Friday, May 25, 2012

WTO, globalisation and democracy - Heady mix?

Read an interesting blog piece here on the relationship between WTO and democratisation of nation states. Is the WTO a catalyst for democratisation? The piece tended to argue that more economic integration and membership to the multilateral trading organisation enhanced the chances of propelling the forces of democracy (in whatever form). Thus, countries that were acceding as members of the WTO were more likely to get more democratic, reform oriented rather than being closed, non-democratic states. is it safe to assume that liberal democracy and globalisation are natural allies? Does the adoption of multilateral rules encourage rule based reforms within the country that includes a more transparent, non-discriminatory process as compared to closed economies? Does economic interdependence foster democratic change? Do examples of existing members of the WTO indicate this kind of a causal relationship between democratic values and membership? Can dictatorships/autocratic states be at the forefront of globalisation?

In a related paper titled "Globalization and Political Trust" , Justina A V Fischer, with the help of complex statistical models argues that globalisation lowers the "political trust" of citizens in their respective domestic governments due to the decreasing control over domestic policy.
"This article provides an empirical test  of whether  or not  there is erosion of political trust caused by economic globalization. In a pseudo micro-panel consisting of 260’000 individuals living in 80 countries, interviewed between 1981 and 2007, I detect that globalization lowers political trust in the population, as predicted. Effects are more pronounced for the politically uninformed and, thus, for those who are  possibly  not aware of the policy constraints globalization imposes on domestic politicians, compared to someone who keeps track of new political and economic developments. This erosion of political trust through globalization is observable in both developing and developed countries likewise. In developed countries, persons with  low (high) educational levels experience globalization as more (less) trust lowering  compared to the medium-educated  – an alternative explanation is based on their worse (improved) wage  prospects  as their country becomes more integrated into the world economy.

This analysis suggests that understanding the relentlessness of the forces of globalization and how these disempower domestic governments is, in the presence of globalization, important for NOT developing  trust  too low  in the domestic political institutions. Indeed,  it is  the politically  ignorant  who  appear to  particularly  view  government’s policies (compelled by globalization) as underperformance  and non-responsiveness to  her wishes and preferences. Recent examples include the riots and protests on the  streets in Athens against the debtcutting policies of the Greek government (in response to the Euro crisis), or the protests in Germany in 2008 against cutting down the initially generous welfare programs  by a leftist government (as competitiveness-increasing measure). My analysis suggests that, as the forces of economic globalization get stronger, not only the average man, but even more  the politically and economically uninformed tend to view the government as being in breach of its psychological contract with the citizenry."
The author advocates that countries should have a robust communication mechanism to  inform the citizens on how globalisation impacts on domestic policy choice in order to reduce the trust deficit.

Dani Rodrik in the Globalisation paradox has argued that hyper globalisation, democracy and national autonomy cannot co-exist. Having two of them would preclude the third. Does that mean, then that an autocratic state (since democracy would not be a possible triad) can engage in globalisation with a fair deal of national autonomy? The debates about loss of sovereignty and domestic regulatory space are central to the WTO discourse. Does integration into the globalised world enhance democracy or challenge it? Are democracies in a better position to adjust to difficult issues posed by the integration of economies into the globalised world or is it easier for autocracies to deal with serious challenges to integration from domestic opposition? Is the WTo and multilateral rules themselves a manifestation of sovereign will under International law between consenting countries? Or is this "consent" shrouded in the inevitability of market and interdependence? Can a country walk out of the WTO to maintain its domestic autonomy, democratic rights and economic interdependence? is it economically and politically feasible? 


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