NCPA - National Center for Policy Analysis

Hostilities Abroad Could Harm Globalization

April 15, 2003

The war on terrorism might sharply slow down the international movement of capital and people for an extended period. This will please the more extreme critics of globalization and immigration, but it will greatly reduce the opportunities for poor nations to grow out of poverty, says Gary S. Becker of the Hoover Institution.

Becker argues that there will be many other such setbacks:

  • These undeveloped nations also import large amounts of capital to help their agriculture and expand industrial production.
  • Many of these nations also sent large numbers of students to the United States and elsewhere to study science, engineering, medicine and other technical subjects.
  • Some of these students stayed abroad to work and often to prosper, but many came back with the knowledge they gained in the advanced nations.

Unfortunately, it is the international movement of people and of capital that is put in greatest jeopardy by events of the past few years.

  • Owners of capital are reluctant to invest in developing nations when there is great uncertainty caused by war and terrorism.
  • Rich countries are less willing to admit young male students and immigrants to study and work, especially those from Muslim nations or other countries with known hostility and resentment toward the United States and other western nations.

The antiglobalization movement may get its wish for a breakdown in the world economic order because of sharp reductions in the international movement of capital and people due to terrorism and a more divided West. But the biggest losers will be not the relatively rich members of the G7 countries but rather the nations that want to extricate the mass of their populations from extreme poverty and disease.

Source: Gary S. Becker, "When Globalization Suffers, the Poor Take the Heath," BusinessWeek, April 21, 2003.

For text

http://www.businessweek.com/magazine/content/03_16/b3829031_mz007.htm

 

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