ABSTRACT
The current world economy is a globalised – not a global – economy. That is, neither the principles of absolute nor comparative advantage are allowed to operate unhindered, and all forms of trade and investment are politically negotiated among states or economic blocs. This is fortunate given current global inequalities. But there has been some reduction in those inequalities in the last 30–40 years as a result of globalisation. If this ‘convergence’ continues it could allow comparative and absolute advantage to operate in the future without massive human costs. Economic convergence has been due to the spread of branch plants of trans-national corporations, especially to parts of Asia, the Middle East and Latin America, and the ‘off-shoring’ of production to locally-owned companies in low wage locations around the world. These trends, along with economic and social policies pursued by a number of non-western states, have reduced levels of absolute poverty in the world and created a non-western middle class of 3 billion or so people. But paradoxically the rise of non-western living standards from absolutely low levels have increased a sense of ‘relative deprivation’ in many parts of the world. The implications of this for political instability and mass migration.
