The Asymmetries of Globalization The discourse on globalization has become polarized. Proponents consider glob- alization as the silver bullet for targeting growth in the world economy and for poor countries specifically, while opponents see it as the poisoned arrow of exploitation and impoverishment of the Third World. The Asymmetries of Globalization deals with the “what” and “how,” but pri- marily with “why” globalization has most often negative outcomes for develop- ing countries. It breaks new ground in approaching globalization not only as trade in commodities, but also as trade in positional goods (“decommodified trade.”) The two novel and munificent forms of post-Ricardian decommodified trade, trade in services and trade in hard currency in the form of currency substitution, are sculpted in the introductory chapter as the foundation of the systematic asymmetries of globalization. Decommodified trade involves exports of developed countries that cater mostly to the elites of the developing world. The developing countries, in turn, procure the foreign exchange to pay for these imports by exporting commodities that trade on comparative advantage at the least cost of production. The analytical approach of introducing “positional goods” in the form of decommodified trade, in the discourse on globalization, is original. It is also timely in a situation where the tail of trade in “services” has grown enough to wag the traditional trade-in-commodities dog of globalization. The balance of the chapters in this volume constitute a tapestry of case studies that elaborate and empirically investigate the causes of systematic asym- metries of globalization. The book’s appeal transcends economics to make it also highly useful to students across the disciplines of sociology and political science, especially in the fields of international political economy and the poli- tics of international trade. It will certainly enlighten all those working in the general areas of globalization, poverty and economic development. Pan A. Yotopoulosis Distinguished Professor, University of Florence, Italy and Professor Emeritus, Stanford University, USA. Donato Romano is Professor, University of Florence, Italy. Routledge studies in development economics 1 Economic Development in the 8 Public Sector Pay and Adjustment Middle East Lessons from five countries Rodney Wilson Edited by Christopher Colclough 2 Monetary and Financial Policies in 9 Europe and Economic Reform in Developing Countries Africa Growth and stabilization Structural adjustment and economic Akhtar Hossain and Anis Chowdhury diplomacy Obed O. 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Ade Freeman Edited by Stephen Devereux 43 Beyond Market-Driven 53 Development Ethics at Work Development Explorations – 1960–2002 Drawing on the experience of Asia Denis Goulet and Latin America 54 Law Reform in Developing and Edited by Makoto Noguchi and Transitional States CostasLapavitsas Edited by Tim Lindsey 44 The Political Economy of Reform Failure 55 The Asymmetries of Globalization Edited by Mats Lundahl and Edited by Pan A. Yotopoulos and MichaelL. Wyzan Donato Romano 45 Overcoming Inequality in Latin America Issues and challenges for the twenty- first century Edited by Ricardo Gottschalk and Patricia Justino The Asymmetries of Globalization Edited by Pan A. Yotopoulos and Donato Romano First published 2007 by Routledge 2 Park Square, Milton Park, Abingdon, Oxon OX14 4RN Simultaneously published in the USA and Canada by Routledge 270 Madison Ave, New York, NY 10016 Routledge is an imprint of the Taylor & Francis Group, an informa business This edition published in the Taylor & Francis e-Library, 2007. “To purchase your own copy of this or any of Taylor & Francis or Routledge’s collection of thousands of eBooks please go to www.eBookstore.tandf.co.uk.” © 2007 Selection and editorial matter, Pan A. Yotopoulos and Donato Romano; individual chapters, the contributors All rights reserved. No part of this book may be reprinted or reproduced or utilized in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. British Library Cataloguing in Publication Data A catalogue record for this book is available from the British Library Library of Congress Cataloging in Publication Data A catalog record for this book has been requested ISBN 0-203-96229-X Master e-book ISBN ISBN10: 0-415-42048-2 (hbk) ISBN10: 0-203-96229-X (ebk) ISBN13: 978-0-415-42048-8 (hbk) ISBN13: 978-0-203-96229-9 (ebk) Contents List of figures ix List of tables x List of contributors xii Acknowledgments xiv Editors’ introduction 1 PAN A. YOTOPOULOS AND DONATO ROMANO PART I Decommodification: from trade in commodities to trade in services 5 1 Asymmetric globalization: impact on the Third World 7 PAN A. YOTOPOULOS 2 Positional goods and asymmetric development 28 UGO PAGANO 3 Growth and poverty reduction under globalization: the systematicimpact of currency substitution and exchange ratemisalignment 48 YASUYUKI SAWADA AND PAN A. YOTOPOULOS 4 With whom to trade? An examination of the effects of intra-nationaland between-country income inequality on bilateral trade 67 RANIA S. MINIESY AND JEFFREY B. NUGENT viii Contents PART II Institutional asymmetries 87 5 Communities and markets for rural development under globalization:a perspective from villages in Asia 89 YUJIRO HAYAMI 6 Export outsourcing: cost disadvantage and reputation advantage 108 BIH JANE LIU, ALAN YUN LU AND AN-CHI TUNG 7 Transition economies and globalization: food system asymmetriesonthe path to free markets 126 KOLLEEN J. RASK AND NORMAN RASK PART III Agricultural poverty and decommodification 145 8 Genetically modified seeds and decommodification: ananalysisbasedon the Chinese cotton case 147 MICHEL A.C. FOK, WEILI LIANG, DONATO ROMANO AND PAN A. YOTOPOULOS 9 Globalization and small-scale farmers: customizing “fair-trade coffee” 164 MARIJKE D’HAESE, JAN VANNOPPEN AND GUIDO VAN HUYLENBROECK PART IV Conclusions 179 10 What have we learned about globalization? 181 DONATO ROMANO Subject index 199 Author index 205 Figures 1.1 International trade in commercial services value and share in total exports,1980–2002 11 5.1 Channels of local rice marketing in Laguna, Philippines 94 5.2 Operations of an inter-village collector for vegetable marketing inanupland West Java, Indonesia 99 6.a.1 Aplaces orders directly with C 119 6.a.2 Aplaces orders indirectly withC 120 7.1 Food consumption measured in cereal equivalents: cereals, fruits,vegetables and livestock components 131 7.2 Per capita consumption adjustments pre- and during transition forselected countries and regional groups, 1975–2001 135 7.3 Per capita consumption adjustments pre- and during transition informerSoviet republics, 1992–2001 136 7.4 Positions in food consumption–income relationship relative tomarkettrend, 2001 137 9.1 The supply chain of coffee 167 9.2 Evolution of coffee retail price, 1975–2004 168 9.3 Product flow, reports and controls in the fair-trade coffee supply chain 172