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In: Economics

With two paragraphs, explain how the relationship between International Financial Institutions and the Anti-Globalization Movement is...

With two paragraphs, explain how the relationship between International Financial Institutions and the Anti-Globalization Movement is relevant for supply chain managers.

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Expert Solution

The anti-globalization movement, or counter-globalization movement, is a social movement critical of economic globalization. The movement is also commonly referred to as the global justice movement, alter-globalization movement, anti-globalist movement, anti-corporate globalization movement, or movement against neoliberal globalization.

People opposing globalization believe that international agreements and global financial institutions, such as the International Monetary Fund (IMF) and the World Trade Organization, undermine local decision-making. Corporations that use these institutions to support their own corporate and financial interests, can exercise privileges that individuals and small businesses cannot, including the ability to:

  1. move freely across borders.
  2. extract desired natural resources.
  3. use a wide variety of human resources.

The movement aims for an end to the legal status of "corporate personhood" and the dissolution of free market fundamentalism and the radical economic privatization measures of the World Bank, the IMF, and the World Trade Organization.

Activists are especially opposed to the various abuses which they think are perpetuated by globalization and the international institutions that, they say, promote neoliberalism without regard to ethical standards or environmental protection. Common targets include the World Bank(WB), International Monetary Fund (IMF), the Organisation for Economic Co-operation and Development (OECD) and the World Trade Organization (WTO) and free trade treaties like the North American Free Trade Agreement (NAFTA), Free Trade Area of the Americas(FTAA), the Trans Pacific Trade Agreement (TPPA), the Multilateral Agreement on Investment (MAI) and the General Agreement on Trade in Services (GATS). In light of the economic gap between rich and poor countries, adherents of the movement claim that free trade without measures to protect the environment and the health and wellbeing of workers will merely increase the power of industrialized nations Proponents of this line of thought refer to the process as polarization and argue that current neo-liberal economic policies have given wealthier states an advantage over developing nations, enabling their exploitation and leading to a widening of the global wealth gap.

The global trade landscape is evolving at a considerable pace, with new developments resulting in both challenges and opportunities for banks and businesses across the world. A number of factors are at play that are contributing to this, but undoubtedly, a key influencer is the rapid advancement of emerging economies. This is particularly true of the Asia Pacific region, with Latin American markets also gaining prominence as global commerce has become more integrated. China has been at the forefront of this transformation, growing at a phenomenal rate in a short period of time, and coming to dominate world trade in terms of the volume of goods shipped and delivered. What’s more, as China evolves to become a middle market economy, trade dynamics are evolving yet further as it begins to shift its focus to consumption and the production of higher value goods, such as jet engine components and LED screens. In turn, the manufacture of cheaper goods that has traditionally been associated with China is now increasingly moving towards markets including Indonesia, Bangladesh and Vietnam.
Lower trade tariff barriers and advances in transportation and communication have supported the spread of global value chains, while the fragmentation of production processes has helped to boost trade growth, as components cross borders multiple times. Of course, the global trade community is also facing numerous challenges, including the rising trend for protectionism, which is a significant barrier to trade. The U.S.’s stance towards anti-globalisation in particular, has spurred free trade advocates across the globe to examine new deals to reinforce global commerce and safeguard exports. It is clear that we are no longer seeing the same levels of world trade growth as in the two decades preceding the financial crisis. These levels were inevitably going to trail off due to being fuelled by “one off” factors, including the rapid growth of the Chinese economy since joining the WTO in 2001, and the reintegration of the Communist bloc into the world economy. However, crucially, global trade remains a dynamic economic force with significant inter- and intra-regional opportunities for businesses to capitalise upon.
Alongside the changes to the physical supply chain, technology is also playing a crucial role in paving the trade landscape we see today. New capabilities are coming to the fore and presenting the opportunity to enhance existing processes across the trade finance spectrum. Advancements include documentation exchange and approval, harnessing rich data sets through analytics to unlock value throughout the supply chain, and the adoption of common documentation standards to help ease the passage of goods and services across the globe. What’s more, the technology emerging around transparency and access to information is helping banks to equip clients with tools to manage their trade flows and accounts payable and receivable far more effectively than before.


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