Globalisation or more of the same?
By Mike Moore, Director-General, World Trade Organisation
May 20, 2001
"WHEN has the entire earth ever been so closely joined together, by so few threads? Who has ever had more power and more machines, such that with a single impulse, with the single movement of a finger, entire nations are shaken?"
This was written in the 1770s. In 1840, the French diplomat Chateaubriand said of railway, telegraph and steam ships:
"Distances will disappear, it will not only be commodities which travel, but also ideas which will have wings. When fiscal and commercial barriers will have been abolished between states as they have between provinces of the same state; when different countries, in daily relations, tend towards the unity of peoples; how will you be able to revive the old mode of separation?"
Now we have the luxury of hindsight. What lessons have we learnt?
As provinces dismantled barriers within nations, economic prosperity and political power grew, not weakening the state but strengthening it. A strong Germany from jealous rival provinces. An economic power house, the United States, not individual states competing with local tariffs and taxes.
Historians argue that there was more trade in 1990 and more movement of people then than now. The canal proprietors organised against the new threat from railways. Reaction and protectionism are not new either.
Alas, much of the few centuries has been marked by colonial coercion. We now live in a better yet imperfect world of persuasion through international institutions and treaties.
The last 50 years have seen the greatest lift in living standards in the history of our species. Since 1960, child death rates have halved in developing countries; malnutrition rates have declined by 33 per cent; and the proportion of school children who do not go to school has dropped from around half to a quarter. The number of rural families without access to safe water has fallen from nine tenths to one quarter. Over 150 million people have been taken out of extreme poverty in China alone in the past 10 years.
Countries that are more open to trade grow faster than those that aren't and so have less poverty, better jobs, hospitals and better schools. Thirty years ago, Ghana had the same living standards as South Korea. Now South Korea is in the OECD. Compare North Korea with South Korea. Thirty years ago, Japan had developing country status: a tribute to democracy and open economic systems.
The real aberration in economic history was from the First World War to the end of the Cold War. Except for those 80 years, history has been about movement: movement of people, ideas and products.
Despite the lessons of history, some still think that isolation and protectionism will provide a better answer. Anti-globalisation dot.com groups in the rich North worry about globalisation, while leaders in the poor South worry about being marginalised from its benefits.
The far left and far right have joined hands in the streets against globalisation. The last time they did that was in the 1930s against decadent democracy. Yet, many of the anxieties are real. But much of the response is unreal. So what is new? Globalisation is not new; it is an age old process which has been going on since man first emerged from the cave. It is the velocity of change that disturbs.
People now know what is happening due to the explosion of information and low cost technology. It is now far more difficult for the corrupt and the politically powerful to deny information to their people.
An unhealthy hatred and fear of science and its possibilities is growing, partly due to the failure of Governments to regulate and ensure safety. Norman Borlang won the Nobel Prize for Peace in 1970 for discovering super wheat and unleashing the Green Revolution, saving the lives of millions. Today luddites would smash his experiments, rip out his plants.
Six million children die of malnutrition each year. Should we put our hope in super rice which can yield 35 per cent more grain per acre, golden rice that could prevent blindness in millions of children through Vitamin A deficiency? And a strain of cotton that increases production and needs one pesticide spray per year, not 15, or frost resistant crops than can double harvests. Romantics suggest organic farming. Great for those rich who can afford it. If we cut down every rainforest on the planet, we could not feed half of us properly through true techniques.
Of course, the world has problems. In some countries, living standards have declined. Ministers say their problem is marginalisation, not globalisation. Africa has a lower share of world trade now than 10 years ago. Debt, Aids, poor Governance, civil wars are all part of the problem. The lesson of success stories are consistent. Open societies, open trading systems, open and honest governance, curious, inventive people and an educated workforce get the best results.