The Miracles of Globalization

Foreign Affairs has a review of Martin Wolf’s new book Why Globalization Works

To those who complain that increased openness to trade during the 1980s and 1990s has failed to deliver faster growth, Wolf points to the contrary experiences of China and India. Both countries witnessed significant jumps in their growth rates as they opened up their economies to international trade and foreign investment. As Wolf points out, “Never before have so many people-or so large a proportion of the world’s population-enjoyed such large rises in their standards of living.”

The first charge, commonly made by NGOS and student organizations in the United States, is easiest to dismiss. If multinational jobs are so exploitative, why do workers in Bangalore, and even in predominantly Marxist Kolkata (Calcutta), line up to take them? The answer, as Wolf painstakingly documents, is that multinationals pay their workers more and treat them better than do local companies. Among other data, he cites a study of 20,000 plants in Indonesia showing that the average wage paid to workers in foreign-owned plants in 1996 was 50 percent higher than in private domestic plants. Even after controlling for education levels, plant size, and other relevant variables, wages paid by multinational companies were 12 percent higher for blue-collar workers and 27 percent higher for white-collar workers. According to surveys by the International Labor Organization, moreover, allegations that foreign-owned plants in “sweatshop industries” (such as footwear and apparel) pay lower wages and provide inferior working conditions also turn out to be false.[The Miracles of Globalization]

Daniel Drezner says this one book blows everything else out of the water.