That globalization is good for the participating economies is not a majorly contested proposition. What however splits the deck is the way it delivers the benefit, the proportional gains among the nations, and the roadblocks in the way of reaping the full potential by a participating economy.

Why globalization is deemed good for the participating economies is the first issue that needs to be addressed. Let us start with an economy within a country. A fair market competition tends to increase all round economic efficiency by nurturing competence and its continuous improvement at a price that consumers accept. Any product that hits the market as a novelty initially gets a price that the producer demands. Soon others, sensing an opportunity, gets into the market with competing products priced lower than the pioneer to grab the market. Thus ensues a price and quality competition and once the market decides the best price, the competition for the time being stabilizes before the next round of a similar story unfolds.

This is a simplified version of how the market operates. And this mode operates in the labour and capital market as well ensuring the most efficient transactions. However, the chain breaks down when there are impediments in the cycle that prevents the cycle to play out in its full potential. This may happen due to several reasons.

For example a product may need a technology that requires highly skilled workforce with a very high degree of knowledge exposure. Which by itself cannot be replicated so easily. This creates stiff barrier for competitors to enter. There could be other barriers like proprietary technology and so on and so forth. There may also be political and regulatory barriers that prevent the market to play out in its full potential. Each such barrier tends to create inefficiencies of various hues one of which may be a severe inequality in income leading to poverty.

Now, if we scale up our analysis to global level with each participating economy operating as interacting market the same logic will hold. Studies by Bertelsmann Stiftung over a decade based on 42 countries survey read with all the studies on gains from study by the IMF and the World Bank clearly point out that globalization benefit does not accrue to the same degree to all the economies. The countries that are comparatively more affluent gain more than the poorer ones due to reasons attributed to ability to deploy greater resources to R&D and marketing among others. But it is also true that despite there being inequality in distribution of gains among nations all economies have reported gains.

However, the gains in efficiency and growth globally are negatively affected if the chain gets snapped. The current tendency of the nations to look inward and create barriers in the free movement of commodities and labour is increasingly sapping the growth in the global wellbeing. North American Free Trade agreement is lost. Other regional trade pacts are increasingly stressed to the point of turning almost defunct. Globalisation brought in local specialization. Whatever that one could do best became one’s specialization. For example, Bangladesh’s specialization in textiles or India’s expertise in leather, IT projects and other areas are all accruals from gradual opening up of foreign trade.

But if there is a reversal in the process of globalization all these gains will get reduced affecting all the players in the game by shrinking the market.