global political economy essay

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Asymmetries of market power, asymmetries of social power, asymmetries of political power.

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Power and inequality in the global political economy

This article is an adapted version of the 2016 Martin Wight Memorial Lecture, delivered on 9 November 2016 at the London School of Economics and Political Science. I am sincerely grateful to the Martin Wight Memorial Trust and the LSE for their invitation and generous hospitality, and to International Affairs for the opportunity to publish this revised version.

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Nicola Phillips, Power and inequality in the global political economy, International Affairs , Volume 93, Issue 2, 1 March 2017, Pages 429–444, https://doi.org/10.1093/ia/iix019

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Inequality in all its forms is the defining global problem and increasingly the defining political problem of our age. A monumental body of scholarly research seeks to understand the drivers behind the vast and accelerating patterns of socio-economic inequality in the global political economy. This article, an adapted version of the 2016 Martin Wight Memorial Lecture, contributes to this effort by focusing on a dimension of the picture which has received surprisingly little attention, namely, the implications for socio-economic inequality of the particular form of industrial organization that has come to underpin the contemporary global economy—one organized around global value chains and global production networks. It proposes an approach which sees inequality as arising at the intersections of three dimensions of asymmetry—asymmetries of market power, asymmetries of social power and asymmetries of political power—which underpin and crystallize around global value chains. It explores these dynamics in the particular arena of labour and labour exploitation in global value chains, as a means of shedding a valuable wide-angle beam on the big questions of power and inequality in the contemporary global political economy.

As the World Economic Forum meeting convened in Davos in January 2017, headlines were dominated by reports from Oxfam which laid bare the startling—and growing—scale of inequality in the global political economy. Continuing a theme of its research over several years, Oxfam presented updated figures showing that the eight richest billionaires in the world controlled more wealth than the poorest 50 per cent of the world's total population. 1 The corresponding figure for 2016 had been the 62 richest people, revealing an acceleration of inequality over the year stemming mainly from increases in poverty levels in China and India. 2 International organizations tell us that dramatic progress was made in the alleviation of extreme poverty between 1990 and 2015, estimating that over that period the number of people living in extreme poverty (defined as income of US$1.25 a day or less) fell by slightly more than half of the 1990 figure to under 10 per cent of the global population. 3 However, these aggregate figures hide the very uneven nature of improvements across the world. Outside China, progress has been patchy, and an overall decline in extreme poverty has not been sufficient to reduce the total number of people living in such conditions. Perhaps most significantly, while there has been a drop in extreme poverty, there has been much less progress on poverty in general: in fact, between 1981 and 2008 the number of people living on daily incomes between the $1.25 extreme poverty line and the $2 per day poverty line doubled. 4

A monumental body of scholarly research has traced trends in inequality over time and across the world, 5 engaging in energetic empirical and theoretical work seeking to understand the drivers behind these vast socio-economic disparities, which some time ago Jan Nederveen Pieterse rightly described as being ‘without historical precedent and without conceivable justification—economic, moral or otherwise’, 6 and which are now playing out politically in seismic and traumatic ways. Not least for that reason, the task is one of ever greater urgency. My contribution to this effort here focuses on a dimension of the picture which has received surprisingly little attention: namely, the implications for socio-economic inequality of the particular form of industrial organization that has come to underpin the contemporary global economy—one organized around the structures of global value chains (GVCs) and global production networks (GPNs). 7

The GVC/GPN concepts refer to a pattern of global and regional production, coordinated and controlled by transnational corporations (TNCs), that is both functionally and geographically fragmented. 8 In the functional fragmentation of the production process, trade is no longer about the international exchange of final goods, but rather about intermediate goods and services, or ‘trade in tasks’. 9 Functional fragmentation is associated with geographic fragmentation, as lead firms progressively outsource and/or offshore productive functions, shaping new global and regional patterns of specialization, and a new global politics of distribution. It has become widely accepted that we are now living in what we could call a ‘GVC world’. 10 For one group of observers, GVCs have become no less than ‘the world economy's backbone and central nervous system’. 11 The 2013 World Investment Report , published by the United Nations Commission on Trade and Development, estimates that around 80 per cent of global trade now flows through GVCs led by TNCs. 12 The International Labour Organization estimates that one in five jobs worldwide is linked to production in GVCs. 13 Virtually all of the major international organizations focused on economic development have picked up and actively deploy, in different ways, the concept and language of GVCs, in parallel with national governments across the developing world. 14 We have in this sense reached a point where it can plausibly be suggested that ‘the goal of industrial upgrading within GVCs has become nearly synonymous with economic development itself’. 15

To the extent that the broad field of international political economy has been somewhat slow to embrace what has become a voluminous scholarly and policy debate on GVCs/GPNs, it is perhaps inevitable that the associated dynamics of a ‘GVC world’ have rarely been linked up to the otherwise vibrant debates about inequality that have flourished in our field over the years. Yet, from the other angle, much of the GVC/GPN literature also displays strikingly little direct concern with the question of inequality, despite aspirations in some parts of the field to move beyond the terrain of economic coordination between firms towards what we might see as a more encompassing and critical political economy of GVCs/GPNs. Indeed, it has been observed for some time that GVC/GPN scholarship has been ‘converging with more conventional approaches to competitiveness and losing touch with [its] more critical origins’, 16 notwithstanding honourable exceptions to this generalization.

Against this backdrop, my focus in this article is on how the dynamics of a global economy dominated by GVCs/GPNs contribute to the patterns of inequality that we observe across the world. My intention is to demonstrate that inequality is not a ‘bug in the system’ of a GVC world; 17 rather, the foundational dynamics of a global economy organized in this manner directly produce these outcomes, on the one hand, and on the other depend on the harnessing of existing inequalities for their ability to emerge and thrive. To put the point slightly differently, global patterns of inequality are critical to understanding how the GVC world was enabled to come into being from the 1970s onwards, and how it continues to serve the powerful economic and political interests which benefit from this form of global economic organization. Conversely, the nature and functioning of the GVC world are central to understanding the drivers of the patterns of inequality that we have observed being consolidated over this period of time, and by extension to understanding the political and economic juncture at which we find ourselves at the start of 2017, dominated by an emphatic shifting of domestic and international political sands.

Strands of the GVC/GPN literature offer a valuable starting-point for this enterprise, in their recognition that this particular form of global industrial organization is founded on corporate strategies to harness significant global asymmetries of market power in the interests of generating and capturing profit. 18 GVCs, in other words, exist for a reason: they enable lead firms to mobilize and exploit vastly asymmetrical power relations between firms and other actors within value chains, in order to control how, where and by whom value is created , and how, where and by whom it is captured . The mobilization of these asymmetrical relations of market power to produce a global economy marked by significant concentrations of wealth and assets is now amply documented. 19

My suggestion here is nevertheless that this focus on market power remains too limited to serve as the basis for a broader understanding of how inequalities are produced and reproduced in a GVC world. I propose instead an approach which sees inequality as arising at the intersections of three dimensions of asymmetry in the power relations that crystallize in and around GVCs—asymmetries of market power, asymmetries of social power, and asymmetries of political power. Asymmetries of market power refer to the relative positions of firms within GVC structures, characterized by oligopoly power among lead firms and intense competition among supplier firms, 20 and the ways in which these positions correspond with degrees of control over production and the capture of value. Asymmetries of social power refer to wider patterns of poverty, wealth and inequality in the societal contexts in which GVCs are rooted, as well as between actors within GVCs, and how forms of social power are mobilized to reinforce these patterns. Asymmetries of political power refer to the wider political dynamics which shape the governance of GVCs, highlighting the interactions between political interests in shaping the governance of GVCs, and by extension their social underpinnings, at the local, regional and global scales. These three dimensions of asymmetry are depicted in stylized terms in figure 1 , and the task is to capture how these dimensions interlock and intersect to produce observed patterns of socio-economic inequality.

The political economy of global value chains

Such an approach opens up an expansive set of questions and an expansive terrain for research, both of which far exceed the possible remit for a single article. I therefore wish to take a microcosm of these dynamics, exploring in necessarily illustrative terms what this triangle looks like, in theory and in practice, in the particular arena of labour and labour exploitation in GVCs. Labour relations are key to understanding the dynamics of value creation and capture in GVCs, in terms both of wealth concentration and of poverty and vulnerability. This focus accordingly sheds a valuable wide-angle beam on the big questions of power and inequality in the contemporary global political economy. By taking each of these dimensions of asymmetry in turn and exploring their interactions, I hope to elucidate how the evolution of GVCs constitutes a critically important means through which socio-economic inequality has become a defining feature of the contemporary global political economy.

Figure 2 (overleaf), depicting the distribution of value in the production of Apple's iPhone, tells us at a single glance much of what we need to know about where value is created and captured in GVCs, and by whom or what. What jumps out immediately is that more than half of the total value, across the whole of the production process, is captured by the lead firm—Apple—as profit. The figures for labour costs, by contrast, offer an insight into both the relationship between capital and labour in the global economy, and the relative proportions of value that are captured by each. The costs of materials involved in production are vastly greater than the human input costs associated with labour. The proportion of profits flowing to the principal countries in which the iPhone is produced are insignificant compared with the profits that flow to a single private company—in the language of GVCs/GPNs, the ‘lead firm’.

The limited effect of Chinese financing and investment on the bargaining power of traditional donors

It is well known that the iPhone value chain stretches across a wide range of geographic locations, with the largest concentration of suppliers being in east Asia. Yet conventional depictions of the value chain tend to focus only on its upper tiers, specifically on registered factories and the increasingly powerful giant supplier firms in east Asia, of which Foxconn is the most notable in the electronics sector. 21 The value chain in reality encompasses thousands of firms and enterprises which are involved in production for Apple, but are not registered suppliers and have no formal relationship with Apple. Very often these will be subcontractors to the first- or second-tier supplier firms, or informal units operating way down in the least visible parts of the value chain. These extend to the tiers associated with the production of raw materials for the electronics industry, which in mobile phone production notably include the mineral coltan. It is notable that these arenas of production are almost always excluded from depictions of value chains, and frequently also from firms’ own definitions of the scope of their supply chains. This is especially so in those value chains characterized by relationships between firms based on arm's-length subcontracting arrangements, as distinct from those organized around direct ownership and control by the lead firm of a network of affiliated entities. Indeed, the length and complexity of value chains organized around subcontracting, in electronics and many other sectors, mean that productive activities in the lower tiers are in every sense removed from the world of first-tier suppliers and lead firms. It is especially common for workers in the lower tiers of the value chain, particularly in informal units and home settings, to be entirely unaware of the final destinations of the products they contribute to producing, or of which lead firm or supplier firm controls the production process in which they participate.

Starting with the illustrative iPhone example helps to underline the core point that the globalization of production along these lines is no accident: GVCs have been purposefully constructed by powerful economic and political interests to bring about a particular model of globalized production. We have already established that this pattern of production is driven by lead firms seeking to create and harness significant global asymmetries of market power in the interests of generating and capturing profit, facilitated and buttressed by states and other political actors. With the maturing of GVCs, it has come to be firms, not states, that now play the major role in determining what will be produced where and on what terms, and what will be traded on what terms. So, to a great extent, global patterns of production that were once strongly shaped by constellations of state policies are now artefacts of value-chain governance. States are, though, by no means passive bystanders: on the contrary, along with powerful corporate interests, they have been architects of the GVC world, providing facilitative governance functions ranging across trade policy, development policy, corporate tax policy, competition policy and other areas. 22

Competition policy is perhaps particularly significant. The loosening of competition policy across the world reflects the much greater political tolerance of the high levels of market concentration and the high levels of market power that characterize lead firms in GVCs, and as a consequence the trends of massive wealth concentration which form a core feature of the global political economy of inequality. The increasing concentration of market power is apparent in many sectors. Examples include retailing (Walmart, Amazon, Alibaba), office software and operating systems (Microsoft), smartphones (Apple and Samsung), large commercial aircraft (Boeing and Airbus), soft drinks (Coca-Cola) and credit card networks (Visa and MasterCard). 23 A key policy support underpinning this trend is the expansion of intellectual property protections, particularly in the high-technology sector. 24

The consolidation and mobilization of these market asymmetries rests on securing a structure of production in which a small number of very large firms at the top, in many cases the branded retailers, occupy oligopolistic positions—that is, positions of market dominance, and in which the lower tiers of production are characterized by densely populated and intensely competitive markets. 25 In the context of high levels of market concentration, asymmetry of market power is entrenched by the simple fact that suppliers face limited numbers of buyers for their goods, lending to those lead firms a form of monopsony power, while buyers often have many potential suppliers and are able to use their market power to generate intense competition between supplier firms, particularly on conditions of price and supply. 26

Producers’ and suppliers’ strategies to manage these commercial pressures frequently rest on the mechanisms of labour costs and labour practices, especially in the most labour-intensive and price-sensitive sectors. Especially where required quality standards are high, labour becomes the key arena for input cost reduction; equally, in sectors where the key requirement is flexibility in the face of significant commercial risk (whether for reasons of seasonal dynamics or highly variable commercial conditions), business models are built around the aggressive management of labour supply, conditions and wages. This is particularly the case where incentives imposed by external stakeholders to adhere to labour and social standards are low: for the vast population of ‘invisible’ firms and entrepreneurs in the informal economy in sectors such as garments, the incentives they face point in precisely the opposite direction, particularly as their share of the consumer market rests on cut-throat price competition. 27 Lead firms and lead suppliers, equally, are apt to pursue locational strategies which permit access to such environments for production. Firms in price-sensitive and labour-intensive sectors, as well as firms which rely on retail strategies, prefer less stringent regulation and will go to some lengths to secure those conditions. 28

The consequence across the world has been the explosive growth of precarious, insecure and exploitative work in global production, performed by a workforce significantly made up of informal, migrant, contract and female workers, 29 and extending at the end of the spectrum to the purposeful use of forced labour. 30 To return to our illustrative example of Apple, documented and highly publicized conditions in its value chains illustrate some of the forms that exploitation takes. We know that diverse forms of labour exploitation are embedded in Apple's supply chains and those of other electronics producers, not least from a steady flow of revelations about the use of forced labour, unpaid student intern labour and child labour in supplier factories for Apple, Samsung, HP, Dell and other firms. 31 When we trace labour conditions in the value chain, we encounter the famous ‘dormitory’ system in China, 32 where workers are often confined to factories and obliged to live in factory accommodation, not least to facilitate compulsory overtime; they are usually locked in at night, and work in what in the garment sector are often referred to as ‘sweatshop’ conditions. Exploitation and forced labour are also rife way down the value chain in the production of raw materials. Mining for coltan in the Congo and other parts of Africa and South America is strongly associated with human rights abuses and forced labour; coltan mining is essentially unregulated, and often also illegal and/or associated with illicit trade and smuggling. 33

Conditions such as these in global production are often depicted as being a problem in and of the ‘developing’ world. We are used to focusing on conditions in garment factories in Bangladesh, electronics factories in Taiwan, horticulture in South Africa or the cut flowers industry in Ecuador. Labour flexibilization and the erosion of labour standards in what are traditionally thought of as the more advanced industrial economies are amply observed and theorized, but in debates that tend to be remote from the concerns with global production and GVCs/GPNs. Yet, particularly in retail, the dynamics of GVCs extend to geographic and social locations that are not generally included in this literature, in North America or Europe, where they bring about parallel trends associated with offshoring strategies, labour practices involving pressure on wages, contracts and conditions, and an appreciable incidence of forced labour. Migrant workers in these locations are especially vulnerable to the forms of exploitation that are generally documented in ‘developing-country’ locations within GVCs. All of these phenomena shape patterns of inequality in these contexts, both in terms of how existing inequalities facilitate these practices, and in terms of the inequalities that their outcomes act to produce or reinforce.

We must nevertheless beware of excessive generalization. It is important to recognize that these patterns of exploitation and abuses of labour rights are not uniform or universal in global production, and that a great deal of contingency attaches to the nature and structure of the value chain, patterns of ownership, the type and condition of the labour market, the political environment and institutional context, the form that public and private governance initiatives take, the nature of end consumer markets, and the possibilities for labour agency. Impressive empirical research has sought to document these patterns of contingency, and develop propositions about where, when and under what circumstances labour rights and standards are more likely to be protected, and where, when and under what circumstances they are more likely to be violated. 34 It is in this sense unsatisfactory simply to assert that GVCs are always and everywhere associated with a ‘race to the bottom’ type of logic which creates or entrenches inequality in identical ways.

Nevertheless, we have established here a case for a foundational understanding of GVCs as purposefully constructed to facilitate the mobilization of asymmetries of market power by lead firms in order to create and capture value or profit, and of labour exploitation as arising within and from the ‘normal processes of power within production’. 35 We have an insight into the disjunctures between where, how and by whom or what value is created, and captured, in the global economy—in other words, into how commercial dynamics in GVCs create and deepen socio-economic inequalities across the world through the twin mechanisms of facilitating the massive concentration of market power and enabling the proliferation of business models founded on exploitative labour strategies. At the same time, these inequalities are not simply outcomes, as they are often understood to be in debates about labour standards. Rather, echoing an insight well established in classical theories of political economy, the advance of production depends on a set of prior enabling conditions of inequality—and this brings us to the second dimension of the triangular structure depicted in figure 1 .

How do these enabling social asymmetries come about, and what forms do they take? There are three aspects that deserve attention. The first is a well-recognized structural trend, which has been called by Richard Freeman the ‘great doubling’ of the world's labour force as a result of the entry into the global economy of China, India and the former Soviet bloc nations during the 1990s. 36 On the tide of political change in those countries, along with the accelerating liberalization of the global economy and demographic trends, Freeman estimated the size of the global labour pool to have increased from approximately 1.46 billion to 2.93 billion workers between 2000 and 2010, generating a ‘global readjustment of labour and capital’.

The second aspect is the parallel trend in adoption of a policy framework designed to facilitate the liberalization and deregulation processes associated with globalization, condensed into the shorthand of ‘labour flexibilization’. Across the world, as much in the United Kingdom and United States as in India, Argentina, Mexico or South Africa, new laws were passed to dismantle previous regimes of worker protections and to provide employers with maximum flexibility in handling labour. At the same time, existing welfare state structures were dismantled or scaled back, leading to an explosion in casual, precarious work, the celebration of ‘disposability’ as the core attribute of this new global workforce, 37 and the global problem not only of unemployment but of under -employment.

In a contribution in 1976, Robert W. Cox identified a new threefold social configuration, dominated by a ‘transnational managerial class’ at its apex, beneath which stood a large class of ‘established labour’ in what at the time was beginning to be understood as the primary labour market and finally the group of ‘social marginals’ who were either excluded from industrial production or integrated into the secondary labour market through markedly precarious forms of employment. 38 Today, while a proportion of Cox's ‘social marginals’ may well exist in conditions of exclusion from employment in global production, a far greater proportion is now integrated into it, recalling the ILO estimate mentioned above that one in five jobs worldwide are now connected to GVCs. 39

It was also noted above that recent figures on global poverty indicate a decline in extreme poverty on aggregate, but a marked ‘bunching up’ of the numbers of people living between the US$1.25 per day extreme poverty line and the US$2 per day poverty line. This expanding population is largely comprised of the global working poor—a category that orthodox economic and development policy thinking has long struggled to accommodate, as work is envisaged in this thinking as the route out of poverty and the key to poverty reduction. The question of marginality in this sense has never been more pronounced or pressing; but the marginality stems as much from the terms of in clusion in global economic activity as from conditions of ex clusion. The concept of ‘adverse incorporation’ has been useful in understanding these patterns and the question of how inclusion in global economic activity can for many people act to create or reinforce their chronic poverty rather than alleviate it. 40

The third aspect of particular relevance relates to the inequalities which stem from migration. Migrant labour was identified above as one of the most important constituencies in this new global labour force—and here, obviously, our interest is in the low-paid, low-skill segments of the labour force, which are also significantly feminized in many sectors. The dynamics of precarious employment and adverse incorporation are magnified by the particular vulnerabilities of migrant workers, especially where they are working in the informal economy. Migrant workers lack the power to engage in political action around wages and conditions, and they lack the rights and entitlements associated with citizenship or residency. Laws governing immigration or internal movements also often act to strip these workers of labour or welfare protections, constrain their ability to seek satisfactory working conditions by changing employers, and provide mechanisms that employers can use to manipulate them, particularly perhaps when the worker is undocumented, such as the threat of denunciation to immigration authorities. Forced labour and child labour are strongly, although not exclusively, associated with the inequalities which attach to the migrant labour force. 41 Hence we see a complex nexus of inequalities—political, social and economic—which reinforce the disproportionate likelihood that migrant workers will encounter the more severe forms of labour exploitation in GVCs.

These existing social inequalities provide the environment in which the commercial dynamics within GVCs outlined in the previous section can flourish. In many sectors, particularly in the ‘lower’ tiers of GVCs, the globalization of production has been driven by lead firms pursuing locational advantages to manage and minimize production costs, facilitated by the changing structures of global and local labour markets; subcontracting firms in turn mobilize these existing social inequalities in order to construct and maintain a highly flexible workforce which is vulnerable to relentless commercial pressure on wages and conditions. It can plausibly be hypothesized that these dynamics are most pronounced where labour is both abundant and relatively immobile, inasmuch as in these circumstances employers’ leverage is enhanced by the competition for jobs between workers, and with it the possibilities for exploitation are increased (including for the worst forms associated with forced labour). Conversely, where labour is scarce, employers are more likely to raise wages and improve conditions in order to attract and retain workers. 42

A final layer in our discussion relates to the asymmetries of social power which come into play in generating these patterns of exploitation and inequality. What Charles Tilly called practices of ‘social categorization’ refer to the ways in which particular kinds of ‘markers’ are used to institutionalize and enable discrimination against and exploitation of particular groups of people. In Tilly's theorization, the ‘inequality-generating mechanisms’ of social categorization relate to markers such as gender, age, race, ethnicity, caste, religion and so on, which are deployed by those who possess social power in order to control access to ‘value-producing resources’ and reserve their own monopoly in this respect. 43 Such a perspective gives us an insight into how socio-economic inequalities are produced and reproduced by asymmetries of social power, which, in our context of GVCs, facilitate the patterns of exclusion and/or ‘adverse incorporation’ that are characteristic of many arenas of global production. It is through these mechanisms that inequality, in Tilly's phrase, becomes durable, and often intergenerational: exclusion from access to value-producing resources and arenas of opportunity is perpetuated by the consequences of exploitation in GVCs, perhaps particularly in those forms associated with forced and child labour. 44

Let us then take the argument on to the third point of the triangular scheme in figure 1 , returning to our starting-point of the geographic fragmentation of global production. We have explored the business case for this kind of model and its social foundations, but now need to incorporate a more explicit recognition of the asymmetries of political power which underpin it. These asymmetries take many forms across diverse arenas of governance and policy, some of which (such as the governance of immigration and mobility) we have already touched on. Given constraint on space, this final section will focus on the politics of global business and regulation.

We have established that the geographic fragmentation of production is driven in large part by the search of many firms in many sectors for permissive regulatory and political environments, particularly in relation to labour and environmental standards. However, it is not simply that these conditions exist and firms take locational decisions on that basis. Rather, lead firms mobilize vast political power to create those conditions and ensure that they are maintained. In the competition to attract foreign investment and to increase their exports, many developing countries have incentives to be the low-cost point in GVCs. This, in turn, translates into incentives to limit regulatory costs for producers, as well as to keep wages ‘competitive’ and to restrict workers’ ability to organize. Similarly, enforcement mechanisms remain either underdeveloped or unimplemented. For many states, these outcomes emerge from the significant asymmetries of political and bargaining power that exist between their governments and transnational (and some local) firms. For others, the pressures of compulsion are less pronounced, but the competitive dynamics of the global economy and the demands of economic development push in the same direction, given additional impetus by the political power of transnational business.

Evidence of these political dynamics abounds. China's Labour Contract Law of 2008, for example, increased wages and protections for workers. A large number of big firms responded by moving their operations to sites in countries such as Vietnam or Cambodia where the regulatory environment remained even more permissive and labour costs even lower. 45 We have documented evidence of a substantial increase over time in provisions built into bilateral investment treaties to protect the interests of foreign investors—wherein such investors are granted exemption from new labour laws, or guaranteed the payment of compensation by national governments if any such laws are enacted or amended. Similarly, a recent body of research associated with the generation of the United Nations’ Guiding Principles on Business and Human Rights involved a survey of around 90 contracts for large-scale investment projects, which revealed that a majority of those drawn up with countries outside the OECD contained provisions to insulate or exempt investor firms from compliance with new social or environmental laws, or to facilitate compensation from national governments for the costs involved in complying with such legislation. 46 Representatives of big business occupy seats in parliaments and congresses around the world, and use lobbying power to secure favourable legislation; their leverage is very strong over national governments in general, and particularly over those whose bargaining power is weak. Arguments about political incentives against regulation are just as relevant to the more advanced economies as in the so-called developing world, where political dynamics between governments and big business, as well as ideological affinities between them, have substantially the same outcomes in terms of a retraction of regulation.

In short, TNCs themselves push for the very ‘gaps’ in public governance that are necessary for their business models to thrive, working in tandem with some states and through forms of political compulsion over others. As indicated above, it is firms, not states, that now play the major role in determining what will be produced, where and on what terms, and what will be traded internationally. Specifically, firms also play a major role in determining how production will be regulated, including through labour and environmental standards. Jill Esbenshade argued in 2004 that the new ‘triangle of power’ in the era of global supply chains (or, in our language, a GVC world) consisted of employers, contractors and government as the key points of the governance and regulatory landscape. 47 Others have argued that this overstates the role of government, and argue instead that the triangle is now composed of brands, their contract factories and the set of (western) non-governmental organizations (NGOs) that provide the pressure on firms to improve standards. 48 In short, governance in a GVC world is observed to have shifted to private actors, and to have come to rest on the notions of corporate social responsibility (CSR) and voluntary self-regulation on the part of firms, ushering in a new era of ‘transnational private regulation’. 49 In such a model, it is NGOs and consumers, not governments and states, that are responsible for holding commercial firms to account. 50 We know that this model is not effective in improving standards, and an ample literature has emerged which highlights the shortcomings of private governance and CSR. 51

In consequence, the debate has recently shifted to an important and fascinating consideration of what kinds of governance initiatives, under what conditions, can make a difference in improving labour and other standards in the global economy, and what kinds of effective regulation can be conceived in the context of a world dominated by powerful business actors and the competitive dynamics of GVCs. 52 Much has been made in particular of the combination of public and private governance that is deemed necessary to achieve these improvements, arguing for a continuation of the ‘regulatory renaissance’ that is thought to be under way in some parts of the world. At the same time it must not be forgotten that there are plentiful examples of firms that have engaged in meaningful responsibility and accountability initiatives with some positive outcomes, and that not all firms are engaged in strategies of continually seeking to circumvent or undermine public regulation. It is interesting that in Britain, during the process of drawing up the Modern Slavery Act of 2015, some businesses agitated for at least an element of government regulation inasmuch as they perceived a need for a level playing field in relation to labour practices. At the same time, the relentless pressure on electronics firms from media and NGOs, noted above, has led to some significant initiatives to address the problem of labour abuses in their value chains. While firms such as Apple have been open to challenge on how extensive, committed and/or effective these initiatives have been, 53 nevertheless an element of at least ostensibly progressive activity by some private actors has to be recognized as an important part of the governance landscape.

A final caveat is in order. We have seen that a pervasive assumption remains that states and governments remain ‘absent’ in a GVC world, removed from the task of governance, and overwhelmed by the asymmetries of political power that have been documented, necessarily briefly, in this discussion. Such an assumption is misleading: the state remains a core part of the political economy of governance, functioning as an architect of the GVC world, and is itself active in a politically purposeful process of delegating or ‘outsourcing’ governance to private actors. 54 What may appear to be purely private forms of governance are always and everywhere underpinned by particular kinds of interactions with state authority and public governance. 55 This does not mean that states and TNCs are politically united and serving the same cause, any more than we may assume that national states are simply overwhelmed by the asymmetries of political power that crystallize in and around GVCs. Some states are more politically willing than others to challenge big business, through regulation or other means. Similarly, intense political contestation occurs between states and firms, as they tussle for control over the terms of production and the value created in the global economy. Tax scandals represent one case-study of this contestation. Another is the tension between business and government in relation to immigration policy and its consequences for labour supply. In relation to labour standards, there has emerged a politics of blame, where firms are apt to place responsibility on state regulation and blame its deficiencies, states are apt to insist that these are supply-chain issues, consumers receive appeals from each side, and workers continue to labour in conditions of systematic exploitation.

Asymmetries of political power thus form a critical part of the picture of how inequalities are produced and reproduced in a GVC world. Governance and politics matter, in short, and political power—both public and private—fuses in dynamic ways with market power and social power to produce the patterns of inequality in the global political economy that have been so amply observed over recent years.

Inequality in all its forms is the defining global problem and increasingly the defining political problem of our age. At the time of writing in early 2017, public discourse had renewed its focus on inequality in an attempt to understand seismic events such as the UK's referendum vote to leave the European Union, the election of Donald Trump as president of the United States, and the rise of the populist right in several countries. Questions of disadvantage, alienation and exclusion are all critical to this conjunction of events and trends. Yet a focus on those people and sections of society alienated from globalization and crushed by its distributional dynamics cannot capture the full complexity of the political moment in which we find ourselves. Equally relevant is the question of for whom the system works: how, politically, the opportunities are protected for the massive concentration of wealth, power and advantage that we have explored here, and how economic, social and political inequalities can be manipulated and created afresh for that purpose.

Whether this means that we are seeing a significant crisis of capitalism, of an order which could usher in a substantively new order, remains an open question and one which deserves continued careful attention. 56 I have argued here that the current vast and expanding extent of global inequality is not a ‘bug in the system’ of a GVC world, but is rather foundational to the functioning of a global political economy built around the form of industrial organization associated with GVCs—an outcome that arises from the interactions of market, social and political power in underpinning this global economic order. To this extent, the inescapable conclusion is that incremental change will not be sufficient to address the distributional implications of the GVC world. The nationalistic, nativistic response of the political right in this context is deeply unpalatable and alarming to many, but has not yet been met with a coherent challenge from the centre or the left. A compelling vision is needed of a progressive, internationalist politics that is capable of addressing the issues of power and inequality in the global political economy which have led us to this juncture, and capable of producing a foundation for significantly more equitable and inclusive forms of growth and development.

Deborah Hardoon, ‘An economy for the 99%: it's time to build a human economy that benefits everyone, not just the privileged few’, Oxfam Briefing Papers, 16 Jan. 2017, http://policy-practice.oxfam.org.uk/publications/an-economy-for-the-99-its-time-to-build-a-human-economy-that-benefits-everyone-620170 . (Unless otherwise noted at point of citation, all URLs cited in this article were accessible on 25 Jan. 2017.)

Oxfam, ‘62 people own same as half world’, press release, 16 Jan. 2016, http://www.oxfam.org.uk/media-centre/press-releases/2016/01/62-people-own-same-as-half-world-says-oxfam-inequality-report-davos-world-economic-forum ; Larry Elliott, ‘World's eight richest people have same wealth as poorest 50%’, Guardian , 16 Jan. 2017.

World Bank, ‘World Bank forecasts global poverty to fall below 10% for first time; major hurdles remain in goal to end poverty by 2030’, press release, 4 Oct. 2015, http://www.worldbank.org/en/news/press-release/2015/10/04/world-bank-forecasts-global-poverty-to-fall-below-10-for-first-time-major-hurdles-remain-in-goal-to-end-poverty-by-2030 ; UN Development Program, The Millennium Development Goals Report 2015 (New York, 2015).

World Bank, ‘An update to the World Bank's estimates of consumption poverty in the developing world’, briefing note, 29 Feb. 2012, http://siteresources.worldbank.org/INTPOVCALNET/Resources/Global_Poverty_Update_2012_02-29-12.pdf .

As a tiny selection of examples: Charles Tilly, Durable inequality (Berkeley, CA: University of California Press, 1998); Branko Milanovic, The haves and the have nots: a brief and idiosyncratic history of global inequality (New York: Basic Books, 2001); Robert Wade, ‘Is globalization reducing poverty and inequality?’, World Development 32: 4, 2004, pp. 567–89; Thomas Piketty, Capital in the twenty-first century (Cambridge, MA: Belknap/ Harvard University Press, 2014); Anthony B. Atkinson, Inequality: what can be done? (Cambridge, MA: Harvard University Press, 2015).

Jan Nederveen Pieterse, ‘Global inequality: bringing politics back in’, Third World Quarterly 23: 6, 2002, p. 1024.

The choice of conceptual labels in this debate is, as ever, contentious, and in my view the differences between the GVC and GPN approaches are overstated in ways that impede their common endeavour. While it will not please advocates of each set of terms, I use them here essentially interchangeably, usually preferring GVC as a shorthand for the structures in question, and more often GVC/GPN to connote the field of study.

For important statements in the field displaying a range of conceptual preferences, see Gary Gereffi, ‘The organization of buyer-driven global commodity chains: how US retailers shape overseas production networks’, in Gary Gereffi and Miguel Korzeniewicz, eds, Commodity chains and global capitalism (Westport, CT: Praeger, 1994), pp. 95–122; Jeffrey Henderson, Peter Dicken, Martin Hess, Neil Coe and Henry Wai-Chung Yeung, ‘Global production networks and the analysis of economic development’, Review of International Political Economy 9: 3, 2002, pp. 436–64; Jennifer Bair, ed., Frontiers of commodity chain research (Stanford, CA: Stanford University Press, 2009); William Milberg and Deborah Winkler, Outsourcing economics: global value chains in capitalist development (Cambridge: Cambridge University Press, 2013).

Gene Grossman and Esteban Rossi-Hansberg, ‘Trading tasks: a simple theory of offshoring’, American Economic Review 98: 5, 2008, pp. 1978–97.

Frederick W. Mayer, Nicola Phillips and Anne Posthuma, eds, symposium on ‘The political economy of governance in a “global value chain world”’, New Political Economy , Jan. 2017, DOI : http://dx.doi.org/10.1080/13563467.2016.1273343 .

Olivier Cattaneo, Gary Gereffi and Cornelia Staritz, ‘Global value chains in a post-crisis world: resilience, consolidation and shifting end markets’, in Olivier Cattaneo, Gary Gereffi and Cornelia Staritz, eds, Global value chains in a post-crisis world: a development perspective (Washington DC: World Bank, 2010), p. 7.

United Nations Conference on Trade and Development (UNCTAD), World Investment Report 2013. Global value chains: investment and trade for development (Geneva, 2013).

International Labour Organization, World employment social outlook: the changing nature of jobs (Geneva, 2015).

Gary Gereffi, ‘Global value chains in a post-Washington Consensus world’, Review of International Political Economy 21: 1, 2014, pp. 9–37.

Milberg and Winkler, Outsourcing economics , p. 238.

David Levy, ‘Political contestation in global production networks’, Academy of Management Review 33: 4, 2008, p. 951; Jennifer Bair, ‘Global capitalism and commodity chains: looking back, going forward’, Competition and Change 9: 2, 2005, pp. 153–80.

Frederick W. Mayer and Nicola Phillips, ‘Outsourcing governance: states and the politics of a “global value chain world”’, New Political Economy , 4 Jan. 2017, p. 13, DOI : 10.1080/13563467.2016.1273341.

Milberg and Winkler, Outsourcing economics ; Raphael Kaplinsky, Globalization, poverty and inequality (Cambridge: Polity, 2005).

Milberg and Winkler, Outsourcing economics ; Mayer and Phillips, ‘Outsourcing governance’.

Milberg and Winkler, Outsourcing economics , p. 103.

Richard P. Appelbaum, ‘Giant transnational contractors in east Asia: emergent trends in global supply chains’, Competition and Change 12: 1, 2008, pp. 69–87; Jenny Chan, Pun Ngai and Mark Selden, ‘Apple, Foxconn and China's new working class’, in Richard P. Appelbaum and Nelson Lichtenstein, eds, Achieving workers’ rights in the global economy (Ithaca, NY: Cornell University Press, 2016), pp. 173–89.

Mayer and Phillips, ‘Outsourcing governance’, pp. 9–10.

Mayer and Phillips, ‘Outsourcing governance’, p. 9; see e.g. Milberg and Winkler, Outsourcing economics ; Peter Nolan, Dylan Sutherland and Zhang Jin, ‘The challenge of the global business revolution’, Contributions to Political Economy 21: 1, 2002, pp. 91–110; Jacob A. Bikker and Katharina Haaf, ‘Competition, concentration and their relationship: an empirical analysis of the banking industry’, Journal of Banking and Finance 26: 11, 2002, pp. 2191–214; UNCTAD, Tracking the trend towards market concentration: the case of the agricultural input industry (Geneva, 2006).

William E. Kovacic, ‘From Microsoft to Google: intellectual property, high technology, and the reorientation of US competition policy and practice’, Fordham Intellectual Property, Media and Entertainment Law Journal 23: 2, 2012, pp. 645–54.

Milberg and Winkler, Outsourcing economics , pp. 123–4.

Mayer and Phillips, ‘Outsourcing governance’, p. 9.

Peter Knorringa, ‘Private governance and social legitimacy in production’, in Anthony Payne and Nicola Phillips, eds, The handbook of the international political economy of governance (Cheltenham: Edward Elgar, 2014), p. 368.

Luc Fransen and Brian Burgoon, ‘A market for worker rights: explaining business support for international private labour regulation’, Review of International Political Economy 19: 2, 2012, pp. 236–66.

See, for a flavour of a huge literature: Alejandro Portes, Manuel Castells and Lauren A. Benton, eds, The informal economy: studies in advanced and less developed countries (Baltimore, MD: Johns Hopkins University Press, 1989); Ulrich Beck, The brave new world of work (Cambridge: Polity, 2000); Melissa Wright, Disposable women and other myths of global capitalism (London: Routledge, 2006); Matt Davies and Magnus Ryner, eds, Poverty and the production of world politics: unprotected workers in the global economy (Basingstoke: Palgrave, 2006); Marcus Taylor, ed., Global economy contested: power and conflict across the international division of labour (London: Routledge, 2008); Judy Fudge and Kendra Strauss, eds, Temporary work, agencies, and unfree labour: insecurity in the world of work (London: Routledge, 2013); Louise Waite, Gary Craig, Hannah Lewis and Klara Skrivankova, eds, Vulnerability, exploitation and migrants: insecure work in a global economy (Basingstoke: Palgrave, 2015).

Andrew Crane, ‘Modern slavery as a management practice: exploring the conditions and capabilities for human exploitation’, Academy of Management Review 38: 1, 2013, pp. 45–69; Nicola Phillips, ‘Unfree labour and adverse incorporation in the global economy: comparative perspectives from Brazil and India’, Economy and Society 42: 2, 2013, pp. 171–96.

As a tiny sample: ‘Apple admits it has a human rights problem’, Independent , 14 Feb. 2012; ‘Apple faces its “Nike moment” over working conditions in Chinese factories’, Guardian , 20 Feb. 2012; ‘Child labour uncovered in Apple's supply chain’, Guardian , 25 Jan. 2013; China Labor Watch, Apple's unkept promises: cheap iPhones come at high costs to Chinese workers (Hong Kong, 29 July 2013); Aditya Chakrabortty, ‘Forced student labour is central to the Chinese economic miracle’, Guardian , 14 Oct. 2013; ‘Apple bans “bonded servitude” for factory workers’, BBC News, 12 Feb. 2015; ‘Dell's China suppliers “break employment laws with illegal labour conditions”’, Telegraph , 5 Nov. 2013; ‘Brazil sues Samsung over labour violations’, Guardian , 14 Aug. 2013; ‘Samsung contractor suspended over child labor allegations’, New York Times , 14 July 2014; ‘Hewlett Packard directs its suppliers in China to limit student labor’, New York Times , 7 Feb. 2013.

Pun Ngai and Chris Smith, ‘Putting transnational labour in its place: the dormitory labour regime in post-socialist China’, Work, Employment and Society 21: 1, 2007, pp. 27–45.

Dev Nathan and Sandip Sarkar, Blood on your mobile phone? Capturing the gains for artisanal miners, poor workers and women , Capturing the Gains Briefing Note no. 2, Feb. 2011, http://www.capturingthegains.org/pdf/ctg_briefing_note_02.pdf .

As important contributions, including excellent overviews of these debates, see Layna Mosley, Multinational production and labor rights (Cambridge: Cambridge University Press, 2011); Layna Mosley and David Singer, ‘Migration, labor and the international political economy’, Annual Review of Political Science 18, 2015, pp. 283–301; Layna Mosley, ‘Workers’ rights in global value chains: possibilities for protection and for peril’, New Political Economy , 4 Jan. 2017, pp. 1–16, DOI : 10.1080/13563467.2016.1273339.

Jeffrey Harrod, Power, production, and the unprotected worker (New York: Columbia University Press, 1987), p. 4.

Richard Freeman, ‘The great doubling: the challenge of the new global labor market’, Aug. 2006, http://emlab.berkeley.edu/users/webfac/eichengreen/e183_sp07/great_doub.pdf .

Wright, Disposable women .

Robert Cox, ‘Labor and the multinationals’, Foreign Affairs , vol. 54, Jan. 1976, pp. 351–2.

Nicola Phillips, ‘Labour in global production: reflections on Coxian insights in a world of global value chains’, Globalizations , 5 Feb. 2016, DOI : 10.1080/14747731.2016.1138608.

See e.g. Geoffrey Wood, ‘Staying secure, staying poor: the “Faustian bargain”’, World Development 31: 3, 2000, pp. 455–71; Sam Hickey and Andries du Toit, ‘Adverse incorporation, social exclusion and chronic poverty’, Chronic Poverty Research Centre Working Papers no. 81 (Manchester, 2007); Stefano Ponte, ‘Developing a “vertical” dimension to chronic poverty research: some lessons from global value chain analysis’, Chronic Poverty Research Centre Working Papers no. 111 (Manchester, 2008); Nicola Phillips, ‘Informality, global production networks and the dynamics of “adverse incorporation”’, Global Networks 11: 3, 2011, pp. 380–97.

Phillips, ‘Unfree labour’ Waite et al., Vulnerability .

Mosley and Singer, ‘Migration’, pp. 284–5.

Tilly, Durable inequality , pp. 7–8.

Nicola Phillips, Resmi Bhaskaran, Dev Nathan and C. Upendranadh, ‘The social foundations of global production networks: towards a global political economy of child labour’, Third World Quarterly 35: 3, 2014, pp. 428–46.

Haiyan Wang, Richard P. Appelbaum, Francesca Degiuli and Nelson Lichtenstein, ‘China's new labour contract law: is China moving towards increased power for workers?’, Third World Quarterly 30: 3, 2009, pp. 485–501.

John G. Ruggie, Just business: multinational corporations and human rights (New York: Norton, 2013), pp. 86, 136.

Jill Esbenshade, Monitoring sweatshops: workers, consumers, and the global apparel industry (Philadelphia: Temple University Press, 2004), p. 33.

Richard P. Appelbaum and Nelson Lichtenstein, ‘Introduction: achieving workers’ rights in the global economy’, in Appelbaum and Lichtenstein, eds, Achieving workers’ rights , pp. 3–4.

Tim Bartley, ‘Institutional emergence in an era of globalization: the rise of transnational private regulation of labor and environmental conditions’, American Journal of Sociology 113: 2, 2007, pp. 297–351; Tim Büthe and Walter Mattli, The new global rulers: the privatization of regulation in the world economy (Princeton: Princeton University Press, 2011).

Jill Esbenshade, ‘A review of private regulation: codes and monitoring in the apparel industry’, Sociology Compass 6: 7, 2012, p. 547; Kate MacDonald, The politics of global supply chains (Cambridge: Polity, 2014).

For a flavour, see Peter Newell, ‘Citizenship, accountability and community: the limits of the CSR agenda’, International Affairs 81: 3, May 2005, pp. 541–57; Cynthia Stohl, Michael Stohl and Lucy Popova, ‘A new generation of corporate codes of ethics’, Journal of Business Ethics 90: 607, 2009, pp. 607–22; David Vogel, ‘The private regulation of global corporate conduct: achievements and limitations’, Business and Society 49: 1, 2010, pp. 68–87; Esbenshade, ‘A review’ Richard Locke, The promise and limits of private power: promoting labor standards in a global economy (Cambridge: Cambridge University Press, 2013).

See Locke, The promise ; Daniel Berliner, Anne Regan Greenleaf, Milli Lake, Margaret Levi and Jennifer Noveck, Labor standards in international supply chains: aligning rights and incentives (Cheltenham: Edward Elgar, 2015); Appelbaum and Lichtenstein, eds, Achieving workers’ rights .

e.g. Scott Nova and Isaac Shapiro, ‘Polishing Apple: fair labor association gives Foxconn and Apple undue credit for labor rights progress’, EPI briefing paper no. 352 (Washington DC: Economic Policy Institute, 8 Nov. 2012); Students and Scholars Against Corporate Misbehaviour, ‘FLA waters down rights violations at Apple Suppliers’, Hong Kong, 18 Feb. 2012, http://sacom.hk/archives/931 .

Mayer and Phillips, ‘Outsourcing governance’.

Bartley, ‘Institutional emergence’ Kenneth W. Abbott and Duncan Snidal, ‘The governance triangle: regulatory standards institutions and the shadow of the state’, in Walter Mattli and Ngaire Woods, eds, The politics of global regulation (Princeton: Princeton University Press, 2009), pp. 44–88; Paul Verbruggen, ‘Gorillas in the closet? Public and private actors in the enforcement of transnational private regulation’, Regulation and Governance 7: 4, 2013, pp. 512–32.

Wolfgang Streeck, How will capitalism end? Essays on a failing system (London: Verso, 2016).

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The impact of economic, social, and political globalization and democracy on life expectancy in low-income countries: are sustainable development goals contradictory?

• Published: 18 January 2021
• Volume 23 , pages 13508–13525, ( 2021 )

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• Arif Eser Guzel   ORCID: orcid.org/0000-0001-5072-9527 1 ,
• Unal Arslan 1 &
• Ali Acaravci 1  

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The 17 Sustainable Development Goals announced by the United Nations are important guides for the development processes of developing countries. However, achieving all of these goals is only possible if the goals are consistent with each other. It has been observed in the literature that possible contradictions between these goals are ignored. Therefore, the main purpose of this study is to investigate whether two sustainable development goals (SDGs) of the UN are contradictory or supporting each other in low-income countries. These SDGs are “Good Health and Well-Being” (SDG3) and “Partnerships for the Goals” (SDG17). For this purpose, the role of globalization and democracy in life expectancy is empirically investigated in 16 low-income countries over the period 1970–2017. While globalization has been used as an indicator of the partnership between countries, democracy has been used as an indicator of accountability and cooperation between governments and societies. According to estimations of the continuous-updated fully modified (CUP-FM) and bias-adjusted ordinary least squares (BA-OLS), globalization and its subcomponents such as economic, social, and political globalization affect life expectancy positively. Democracy also increases life expectancy in those countries. The GDP per capita is also used as a control variable. Our results show that a higher level of per capita income is positively associated with higher levels of life expectancy. In conclusion, no contradiction was found between SDG3 and SDG17 in those countries. Achieving a healthier society requires economic, social, and political integration between governments and societies.

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1 Introduction

The main problem of economics is to increase economic development and social welfare. Increasing the social welfare level is a complex process that depends on economic and non-economic factors. Achieving economic development or increasing the level of welfare depends on achieving and sustaining the main objectives in political, economic, and social areas. Today, development is no longer a process that can be realized through policies implemented by governments alone. It requires cooperation between governments and societies. While cooperation between different countries requires globalization in the economic, social, and political fields, democracy is the way to ensure cooperation between governments and societies.

Health is one of the most important indicators of social welfare. Besides being one of the indicators of development, it is one of the determinants of human capital formation which is necessary for economic development. Individuals living in developed countries live a healthier life compared to those living in less developed countries. While the differences between the levels of development of countries determine the health conditions, at the same time, improvement of public health paves the way for economic development. Healthy people have higher opportunities to earn a higher income than unhealthy people. Individuals with higher incomes can benefit from better nutrition and access to health services. Therefore, economic development and improvement of health conditions represent a two-way process. In this context, the determination of the variables that will enable the achievement of the goal of a healthier society is especially important in explaining the economic differences between developing countries and developed countries. Because of its importance, health-related goals have an important place both among the Millennium Development Goals (MDGs) and the Sustainable Development Goals (SDGs) announced by the United Nations.

The world leaders with the support of international funding organizations announced the Millennium Declaration in September 2000 at the United Nations Headquarters in New York. They committed their nations to a new international partnership to achieve some development targets having with the final deadline of 2015. The Millennium Development Goals (MDGs) consist of 8 goals, 21 targets, and 60 related indicators covering a wide spectrum of development areas such as “End Poverty and Hunger (MDG 1),” “Universal Education (MDG 2),” “Gender Equality (MDG 3),” “Child Health (MDG 4),” “Maternal Health (MDG 5),” “Combat HIV/AIDS (MDG 6),” “Environmental Sustainability (MDG 7),” and “Global Partnership (MDG 8).” As we see, three of the goals are directly associated with the health status of the people. In the deadline of 2015, according to “Health in 2015: From MDGs to SDGs” report of the World Health Organization (WHO), there are improvements in health-related targets such as child health, maternal health, and combat with HIV/AIDS. Globally, HIV, tuberculosis, and malaria targets have been met. Also, the child mortality rate was reduced by 53% and maternal mortality by 43% (WHO 2016 ). On a global view, although health-related problems are largely resolved, the situation is not as good for low-income countries. As shown in Fig.  1 , significant differences exist between developing countries and developed countries in achieving health-related goals.

Source Halisçelik and Soytas (2015)

World Bank Income Groups’ MDGs Index Values in 2015.

According to MDGs, indexes in the context of health status show that the goals desired in terms of health are not attained in low-income countries compared to other income groups. After the deadline of MDGs, the United Nations has announced 17 SDGs, and “Good Health and Well-Being” takes its place as the third goal. Since achieving these goals requires the cooperation of countries and societies, “Partnership for the Goals” is determined as the seventeenth SDG. According to the United Nations ( 2019 ), the main indicators of global partnerships are trade, foreign direct investments, remittances, financial integration technology transfers, data monitoring and accountability, internet usage, and political integration among countries. In our study, while globalization is used as a proxy indicator of global cooperation, democracy is an indicator of cooperation between societies and governments. Democracy also refers to accountability levels of governments.

Globalization can simply be defined as the process of international integration which has economic, social, and political dimensions (Dreher 2006 ). Many countries have adapted to this process and have enjoyed the welfare effects of globalization by implementing necessary economic and institutional transformation. However, some countries still suffer from poor adaption to global markets. According to the KOF Globalization Index published by the Swiss Economic Institute ( 2020 ), low-income countries have the lowest globalization level compared to other income groups. They also suffer from bad health conditions such as low life expectancy, communicable diseases, and high mortality rates according to MDG indexes given above. At this point, the literature is divided into two parts. The first one blames globalization and argues that poverty and as a result of this, low life expectancy derives from the inequality created by globalization itself (Buss 2002 ). The second group mostly focuses on the benefits of free trade, capital mobility, and technology transfers (Rao and Vadlamannati 2011 ). The low-income countries also suffer from low institutional quality in the context of democracy and political rights. According to Freedom House’s list of electoral democracies, the countries without electoral democracy are mostly the low-income countries in the Middle East, North Africa, Sub-Saharan Africa, and Southeast Asia (Freedom House 2019 ).

The main question of our study is to determine whether the problem of low life expectancy in low-income countries is due to the low levels of globalization and weak political institutions in these countries. To answer this question, the role of economic, social, and political globalization and democracy in life expectancy in those countries is empirically investigated. This study provides several contributions to previous literature. First, we provide a new perspective in the context of sustainable development goals. Previous studies mostly focused on how to achieve SDGs, while possible conflicts between the goals were mostly ignored especially in the context of health. Such conflicts between sustainable development goals in the literature have mostly focused on the impact of economic growth and globalization on the sustainable environment (Ulucak and Bilgili 2018 ; Zafar et al. 2019a ). Those studies are mostly addressed the relationship between SDG7, SDG8, SDG13, and SDG17 (Zafar et al. 2019b ). To the best of our knowledge, it is the first study that investigates the relationship between SDG3 and SDG17. It is also important to examine this relationship in low-income countries since they still suffer from low levels of life expectancy, less adaptation to globalization, and poor democratic institutions compared to other income groups. Previous works mostly provide global evidence, while only a few studies focus on less developed countries. Achieving these 17 goals put forward by the United Nations at the same time is possible only if these goals do not conflict with each other. Second, empirical works in previous literature consist of traditional estimation methods called first-generation tests. In the analysis of panel data, the estimators considering cross-sectional dependence are called the second-generation estimators. Cross-sectional dependency simply refers to the situation when the shock that occurs in one country affects other countries as well. The source of this problem encountered in panel data analysis is the economic, financial, and political integration among countries (Menyah et al. 2014 ). The ignorance of cross-sectional dependence results in biased and inconsistent estimates and wrong inferences (De Hoyos and Sarafidis 2006 ; Chudik and Pesaran 2013 ). Low-income countries are mostly African countries where there is a rising trend in terms of integration to global markets and institutions (Beck et al. 2011 ). Using estimation techniques that consider cross-sectional dependence in those countries prevents misleading results. As the literature is divided into two parts about the effects of globalization on human well-being, fresh evidence via robust estimation methods is required in order to provide proper policy implications. To fill this gap, our work provides second-generation estimations.

2 Literature review

To improve the health conditions of a country, the welfare of the poor should be improved as well. Poverty is detrimental to access to health services. Therefore, the positive impact of globalization on health first emerged with its positive effects on economic growth (Labonté et al. 2009 : 10). The effects of globalization on growth were mostly driven by free trade, international specialization, technology transfers, knowledge spillovers, and competitive markets. It also offers broader opportunities for entrepreneurs and paves the way for innovation (Grossman and Helpman 2015 : 101). As expected, poverty rates significantly reduced in the last two decades because of the integration of developing economies to global markets (Harrison 2006 ). When trade liberalization and income increases are considered together, people's access to treatments and medications can be easier and life expectancy may be prolonged. However, we should consider other possibilities in the context of spreading communicable diseases. As Deaton ( 2004 ) mentioned before, access to cheap and easy travel can increase the rate of spread of communicable diseases. Migration is also another fact to take into account. Particularly rising sexual tourism and migrant sex workers increase the spread of sexually transmitted diseases such as HIV/AIDS. But today there are improved treatment methods to solve these problems. Even HIV-infected people can survive with antiretroviral therapy, and it also reduces sexual transmission of the infection (Dollar 2001 ; Cohen et al. 2011 ). Due to the high cost of advanced drugs as in the case of antiretroviral therapy, it should be accepted that people in low-income countries will have trouble accessing the drugs (Buss 2002 ). There are approaches known as the unequal exchange that globalization increases inequality among countries and that developed countries are more profitable from the globalization process (Love, 1980 ). It may also increase domestic income inequality. There are a few studies that came with the conclusion that globalization rises inequality (Dreher and Gaston 2008 ; Ha 2012 ), but Bergh and Nilsson ( 2010 ) suggested a different perspective. Due to extensive R&D investments and scientific activities, developed countries can find new treatment methods and supply advanced drugs. The only way to access that knowledge and these drugs are trade and integration between developed and underdeveloped countries. Globalization can play an important role in improving the health conditions of low-income countries to the extent that it can provide these linkages. One should also notice that wider markets and higher returns are important factors that motivate entrepreneurs. Buss ( 2002 ) claimed that the intellectual property rights of advanced drugs belong to private firms in developed countries, and because of the strong protection of property rights, less developed countries have trouble accessing them. However, rising global human rights became an important step to advance public health issues against economic concerns in the trade of pharmaceutical products.

The human rights approach focuses on how globalization affected disadvantaged people worldwide (Chapman 2009 ). It is an important instrument in the suppression of the inequality created by economic globalization. Because of the pressure on the government about human rights, disadvantaged people are becoming able to meet their basic human needs. The role of political globalization on this point is forcing governments to adopt global institutions. It increases the number of international organizations in which a country is a member. This makes governments more accountable in the global area and forcing them to pay attention to protect human rights. Gelleny and McCoy ( 2001 ) also claimed that integration among countries leads to political stability. Therefore, governments' tendency to violate human rights in order to maintain their power becomes lesser. Moreover, as social dimensions of globalization expand and communication opportunities among people in different countries increase, the possibility of human rights violations being discovered by other people increases (Dreher et al. 2012 ). Governments that know the international sanctions required by these violations have to be more cautious against human rights violations. Social globalization also provides cultural integration among the world’s people, and it changes lifestyles and consumption patterns worldwide. The consequences of this change can have positive and negative effects. First, increased urban population and sedentary lifestyles may enhance prepared food consumption and reduce daily movements which result in rising obesity and diabetes (Hu 2011 ). Second, although rapidly increasing consumption options and diversity are known as welfare indicators, they also can cause stress which is known as an important determinant of many diseases both psychological and physical (Cutler et al. 2006 ). Third, due to knowledge spillovers and communication technology, people can learn about healthy nutrition and protection from communicable diseases. Thus, unhealthy but traditional consumption patterns and lifestyles may change. These days we experience the coronavirus epidemic and we see once again the importance of globalization. Countries are aware of infectious diseases in different parts of the world in a very short time and can take measures to stop the spread of the virus. The changes created by social and political globalization play a major role in this emergence. Social globalization enables people in very remote areas of the world to communicate with each other, while political globalization forces governments to be transparent about infectious diseases.

With economic globalization, increased economic activity may lead to urbanization. One may think about unhealthy conditions of an urban area such as environmental degradation, air and water pollution, higher crime rates, and stress which reduce life expectancy. However, according to Kabir ( 2008 ), people living in an urban area can benefit from improved medical care, easy access to pharmacy, and to the hospitals that use higher technology. They can also get a better education and can enjoy better socioeconomic conditions.

Democracy can be considered as another determinant of life expectancy. In order to solve the health problems of the poor, people should draw the attention of the government. Sen ( 1999 ) claimed that the instrumental role of democracy in solving problems is enabling people to express and support their claims. Thus, the attention of politicians can be attracted to the problems of the poor. Politicians who have never tasted poverty do not have the urge to take action against the problems of the poor at the right time. Another linkage can be established through accountability (Besley and Kudamatsu 2006 ). In democracies, governments have an obligation to account to citizens for what purposes the resources were used. Thus, resources can be allocated to solve important public issues such as quality of life, communicable diseases, and mortality.

Compared to theoretical discussions, previous literature provides a lack of empirical evidence. Barlow and Vissandjee ( 1999 ) examined the determinants of life expectancy with cross-sectional data available in 1990 for 77 developed and developing countries. According to regression results, per capita income, literacy rate, and lower fertility are important determinants of life expectancy while living in a tropical area decreasing it. Another finding in this study shows that health expenditures in those countries failed to increase life expectancy. Following this study, Or ( 2000 ) analyzed the determinants of health outcomes in 21 industrialized OECD countries covering the period 1970–1992. This study presents gender-specific estimates separately for men and women. Fixed effects estimation results reveal a significant negative relationship between public health expenditure and women's premature death. The relationship also occurs for men, while GDP per capita dropped from the regression model due to high collinearity. Furthermore, GDP per capita and the proportion of white-collar workers reduce premature death for both men and women, while alcohol consumption increases it.

Franco et al. ( 2004 ) analyzed the impact of democracy on health utilizing political rights data of 170 countries. Empirical results show that people living in democracies enjoy better health conditions such as longer life expectancy, better maternal health, and lower child mortality. Following this, Besley and Kudamatsu ( 2006 ) investigated the nexus between democracy and health outcomes utilizing panel data from the 1960s to the 2000s. In their study, they used life expectancy at birth and child mortality variables for 146 countries as indicators of health outcomes. According to results, democracy has a positive and significant effect on life expectancy at birth and it also reduces child mortality. Safaei ( 2006 ) also investigated the impact of democracy on life expectancy and adult and child mortality rates with the data of 32 autocratic, 13 incoherent, and 72 democratic countries. According to the OLS estimation results, improving democratic institutions increases life expectancy and reduces child and adult mortality rates. Another finding of the study is that socioeconomic factors such as income, education, and access to health care services are important determinants of health status.

Owen and Wu ( 2007 ) found a positive relationship between trade openness and health outcomes using a panel of 219 countries. Health outcome measures of this study are infant mortality and life expectancy. Trade openness is one of the most important dimensions of globalization.

Kabir ( 2008 ) analyzed the determinants of life expectancy in 91 developing countries. Empirical results obtained are the opposite of the expected. According to results, per capita income, literacy rate, per capita health expenditure, and urbanization have no significant impact on life expectancy. On the other hand, the number of physicians has a positive and significant impact on life expectancy, while malnutrition reduces it. As a dummy variable, living in Sub-Saharan Africa is another factor that reduces life expectancy due to communicable diseases like HIV, malaria, etc.

Bergh and Nilsson ( 2010 ) used a panel of 92 countries in the period 1970–2005 to investigate the relationship between globalization and life expectancy. They used social, political, and economic globalization data separately, and the results show a significant positive effect of economic globalization on life expectancy at birth. But no significant relationship was found between social globalization, political globalization, and life expectancy. They also used average years of education, urban population, the number of physicians, and nutrition as control variables and the effect of economic globalization was still positive and significant.

Welander et al. ( 2015 ) examined the effects of globalization and democracy on child health in their panel data analysis for 70 developing countries covering the period 1970–2009. According to the results, globalization significantly reduces child mortality. In addition, democracy improves child health and it also increases the beneficial effects of globalization on child health. Following this study, Tausch ( 2015 ) analyzed the role of globalization in life expectancy in 99 countries. The results of OLS estimates show that globalization leads to inequality, and therefore, it reduces health performance in terms of life expectancy and infant mortality. These results are contradictory to positive views on the role of globalization in public health. However, in 19 of 99 countries, globalization increases public health performance. Ali and Audi ( 2016 ) also analyzed the role of globalization in life expectancy in Pakistan. According to ARDL estimation results, life expectancy is positively associated with higher levels of globalization. Another study on the Pakistan case proposed by Alam et al. ( 2016 ) concluded that foreign direct investment and trade openness which are important indicators of economic globalization affects life expectancy positively.

Patterson and Veenstra ( 2016 ) concluded that electoral democracies provide better health conditions compared to other countries. Their analysis includes annual data from 168 countries covering the period 1960–2010. Empirical results show democracy has a significant positive impact on life expectancy and it reduces infant mortality.

In their recent study, Shahbaz et al. ( 2019 ) investigated the impact of globalization, financial development, and economic growth on life expectancy. The authors used nonlinear time series analysis methods utilizing the data of 16 Sub-Saharan African countries over the period 1970–2012. Their results show that globalization, financial development, and economic growth affect life expectancy positively in 14 of 16 Sub-Saharan African countries.

The previous literature provides a lack of evidence in the context of globalization, democracy, and life expectancy relationship. There are also methodological weaknesses in previous empirical studies. First, it can be observed that previous studies are mostly based on traditional estimation methods. Second, the panel data analyses are based on the first-generation estimators that assume cross-sectional independence. This assumption is hard to satisfy due to integration among countries. In addition, ignoring the cross-sectional dependence results in inconsistent estimations. Particularly in empirical work in the context of globalization which refers to economic, political, and cultural integration among countries, considering the cross-sectional dependence becomes more important. Therefore, in order to make a methodological contribution to previous literature, we used second-generation panel time series methods considering cross-sectional dependence.

3 Methodology and data

According to the United Nations, achieving sustainable development goals requires global cooperation and partnership. Therefore, “partnerships for goals” has taken its place as the 17th sustainable development target. However, it was emphasized that some sub-goals should be realized in order to reach this goal. These include improving international resource mobility, helping developing countries to attain debt sustainability, promoting the transfer of information and technology between developed and developing countries, an open and rule-based free trade system, encouraging public–private and civil society partnerships, increasing transparency and accountability, and high quality and reliable data (United Nations 2019 ). In our empirical work, economic, social, and political globalization and democracy variables were used as proxies of the subcomponents of SDG17. In addition, the life expectancy at birth variable that mostly used in related literature as a proxy of health status and well-being, it is used in our study as a proxy of SDG3. In this study, we investigated the role of globalization and democracy in life expectancy in 16 low-income countries. Footnote 1 Following Barlow and Vissandjee ( 1999 ) and ( 2000 ), GDP per capita is used as a control variable in order to mitigate omitted variable bias. Our dataset is covering the period 1970–2017. Following the related literature, we present our model as follows:

where lex is life expectancy at birth which refers to the average number of years a newborn is expected to live. Life expectancy at birth data is provided by World Bank ( 2019 ) World Development Indicators. Life expectancy at birth indicates the number of years a newborn infant would live if prevailing patterns of mortality at the time of its birth were to stay the same throughout its life. The dataset is consisting of a weighted average of collected data from several co-founders. In Eq.  1 , X refers to the KOF Globalization Index developed by Dreher ( 2006 ). This index has been used in previous literature as a proxy of SDG17 (Saint Akadiri et al. 2020 ). The current version of the data published by the Swiss Economic Institute is revised by Gygli et al. ( 2019 ). The globalization variables are between 0–100, and 100 refers to the highest globalization level. In our analysis, we used subcomponents of globalization index such as economic (EC), social (SOS), and political (POL) globalization in addition to overall globalization (GLB). Due to high collinearity, the effects of different types of globalization are analyzed separately. Models 1, 2, 3, and 4 represent the estimations with overall, economic, social, and political globalization indexes, respectively. The democracy variable ( dem ) is provided from the Polity IV project dataset (Marshall and Jaggers 2002 ). While the increases in this indicator represent a more democratic regime, the decreases represent a more autocratic regime. Finally, gdp is real GDP per capita (constant 2010 $) and it is provided from World Bank World Development Indicators. All variables transformed to the logarithmic form except democracy due to negative values. In the estimation of the model, the panel data analysis methods are used.

3.1 Cross-sectional dependence

Traditional panel data methods are based on the assumption that no cross-sectional dependence exists among cross section units. However, this assumption is hard to satisfy due to rising economic, social, and political integration between countries. The estimations do not take this process into account may cause inconsistent results. Such results may also lead to incorrect inferences (Chudik and Pesaran, 2013 ). The existence of cross-sectional dependence in variables and the error term is obtained from the model analyzed with Pesaran ( 2004 ) \({\text{CD}}_{{{\text{LM}}}}\) and Pesaran et al. ( 2008 ) bias-adjusted LM test. These techniques are robust whether N > T and T > N. Therefore, \({CD}_{LM}\) and bias-adjusted LM ( \({LM}_{adj})\) tests are found to be appropriate and their test statistics can be calculated as follows:

Equation  2 shows the calculation of Pesaran ( 2004 ) \({CD}_{LM},\) and Eq.  3 is Pesaran et al. ( 2008 ) bias-adjusted LM test statistic. \({V}_{Tij}\) , \({\mu }_{Tij}\) , and \({\widehat{\rho }}_{ij},\) respectively, represent variance, mean, and the correlation between cross section units. The null and alternative hypothesis for both test statistics; \({H}_{0}\) : No cross-sectional dependence exist; \({H}_{1}\) : Cross-sectional dependence exist.

In the selection of stationarity tests and long-run estimators, the existence of cross-sectional dependence will be decisive. If the null of no cross-sectional dependence is rejected, second-generation methods that assume cross-sectional dependence should be used in order to provide unbiased and consistent estimation results.

3.2 Slope homogeneity

Pesaran and Yamagata ( 2008 ) proposed a method to examine slope heterogeneity in panel data analysis based on the Swamy ( 1970 )’s random coefficient model.

The calculation of the test statistic of Swamy’s model is given in Eq.  4 .

In Eq.  4 , \({\stackrel{\sim }{\beta }}_{i}\) and \({\overbrace{\beta }}_{WFE},\) respectively, indicate the parameters obtained from pooled OLS and weighted fixed effects estimation, while \({M}_{T}\) is the identity matrix. The test statistic obtained from Swamy’s model is improved by Pesaran et al. ( 2008 ) as follows:

where \(\stackrel{\sim }{S}\) is the Swamy test statistic and k is a number of explanatory variables. \({\stackrel{\sim }{\Delta }}_{adj}\) is a bias-adjusted version of \(\stackrel{\sim }{\Delta }\) . \({\stackrel{\sim }{Z}}_{it}\) =k and \(Var\left({\stackrel{\sim }{Z}}_{it}\right)=2k(T-k-1)/T+1\) . The null and alternative hypothesis for both test statistics is given below.

The rejection of the null hypothesis shows that slope coefficients of Eq. 1 are heterogeneous. In the selection of panel data estimation methods, the results of those preliminary analysis are taken into account.

3.3 Unit root test

Pesaran ( 2006 ) suggested a factor modeling approach to solve the cross-sectional dependency problem. This approach is simply based on adding cross-sectional averages to the models as proxies of unobserved common factors. The Cross-sectionally Augmented Dickey–Fuller (CADF) unit root test developed by Pesaran ( 2007 ) is based on that factor modelling approach. This method is an augmented form of Augmented Dickey–Fuller (ADF) regression with lagged cross-sectional average and its first difference to deal with cross-sectional dependence (Baltagi, 2008 : 249). This method considers the cross-sectional dependence and can be used, while N > T and T > N. The CADF regression is:

\({\stackrel{-}{y}}_{t}\) is the average of all N observations. To prevent serial correlation, the regression must be augmented with lagged first differences of both \({y}_{it}\) and \({\stackrel{-}{y}}_{t}\) as follows:

After the calculation of CADF statistics for each cross section ( \({CADF}_{i}\) ), Pesaran ( 2007 ) calculates the CIPS statistic as average of CADF statistics.

If the calculated CIPS statistic exceeds the critical value, it means that the unit root hypothesis is rejected. After the preliminary analysis of unit root, the existence of a long-run relationship between the variables in our model will be investigated via Westerlund and Edgerton ( 2007 ) cointegration test. After this, the long-run coefficients will be estimated using the continuous-updated fully modified (CUP-FM) estimator developed by Bai and Kao ( 2006 ) and Bias-adjusted OLS estimator developed by Westerlund ( 2007 ).

3.4 Cointegration test and long-run relationship

In this study, the cointegration relationship was investigated by Westerlund and Edgerton ( 2007 ) LM bootstrap test. This method considers cross-sectional dependence and provides robust results in small samples (Westerlund and Edgerton, 2007 ). This method is based on the following equation

where \({n}_{ij}\) is an independent and identically distributed process with zero mean and var( \({n}_{ij})\) = \({{\sigma }_{i}}^{2}\) . Westerlund and Edgerton ( 2007 ) suggested following LM test in order to test the null of cointegration

where \({S}_{it}\) is partial sum process of the fully modified estimate of \({z}_{it}\) and \({\widehat{w}}_{i}^{-2}\) is the estimated long-run variance of \({u}_{it}\) conditional on \(\Delta {x}_{it}^{^{\prime}}\) . If the calculated LM statistic is below the critical value, the null of cointegration will be accepted. The critical values will be provided using the bootstrap method in order to prevent cross-sectional dependence.

In the estimation of long-run coefficients, the CUP-FM estimator was used and this method is based on the following regression

where \({\widehat{\lambda }}_{i}^{^{\prime}}\) refers to the estimated factor loadings and \(\hat{y}_{{i,t}}^{ + } = y_{{i,t}} - \left( {\lambda _{i} ^{\prime } \hat{\Omega }_{{F \in i}} + \hat{\Omega }_{{\mu \in i}} } \right)\hat{\Omega }_{{ \in i}}^{{ - 1}} {{\Delta }}x_{{i,t}}\) indicates the transformation of the dependent variable for endogeneity correction. According to Bai and Kao ( 2006 ), CUP-FM estimator is robust under cross-sectional dependence. However, the assumption that the number of common factors (k) is known cannot be satisfied in practice (Westerlund, 2007 ). Therefore, Westerlund ( 2007 ) suggested a bias-adjusted estimator (BA-OLS) following the methodology of Bai and Kao ( 2006 ) except in the context of determining the number of common factors. The author suggested the estimation of k using an information criterion as

where \(IC\left(k\right)\) is the information criterion. In this study, we determined the number of common factors via the Bayesian information criterion (BIC) as follows.

In the equation above, V(k) is the estimated variance of \({\widehat{u}}_{it}\) based on k factors. By minimizing the BIC, we obtain \(\widehat{k}\) . Westerlund ( 2007 ) showed that the estimation of k provides better results compared to CUP-FM estimator assuming k is known. Both of the estimators require cointegrated variables in the long run.

3.5 Empirical results and discussion

The results of Pesaran ( 2004 ) \({CD}_{LM}\) and Pesaran et al. ( 2008 ) bias-adjusted LM tests are given in Table 1 .

The results given in Table 1 show that the null of no cross-sectional dependence is rejected at 1% according to both \({CD}_{LM}\) and \({LM}_{adj}\) test statistics in all variables. In addition, in the error terms obtained from models 1, 2, 3, and 4 the null of no cross-sectional dependence is rejected at 1%. These results show that the methods to be used in the analysis of the stationarity of the variables and the determination of the long-run relationship should consider the cross-sectional dependence.

The results of homogeneity tests developed by Pesaran and Yamagata ( 2008 ) are given in Table 2 . According to the results, the null of homogeneity is accepted at %1 in all models. Therefore, estimators assume parameter homogeneity are used in our analysis.

After the preliminary analysis of cross-sectional dependence, the CADF unit root test developed by Pesaran ( 2007 ) is found to be appropriate for our model because of its robustness under cross-sectional dependence. The results of the CADF unit root test are given in Table 3 .

In the analysis of unit root, constant and trend terms are both considered at level, while only constant term is added at first difference. Maximum lag level is determined as 3, while optimum lag level is determined by F joint test from general to particular. According to results, the null of unit root is accepted for all variables, while calculated CIPS statistics of first-differenced variables exceed 1% critical value. All variables have a unit root, and their first differences are stationary ( \({I}_{1})\) . Therefore, in order to determine the existence of a long-run relationship, we applied Westerlund and Edgerton ( 2007 ) panel cointegration test. This method considers cross-sectional dependence and can be used, while the series are integrated in the same order. The results are shown in Table 4 .

Constant and trend are both considered in the analysis of cointegration, and critical values are obtained from 5000 bootstrap replications. The results show that the null of cointegration is accepted for all models. There is a long-run relationship between life expectancy, globalization, democracy, and GDP per capita. After determining the cointegration relationship, we estimated long-run coefficients utilizing CUP-FM and BA-OLS estimators proposed by Bai and Kao ( 2006 ) and Westerlund ( 2007 ), respectively.

The long-run estimation results given in Table 5 show that overall, economic, social, and political globalization are positively associated with life expectancy at 1% significance level according to both CUP-FM and BA-OLS estimators. The results show that a 1% increase in globalization index increases life expectancy %0.014 and %0.015 according to CUP-FM and BA-OLS estimators, respectively. The impact of economic, social and political globalization indexes is 0.013%, 0.011%, and 0.015% according to CUP-FM estimation results while 0.014%, 0.012%, and 0.017% according to both estimators, respectively.

Our results confirms the findings of Owen and Wu ( 2007 ), Ali and Audi ( 2016 ), and Shahbaz et al. ( 2019 ) who found a positive relationship between globalization and life expectancy. Our empirical work also supports the evidence of Bergh and Nilsson ( 2010 ) in terms of positive effect of economic globalization on life expectancy. While the authors found no significant impact of social and political globalization on life expectancy, our results show that life expectancy is positively associated with both social and political globalization. The results we found contradict Tausch ( 2015 )’s evidences in 80 of 99 countries. However, according to his results, in 19 of 99 countries, globalization affects health positively. When these countries are examined, it is seen that 14 of them are countries in the low and lower-middle income groups. In this sense, it can be said that the evidence we found for low-income countries is in line with the author's evidence. As Dreher ( 2006 ) mentioned, despite its possible inequality effects, the net effect of globalization on development is mostly positive and our empirical work supports that idea. The effect of democracy on life expectancy is also positive and significant at 1% which confirms the findings of Franco et al. ( 2004 ) and Besley and Kudamatsu ( 2006 ). In electoral democracies, people living in poverty and suffering from health problems can easily attract the attention of policymakers compared to autocracies. This leads to the reallocation of resources to solve the primary problems of the society. In the context of sustainable development goals, our results show that there is no conflict between SDG3 (good health and well-being) and SDG17 (partnerships for the goals). The improvement of the health conditions of the poor countries depends on global partnership and economic, social, and political integration among countries. In addition, democracy is an important tool in achieving the goal of a healthy society, as it fosters accountability, transparency, and partnership between governments and the societies they rule. As stated in the introduction section, low-income countries show low performance in terms of health-related sustainable development goals, and their connections with global markets are weak compared to other countries. At the same time, democratic institutions are not developed. Our work supports the idea that in order to achieve SDG3, global partnership and democracy are required.

The GDP per capita that used as a control variable has a positive impact on life expectancy at a 1% level. These results support the evidence of Barlow and Vissandjee ( 1999 ), Or ( 2000 ), and Shahbaz et al. ( 2019 ). Individuals living in countries with high per capita income are expected to have higher welfare and have a longer life expectancy (Judge, 1995 ). In low-income countries where people still suffer from having difficulty in meeting basic human needs, increasing per capita income may lead to better nutritional status, easier access to advanced treatment methods and technology.

4 Conclusion

In this study, the effects of globalization and democracy on life expectancy are empirically investigated in low-income countries. While globalization and democracy indexes are used as proxy indicators of “Partnerships for the Goals (SDG 17),” life expectancy used a proxy of “Good Health and Well-Being (SDG 3).” With this, it is aimed to examine the existence of contradiction between those SDGs. In the estimation of the long-run relationship between the variables, second-generation panel data analysis methods that consider cross-sectional dependency are used. According to the results, the globalization index and its subcomponents such as economic, social, and political globalization are important instruments to achieve a healthier society. In addition, higher levels of democracy lead to higher levels of life expectancy. Finally, GDP per capita growth improves health status of countries.

The findings obtained from our study show that economic, social, and political integration of countries and democracy accelerate the process of achieving a healthier society. Therefore, it is seen that SDG3 and SDG17 targets are compatible with each other. In order to achieve SDG3, economic, social, and political integration between countries should be encouraged and democratic institutions should be improved. Policy makers should remove the barriers on globalization, and they should promote participation on international organizations and public–private and civil society partnerships.

Those countries are Benin, Burkina Faso, Burundi, Central African Republic, Chad, Democratic Republic of Congo, The Gambia, Haiti, Madagascar, Malawi, Mali, Nepal, Niger, Rwanda, Sierra Leone, and Togo.

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Guzel, A.E., Arslan, U. & Acaravci, A. The impact of economic, social, and political globalization and democracy on life expectancy in low-income countries: are sustainable development goals contradictory?. Environ Dev Sustain 23 , 13508–13525 (2021). https://doi.org/10.1007/s10668-021-01225-2

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Received : 30 April 2020

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Published : 18 January 2021

Issue Date : September 2021

DOI : https://doi.org/10.1007/s10668-021-01225-2

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Global political economy

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The Global Political Economy Analytical Essay

There are three main theories and worldviews involved in analyzing the global political economy. The first of these worldviews is liberalism. Under liberalism, individual corporations are regarded as the basic units of analysis. Moreover, the market is superior to the state, and the government plays a minimal role in the economy. The theory was developed by Adam Smith and David Ricardo, economists by their own rights.

Later, it was modified by Raymond Vernon and turned into the Sovereignty-at-Bay theory. The second theory is economic nationalism. It is the worldview that takes the state as its basic unit of analysis. In this theory, the state is superior to the market. In addition, the government, through its various agencies, plays a significant role in the economy.

The government regulates prices, production and such other issues related to the economy. The theory was originally developed by Hamilton and List. It was later modified by Kindleberger. The third form of worldview is structuralism theory. In this theory, class is taken as the basic unit of analysis. Under structuralism, the dominant class in the society wields significant control over the market and the state.

For example, the dominant class controls the means of production, as well as the government. The current paper is written against this background. In the paper, the author examines how the International Monetary Fund (herein referred to as the IMF) has used liberalism to control developing nations in Latin America and Asia.

The International Monetary Fund has a long history in the global economy. The organization was created on December 27 th , 1945. The initial membership of the organization was 45 nations. The brains behind the creation of the organization were motivated by several objectives. One of the major objectives of the IMF was to stabilize exchange rates in the global market.

The organization was also aimed at regulating and stabilizing the international payment system after the Second World War. Member countries contribute money to the organization. Nations facing various financial challenges borrow from these funds and repay their loans with interest.

Another role of the IMF is to provide guidance to member states on how to grow their economies and formulate sound economic policies. As of today, the organization has 188 members drawn from all continents in the world.

Many countries, especially those with transitional and developing economies, have encountered various challenges emanating from budget deficits. An example of how the IMF relates with its member nations is illustrated by the agreement that the organization made with Brazil in late 1990s. Around this time, the country was going through a crisis related to its Balance of Payments (herein referred to as BOP).

The organization and the government agreed that after receiving financial assistance, the Central Bank will make sure that interest rates in the country remain high. The demand was just one of the conditions put in place by the IMF. According to the IMF, the conditions were put in place for two main reasons. The first justification given by the organization for the conditions was to keep investors in the country.

The organization felt that the new policies will not only lock the existing local investors in the country, but will also attract foreign investor. The second reason used to justify the conditions was to reduce the rate of economic growth in the country. However, just like many other developing nations, Brazil found faced various challenges in efforts to implement the new policies prescribed by the organization.

For example, the government found it politically difficult to adopt some of the measures. If implemented, the government felt that the policies will make the regime unpopular in the country. High interest rates may also lead to civil unrest in the country.

At the end of the day, the Brazilian government was unable to address the budget deficit. The relationship between the IMF and the Brazilian government can be analyzed from the perspective of the liberalism theory. According to this theory, the IMF, as an organization, can have primacy over the state.

The superiority of the organization to local governments is expressed through the various conditions given by IMF, conditions that member states have to stick to for them to retain their membership in the organization.

The conditions put in place by IMF and other similar organizations are normally referred to as structural adjustment programs (herein referred to as SAPs). The conditions, which are set by other bodies, such as the World Bank Group (herein referred to as WBG) and the World Trade Organization (herein referred to as WTO) are associated with radical trade liberalization.

Such liberalizations are not supported by most developing nations in the world. The main reason for this lack of support is the fact that the developing nations feel that the liberalization policies are structured to benefit the developed nations at their expense. However, given the amount of money such countries owe the IMF, they do not have any option other than to comply with the demands of these organizations.

Analysts and economic scholars refer to this situation as arm-twisting on the part of the organizations. Such arm-twisting measures, which are meant to put pressure on developing countries, were evident during the Uruguay Round negotiations. During the negotiations, most third world economies expressed their lack of support for the process.

The lack of support was evident in their passive participation in the process, as well as lack of representation. However, the developing nations were dragged into endorsing the 1994 Marrakesh Accord, which established the WTO.

The accord also sealed the negotiations made during the Uruguay Round. Only a minority of developing countries, most of them belonging to the Cairns Group, were in support of WTO. Their support was pegged on hopes of WTO widening the market for their agricultural products.

The forceful liberalization of markets, which is championed by the IMF, has not benefited the developing economies as expected. For instance, before 1997, most nations in East Asia had fairly successful economies. For a period of about thirty years, ending in 1997, the economies of these nations recorded positive growth. The countries had recorded impressive results in the health, education, and economic sectors.

In addition, they had very low levels of poverty. However, in the early 1990s, the markets were liberalized due to international pressure from IMF and the United States of America. Consequently, such countries as Thailand received short-term capital assistance, which could not be used for long term investments.

For example, the country was unable to use the capital assistance to put in place such infrastructures as factories. Instead, the money was used to pump a real estate bubble, which eventually burst.

Just like in the case of Latin America in 1997, the IMF prescribed controversial policies to address the economic challenges faced by Thailand. The organization advised the government to put in place stringent and politically unviable measures to address the economic challenges. Soon after this, all the other nations in the region were suffering from the same problems.

The most surprising thing was that the IMF ought to have known that the remedy was not working, given the effects it had on Brazil and other nations. However, the organization went ahead and prescribed the same “solution” in Thailand.

In the late 1990s, the economies of Latin America and East Asia were significantly different from one another. As a result, the attempt by the IMF to solve the challenges faced by economies in the two regions using the same strategy was a big mistake. For instance, the rate of inflation in South Korea at this time was 4%.

While the problems in Brazil and other Latin American countries had to do with their imprudent governments, the imprudence in East Asia was in the private sector, and not in the public sector. As such, austerity was not the approach to use in East Asia.

Other organizations, such as the World Bank, were becoming increasingly aware of the negative effects of market liberalization. To address the problem, the organizations were advocating for stringent conditions for financial aid in the region. However, the IMF refused to act with consideration.

The crux of the problem is that whereas the IMF is intended to serve the developing countries, it is largely controlled by industrial economies. In practice, and through the imposition of trade policies, the IMF is crippling democracies around the world. In theory, the organization is expected to support the same democratic institutions.

It is widely believed that the IMF negotiates the conditions for receiving aid with member countries. However, this is not the case given that it is not possible to have balanced negotiations when the power to decide is vested on one party.

Additionally, the organization does not give member countries enough time to build consensus or even consult with their civil societies and parliaments. At times, aid is offered on a plate that seems quite open, but the real covenants are negotiated in secret.

Before dispatching aid, the IMF sends its mission of economists to the member country. The mission lacks knowledge with regard to the culture of the developing countries. The mission is given a very short time to come up with the most suitable program for the country.

At the end, the information they collect and present to the IMF does not represent the nation’s development strategy. Furthermore, some of the models used by the economists are either out-of-date or flawed given that they are developed without taking into consideration the economic dynamics of the developing world.

The East Asia crisis spread to Indonesia, and the IMF again offered the same solution of funds with stringent conditions, especially increasing interest rates. The argument of the IMF this time round was that Indonesia would make it through like Mexico. However, a closer look reveals that Mexico had not made it through the financial crisis with the help of the IMF.

On the contrary, the country managed to get over the depression because of the increase of exports to the US. At that time, Japan was Indonesia’s main partner in trade. As a result, the situation in Indonesia was highly explosive, socially and politically, compared to that in Mexico. The IMF was just about to intensify the capital strife in the country through its restrictions that would hinder the relaxed flow of currency.

At a time when the nation needed fuel and food subsidies, the government was forced to cut its spending. As a result, subsidies were eliminated. In 1998, World Bank’s vice president in East Asia averred that the region was going through a recession.

In light of the record high rates of unemployment and the number of businesses that went bankrupt, the vice president could not have been more right in summing up the situation. To make matters worse, the region was unable to take advantage of opportunities provided by low exchange rates.

By the end of 1998, the depression reached Russia. The similarity between what happened in Russia and East Asia was represented by the participation of the United States and IMF. In the case of Russia, the IMF was largely advised by a group of macroeconomists who did not have an idea with regard to Russian economic history.

Lack of adequate consultations, which was fueled by a know-it-all attitude exhibited by the IMF and local macroeconomists, led to the economic setback that was recorded after the 1993 elections. The economic shock experienced in the country did little to move Russia towards the envisaged market economy.

The Treasury and the IMF paid very little attention, if any, to institutional infrastructure. Instead, the agencies provided the oligarchs with the opportunity to plunder the economy.

In conclusion, it is important to reiterate that the IMF was formed to assist developing nations overcome economic and capital challenges. However, the organization has ended up controlling these economies through liberalization of capital markets.

In the end, developing countries are stuck with deficits that have turned into recessions and depressions. In light of these realities, the IMF should abandon liberalism and let the developing countries grow their economies at their own pace without interference.

• Chicago (A-D)
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IvyPanda. (2019, June 18). The Global Political Economy. https://ivypanda.com/essays/the-global-political-economy/

"The Global Political Economy." IvyPanda , 18 June 2019, ivypanda.com/essays/the-global-political-economy/.

IvyPanda . (2019) 'The Global Political Economy'. 18 June.

IvyPanda . 2019. "The Global Political Economy." June 18, 2019. https://ivypanda.com/essays/the-global-political-economy/.

1. IvyPanda . "The Global Political Economy." June 18, 2019. https://ivypanda.com/essays/the-global-political-economy/.

Bibliography

IvyPanda . "The Global Political Economy." June 18, 2019. https://ivypanda.com/essays/the-global-political-economy/.

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Short Essay on Global Political Economy

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kiky larasaty

* The contemporary international economic system is more closely integrated than in any previous era. The recession of 2008–9 provides a clear illustration of the relationship between trade, finance, international institutions, and the difficulties that governments face in coping with the problems generated by complex interdependence. Before 1945, the spectacular increase in economic integration that had occurred over the previous century was not accompanied by institutionalized governmental collaboration on economic matters. International trade patterns also changed very little over several centuries before 1945. The end of the Second World War marked a significant disjunction: global economic institutions were created, and the transnational corporation emerged as a major actor in international economic relations. Since the emergence of international political economy (IPE) as a major subfield of the study of international relations in the early 1970s, IPE scholars have generated an enormous literature that has been the product of the employment of a wide variety of theories and methods. Most introductions to the study of IPE have divided the theoretical approaches to the subject into three categories: liberalism, nationalism, and Marxism. This threefold typology is of limited utility today, given the overlap between many of the approaches classified in different categories, and the wealth of theories and methodologies applied in the contemporary study of global political economy.

halil kürşad aslan

Parakh Hoon

Ahmad A R I Irsal

Penny Intan

Rohan Kalyan

Bwite Lukama

Kees Van der Pijl

This was a text of 2009 for use in the Sussex Global Political Economy MA. Because it no longer appears under its original web address at the Sussex website I have downloaded the LibCom version.

This chapter presents three important IPE debates. They concern: (1) the exact relationship between politics and economics; (2) development and underdevelopment in the developing world; (3) the nature and extent of economic globalization. The last part of the chapter presents recent developments in theorizing on IPE. We emphasize that there is a growing concern about issues of wealth and poverty in many countries. For this reason, the IPE research agenda is of increasing importance.

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