Shaping globalisation

Globalisation is a question of balance.
Secretary-General of the OECD
Page 3 

I confess to being somewhat tired of the term “globalisation” which seems to find its way into the speeches and writings of everyone who has any interest in public policy. Globalisation is alternatively condemned as a worldwide agenda driven by greedy multinational corporations and bureaucrats where the rich get richer and the poor poorer, or praised as the way forward to increased prosperity for all and the answer to the dire circumstances of billions of distressed people on planet earth.

Tired as I may be of the term, I am hard-pressed to find a replacement that adequately captures contemporary events and trends. But what does globalisation really mean and why is there such a polarisation around the issue? Why is it so important?

In its simplest form I would define globalisation, when fully matured, as a “borderless economic world”, where trade and investment on a planetary scale flow and locate as freely as within national boundaries and where workers can cross borders freely to find jobs. We are a long way from achieving that degree of globalisation, but economic integration has certainly accelerated, spurred by new transportation and information and communication technologies as well as by business strategies and public policy.

When I arrived at the OECD five years ago I suggested that achieving balance in a “triangular paradigm” between economy, society and governance would be necessary for real progress. The concept is largely a statement of the objectives of good governance and is inherent in the aims set out in the OECD Convention. All the challenges and priorities of our democratic societies – from poverty reduction to managing the environment – fit within this concept. Remove or unbalance any one of its corners and social and economic progress slows down and is often arrested. History is replete with examples, the extreme ones being revolutions.

The paradigm does not imply a standardised mould for all countries. Each democracy has to find its own balance within the paradigm, based on its own social, economic and cultural particularities. Just contrast the degree of responsibility for citizens’ well-being that many European nations assign to government with the individualism that countries like the United States espouse. Different preferences have led to important differences in many policies, affecting the distribution of national income for instance, the flexibility of labour markets, taxation, and indeed in the role of government itself. The notion of social equity also varies among democracies but, provided there is social stability, one cannot conclude that the balance achieved in one national paradigm is better or worse than any other. Only the electorate can decide that.

It may be time to revisit this paradigm, especially in light of the passions raised in the debate about globalisation. Serious clashes arise between those who support freer markets (including international markets through multilateral trade and investment) as the prescription for economic growth and job creation, and those who believe that social equity is being placed in jeopardy by the unbridled play of market forces.

It is not always easy to see where the answer lies. Yet for globalisation to work, there needs to be balance in this triangular paradigm at world level too. The public demonstrations in several cities in recent years suggest some imbalance. The question is: where?

There is no doubt that the fruits of globalisation, namely, trade and investment liberalisation, have brought much increased wealth to the world as a whole. But there is no point arguing that globalisation is good because no one is getting poorer. Individuals within OECD countries have been falling behind as others race ahead and there is a sense that the North-South gap is widening. Is the social equity side of the paradigm getting enough attention? Do the governance aspects require strengthening?

Many would agree that globalisation offers great potential for world development. So how can diverging interests be brought behind what may be a unique opportunity? As the phenomena of globalisation touch almost every aspect of economic life, so shaping it inevitably involves a wide range of public policies – not only for trade and investment, but also competition, labour, environment, financial markets, energy, agriculture and development, to name a few. No government, ministry, union or business is an island in today’s community of economies and societies.

The democratic governments of the OECD work together to improve policy, build co-operation and enhance the well-being of our countries. We take decisions by consensus and operate through dialogue, including with business, labour and civil society. We work closely with non-OECD countries too. We know there are downsides to globalisation which have to be managed, especially adjustment costs. Opening markets introduces competition, rewards efficiency and productivity and penalises the inefficient – even to the point of closing business and putting people out of work. The economic gains from globalisation on one side of the paradigm must be matched by measures to ensure social equity and stability. This is the business of good governance and the hallmark of the work of the OECD.

Globalisation for all represents an opportunity we cannot afford to miss. In fact, it is a moral responsibility of our times.

Donald J. Johnston, Secretary-General, OECD

©OECD Observer No 228, September 2001

Economic data

GDP growth: +0.6% Q3 2017 year-on-year
Consumer price inflation: 2.3% Sept 2017 annual
Trade: +1.4% exp, +1.7% imp, Q2 2017
Unemployment: 5.7% Sept 2017
Last update: 14 Nov 2017


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly

Online edition
Previous editions

Don't miss

  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • The annual OECD Eurasia Week takes place in Almaty, Kazakhstan 23-25 October. Writing in The Astana Times, OECD Secretary-General Angel Gurría urges Eurasia countries to stay the course on openness and international integration, which has brought prosperity but also disillusionment, notably regarding inequality. The OECD is working with this key region, and Mr Gurría urges Eurasia to focus on human capital and innovation to enhance productivity and people’s well-being. Read more.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • How do the largest community of British expats living in Spain feel about Brexit? Britons living in Orihuela Costa, Alicante give their views.
  • Brexit is taking up Europe's energy and focus, according to OECD Secretary-General Angel Gurría. Watch video.
  • OECD Chief Economist Catherine Mann and former Bank of England Governor Mervyn King discuss the economic merits of a US border adjustment tax and the outlook for US economic growth.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2017