Anyone who doubts that global financial markets control national economies need only look at the crisis facing the "tigers" of the Far East. Last year, the value of their currencies dropped rapidly, after investors decided that their economic policies were not strong enough; now the region is suffering slower growth, lower living standards and rising unemployment.
The situation in Asia shows how power has shifted from individual governments to the markets. In theory, governments are free to set their own economic policies; in practice, they must conform to a global economic model or risk being penalized by the markets.
Adjusting to this new "economic order" is proving difficult, in the developed world, and in particular the European Union, globalization is facing widespread public resistance. Critics complain that, without the protection of trade barriers, jobs are being lost to workers in poorer countries, and wages for employees in rich countries are falling. Opponents in the European Union point to the effects that globalization has had in the U.S. and Britain. In those countries, wages are stagnant--except for a few privileged--and taxes and welfare benefits have been reduced to help companies compete with industries in the developing world.
Those in favor of globalization accuse their critics of being shortsighted protectionists. They claim that a more integrated global economy will ultimately benefit everyone because it will enable countries to specialize in those areas where they perform best. Developing countries, with their higher populations and lower wages, will concentrate on labor-intensive industries. The richer countries, on the other hand, will diversify into high-tech industries, where high productivity and specialist knowledge are paramount. The effect of this will be to improve productivity in all countries, leading to higher living standards. The free movement of capital will also help poorer countries develop so that they can play a full and active role in the world economy.
But how close are we to a truly global economy For those in favor of globalization, probably too close. But in terms of real economic integration, there are still many problems to be solved. A global economy would mean complete freedom of movement of goods and services, capital, and labor. Yet, even ignoring the tariffs and other restrictions still in place, cross-border trade remains tiny as compared with the volume of goods and services traded within countries; foreign investment is also extremely small, amounting to little more than five percent of the developed world’s domestic investments.
But what is really holding globalization back is the lack of labor mobility. Labor markets remain overwhelmingly national, even in areas like the European Union, where citizens can live and work in any EU country. The main reasons for this are language and cultural barriers; the lack of internationally recognized qualifications; and, in some cases, strict immigration controls. The author suggests in the passage that in order to realize a truly global economy, great efforts should be made in all the following aspects EXCEPT ______.