10:16 AM Aug 7, 1996

GROWING CONSENSUS ON ILLS OF GLOBALIZATION

Penang 7 August (Martin Khor) -- Recent speeches by Third World leaders and reports of international agencies suggest that there is a new convergence of global opinion that the globalisation process is leading to great wealth for a few, marginalisation of the many and polarisation (or inequality) between them.

A fortnight ago, the Malaysian Prime Minister, Dr Mahathir Mohamed made a speech in Kuala Lumpur attacking "globalisation," thus adding considerable weight to the growing international backlash against this seemingly uncontrollable process.

Dr Mahathir said the developed countries interpret globalisation as the breakdown of boundaries as barriers to economic exploitation. As a result, every country rich or poor would have access to every other country, and all would benefit. In reality, however, globalisation would leave the developing countries "totally exposed and unable to protect themselves."

The effect of economic globalisation, said the Prime Minister, would be the demise of small companies in developing countries. It would also mean the loss of the nominal independence they have.

"Just as the ending of the Cold War has brought death and destruction to many people, globalisation may do exactly the same and maybe more."

While possibly a drastic and pessimistic conclusion, Dr Mahathir added, it is unfortunately "entirely possible."

He however ended on a positive note, calling on the weak and poor to appreciate this possibility and to fight "tooth and nail" against it, in a kind of 'guerilla war', but a war that can only begin if there is understanding of what globalisation can mean.

The Malaysian premier's speech is the most recent and articulate addition to the increasing number of criticisms made against globalisation by leaders and citizens in the South.

At the UNCTAD-9 Conference in Midrand in May/June, several leaders from developing countries decried how globalisation and liberalisation had run their local companies out of business and marginalised their economies.

They described how trade liberalisation or the opening up of their economies to foreign goods and companies (following policies imposed on them by donors and creditor institutions like the World Bank and IMF) has led to often devastating problems.

Tanzania's President Benjamin Mkapa told the Conference that countries undergoing liberalisation and privatisation under World Bank-IMF policies had suffered immense social costs, including job losses, cuts in health care and education, and the "immense possibility of instability."

"Opening up of our national economies is also a problem," he added. "The prospects of integrating our countries to the global economy is extremely dim.

"Meanwhile, such industries as we have will be affected by imported products that run our companies out of business. It is leading to the deindustrialization of our countries." Ministers from the poorest nations, the Least Developed Countries (LDCs) also issued a declaration stating that "the LDCs confront the processes of globalisation and liberalisation from a position of disadvantage.

"In the short-run (these processes) would do little to address LDCs' trend towards marginalisation. On the contrary it is feared that these forces may well accentuate it...

"The implementation of the Uruguay Round Agreements would involve significant transitional costs on the LDCs. Erosion of trade preferences, higher bill for import of food, pharmaceuticals and essential capital goods will create serious difficulties for these countries."

Interestingly enough, there are also loud protests against the insecurities of globalisation coming from people and groups in the North.

At a Washington seminar in May, organised by the International Forum on Globalisation and attended by 700 groups and individuals, leaders of many US, Canadian and European NGOs joined their colleagues from the South in decrying the adverse affects of liberalisation in increasing the incidence of poverty, unemployment, job insecurity, social inequalities and ecological degradation in their societies.

The Human Development Report 1996, launched recently by the United Nations Development Programme, also contains data that add empirical weight to the thesis that globalisation benefits only a few, makes a lot of people worse off, and generates tremendous inequities. It also contradicts the conventional wisdom that economic growth has been benefitting most of the world's people.

Instead, over the past three decades, only 15 countries have enjoyed high growth whilst 89 countries are worse off economically than they were ten or more years ago.

In 70 developing countries, today's income levels are less than in the 1960s and 1970s. And in 19 of them (including Ghana, Venezuela, Haiti, Nicaragua, Sudan), per capita income is less than in 1960 or before.

"Economic gains have benefitted greatly a few countries, at the expense of many," says the UNDP. The old cliche, that the poor get poorer and the rich richer, is unfortunately well backed up with fact after fact.

In the past three decades, 1.6 billion people were left behind or became more poor.

"And the very rich are getting richer," the UNDP report says. To illustrate, it estimates that the assets of the world's 358 billionaires exceed the combined annual incomes of countries accounting for nearly half (45 per cent) of the world's people. That's 2.3 billion people!

UNDP chief, Gus Speth, concludes that the world has become more economically polarised, and "if present trends continue, disparities between industrial and developing nations will move from inequitable to inhuman."

A commentary on these statistics in the London-based daily, The Guardian, was even more frank and scathing. Noting in bold headlines that "358 people own as much wealth as half the world's population", columnist Victor Keegan called it "highway robbery by the super-rich."

Using data from Forbes magazine's annual survey of the world's richest people, Keegan shows that Microsoft owner Bill Gates tops the list with personal wealth of US$ 18 billion, "enough to purchase half a dozen poor countries."

Others on the list are US businessman Warren Buffet (US$ 15 billion), Roche company owner Paul Sacher, Asian businessmen Lee Shau Kee, Tsai Wan Lin and Li Ka Shing, and Microsoft co-owner Paul Allen.

As the HDR 1996 reveals, the world's total economic income (global GDP) is US$ 23 trillion, of which only $5 trillion (or 22%) goes to developing countries, although they house almost 80% of the world's population.

And the North-South gap is worsening. Between 1960 and 1991, the richest 20 percent of the world's people increased their share of total global income from 70 to 85 per cent.

The poorest 20% had their share fall from 2.3% to a miniscule 1.4 per cent.

In 1991, more than 85 per cent of the world's population received only 15 per cent of global income.

These glaring statistics formed the background picture at a Asia Pacific regional workshop on "Growth and Equity" which the UNDP organised at the end of July in Jakarta to coincide with the launch of its HDR 1996.

At one of the sessions, on the link between growth and inequities, the participants made the following conclusions:

* There is high inequality between and within nations, and it is growing fast.

* There is not necessarily a trade off between equity and growth. Both can and should go together.

* Governments can do much more to promote growth with equity, and equity with growth.

* To do so, there should be higher government expenditure on social services, as well as better quality in this expenditure.

* However there are disturbing signs at the national level that there is lower social expenditure in many countries due to debt and structural adjustment.

* Even in better off countries, the moves towards privatisation and increased health and education fees (to "recover costs") could reduce people's access to social services.

The workshop also concluded that at international level, globalisation is accompanied by polarisation between rich and poor, as well as marginalisation of the poor.

These trends are likely to get worse with the future workings of the world trade system under the World Trade Organisation, as strong countries are able to take advantage of liberalisation whilst the weaker countries may be threatened by cheaper imports and by more efficient foreign companies.

There is a need to learn from some elements of the experiences of those countries in East Asia that have succeeded to attain high growth, together with a good measure of social development and equity.

However, it was also noted that in many of the region's high- growth countries, there was a heavy toll on the environment, in terms of deforestation, wastage of water and other resources, and pollution.

These environmental concerns have to be addressed if the growth is to be sustained.

Finally, the workshop also concluded that to attain better balance between growth and equity, and to get "human development" going, ordinary people and citizens need to get "empowered".

Only then can there be a better chance of their fair participation in the process and benefits of development.

Examples of efforts of citizen groups were given, for instance in South Korea where the people joined in a movement to democratise the country and even succeeded in getting two former Presidents to face trial for alleged corruption.

The big question is how this "people empowerment" can or will come about, especially in those countries where the poor languish, growth is negative, the inequality gaps grow wider and development is absent.

The negative effects of globalisation, as well as the structural problems within nations, need to be tackled together, to overcome the poverty of countries and the polarisation of the world.