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Whose Prosperity Are We Talking About? 
By Faiq Lodhi

The retreat into the national sphere is in vogue – especially in the industrialized countries. The election results between Washington and Brasilia, between London and Budapest reflect citizens’ concerns about the negative consequences of globalization. However, an international globalization report shows that the winners of globalization are often right where the criticism of globalization is loudest: in the industrialized countries.
 
People in the industrialized countries benefit the most from increasing globalization. This is the key finding of the Bertelsmann Stiftung’s Globalization Report 2018. The report calculates the degree of international interconnectedness and the resulting increases in real gross domestic product (GDP) per capita for 42 industrialized and emerging countries. “The report shows: Globalization can clearly create welfare gains,” says Aart De Geus, Chairman and CEO of the Bertelsmann Stiftung. “Protectionism is not the right way forward. However, globalization must be shaped in such a way so the focus is on the people. This is the only way we can live up to our promise of success.” 
 
Switzerland profits most from globalization, India comes in last
 
During the period under study, real GDP per capita grew by an average of around one trillion euros per year as a result of increasing globalization across all 42 countries surveyed. This corresponds roughly to the economic output of a medium-sized economy such as Mexico or South Korea. In all countries surveyed, real GDP per capita growth is positive. However, the amounts differ significantly from country to country.
 
The Swiss benefit the most. In Switzerland, the GDP per capita resulting from increasing globalization grew on average by €1,910 per year between 1990 and 2016. In India – the last-ranked with respect to globalization-related welfare gains – this figure rose by an average of only €20 per year. China also recorded below-average gains (€80 per year).
 
The main reason for these low growth rates in the emerging countries is the low starting level of GDP per capita when the measurements were taken. Emerging countries such as China and India were only in the early stages of a dramatic growth curve in 1990, and thus they performed worse overall in terms of absolute gains than industrialized countries, which were already more globally interconnected at that time.
 
Better distribution of globalization gains is needed
 
From the Bertelsmann Stiftung’s perspective, one of the biggest issues of globalization is the unequal distribution of globalization gains between industrialized and emerging countries, but also within states. Since the industrialized countries have had higher economic performance levels per capita for a long time, absolute globalization gains are also significantly higher, and therefore difficult for the emerging countries to catch up with. Dr. Cora Jungbluth, economic expert at the Bertelsmann Stiftung, sees a revival of the WTO trade rounds as a possible solution: “We must promote an international economic order that does not promote the right of the strongest, but sets common binding rules and standards,” says Jungbluth. “Only in this way can globalization profits be distributed as widely as possible.” According to the Bertelsmann Stiftung, this includes market openings in emerging countries as well as the reduction of subsidies in industrialized countries.
 
In the industrialized countries, Bertelsmann Stiftung experts also see the need to ensure that the obvious and tangible benefits of globalization are distributed in such a way that all citizens participate. “We can see from the data that globalization is bringing us significant welfare gains,” says Jungbluth. This is why awareness must be strengthened in the industrialized countries that integration with the global economy – as long as it is based on internationally recognized rules and standards – brings material benefits.
 
Going beyond GDP 

“What we measure affects what we do. If you measure the wrong thing, you will do the wrong thing. If you don’t measure something, it becomes neglected, as if the problem did not exist,” says Nobel Prize winner Joseph Stiglitz in a recent OECD presentation. For years, economists have been searching for a new definition of well-being beyond GDP. Henrietta L. Moore, Director of the Institute for Global Prosperity, brings the fragile interdependency between profit and purpose to the point: “A prosperous society is not necessarily a society that is wealthy – although a strong economy is an essential part of it. Instead, it is a society that is inclusive, sustainable, and capable of offering its residents the ability to have a fulfilling life. This has sparked an interest in new types of conversations about the most efficient ways in which economic resources can translate into well-being for both people and the environment.” She adds: “This is not just a matter of ceasing to externalize the costs of pollution and deterioration, but recognizing that the planet’s assets are common assets and must be protected, maintained and regenerated.”
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Global Goals Yearbook 2019
Münster 2019: macondo publishing, 172 pages
ISBN: 978-3-946284-07-9
 
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