Globalization—An unstoppable force?  

There was a time when Coca-Cola was the hallmark of a global company, selling its soft drink in virtually every country, in virtually every language. But now the world is used to MacDonald’s selling hamburgers in Moscow, Beijing and Karachi, while Toyota pick-up trucks roam the African Sahel, and Sony televisions occupy a central location in homes worldwide.

This is the golden age for business, commerce and trade. Never before in the history of the world has there been such an opportunity to sell as many goods to as many people as there is right now.

It’s not just big companies that are in on the explosion—although they may dominate. Instant information and communications have allowed indigenous people in Guyana to market handmade hammocks through the Internet, and even the fifty or so people living on remote Pitcairn Island can sell their handicrafts anywhere.

With instant information and communication, virtually everything is available to anyone, anywhere. Markets are now global and many corporations are often richer and more powerful than many countries.

There has always been trade between countries and societies, but never on a scale close to today's levels. A combination of reduced trade barriers, financial liberalization and a technological revolution have completely changed the nature of business in virtually all of the industrialized countries.

• The countries of the world are exporting ten times the amount they did in 1950, and more money—more than $1.5 trillion a day—now moves across borders. In 1973, that figure was only $15 billion.
• More people are travelling than ever before, with 590 million going abroad in 1996, compared to about 260 million in 1980.
• More people are making international telephone calls than ever before, and are paying less. A three minute phone call from New York to London cost $245 in 1930—in 1990 it cost just $3.

Globalization does not stop there. With the Internet and state-of–the-art telecommunications, sales and technical representatives based in India can answer customer questions in the United States. Back-office insurance jobs can be located thousands of miles from company headquarters, in different parts of the country, in different countries, and on different continents.

More trade, more markets, more business, more information, more jobs, more opportunities. This is the promise of a globalized world. The tide of globalization has already brought considerable wealth to areas of the world long accustomed to only poverty, and even more wealth to areas that were doing quite well already. In East and South-East Asia, countries have turned to export-based economies to propel themselves up the development ladder. In the coastal regions of China, global market-oriented businesses have helped raise living standards for millions of people.

This whirlwind of economic activity has brought many benefits, and wealth, to many people. There has been faster economic growth, higher living standards, accelerated innovation, and new opportunities for both individuals and countries. Accompanied by a revolution in information and technology, the world is very much a smaller and more integrated planet than ever before.

But if globalization can generate wealth, it can also take it away:

• The billions of investment dollars that washed up on Asian shores in the mid-1990's abruptly reversed direction in 1997, sending millions of people back into poverty in what has become known as the Asian financial crises, although its impact was so widespread it affected countries on virtually every continent. Hardly a fluke economic condition, the Asian crisis marked the fifth serious international monetary and financial crisis in the last two decades, all which have left a trail of financial devastation and ruin from Russia to Latin America.

• The benefits of globalization have largely bypassed over half of the world's population, or close to 3 billion people who make do on less than US$2 a day. These are people who have not shared in the new wealth, are not connected to the Internet, and for the most part, lack the necessary skills that are needed to participate in this brave new economic world.

• In Central Asia and Eastern Europe, where many countries have not adapted to the global economy, more people today are living in poverty than ten years ago.

• Despite all the talk of globalization, the bulk of the world remains largely untouched by it. It is estimated that half the world's population has never even made, or received, a telephone call, according to United Nations Secretary-General Kofi Annan.

The Secretary-General contends that with all its problems, globalization can be a positive force for all the world's people.

But the Secretary-General recognizes that globalization comes with many dangers. On the balance, he found that globalization "draws peoples closer together, and offers many of us choices that our grandparents could not even dream of. It enables us to produce more efficiently, and allows some of us, at least, to improve our quality of life. But alas, these benefits are far from being felt equally by all. The long term of positive change is, for millions of our fellow human beings, simply too far off to be meaningful. Millions still live on the margins of the world economy. Millions more are experiencing globalization not as an opportunity, but as a force of disruption or destruction: as an assault on their material standards of living, or on their traditional way of life. And those who feel marginalized in this way are growing more and more numerous." -- Address to the General Assembly, New York, 21 September 1998 (SG/SM/6707)

The Backlash to Globalization

Clearly, not everyone is happy about globalization. Many people don't like globalization because it allows rich and powerful outside business interests to intrude into a local culture, overrides local traditions, and threatens a way of life. There were many who cheered for a French farmer who vandalized a MacDonalds. Starbucks coffee shops have been favorite targets for people protesting globalization.

In more traditional societies, globalization threatens the cultural and religious underpinnings of society. In both industrialized and developing countries, many people feel threatened—and are threatened—by the globalization process. A globalized economy presents a myriad of challenges, from protecting local cultures to protecting the environment to protecting local jobs.

The backlash is very real. During the failed World Trade Organization talks in Seattle that were intended to further expand trading opportunities last December, thousands of demonstators who agree on little else aside from a common dislike for globalization, caused major disruptions. Labor Unions protested, fearing that a new trade agreement would provide an incentive for companies to move their jobs abroad. Environmentalists protested, fearing that global trade agreements would undercut domestic environmental safeguards. And there were nationalists, who feared that further globalization would diminish national sovereignty, and possibly lead to a loss of freedom, liberty or rights.

Whether it is viewed as an ominous juggernaut that crushes everything in its path, or whether it holds the promise of a better future, globalization is a phenomenon that is with us. Like the weather, it is, and will be, a source for endless discussion, but little can be done about it. But also like the weather, it is a force to which people can adapt.

Balancing the Concerns

At the international level, developing and developed countries have widely differing concerns. In developing countries, where poverty is acute, the emphasis is on development, at almost any cost. Pointing out that the developed countries industrialized at a time when there was no regard for environmental concerns and when labor standards were abominable, developing countries maintain that unless they receive some assistance, they have little choice but to develop any way they can.

Developing countries have also asked the international community for help to postpone or cancel their staggering debt. These countries are obligated to repay loans that were taken out by previous corrupt or dictatorial regimes, or that were suggested by donors to finance development schemes that did not work out. Often, these debt payments amount to far more money than the countries are able to spend on other necessities, such as health or education.

Assistance—both financial and technical—has been sorely lacking, developing countries say. Statistics support that contention and show that the financial assistance that the richer countries have provided the poorer ones has dropped sharply over the last decade. There have been initiatives by the international financial institutions and by some donor governments to forgive debt, but so far, very few countries have qualified for these programmes, and debt relief has been long in coming.

Developed countries, on the other hand, say that the debate over foreign assistance misses the point. What is important, they say, is the skyrocketing amounts of foreign direct investment by the private sector, and maintain that if developing countries want to attract investment, they must adapt themselves to the needs of the global economy in terms of governance and infrastructiure.

In fact, foreign investment, coupled with an export-oriented economy, has already proven itself as a potent force for development, and has fueled the extraordinary growth of the so-called "Asian Tigers" over the last several decades—both before and after the Asian financial crisis. Countries such as the Republic of Korea, Thailand, the Philippines and China have all benefited from a large influx of foreign investment and have experienced rapid growth, allowing millions to move out of poverty. Yet while the amounts of foreign investments to developing countries have grown, most of it goes to one country—China, and most other countries receive very little.

The argument given, then, is that most developing countries have to work to make themselves attractive to foreign investment. This means, these countries have been told, that they must establish governments that are stable, democratic, accountable and transparent to provide a place where business can operate.

• Though about one-quarters of foreign direct investment (FDI) now goes to developing countries, not everybody benefits from it. Asia receives almost 20 times more foreign investment than Sub-Saharan Africa, where the need is the greatest. One of the reasons why some developing countries fail to attract foreign investment is lack of information about investment opportunities in those countries. Doing precisely that is the goal of a new joint initiative undertaken by the United Nations Conference on Trade and Development (UNCTAD) and the International Chamber of Commerce. This initiative includes publication of investment guides, describing investment opportunities and conditions in the least developed countries, and promoting dialogue between Governments and potential investment. Twenty-eight companies, some of them very big, are supporting the partnership and contributing to the project, as are China, Finland, France, India and Norway
  
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