Is Globalization What It’s Cracked Up to Be? Economic Freedom, Corruption, and Human Development

This paper examines the effect of economic globalization on human development and argues that the relation between economic globalization and human development is mediated by economic freedom and corruption. Findings suggest that economic globalization affects economic freedom positively and corruption negatively. In turn, economic freedom has a positive effect and corruption has a negative effect on human development. All relations are in the hypothesized directions and significant. Research, business, and public policy implications as well as directions for future research are presented. The benefits of globalization are obvious: faster growth, higher standards of living, and new opportunities. Kofi Annan, 2001. Globalization is an emotional word. It evokes strong reactions among exponents as well as opponents of globalization. While the former group equates globalization with higher living standards, greater transparency, and increased economic freedom, the latter associates it with economic exploitation, environmental degradation, and cultural homogenization. The controversies surrounding the effects of globalization reached a pinnacle when, during the World Trade Organization (WTO) meetings in Seattle, USA (November 29–December 3, 1999) and in Genoa, Italy (July 19–24, 2001), a variety of interest groups challenged the legitimacy of globalization and protested against what they considered to be its direct and collateral effects. The WTO considers the opposition to globalization a serious development. To avoid confrontation with the anti-globalization groups and also because of the reluctance of developed economies to host the WTO, the WTO held its recent meeting in Doha, Qatar (November 12–14, 2001). The anti-globalization groups have been successful in reaching out to the general public. They have put together a coherent case for their position, drawing attention to issues such as the use of child labor in less developed economies, the indifference of pharmaceutical companies to the spread of AIDS and of the developed countries to the burden of third-world debt. These concerns about globalization have sparked heated debates among different segments of society. It is generally agreed that the nature and outcome of these debates will influence the progress of globalization. Globalization, as Weisbrot, Naiman, and Kim (2001) note, is not an inevitable outcome, but the result of the laborious process of rule making.