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CIAO DATE: 08/04
Report on Working Group III: Globalization, Technology and Inequalities
Walter Dorn, Ana Maria Cetto and Nola Dippenaar
Pugwash Conferences on Science and World Affairs
March 12-16, 2002
1. Globalization: What is it? What drives it? What are its consequences?
Globalization is the process of increased world-wide movement of finance and investment capital, goods, services, people and information. More abstractly, it means the loss of the territorial dimension in global economic, technological and cultural affairs and the creation of the world as a single space. It results in a perception of shrinking space, contracting time and disappearing borders. It is the result of the breaking down of barriers to trade and investment, travel and information flow. Most people perceive it as primarily an economically driven process, but one that is also aided by advances in science and technology, including new capabilities for telecommunications, information management, rapid travel, and the large movement of goods.
Globalization is a well established phenomenon, as evidenced over the last two decades by a seven-fold increase in foreign direct investment, tripling of international phone call time, novel forms of communications between people (particularly electronic ones), and tripling of travel, bringing people and cultures into greater contact as never before.
In the economic sphere, those who push for further and faster globalization allege that there are many other benefits: the creation of new and freer markets, increased competition and efficiency, greater productivity, a reduction of poverty, and an increase in human security. They also claim that globalization discourages subsidy wars, removes otherwise impenetrable trade barriers, limits government favoritism over certain industries, reduces travel restrictions, and discourages censorship of information.
While the proponents say economic globalization has resulted in greater freedom; others strongly deny this. The latter point out that the effects of globalization are far from uniform and far from beneficial overall. While globalization has increased the power of transnational corporations (TNCs), international financial institutions (IFIs), the World Trade Organization (WTO) and some countries with strong economies, by and large, the developing states have suffered from this process, over which they have little control.1 Their freedom is greatly compromised because of new market forces, the demands of IFIs and the domination of stronger countries. Because of this relative incapacity, globalization is not an equalizer, as claimed, but is deemed to be highly discriminatory. Simply put, the strong get stronger while the weak get weaker.
Critics of economic globalization point out that in practice pro-free trade states exploit weaker states under the banner of globalization, forcing smaller developing states to open their markets to decimating foreign competition while maintaining unfair trade barriers themselves. In addition, the staggering burden of foreign debts, TNC profit extraction and IFI & WTO conditionality is sapping countries of resources and capital, thereby greatly reducing their options for development. While the value of international trade is undeniable, the current systems and practices are deemed to be far from satisfactory, and often counterproductive.
Economic globalization has been held responsible for many other detrimental effects: a decline of local culture, a loss of local autonomy and access to local resources, greater unemployment, a widening gap between rich and poor (both between nations and within nations) and a break-down of social safety nets.
As the market place and the strongest economies in the world dominate, there is a decline in the public sector and the public good in nations around the world. There is a growing and unnatural dependency on foreign executives at headquarters far away, and an increased capacity for international corruption, transnational crime, tax evasion and the avoidance of environmental and social responsibilities.
In principle, economic globalization should mean that companies and countries are made more accountable and more susceptible to pressure from abroad. There have been cases where TNCs have changed their practices because of international pressure and civil society action (e.g., the cases of companies engaged in the oil exploration in Nigeria, "blood diamonds" in West Africa and building components for land-mines). But more often than not TNCs have used the unified global space to evade moral obligations and the laws of particular nations.
The prominent role of the United States, identified as the "prime mover" of globalization, was bemoaned by participants. They felt that it imposes its will, its policies and sometimes non-negotiated trade texts on weaker countries. Furthermore, at times it acts hypocritically. When it has a stronger sector, it advocates free trade, when its has a weak sector, it still protects its own markets.
Recent US actions are perceived as especially self-centered and unfair. The assertion of US unilateralism, favoritism and irresponsibility was evidenced by the US rejection of the Kyoto protocol, its dismissal of the catastrophic effects of planetary environmental degradation, and more broadly by the abrogation of arms control treaties and measures, and its continuing refusal to ratify key international documents such as the Statute of the International Criminal Court, the International Covenants on Civil and Political Rights and on Economic, Social and Cultural Rights and the Convention on the Rights of the Child.
One of the main results of globalization has been an increase in inequality. One representative statistic is that the combined assets of the three richest people of the planet is more than the combined GDP of all the least developed counties. Many other indicators of great inequality, in the health and education spheres for instance, are provided in the much valued Human Development Reports of the United Nations Development Program (UNDP).
Even in absolute terms, poverty is alarmingly prevalent in the world. Figures reveal that almost half of the world's population earns under $2 per day and 1.2 billion people live on less than US $1 per day (World Development Report, 2000 and 2001). There is deeping poverty (e.g., with Purchasing Power Parity less than $1) in some regions, such as sub-Saharan Africa and parts of South and Central America. It has to be acknowledged, however, that over centuries, poverty has lessened in absolute terms world-wide and gains have been made in many regions of the world.
As inequality is growing, it presents a grave danger to the peace of the world. Inequity is a contributing factor to violent conflict and civil strife, including civil war and terrorism. In addition, the lack of a social contract (where the state is not "owned" by its people and groups feel cut off) is a root cause of much conflict in the world today. Similarly, the lack of a global social contract and a genuine global system of governance, coupled with the presence of extreme inequalities and blatant injustice are reasons for alarm.
2. Indicators of Economic Globalization
Indicators are an important means to track and understand the phenomenon of globalization but their limitations and pitfalls must be recognized. Though they may appear to be precise, they are often inaccurate and unreliable. Governments sometimes adjust national figures to make the national situation look better. Data is often not available so wild estimates are used in place of painstaking research.
A problem with the standard sets of economic indicators is that the averages commonly presented hide gross inequalities within states. For example, GDP per capita figures do not show the distribution of wealth, which is a key to maximizing human welfare and to reflect the true health of an economy.
Also, other important characteristics are omitted from common lists of indicators or are not measured at all. The lists don't include social and cultural capacities to respond to poverty, including factors such as community charity and role of the families in dealing with poverty or social cohesion and solidarity more generally. Also they omit the long-term damage of industrial activities to the environment, whose health is crucial for sustainable development and the lasting wealth of a nation.
By failing to measure such important characteristics, there is a great danger that detrimental actions will be taken in ignorance when making policies. There is a need to find new ways of quantifying such important factors, however rough the resulting figures may be.
Participants suggest that new indicators and indices be developed and adopted to take into account important factors including: the environmental impact of economic activities at the individual as well as macro-economic level, the extent of local freedom-a broader measure of measure of democracy (viewed as the ability for people to manage own affairs), the main beneficiaries of aid (including the flows to the upper/middle/lower classes and to government leaders and the recycling to TNCs).
Some people questioned the fundamental assumption that economic growth in itself is necessarily good. The development of new indicators to parallel conventional economic statistics will help clarify the problems. Growth is not good if it comes with the destruction of the environment, increasing inequalities, the fragmentation of society or a loss of general morality. The materialistic approach is also faulty in assuming that dollar figures are a measure of human well being or happiness.
Indicators are most useful when they are frequently updated and are able to inspire action to correct problems. Thus, the Millennium Declaration agreed to at the United Nations in October 2000 will have to be closely monitored and rectifying measures taken now rather than in 2015.
Members in the working group from Argentina, Brazil, India, Mexico, South Africa and South Korea shared their national experiences under economic globalization, generally confirming the points made in this report.
Members agreed that while it is important to learn from the experiences of other nations, one must avoid the danger of applying models to countries in different circumstances and with a difference past and culture. It is important, however, to identify some "role models" and some success stories and to monitor a vast set of indicators world-wide, thereby maintaining a sort of global watch for the human interest.
3. New and Alternative Approaches: A Solutions-Oriented Analysis
While the free market was and is still advocated as the best if not only economic system for human development, it is now clear that a mixed system is necessary, involving the free market alongside public enterprises, both being regulated by consistent and humane government policies. Furthermore, just as regulation is a key at the national level, with the advent of globalization, there is a corresponding need for international regulation.
It is clear that globalization requires global rules, but that nations in the driver's seat prefer to maintain their own "rules of the road." What is needed is a concerted effort to move towards a democratic and effective system of global governance in all its dimensions, including the economic ones. Because nations are partial to their own industries, there is a clear need for checks and balances at global level and some form of supranational enforcement.
The global system needs more transparency and a greater sense of individual and corporate responsibility. Civil society has a key role to play in monitoring global conditions and on evaluating the actions of governments, corporations, IFIs, and the WTO and playing the role of a watch dog for unfair practices and intrusions. Civil society within nations and globally needs to be strengthened.
States should maintain the right to reserve key sectors of their national economies to domestic players and limit TNCs from entering those sectors. Some potential areas could be culture, education, energy, transportation, real estate, etc.
To protect weaker states, it is important to place "binding dispute resolution mechanisms" into trade treaties so that more powerful states cannot use their might to force unfair trade practices on such states.
A key to successful reform of the international system is an attitudinal change: so that people recognize poverty as injustice and development as a right. The involves viewing poverty not as a lack but as "pronounced deprivation in well being" and places an emphasis on people rather than abstract concepts, recognizing the daily hardships of billions and confirming entitlements to them. The "rights approach" seeks that human rights (including the rights to health, education, work, etc, as outlined in the Universal Declaration of Human Rights) are be recognized as nationally accepted standards. While the primary responsibility remains with the rights holder, other must share it, including individuals as well as communities. These rights imply duties on the part of the other actors including corporations, states and the G3 (IFIs and WTO). One clear implication is that the international economic, financial and political order require urgent restructuring.
The Group recommended a complete overhaul of the IFIs, including new provisions for democratization (e.g., voting rights, appointments, funding criteria, etc). Some sought completely new organizations and processes, in addition to an expansion of some existing innovations (e.g., microcredit financing). The group heard important proposals for the following measures to strength equity in the global economic order:
4. Globalization: Beyond The Market Place
Fortunately, globalization is not only economic. It is driven by more than the search for profits. Science and technology is allowing increased interconnectivity of people, with much fewer detrimental effects. It is resulting in faster and better information exchange and travel. In psychological terms too, a global sense of citizenship and responsibility is emerging. There is a growing recognition of the globality of human rights, irrespective of race, creed, colour or nationality. In fact, this may be the key to resolving the global economic challenge. As the conscience of humanity is awakened to a common responsibility for the earth and its inhabitants, appropriate policies and decisions can be made to build a brighter future.
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