Globalisation: neither a devil nor a panacea

OECD Observer

Different speakers cast globalisation as either villain or hero in an OECD Forum 2000 session Monday devoted to the subject of “Equity, Globalisation and Development”.

Session moderator, Jean-Claude Faure, OECD Development Assistance Committee (DAC) Chairman, said the purpose of the debate was to identify how globalisation could help developing countries. “Globalisation is neither a devil nor a panacea”, he said, “but a reality, gradually spreading throughout the world.” Policymakers had the problem of needing to reflect on globalisation challenges while being at the same time under pressure to act.

Mrs Xiuhong Ma, China’s assistant minister for foreign trade and economic co-operation, made clear that globalisation had been an essential part of her country’s economic momentum and vitality over the past 20 years. Direct foreign investment had played a crucial role, affecting some 350 000 enterprises, and involving a total commitment of US$ 632 billion of which $320 billion had been realised already. Twenty million Chinese were working for foreign investors who were playing a crucial role in China’s economic development and reform. The quickening pace of globalisation was part of China’s integration into the world economy, notably entry into the World Trade Organisation which, she said, “is now within sight”. To a questioner from the floor who asked why China was characterised as a “socialist market economy” she replied that her country was dominated by the state sector but economic reforms had been set in train by the government 20 years ago. By 2010 the framework would be fully in place, for reform was an “irresistible process”.

Turkish businessman Bulent Eczacibasi, looked back over 50 years of his country’s economic history , to show how the private sector had played a key role in helping to bring Turkey out of its former closed, command system to a modern market economy system. This transformation could not have been accomplished, however, without political stability and a sound public sector. The Turkish private sector helped to achieve that stability by creating NGOs and lobby groups that themselves then underpinned the emerging civil society. “A healthy market economy needs political stability,” he said, “and business should not just mind its own business.”

Another pro-globalisation speaker, Philippines Central Bank monetary board member Melito Salazar, said Asian countries had taken a positive view of adapting to globalisation because it fostered a number of necessary changes such as awareness of the need for environmental protection, and people eempowerment through choice and the creation of jobs and wealth. Globalisation had been criticised for capital flows that caused the Asian financial crisis, the closure of firms and job losses. A former under-secretary for finance and industry, Mr. Salazar said problems often attributed to globalisation should in fact blamed on national policy-makers. “It is not globalisation that is failing us,” he said, “but we who are failing to introduce needed reforms.” Lack of reforms weakened the system and led above all to excessive bureaucracy.

A strongly critical view came from Fouad El-Hage, president of Caritas International. Globalisation had brought lots of riches, he said, but it had also resulted in many poor people still awaiting promised changes. Africa had been particularly hard hit, with per capita income levels offer lower in real terms than in pre-1960s. He said some foreign companies were pillaging the continent, even financing wars to achieve their business aims. The head of the leading NGO present in 198 countries went on to accuse rich countries of failing to keep their promises with only four out of 24 reaching the aid target of 0.7% of GDP. He called on developed countries to mount a concerted action to enforce respect for human rights worldwide, and the institution of controls to limit financial speculation. “There can be no real human development without a redistribution of wealth and a more equitable sharing of economic decision-making. to help the poorest and most vulnerable,” he concluded.

Baldwin Sipho Ngubane, South African minister for art, culture, science and technology, highlighted the need to see how globalisation could best be used to help developing countries speed their integration into the new world knowledge economy. South Africa, he recalled, was a “valuable conduit for the internationally assisted development of the southern African region as a whole”. His country eschewed Luddite ideas about globalisation, but was more concerned about equitable development. It was important to avoid a repetition of the one-way flows of knowledge that so marked the original period of colonisation. It was important to take into account the African renaissance which adopted the view that “our continent is a treasure house still to be more fully revealed”.

“Development, in the knowledge era, must mean partnerships based on sustainable systems of innovation in both developed and developing nations for equity to be achieved,” he said.

Concluding the session, Mr Faure emphasised that the globalisation challenge was above all a matter for the public authorities, whose role it was to spearhead needed reform while at the same time involving those in civil society. The quest for a “lasting shared vision” was the responsibility of all including notably the private sector, which sought profits in business but also needed to operate in a spirit of good governance.

*Based on a speech at Forum 2000, Paris, June 2000

©OECD Observer July 2000 

Economic data

GDP growth: +0.6% Q1 2019 year-on-year
Consumer price inflation: 2.3% May 2019 annual
Trade: +0.4% exp, -1.2% imp, Q1 2019
Unemployment: 5.2% July 2019
Last update: 8 July 2019

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