Order the autumn edition here

Locked into the world

Measures to prevent human movement between countries reveal the weak point of globalization.


[chronicle] The world's first wave of economic globalization, led by the British Empire in the 1800th century, literally ended with a bang one Sunday afternoon in 1914. Then (with two exceptionally well-aimed bullets) Gavrilo Princip took the life of Austrian Archduke Franz Ferdinand and his wife. The years that followed were marked by a pan-European massacre, a lack of stability throughout the 1920s, and the rise of fascism and communism that culminated in the deaths of countless millions of people during World War II.

Is our era of globalization coming to an end? If so, it will not necessarily end with a repetition of the last century's slaughter, but with an economic downturn that brings economic stagnation, leaving millions of people in devastating poverty.

Fences inside.

Various candidates have been proposed for the role of globalization assassin. A little-noticed, yet conceivable, aspirant has crept into the world economy: the growing tendency to limit the free flow of people, to "fence in" the rich world. We see the danger of this tendency all the time, but we perceive it as so non-threatening that we are just as accustomed to it, rather than reacting to it.

Globalization means the free movement of capital, goods, technology, ideas, and, yes, of people. Globalization that is limited to the first three or four freedoms, but omits the latter, is incomplete and unsustainable. Once people cannot move, there is little that can stop governments from restricting the movement of goods or factors of production. However, if overpopulated countries with high unemployment cannot export people, why can't they reach for higher tariff barriers to protect the jobs they have? What about the unemployed who get locked into their own communities?

The war on terror has shown us the dangers that can arise from the social frustration that such isolation creates. Yet the "fencing" of the rich world continues. The United States plans to build a formidable "Mexican wall" to prevent the poor from crossing the border into Texas or California. Likewise, hundreds, if not thousands, of Africans die each year trying to reach the beaches of "Fortress Europe".

The gap is only increasing.

Measures to prevent people moving between countries reveal the weak point of globalization: the growing gap between countries' income. Instead, poor countries are growing faster than the rich, as one would expect from an introductory course in economics, essentially the opposite is true.

Between 1980 and 2002, the average wage increase per head in the rich world (defined as the "old" OECD members) was almost 2 percent, compared to only 0,1 percent in the 42 least developed countries. In fact, the average income in Latin America is now barely above what it was in 1980.

This large gap breeds migration. People today know far more about conditions in different countries than they did before, and if crossing a country border can mean multiple income, they will try it.

This is why today's most conflicts across borders are those that separate economies where the income gap between people on the two sides is greatest. There are four such global focal points: the borders between the United States and Mexico, Spain and Morocco, Greece (and Italy) and the southern Balkans, and the border between Indonesia and Singapore (or Malaysia). The differences in income range from more than 7 to 1 in the latter case, to 4,5 to 1 between Spain and Morocco, 4,3 to 1 between the United States and Mexico, and 4 to 1 between Spain and Albania.

The income differences have not always been that great. In 1980, average American income was just over three times that of Mexico, the gap between Spain and Morocco was 3,5 to 1. Even the gap between Greece and Albania, at 3 to 1, was smaller than it is now. The income gaps between all these countries have increased significantly in the last 25 years.


It is not surprising that it is in these places that most illegal immigration and human trafficking takes place – pirates in the Straits of Malacca, fast boats between Albania and Italy, and loads of desperate people from Africa and Latin America.

If the globalization of our time continues to widen the income gaps, the wave of emigration will grow. Then, in pure reflex, the rich world will build ever-higher barriers to curb the wave of people. In order to continue the globalization that has enriched the world's richest countries, governments must find ways to equalize income disparities between countries.

If not, today's "fencing" of the rich world will result in a setback to the free trade in goods and capital, and a lack of political stability caused by terrorism. Global redistribution of income should not be considered charity but self-interest.

Copyright: Project Syndicate. Norwegian exclusive law: Ny Tid.

Translated by Anette Scots

You may also like