Olga Sasunkevich (2015), Informal Trade, Gender and the Border Experience

Informal Trade, Gender and the Border Experience provides a significant contribution to the existing theoretical, methodological and empirical literature on trade and border studies with a post-positivist approach.

Professor Sasunkevich states that economic globalisation has advanced rapidly over the past three decades, albeit with a slowdown following the global economic crisis. Trade and foreign direct investment flows increased from 17 per cent and 0.9 per cent of global GDP respectively in 1990 to 28 per cent and 3.2 per cent in 2016, while cross-border movements of people have also been on the rise, with about one in ten people now living in OECD countries born abroad. These developments have facilitated productivity gains and global economic growth, the integration of emerging economies into global markets and the lifting out of poverty of hundreds of millions of people, while also bringing important non-economic gains including increased linkages between our societies and better knowledge of other cultures (p. 24).

Globalisation has also been a vector for the dissemination of technological advances, in particular digitalisation, which in many cases have been transformative. Digitalisation vastly reduces the transaction costs of communicating and coordinating globally, enabling fragmented production processes that take advantage of expertise and comparative advantages that exist globally. It can also improve access to health care, skills development or other services and provide entirely new ways for people to connect, socialise, collaborate and participate in societies. It provides opportunities to produce more and better products and services more cheaply, thus increasing consumer welfare. With the processes of globalisation and digitalisation intertwined, so too are their effects on the economy and people’s well-being.

The drive for deregulation at the domestic and international levels, while bringing benefits in terms of growth and innovation, has also hit some people and firms that were not well placed to compete in global markets, and has added to the consequences of market distortions that have undermined fair competition in some sectors. Reliance on metrics such as GDP per capita that provide information only on averages, as well as on models that do not fully capture the complexity of the global economy, is one reason why policies have been too weak or insufficiently tailored to address the challenges of open economies and to avoid the financial crisis (p. 51).

One of Sasunkevich’s main arguments is that there are several mechanisms through which globalisation and technological change may have contributed to the stagnation of middle-class living standards and to the widening of the gap between the latter and those of the top 1 per cent. In particular, there is some evidence that these processes have: contributed to the fall in labour’s share of national income; aggravated local blight and regional inequality; fed the dominance of leading firms in some sectors; allowed the rise of some market distortions; fuelled the process of financialisation; and added to pressure to shift taxation from wealth and high-income individuals onto labour. The combination of technological change and globalisation has put at risk many jobs involving routine tasks, while digitalisation appears to be contributing to the polarisation of labour markets.

There is no consensus about the extent of the various possible downsides to globalisation, but in current circumstances, it is worth addressing the problems even before this uncertainty is fully resolved. For unless the various sources of dissatisfaction with economic globalisation are addressed, political pressure to reverse at least some aspects of globalisation may endanger the great benefits that have been generated by growing openness to trade, investment and movements of people.

A policy response is therefore urgently needed to make globalisation work for all and avoid the onset of a damaging retreat from economic openness. But such a response is only likely to succeed if it goes beyond trying to ‘fix’ aspects of globalisation that are the subject of discontent. It should be framed in the context of a new policy narrative based around the concept of inclusive growth, aimed at improving multi-dimensional well-being in increasingly open and digitalised economies, which would help improve the living standards of those that have been left behind. Not all elements of such a policy response are yet fully developed, and more work, sharing of practice and innovative thinking will be needed to grasp and address the challenges of an increasingly connected and digital world. However, a number of policy directions at the national, sub-national and international levels suggest themselves (p. 120).

At the national level, governments should step up their efforts to bolster people’s ability to cope with change and succeed in a globalised and digital world. Social protection and safety nets need to be adapted and improved, especially in the light of the changing work environment created by digital technologies, without creating disincentives to increased innovation and productivity. However, protecting and compensating will certainly not be enough. Equally important will be the move towards an ‘empowering state’ which finds creative solutions to ensure universal access to quality health care and education, develops stepped-up active labour market and skills policies, shifts the tax burden away from labour, develops a strategy for small and medium-sized enterprises and strengthens technology diffusion and the integration of migrants.

At the sub-national level, regional development policy approaches should focus on reinforcing each region’s advantages rather than simply on redistribution. In addition, there is often a need to strengthen ties between rural and urban areas, and to create employment and skills policies as well as strategies for entrepreneurship, innovation and investment that respond more appropriately to local circumstances. Improved policy coordination and metropolitan governance arrangements can reduce municipal fragmentation and residential segregation by income.

Finally, at the international level, there is a need for the governance of globalisation to catch up with the globalisation of economic activity, while taking due account of concerns about national sovereignty. One aspect of this is strengthening international standards and making them more effective in helping to level the playing field and improve inclusiveness. In particular, greater international collaboration on competition, state-owned enterprises, business accountability, fighting corruption and illicit trade would make a significant difference. Full implementation of existing agreements to crack down on tax avoidance and tax evasion is also key. The other main area concerns bilateral and plurilateral trade and investment agreements. Government officials should be encouraged to further consult with their constituents and other affected stakeholders on trade and investment policy; engagement at the local level would help to improve understanding of the likely impact of trade and investment reforms on communities.

Sasunkevich’s piece opens up new avenues not only for further research, but also for the reinterpretation of the empirical material on human mobility already amassed, and this makes it an important fixed point for both researchers and practitioners.