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Globalization and Industrial Revolutions in India and China: Implications for Advanced and Developing Economies and for National and International Policies

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  • Singh, Ajit

Abstract

This paper examines the impact on labour markets in advanced countries (ACs) of the integration of the two giant fast-growing countries, China and India, with the liberalised global economy. The integration is taking place under “current globalisation,” which consists of free trade, free capital movements and domestic labour market flexibility (instead of free international movement of labour). The first part reviews economic theory as well as several generations of empirical work on the effects of the fast expansion of exports from developing countries (DCs) on AC labour markets. Taking into account the positive, the negative, the direct and the indirect effects, the most up-to-date empirical research suggests that globalisation has a small overall effect on output and employment in the US, that is just as likely to be favourable as being unfavourable, depending on the time period and the countries considered. The paper highlights the pioneering contribution of Freeman (2005), which suggests that even if trade with the South has not previously disadvantaged North workers, the doubling of the global labour force with India and China’s recent integration with the international economy may have profoundly unfavourable repercussions for AC workers. Two major points of constructive criticism of the Freeman thesis have been emphasised here: (a) the lack of analysis of the relevant demand side variables and (b) inadequate recognition of the inherent economic strength and dynamism of the US economy and its innovative large corporations. These should enable the U.S to maintain its technological leadership. In relation to policy, the underlying question examined here is whether India and China’s industrial revolutions, which are a social imperative for these countries, can be sustained and made compatible with full employment and rising real wages for workers in the North. It is concluded that current globalisation cannot meet these twin objectives and that coordination and cooperation between nation states under alternative globalisation are much the better way, if not the only way of realising these goals. The reasons why this should be so are explained in the last part of the paper.

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Bibliographic Info

Paper provided by University Library of Munich, Germany in its series MPRA Paper with number 24286.

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Date of creation: 2007
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Handle: RePEc:pra:mprapa:24286

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Keywords: Labour Markets in Advanced Countires; Globalisation; Economic Policy;

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References

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  1. Nirvikar Singh, 2004. "The Impact of International Labor Standards: A Survey of Economic Theory," International Trade 0412007, EconWPA.
  2. A Singh, 2001. "Income Inequality in Advanced Economies: A Critical Examination of the Trade and Technology Theories and an Alternative Perspective," ESRC Centre for Business Research - Working Papers wp219, ESRC Centre for Business Research.
  3. Barry P. Bosworth & Susan M. Collins, 2003. "The Empirics of Growth: An Update," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 34(2), pages 113-206.
  4. Singh, Ajit, 1977. "UK Industry and the World Economy: A Case of De-industrialisation?," Cambridge Journal of Economics, Oxford University Press, vol. 1(2), pages 113-36, June.
  5. Professor Ajit Singh, 2004. "Labour Standards And The “Race To The Bottom”: Rethinking Globalisation And Workers Rights From Developmental And Solidaristic Perspectives," ESRC Centre for Business Research - Working Papers wp279, ESRC Centre for Business Research.
  6. Kaldor, Nicholas [Lord], 1976. "Inflation and Recession in the World Economy," Economic Journal, Royal Economic Society, vol. 86(344), pages 703-14, December.
  7. Bhagwati, Jagdish, 1994. "Free Trade: Old and New Challenges," Economic Journal, Royal Economic Society, vol. 104(423), pages 231-46, March.
  8. Anthony B. Atkinson, 2000. "The Changing Distribution of Income: Evidence and Explanations," German Economic Review, Verein für Socialpolitik, vol. 1(1), pages 3-18, 02.
  9. Singh, Ajit, 2003. "Special and Differential Treatment, The Multilateral Trading System and Economic Development in the 21st Century," MPRA Paper 24653, University Library of Munich, Germany.
  10. Dani Rodrik & Arvind Subramanian & Francesco Trebbi, 2002. "Institutions Rule: The Primacy of Institutions over Geography and Integration in Economic Development," NBER Working Papers 9305, National Bureau of Economic Research, Inc.
  11. Alex Izurieta & Terry McKinley, 2006. "Addressing Global Imbalances: A Development-Oriented Policy Agenda," Working Papers 23, International Policy Centre for Inclusive Growth.
  12. Thomas Piketty & Emmanuel Saez, 2006. "The Evolution of Top Incomes: A Historical and International Perspective," American Economic Review, American Economic Association, vol. 96(2), pages 200-205, May.
  13. Peter Gottschalk & Timothy M. Smeeding, 1997. "Cross-National Comparisons of Earnings and Income Inequality," Journal of Economic Literature, American Economic Association, vol. 35(2), pages 633-687, June.
  14. (No last name available), Himanshu, 2013. "Poverty and Food Security in India," ADB Economics Working Paper Series 369, Asian Development Bank.
  15. Singh, Ajit, 1989. "Third World Competition and De-industrialisation in Advanced Countries," Cambridge Journal of Economics, Oxford University Press, vol. 13(1), pages 103-20, March.
  16. Sonja Opper, 2005. "The giant graduates: China's strive for high-technology," CESifo Forum, Ifo Institute for Economic Research at the University of Munich, vol. 6(3), pages 43-48, October.
  17. Ajit Singh & Sukti Dasgupta, 2005. "Will services be the new engine of economic growth in India?," ESRC Centre for Business Research - Working Papers wp310, ESRC Centre for Business Research.
  18. Singh, Ajit & Zammit, Ann, 2000. "The global labour standards controversy: critical issues for developing countries," MPRA Paper 53480, University Library of Munich, Germany.
  19. Dasgupta, Sukti & Singh, Ajit, 2006. "Manufacturing, Services and Premature Deindustrialization in Developing Countries: A Kaldorian Analysis," Working Paper Series RP2006/49, World Institute for Development Economic Research (UNU-WIDER).
  20. Matthew J. Slaughter & Phillip Swagel, 1997. "Does Globalization Lower Wages and Export Jobs?," IMF Economic Issues 11, International Monetary Fund.
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