Jul 2, 1998

GLOBALISATION: A DEVELOPMENT APPROACH

BY JAN P. PRONK*

Geneva, 1 July (TWN) -- Although the influence of the globalisation process, to some extent, is counterbalanced by other forces, global trends make clear that we face a number of fundamental world-wide challenges. The globalisation process is a revolution in the true sense of the word.  

It is irreversible, and it is profoundly transforming our societies.

Technological advances are the driving force behind globalisation and they continue to accelerate our potential in communication and information. Communication and information technology are intensifying economic interdependence on a world scale. This revolution is adding substantial new capacities to human intelligence, and it constitutes a resource that is changing our economies and our ways of life.  

Thus, the development of technology and its widespread use are preconditions for successful globalisation. Access to it is also a necessary precondition for attaining full membership in the global economy.

In the meantime, it is becoming very clear that economic progress and the maintenance of our natural environment are coming into conflict. We are degrading the world's environment, that is to say we are using up nature as though it was an inexhaustible resource. The present-day methods of production and consumption are clearly not sustainable.

Scientific evidence is overwhelmingly convincing that the environment sets limits to human endeavours and that we may, in fact, be already damaging the environment in irreparable ways.  

Globalisation confronts us with an additional challenge, and this concerns the world's financial markets. Between 1986 and 1992, global currency transactions increased threefold. As long as enormous profits can be made from the wild swings in exchange values between currencies, the volume of international monetary capital transactions will continue to grow. The resulting volatility and instability of the global financial market are obvious. They are potentially very dangerous.

Recent history provides many examples of what may ensue. In 1982, many developing countries, particularly in Latin America, defaulted on their debts. In 1989, Japan's 'bubble economy' of inflated financial values burst. In 1992, the British pound and the Italian lira came under attack. The following year, it was the French franc's turn. In 1995, the Mexican peso collapsed and recently the economies of Southeast Asia unexpectedly became unstable and lost ground. 

Of course, the Southeast Asian monetary crisis was caused by local failings. Too much reliance was based on real estate resulting in speculation; the hasty expansion of financial service industries led to uncontrolled excessive bank credits. This revealed the weakness of the financial system. Savings were wasted on unproductive investment; there was an increasing imbalance between the expansion of wealth creating machineries and investment raised for the improvement of the productive potential of society; there was insider profiteering and unscrupulous speculation, monetary policies were undisciplined, fiscal policies inadequate and currencies were overvalued.  

Obviously, it is necessary for governments and private actors in the region to redress these inadequacies and to clean up their act. 

But when all is said and done, I cannot agree with the US Deputy Treasury Secretary when he states that "(the) process of market opening is like peeling an onion ... it happens slowly, layer by layer, and there will be plenty of tears involved". That is a recipe for 'cold turkey' treatment as the essential precondition to membership in the global economy. For weaker developing nations, this is simply too harsh and socially much too disruptive. It is not the kind of advice that we in the industrialised world would accept for ourselves. The IMF and the WTO are the essential organisations for the regulation of the open, integrated global economy. They must not unwittingly exact a price of social disruption for membership in that community.  

These issues, then, are global challenges that need to be guided into acceptable channels. All of humanity should be concerned. Hence, the answers we seek must also be globally coordinated. I emphasise that this does not mean that the worldwide framework is the only one of value. Enhanced regional cooperation is another indispensable international tool. 

But at the global level, the answers are to be sought in four directions.

First, we must maintain our policies to integrate less strong, developing countries into the world economy. But that transition must be given sufficient time. A big bang entry into the globalisation process without further ado will occasion more victims than the states concerned can permit without regressing into violence. Thus, the process of becoming a full member of the economic world community will, for many developing countries, need to be very carefully phased and sequenced. While this manner of managing the enlargement of the global village may be difficult, it is certainly not impossible.  

Second, we must strengthen our international institutions. These institutions - notably the WTO, the IMF and the World Bank - are the ones that must guide the transition process. Inter-regional cooperation can certainly assist in smoothing out global differences, but the preeminent place of these three international institutions in this respect is equally important. The urgent task is to better equip them so that they can elaborate international rules, guidelines and codes of conduct. Without clear rules and regulations, the globalisation process is not sustainable in the long run. Thus, the strengthening of existing and the establishment of new international organisations is needed as a countervailing power to transnational corporations and the financial sector.  

The third area which requires answers to challenges posed by globalisation concerns the non-economic dimensions of the global market. In its present form, globalisation is an economically and technologically driven process that disregards political considerations. To put it somewhat bluntly, it is a 'mindless' process that will accelerate inequality, ecological disaster, poverty and identity conflicts in many parts of the world. An increasingly commercially financed world, which only extends materialistic western lifestyles without regard to the noneconomic bonds that form the essence of societies, will end up in dissent, strife and resistance. It will cause debilitating backlashes against the very progress people need and want. It is also an extremely dangerous illusion to think that these disasters will only happen elsewhere. A globalised world means precisely that. 

Fourth and finally, we must do more to promote democracy, human rights and cultural pluriformity. The liberty and intrinsic worth of the individual are the very basis of western culture. These values must be cherished and strengthened. They are the heart of what makes our societies work. They must also be at the heart of our relationship with non-western societies. Without them, policies to promote and protect long-term, peaceful global relationships are doomed to fail. A global world must have a global, inter-cultural dialogue. Such a dialogue can only be useful if it is based on a shared, deep mutual respect. This means that we give others the benefit of the doubt. We live in multicultural societies or in ones that are rapidly acquiring a multicultural character. Inter-cultural collisions are frequent everywhere. To solve these problems, we need to make globalisation more than just an economic and technological process.  

[Jan Pronk is the Dutch Development Cooperation Minister. Above, from the FONDAD publication 'Regional Integration and Multilateral Cooperation in the Global Economy', is based on his address to the conference at the Hague last year]