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Globalisation is wrongly accused

Anti-IMC | 08.01.2002 12:43

Business Day (Johannesburg)

OPINION
January 7, 2002
Martin Wolf

SEPTEMBER 11 changed the world in many ways. Among them was the disappearance of violent protests against globalisation.

This is at least a welcome interlude, one that offers an opportunity to examine afresh globalisation and the complaints it has engendered.

These protests have focused on inequality. Jay Mazur, a prominent US trade unionist, has argued, for example, that "globalisation has dramatically increased inequality between and within nations".

This is wrong. Over the past two decades the number of people in absolute poverty has fallen, not risen; global inequality among households has probably fallen, as has inequality among countries, when they are weighted by population; inequality has risen within some countries but fallen in others; and, above all, economic integration, where successful, has reduced poverty and global inequality.

The tragedy is that there has been too little successful economic integration, not too much.

The correct picture can be seen from figures in an invaluable new study from the World Bank.

First, in 1820, 900-million people, or about 85% of the world's population, lived on the equivalent of $1 a day (converted to today's international purchasing power). The numbers in extreme poverty peaked at about 1,4-billion in 1980, or about 30% of the world's then much increased population.

But over the past two decades of globalisation, the number of people in absolute poverty has fallen for the first time, to 1,2-billion, or 20% of the world's population.

Second, there has been no general tendency to rising inequality within developing countries. But there has been rising inequality in Latin America and China since the mid-1980s, the latter largely caused by restrictions on internal migration. In developed countries, increased inequality has been the norm, partly due to immigration of the unskilled, but more because of biases in technological progress.

The salient feature of the past two decades is that, at last, a large number of big developing countries has participated successfully in the global industrial economy. This "third wave" can be contrasted with the "first wave", between 1870 and 1914, characterised by increased flows of goods, capital and people, but largely benefiting countries in the north; and the second, between 1950 and 1980, limited largely to trade and to today's rich countries.

This third wave has had big achievements: manufactured goods rose from less than a quarter of developing country exports in 1980 to more than 80% by 1998; the countries that strongly increased their participation in the world economy have doubled their ratios of trade to income; and the growth of income per head in this group of successful countries increased from 1% a year in the 1960s to 4% in the 1980s and 5% in the 1990s.

The good news is that the 24 countries in the World Bank's group of successfully integrating countries includes many of the world's biggest and has an aggregate population of 3-billion. Yet there is also significant bad news. Key is that about 2-billion people live in countries that are neither globalising nor developing: the aggregate growth of these was negative in the 1990s. In effect, they are being marginalised within the world economy.

Yet the proposition that globalisation of the past two decades has increased poverty and global inequality is false. The numbers of the desperately poor and of inequality among the world's households have both fallen for the first time in about 160 years. The explanation is accelerated economic growth in successfully globalising countries with very large aggregate populations.

Unfortunately, a large number of countries, with a third of the world's population, has failed to exploit these opportunities, partly because many liberalised very little.

Yet many of them suffer from far deeper problems: poor climate and geography; inadequate education; rampant disease; collapsed or deeply corrupt and predatory states; and failure to diversify beyond primary commodities facing stagnant world markets.

The argument about globalisation, as such, must stop. All successful developing countries have exploited international opportunities in their development. What is needed, instead, is agreement on how to reverse the marginalisation of so broad a swathe of humanity.

If critics of globalisation are concerned about the plight of the poor, they should welcome what has been achieved but resolve to help the world do far better in future.

That will not be achieved by forcing countries into isolation. Integration must, instead, be made to work for a far larger proportion of humanity. Aggressive liberalisation by the advanced countries combined with generous assistance to the world's marginalised is the sane path. The aim must not be to keep as many people as possible in the poverty and insecurity of self-sufficiency. We must help the poor share the opportunities of an everwidening world.

Anti-IMC
- Homepage: http://www.bday.co.za/

Comments

Display the following 3 comments

  1. hmmm — UN
  2. False Premises — Duncan King
  3. something real — Simon
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