Is Globalization a Zero Sum Game or a

Win-Win Situation ?
When we discuss globalization, we often take into account the fact that both countries that
are partners in trade benefit from the exchange. What this means is that a country A that
specializes in a particular good or service can trade with country B that specializes in
another good or service. In this way, both countries stand to gain as they import the goods
that are cheaper to make in the other country and export the goods that are cheaper to
make in their countries. This is the classic version of the win-win situation that globalization
and free trade bring to the table.

However, this is a simplified explanation of the globalization phenomenon and as the

experiences of many countries show, international trade is not linear but a complex activity
that is beset with protectionist rhetoric, subsidies to one’s farmers and traders as well as
skewed rules and regulations.

The famous cheerleader for globalization and author, Thomas Friedman, in his book The
World is Flat argues that globalization is proceeding briskly because of the “flattening of the
world”. What he means is that with the advent of information technology and seamless
communications, any country in the world that has a pool of educated workers can
aspire to jump on to the globalization bandwagon and benefit from the erasing of
entry barriers. The point here is that countries like India have successfully leveraged the
power of IT and communications to leapfrog the intermediate stage of manufacturing power
that is required for economies to become fully fledged powerhouses.

However, an aspect that has been missing in Friedman’s analysis is the fact that unless a
particular person has the minimum required education and access to IT; he or she would
not be able to harness the power of globalization. The point here is that even with the
flattening of the world, globalization works only for the privileged and denies the benefits to
the majority. This is the counter argument to Friedman’s hypothesis about how globalization
is a win-win situation.

Of course, this is not to say that globalization has not benefited the world at large. For
instance, studies have shown that globalization has succeeded in lifting Millions (if not a
Billion) of people out of poverty and has ensured that they live a decent life. It goes without
saying that the benefits of globalization though a bit skewed, have nonetheless reached a
large proportion of humanity. Hence, in this context it is fair to say that globalization has
indeed been a win-win game instead of being a zero sum game.

Finally, the point needs to be made that like any other economic phenomenon, globalization
needs a push and shove from the governments to ensure that there is a level playing field
and hence, the process can benefit more if the governments of the world decide to extend a
helping hand to the less privileged and thereby ensuring that they are able to climb the
ladder through which they can participate in the process.
Globalization and its Discontents
Globalization is a phenomenon that can mean many things to many people. For the workers
and the executives in the manufacturing units of China, it can mean new opportunities and
the chance to earn a decent living. For the software engineers in India, it can mean an
upward mobility towards greater economic and social status. However, globalization can
also mean loss of livelihoods for the people who have lost their jobs in the United
States because of outsourcing. More importantly, globalization can mean millions of
people being denied the access to basic services because they cannot afford them. This
happens when those without the skills or the education find it hard to compete in the global
economy and hence are left out of the economic growth story.

The noted economist, Joseph Stiglitz, authored a book called Globalization and its
Discontents where he makes a clear case for considering those who have been left out of
the spoils and rewards of the globalization juggernaut. The book is also noteworthy for the
various descriptions of how not everyone in the Third World benefits because of
globalization and how the number of people who have lost out is more than the number of
people who have gained.

Of course, this is not to say that globalization produces more losers than winners. Just that
the benefits of globalization are skewed and despite the claims of Thomas Friedman that the
world is flat, the world is flat only for those who can leverage their expertise that has been
developed as a result of being endowed with favorable circumstances.

The point here is that for globalization to work for everybody, the playing field has to be
leveled even for those who cannot climb aboard the bandwagon. For instance, it is often the
case that rural peasants and farmers in China and India cannot compete with global agri
businesses because they do not have the capital or the scale to take them on. Similarly,
small traders and small businesses often find that their livelihoods are at stake because of
the entry of giant retailers like Wal Mart. This explains why there are frequent protests
against these companies in many countries in Asia.

The solution to this problem can be found in the governments of the country
protecting their small businesses and farmers to the extent possible by giving
them incentives and loans. However, it should be clear that this is not a policy
recommendation for protectionism or a return of the welfare state that is unproductive and
inefficient. Rather, the point here is that by incentivizing small businesses and extending
credit to small farmers, the government can ensure that they can stand a chance against
big business. Further, alternative employment and tie-ups with the big businesses including
enlisting the services of these groups is a viable solution. The best example is the
cooperative movement in India that is a federation of small scale farmers and businesses
who come together to band as a unit and with governmental assistance reap the benefits of
economies of scale and efficiency that they otherwise would not have done individually.