There Is No Way Back from Globalization, So We Must Learn to Trust Each Other
On January 14, 2019, Professor Giovanni Tria spoke at HSE on contemporary globalization, including its consequences and problems. Below are the key highlights of his talk.
How We Look at Globalization
In its contemporary form, globalization is a phenomenon of progressive economic, political and cultural integration, driven by economic growth and technological development. Neo-liberal approaches would see it as a consequence of free international markets and freedom from invasive government activities.
I would suggest framing globalization differently, since it is not necessarily friendlier to markets than to governments. Globalization can be seen as a form of self-organized structure that is complementary to the markets and that aims to integrate the world’s ability to provide global public goods. Public goods include, among other things, global public health, world peace, global security, respect for fundamental human dignity, harmonized transportation and communication networks beyond borders, information and knowledge, and institutional global infrastructure.
If we interpret globalization as a process of network creation, we should expect a much more fluid and unpredictable process than traditional international trade development. However, this process is neither uniform in time nor equally spread across countries, social groups and individuals. These differences tend to create inequalities, but they also lead to creative destruction since new connections tend to destroy and substitute the old ones in density, number and location.
From Strong Ties to Weak Ones
In a globalized, fluid network, connections between different clusters are defined by a smaller set of common practices, in some cases even by only one single common standard, for example, a common language. Such connections are called ‘weak ties.’ Greater connectivity also implies that weak ties tend to become increasingly dominant, as growth and preferential attachment will increasingly favour local networks that are more highly connected globally.
But the domination of weak ties leads to a global system that is looser, less resilient to shocks, and prone to rapid shifts. Weak ties forming the global networks are more effective in carrying information over long distances, but they are not necessarily more reliable. In that sense, the exploding phenomenon of fake news is a good example.
Giovanni Tria, Minister of Economy and Finance of Italy
© Mikhail Dmitriev/ Higher School of Economics
Undesirable Effects of Globalization
The first undesirable effect is the loss of trust in Institutions, both at local and global level. One of the reasons for this is that weak ties substitute the more institutionalized mechanisms of cooperation. In addition, there is disillusionment related to failed expectations from globalization, which breaks the traditional ties with no benefit for the people.
The second unintended consequence of contemporary globalization is the decline in investment. This decrease has occurred at national level, but its moderate increase at the global level has not been enough to offset the overall decline. Investment in infrastructure, in particular, has been declining globally, which seems to go hand in hand with declining growth with some common features all over the world. For example, investment in infrastructure in the EU today is at 1.8% of GDP. This is 20% below pre- 2007-2008 crisis levels, and 2.5 times lower than the annual infrastructure investment needs for energy, transport, water and sanitation, and telecoms, according to the European Investment Bank.
In addition, the popular hypothesis that the contribution of the creative component of innovation, productivity and employment to GDP is much bigger than the effect of the destructive component, at least in the long run, is being seriously challenged. Both the negative effects of the destructive component of innovation and the social and economic costs of innovation in products and processes are growing.
© Mikhail Dmitriev/ Higher School of Economics
A Way Forward
With all the problems and difficulties related to globalization, a return to the old models of international interaction is neither feasible nor desirable, because the instruments, policies and institutions of the past are not able to deal with the levels of connectivity that we experience today – or with its consequences. We feel a bit like we are in a trap, and we are looking for a way out. I do believe that trust is the key factor to look for a way out of this trap.
The recent process of adoption of the Italian Budget in the framework of the current European fiscal rules is a good example of the limits of the current legal, political and economic architecture of the EU. What the Italian government is doing today with our economic policy and expansive fiscal policy is very simple. We try to respond to the will of our fellow citizens to emerge from the path that the economic and financial crisis designed for us. What we have decided is to support the temporary losers of this globalization game at the local level in order to find new job opportunities. And we have made a big push for investments to create conditions for growth.
But we have to address rules that were agreed to at the EU level ten years ago when everything seemed to be falling apart with the financial crisis. These rules seemed to work during sustained periods of growth, but they do not address the current situation of a fast slowdown in Europe’s economies, and they do not look at the bigger picture.
I am not suggesting that we should not have rules, but I am noting that technicalities of economic policy should not be given the same political weight as fundamental reasons to cooperate among nations. We will never re-build trust like this. To rebuild trust, we need to look at why we are together, and after that, we have to see if the technical rules still correspond to the current state of affairs.
The path that I believe is necessary to follow to get out of the trap and to re-build trust as the basic foundation of globalization is to rebalance national interest within, and not at the expense of globalization or multilateral cooperation. Will this be an easy path? Absolutely not. It will be a lengthy and difﬁcult process, but it is still a more conﬁdent outlook than the gloomy picture of a self-destructive system.
As part of International Partners Week, a ceremony of setting up Ca' Foscari University Information Corner at HSE University took place on June 19.
On June 18, the third International Partners’ Week ‘Academic Agility: Preparing Students for an Uncertain Future’ began at HSE University. The event brings together representatives of more than 30 universities from 16 countries, including France, Italy, Germany, the Netherlands, Turkey, the USA, Finland, the United Kingdom, and China. They have all come to Moscow to learn more about the kind of learning experience HSE University can provide, as well as to discuss practical challenges and solutions regarding international mobility.
On June 3-4, a conference entitled ‘Beyond Post-Truth: Media Landscapes in the “Age of Insecurity”’ was held in St. Petersburg. The conference was jointly organized by the Poletayev Institute for Theoretical and Historical Studies in the Humanities (IGITI) at HSE University, the Leibniz Institute for the History and Culture of Eastern Europe at GWZO Leipzig, the Max Weber Center for Advanced Cultural and Social Studies at the University of Erfurt, and Justus Liebig University Giessen.
This May, HSE and the Science and Technology Policy Institute (STEPI, Republic of Korea) signed a cooperation agreement on science and advanced technology research. This agreement was signed by Leonid Gokhberg, HSE First Vice Rector, Director of the Institute for Statistical Studies and Economics of Knowledge, and Dr. Hwang-Hee Cho, STEPI President.
This year's theme of the International Partners Week held this past May at HSE St. Petersburg was ‘Nurturing Global Citizens for a Global World’. Participants gathered to discuss common issues that universities face in regard to internationalisation, exchange approaches to implementing the Global Citizens concept, visit the university’s facilities, acquaint HSE SPb students with universities overseas, and, of course, enjoy St Petersburg’s White Nights.
On May 23-24, following the Days of the International Academy of Education held earlier this week, the General Assembly of the International Academy of Education took place at HSE University Moscow. The assembly brings together education researchers and experts from all over the world, and this is the first time that the biannual meeting was held in Russia. Over the course of two days, members discussed joint projects and publications and met newly inducted members who had the opportunity to introduce themselves and present their research. Members also took part in small group discussions on a variety of topics, including digital literacy and math education.
On May 20, the Days of the International Academy of Education commenced at the Higher School of Economics in Moscow. Experts from all over the world engaged in identifying global education policy trends will hold a series of meetings, master classes, seminars and open lectures. They will share their experience with Russian researchers, instructors and education policy makers over the course of three days.
This year, the HSE Faculty of Law is launching new extended programmes in Common Law, for which graduates will receive a degree from the University of London. These programmes are open for first-year students, as well as for other students and professionals.
The Higher School of Economics has become a member of the International Council for Open and Distance Education (ICDE). It is a key partner of UNESCO and the oldest global association that aims to provide quality and affordable online education to students around the world. Today HSE is the only representative of Russia in ICDE.
The agreement establishes a student- and academic-exchange programme and the opportunity for joint educational and research project development. The agreement was signed on April 8 with the participation of representatives of the government of North Rhine-Westphalia.