The changes in level, structure and geographical pattern of world trade are among the central elements in globalization. From the perspective of the World Summit for Social Development, three aspects of the relationship between liberalized trade and social development are particularly notable. The first is how trade liberalization has applied to products of export potential of developed and developing countries. The second is its impact on poorer countries in terms of growth, poverty and income inequality. The third is its relationship with other aspects of globalization and its effect on society.
Though there has been a steady dismantling of tariffs and trade barriers over the past 50 years, crucial sectors of the markets of developed countries remain highly protected against products of export potential of the developing countries. Trade liberalization has been limited or partial, not only with respect to low technology products with export potential to developing countries, such as agricultural products, textiles, clothing, leather and footwear, but also with respect to some capital-intensive and higher technology products. There has also been a surge in anti-dumping duties on imports, typically industrial or manufactured goods. Such duties are rarely lifted. Developed country subsidies in the farm sector, but also in industry, work against developing countries.
Such limitations in trade access, as in agriculture, make the economic environment for social development less enabling by restricting export opportunities and earnings, hampering diversification and industrialization in developing countries, and aggravating structural imbalances in trade capabilities between developed and developing countries as a whole. Fewer countries have been experiencing an annual growth rate or 3 per cent or more since 1996, while many more experienced a decline in gross domestic product (GDP).
As a result of multinational production networks, mobility of capital, freer trade and new technologies, labour has become more susceptible to global forces than ever. Competition for foreign investment and the greater ability of employers to shift production to other locations has weakened labour's bargaining ability. The spread of manufacturing for export to more and more countries provides important employment opportunities for low-income workers, but it has also resulted in rising internal inequality due to unequal distribution of the skills and infrastructure needed to participate in the economy, the high demand for skilled labour coupled with excess supply of low-skilled labour, and substantial profit income. Many of the new job opportunities have been low paying and characterized by poor social protection.
These developments pose a peculiar dilemma for developing countries. On the one hand, they need foreign investments for employment growth, productivity enhancement, export networks and higher rate of economic growth. On the other, participation in the global economy under conditions of liberalized trade and capital flows and global competition often leads to downward pressures on wages, working conditions, collective bargaining ability and taxation, as investors and companies seek the best economic terms to maximize their advantages in the market. The net impact depends on the balance between the expansion of opportunities for employment that trade expansion can offer and the effects of competitive pressures.
The large and potentially mobile supply of unskilled labour in developing countries and the demand for such labour in many industrial countries would seem to point to a convergence of supply and demand that could benefit both if international movement of labour were as free as capital movements. But concerns about the social and political implications of large immigrant populations remain a source of concern and thus of strict limits on migration. Demands of labour mobility accompanying the growth of the market economy in some developing countries have created a transient internal population, with low and insecure wages and poor access to housing, medical care and schooling for their children.
New technologies and greater pressure from international competition have also had implications for the nature and organization of work in the modern economy. The greater mobility of capital as a factor of production have undermined job security and collective bargaining. Together with other changes in labour relations, trade union activity is now concentrated in a few relatively entrenched industries. The growth of service and knowledge-based industries has contributed to a premium on mobility, flexibility and multi-functionality. Considerations of flexibility and competition have also resulted in greater resort to subcontracting, outsourcing and informalization of work. But it also shifts many of the costs of market volatility to workers, making them more vulnerable to recessions and threatening their job and income security.
Many of these trends impact on women in specific ways. The 1999 World Survey on the Role of Women in Development presents a complex picture of the gender impact of globalization. On the one hand, it is associated with an increase in the female share of employment, mainly in export-oriented manufacturing industries, reflecting a movement of female labour from the unpaid household and subsistence (agriculture) sector, to the paid economy. On the other hand, the impact of the greater "flexibilization" of labour, primarily as a business response to changing market conditions, has varied in different countries, depending on their levels of development, socio-economic structure and particular form of integration within the world economy. While it has helped in the entry of women into the paid labour market in some regions, at the lower end, it has also often been accompanied by insecurity of employment, lower wages and poorer labour protection. Poorer women in both developed and developing countries are particularly vulnerable to economic downturns and economic and financial crises. In most regions of the world, women's primary responsibility for household labour and child care has shown little sign of diminishing with their increased participation in paid work. Besides being among the first to be affected, much of the burden of informal social support provided by the family as the welfare provider of last resort falls on women. Social policy constraints stemming from globalization also seem to place women at a disadvantage.
In industrialized countries there has been a growth in employee ownership of stocks along with a "democratization" of stock markets, which has had a significant impact on earnings of workers and labour-management relations. More and more workers in the developed countries are acquiring shares in the companies in which they work and participating in financial markets through pension and other funds. In the United States today, more private-sector employees own stocks than are union members. Stock ownership has also given employees a role in corporate decision-making. Participation in decision-making and stock ownership has led to a blurring of lines between employees and employers, workers and investors, wage earners and owners and managers of capital. It has established a greater commonality of interest between employees, corporations and investors as employees see their interests in the profits of the corporations whose shares they own and the funds in which they have invested.