunities, and Australia could be seen as an attractive destination if it invested in the necessary infrastructure and groundwork to be an attractive investment destination. An increased recognition of Australia’s role in the region would assure investors that Australia was determined and interested in integrating local and Asian financial markets. The report stated that “For Australia to have any chance of becoming a regional financial services hub, we must first demonstrate commitment to the region and a genuine willingness to engage”.
An enhanced role for Australia in the Asia Pacific financial markets would also improve the quality and numbers of financial services professionals in Australia’s capital cities. Rather than attracting talent from Australia, the merger would facilitate skilled professionals to build careers in Australia.
Finally, the merger would reduce the cost of attracting foreign capital. Traditionally, the Australian economy has operated at a significant and increasing current account deficit, indicating a heavy reliance on foreign investment rather than domestic savings. Australia’s largest exports, resources, agriculture, and education, are dependant on Asia, particularly China and India. This dependence is expected to rise in the future.
The merger between ASX and SGX was seen as increasing the potential pool of foreign capital which Australia requires in order to remain an economic power.
Based on the above reasons, proponents of Globalisation see the proposed merger as a win-win situation for all involved.
However, the critics of Globalisation demonstrated their traditional opposition to decreased trade barriers. Immediately after the announcement, two of Australia’s three major political parties, the Greens and the Liberal and National Coalition, hit back at the merger. Both parties refused to support or permit the merger unless it was demonstrated that it was in Australia’s national interest. Bob Brown, leader of the environmentalist and leftist leaning Greens stated that “[The deal would] shortchange Australia and leave the nation vulnerable to the loss of control of a key financial institution. Ceding control now means opening the door to future predators. Once those protections are gone, future takeover attempts are a certainty”.
From the other side of the political spectrum, MP Robert Katter denounced the merger as “lunacy on a grand scale”, and stated that “I have a desire some things in my country are left owned by my country. I do not wish to live in a country of serfs working for foreign landlords”.
Mr Katter’s comments are a textbook case of protectionist and anti-globalist sentiment, which has found favour with many Australians.
The ASX warns, however, that “if ASX-SGX were disallowed, this could add to perceptions, especially in Asia, that Australia is not welcoming of foreign investment and/or was overly protectionist…Disallowing ASX-SGX would send the wrong message to foreign investors – particularly as similar exchange combinations have been approved in many jurisdictions around the world.” 
Cross Border Security Implications:
National aggression has traditionally been carried out through armed conflict between nations for the purpose of establishing regional dominance, acquisition of land and resources, or for ideological purposes, such as during the Cold War.
Globalisation, however, is seen by its proponents as being an instrument for global peace and prosperity. The rise of bilateral free trade agreements has been identified as a contributing factor towards promoting the lessening of armed conflicts, and empirical research by Lee and Pyun aims to refute the charge that the result of globalisation is an increase in aggression between countries.
Lee and Pyun in a later research article identified two ways that globalisation is promoting peace worldwide. Firstly, an aggressive trading partner may be shunned by other partners in a region, leading to economic downturn within the country, as foreign investment will be hesitant to invest in a nation engaged in aggression against another. Secondly, increased information flow, international investment, and communication abilities provided by globalisation enable dissidents under an autocratic regime to successfully gain international support for their cause. The current regime challenges seen in the Middle East have been linked to a globalist movement, which demands greater economic development within Egypt. Globalisation seems to be accomplishing in the Middle East what Neoconservatives in the United States hoped would occur due to the United States military intervention into Iraq.
However, while trade agreements and economic interdependence between nations may lessen the occurrence of armed conflict, they have also provided aggressive nations with opportunities to manipulate trading partners to promote national interests.
An example of economic Globalisation being used for aggressive purposes can be seen in the rise of China in Africa and Asia Pacific. In order to accomplish their goals of economic expansion, Chinese intelligence and military services have become dedicated to infiltrating and targeting business competitors to Chinese interests, rather than political competitors. A recent report on Chinese investment in Africa identified The Ministry of State Security of the People’s Republic of China working in conjunction with the Economic Intelligence Unit of the Ministry of Economics to ensure the competitiveness of Chinese companies and gather intelligence on opposing companies.
In addition, there have been numerous alleged cases of cyber attacks on Australian businesses by China for the purpose of gaining business intelligence. Globalisation may have reduced armed conflict between nations, but it has also given nations the tools to engage in greater economic aggression.
Many countries, however, are still resolved to protect national interests by any means, including armed aggression. China’s openness regarding this has prompted the Australian Defence White Paper to identify China as a possible regional threat in the future. In a 2008 speech, the Director of Australia’s National Security Project stated that nationalism was possibly on the rise in the Asia Pacific. He included India and China as examples of countries willing to engage in territorial disputes.
That Globalisation has redefined and changed the Asia Pacific region is not disputed. As the region moves into the twenty first century, it is inevitable that Globalisation will continue to remain the dominant driving force of economic development. In is the opinion of the author that Australia has much to gain from embracing Globalisation and by integrating itself into Asia Pacific.
It is also inevitable, however, that continued nationalist sympathies will continue to oppose Globalisation. Governments within the region will be forced to confront the delicate task of balancing appropriate national interests with regional and global ones. As migration and trade increases, however, the cultural and economic disparities within the region will lessen, leading to stronger links between nations in Asia Pacific.
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