An update on the globalisation debate
Inam Ahmed goes through an intellectual odyssey and enjoys it
The Future of Globalization: Explorations in Light of Recent
Turbulence
Ed. Ernesto Zedillo
Routledge (Taylor and Francis group)
To both its critics and backers, globalisation is a phenomenon to be seriously studied and debated. And when leading experts like Nobel laureate Joseph Stiglitz and Jagdish Bhagwati, representing the two sides of the debate respectively, are brought together in a single volume, one can expect a lively and state-of-the-art discourse on the subject. A recently published high profile book offers exactly just that a reasoned and sophisticated update on the debate about the benefits, risks and future prospects of globalisation.
The Future of Globalization: Explorations in Light of Recent Turbulence is the outcome of a conference organised by Yale University and has among its contributors two former heads of state the editor, Ernesto Zedillo of Mexico, and Mary Robinson of Ireland as well as a host of leading academics and experts.
Besides the wide-ranging thematic issues relating to globalisation, the book devotes separate chapters to the globalisation experiences of two particular countries: China and Bangladesh. The reason for a special focus on China is obvious, given its phenomenal rise as a global economic power. But why a separate case study for Bangladesh? The author of the chapter, Wahiduddin Mahmud, argues persuasively that the case of Bangladesh best illustrates the challenges faced by a low-income country striving to benefit from global integration. Other contributors to the book seem to agree, as they cite the example of Bangladesh in various contexts, ranging from the role of foreign aid to barriers to international migration and access of the exports of developing countries to the markets of the industrialised West.
As the title of the book suggests, the course of contemporary globalisation has been seriously affected by recent turmoil. The end of the economic expansion of the 1990s, the 9/11 tragedy, the war in Iraq, the rising fuel and commodity prices, and the recurrent financial crises have shocked the international system to an extent not seen in years. Besides the sheer force of geopolitical and economic turbulence, there is also a backlash against globalisation created by a growing perception about its lack of fairness as billions of poor people are left on its fringes. Unless globalisation is better managed to mitigate its risks and downsides, the book argues, it can be slowed down, or even be reversed.
The list of grievances against contemporary globalisation, as pointed out by various contributors to the volume, is a long one. Even a strong supporter of globalisation like Jagdish Bhagwati, for example, agrees that extending national laws of patent rights to trade agreements on arbitrary terms and at the behest of multinationals defies economic logic. Similarly, he is critical of the insistence of the rich industrialised countries on tagging labour and environmental standards to trade agreements since these are not really trade-related issues and should be dealt with separately under international conventions.
The removal of trade restrictions negotiated under WTO agreements is also alleged to have unduly favoured the industrialised West. As Mark Malloch Brown, a former chief of the UNDP, comments: "For poor countries, free trade is neither free nor fair". He substantiates his point by giving the example of Bangladesh, which has made some progress in participating in the global economy, mainly through garment exports. Bangladesh pays 14 per cent tariffs on its annual exports of about US$ 2.5 billion to the US, while France exports more than US$30 billion worth of goods to the US and pays only 1 percent in tariffs.
While there is general agreement that the distribution of benefits of globalisation has been unfairly tilted towards the rich countries, there is no such agreement about the actual impact of globalisation on poor countries in absolute terms. The critics, for example, argue that countries in sub-Saharan Africa have actually become poorer because of globalisation, while others argue that the reasons for their economic woes lie within their domestic economies. It is also argued that developing countries which have benefited most from globalisation notably, China and other East Asian economies have adopted global integration on their own terms, instead of being dictated by, say, the IMF or the World Bank.
There is also general agreement that, in spite of all its faults, globalisation can potentially be a powerful force for the progress of humankind by increasing international economic integration, interdependence and interconnectedness. The problem is how to achieve what is variously termed as "inclusive" globalisation or globalisation "with a human face" in place of what Stiglitz calls "unprincipled globalisation".
A foremost priority is how to make the global trading system work for the poor. T. N. Srinivasan of Yale University traces the progress of the WTO negotiations from the failure at Seattle to the Doha Development Round and its subsequent collapse, but ends on an optimistic note by quoting the American proverb: It ain't over till it's over. Stiglitz argues that the agreement on intellectual property rights needs to be renegotiated not only because it hurts the poor countries, but also because it may actually impede scientific innovations by restricting access to knowledge.
Other authors argue for an overhauling of the global financial architecture to avert the repetition of financial meltdowns. Lant Pritchett of Harvard University makes out a compelling case for more liberal policies towards international labour migration by analysing how the "irresistible forces" of economic logic come up against "immovable ideas" of racial discrimination and prejudices. Ernesto Zedillo, in his editorial introduction, sees a looming crisis in the global multilateral system and underscores the need for visionary political leadership that is wanting at present.
Coming back to the chapter on Bangladesh, Wahiduddin Mahmud points out that while most low-income countries depend largely on the export of primary commodities, Bangladesh has made the transition from being primarily a jute-exporting country to a garment-exporting one. The transition has been dictated by the country's resource endowment, characterised by extreme land scarcity and a very high population density, which makes economic growth dependent on the export of labor-intensive manufactures.
It is not easy, however, for a least developed country like Bangladesh to specialise in manufactured exports. Having low wage costs can hardly compensate for its relative disadvantage in marketing skills and infrastructure, including transport, ports and product quality assurance. Moreover, the heavy dependence of its domestic industries on imported raw materials and intermediate goods makes it difficult for Bangladesh to satisfy the so-called "rules of origin" in getting preferential access for its exports in the markets of the developed countries. Bangladesh is also greatly concerned with the issue of freer movement of temporary workers across borders, given the important role of workers' remittances in its economy.
Bangladesh's development experience also brings into focus the issues surrounding the role of foreign aid, such as in meeting funding needs for achieving the Millennium Development Goals and providing support for the low-income countries to absorb economic shocks. Foreign aid currently received by Bangladesh is much lower compared to the average of low-income countries both as a proportion of GDP and in per capita terms; and this disparity has been increasing over the years. On the one hand, Bangladesh deserves international support given its record of achieving reasonably rapid economic growth and significant progress in social development indicators despite many odds. On the other, the country is alleged to have low "aid absorptive capacity" due to weak governance. But part of the problem also lies in donors insisting on supporting unrealistic projects and policies. The author of the chapter concludes: If aid agencies and other international bodies fail to support economic development in Bangladesh, they will probably fail in other low-income countries as well.
Inam Ahmed is News Editor, The Daily Star
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