Globalisation: Is the world really flat?

Dr. Ruwantissa ABEYRATNE

FIGHTING POVERTY: If the world were really flat (without any boundaries that is) there would be no poverty in one region of the world while there is prosperity in another. There would not be war in one part of the world and peace in another. People would not commit genocide in one corner of the globe and preserve dignity of human life in another.

So the world is not really flat.

However, we can, with some justification, cite globalisation and consider the world flat, but only in the context of trade, where barriers have been lifted in many parts of the World.

Globalisation essentially denotes the removal of trade barriers between nations, bringing to bear the blatant reality that increasing global connectivity, together with integration and interdependence in the economic, social, technological, cultural, political and ecological spheres, have removed all trade barriers, making a world without boundaries.

Encyclopaedia Britannica defines globalisation as the “process by which the experience of everyday life is becoming standardized around the world.”. Globalisation brings to bear the inevitable corollary of the contemporaneous advancement of technology and growing trends toward liberalism in international trade.

The information and telecommunications revolution, which really kick started in the 1980s, dramatically lowered the costs of doing business across national borders.

The giant strides made by information technology, which took its incipient steps in the 1990s, together with paradigm shifts in trade practices such as outsourcing and off-shoring, have ensured the opening of a world which no longer sees boundaries that inhibit global trade and information exchange.

The movement toward outsourcing and subcontracting of services is evident in both developed and developing countries.

Provision of information technology is now frequently outsourced to specialised companies.

One of the distinctive characteristics of outsourcing in the context of trade is that it is not inhibited by national requirements imposing ownership restrictions, which allows trading services to blend in to the process of globalisation.

Off-shoring on the other hand allows a business to move its base to a country where human resources are accessible at rates lower than its home base but at the same time are of the same or higher quality than found at home. China is a good example of an attractive off-shore base.

The strongest thrust of globalisation in the business world is its ability to generate competition within and between nations to offer the best goods and services at the lowest prices.

The quality of services and pricing in China as an off-shore base have encouraged other nations, such as Malaysia, Thailand, Ireland, Vietnam, Brazil and Mexico to vigorously compete as viable off-shore bases.

The World Is Flat: A Brief History of the Twenty-first Century (Farrar, Straus and Giroux: New York, 2006) is a best-selling book which analyses the progress of globalisation with a focus on the early twenty first century.

It was first released two years ago and was later released as an updated and expanded edition last year in 2006.

The author, Thomas L. Friedman uses the metaphor of a flat world suggesting that the competitive playing fields between industrial and emerging market countries are levelling.

This is both an interesting and real phenomenon. The book is excellently researched, well written and makes for compelling and interesting reading.

As the book confirms, there is no doubt that two of the greatest catalysts in the globalisation equation have been e-information and e-trade, which were individually and collectively spawned by the internet.

Downloading and uploading are tools that make the exchange of knowledge instantly accessible throughout the globe. These tools, when viewed in the perspective of the greatest global inhibitors of all - poverty, war and ill health - open a whole new dimension of hope.

There are two basic premises which are incontrovertible. The first is that globalisation enhances the wealth of nations, promotes trade and increases the gross domestic product of a country.

The second is that at the very core, the primary need of every human being is to be rid of poverty, war and ill health. The question then is, how could globalisation assist in eradicating poverty, war and ill health.

As for poverty, it is highly possible to bring an end to poverty through globalisation. Jeffrey D. Sachs, Director of the Earth Institute at Columbia University and one time Special Advisor to former United Nations Secretary General Kofi Annan on the UN Millennium Development Goals and Economic Advisor to Governments around the World, in his book, The End of Poverty - Economic Possibilities of Our Time (Penguin: New York, 2005), says it is a distinct and real possibility.

Sachs quotes the prescient 1930 book of British economist John Maynard Keynes, Economic Possibilities for Our Grandchildren, where Keynes envisioned that there would be no more poverty by the end of the 20th century, attributing to the eradication of poverty the relentless march of science and technology resulting in exponential global economic growth.

Sachs follows through without reservation, by invoking the same logic as Keynes, claiming that by 2025, we could be totally poverty-free by using the wealth of the world and the power of unending repositories of knowledge that we have.

Of course, as every good news has a caveat, Sachs lays down the condition that our ability to transcend global poverty would depend on our collective wisdom in using our resources prudently and with good judgment.

In his book, Sachs shows the way towards charting a wiser path towards global wealth and prosperity.

The key to Sachs’ claim lies in the sharing of wealth, which is what globalisation does best. Sharing of wealth comes from sharing of information and the prudent use of human resources.

To do this, governments must enable and empower citizens to learn trades that are needed in today’s society, recognise the potential of its people, give them the opportunity to develop meaningful connections with other people in global society, and above all, adopt liberal trade policies that promote trade without boundaries.

The first step is to make a commitment toward ending poverty. This could be done nationally, regionally or globally. To start with, the national dimension would be the initial approach. Secondly, we need a plan, which we already have in the United Nations Millennium Goals.

These Goals demand that no individual and no nation must he denied the opportunity to benefit from development. The equal rights and opportunities of women and men must he assured.

Global challenges must be managed in a way that distributes the costs and burdens fairly in accordance with basic principles of equity and social justice. Those who suffer or who benefit least deserve help from those who benefit most.

The Goals also call for responsibility for managing worldwide economic and social development, as well as threats to international peace and security, to be shared among the nations of the world and be exercised multilaterally.

As the most universal and most representative organisation in the world, the United Nations must play the central role in this saga.

The poor need to be empowered. The rich nations may not be encouraged to assist in this goal if the poor nations and their citizens are silent. The biggest inhibitor to reducing trade barriers - the political economy - where removal of trade barriers are considered harmful to domestic industry, should be viewed with apprehension.

A good approach would be to have better dissemination of information on the benefits to consumers and service providers alike and encouragement of technological innovation.

Sachs cites the likes of Mahatma Gandhi and Martin Luther King who did not wait for the rich and powerful but went ahead helping the cause of the poor and downtrodden.

Another important and compelling need is to empower the United Nations and strengthen it, along with raising the profiles and standing of such financial institutions as the International Bank for Reconstruction and Development (World Bank) and the International Monetary Fund.

We also need to ensure sustainable development by harnessing scientific and technological advancement. The last frontier is of course individuals - all of us as separate beings, contributing to the cause and supporting our governments

The eradication of war could be approached on a similar basis, (depending on what the contentions of the parties are), with the main focus on exposing the populace to greater economic opportunity.

The promotion of trade without boundaries opens opportunities for those fighting against poverty and against discrimination that is often caused by inequality in opportunities offered.

In this context, arguably, the role played by economic development in the eradication of hostilities can best be illustrated by the circumstances that led to the ending of the Cold War.

By the early 1980s, the Soviet armed forces were the largest in the world by many measures-in terms of the numbers and types of weapons they possessed, in the number of troops in their ranks, and in the sheer size of their military-industrial base.

By the late years of the Cold War, Moscow had built up a military that consumed as much as twenty-five per cent of the Soviet Union’s gross national product at the expense of consumer goods and investment in civilian sectors.

In 1985, when Mikhail Gorbachev had taken over in the Soviet Union, the Soviets suffered from an economic growth rate close to zero per cent, hand in hand with a sharp fall in hard currency earnings as a result of the downward slide in world oil prices in the 1980s. (Petroleum exports made up around 60 per cent of the Soviet Union’s total export earnings.)

To restructure the Soviet economy before it collapsed, Gorbachev announced an agenda of rapid reform geared toward economic recovery.

This approach, which was the start of flirtation with economic liberalisation and a shift from nationalistic protectionism, required Gorbachev to redirect the country’s resources from costly Cold War military commitments to more profitable areas in the civilian sector.

As a result, Gorbachev offered major concessions to the United States on the levels of conventional forces, nuclear weapons, and policy in Eastern Europe.

President Ronald Reagan was quick to recognise the change of attitude in the Soviet leader and used the real change in the direction of Soviet economics and shifted to diplomacy, with a view to encouraging the Soviet Leader to go further with his reforms.

Gorbachev was agreeable to meet Reagan in four summit conferences around the world: the first, in Geneva, the second in Reykjavik, the third, held in Washington D.C. along with the fourth summit, in Moscow.

Reagan believed that if he could persuade the Soviets to look at the prosperous American economy, they would embrace free markets and a free society. Gorbachev, facing severe economic problems at home, was swayed. Speaking at the Brandenburg Gate at the Berlin Wall on June 12, 1987, Reagan said, “General Secretary Gorbachev, if you seek peace, if you seek prosperity for the Soviet Union and Eastern Europe, if you seek liberalisation: Come here to this gate! Mr. Gorbachev, open this gate! Mr. Gorbachev, tear down this wall!”

As for the eradication of illness, there were 57 million deaths in 2002, nearly 20 persons of which involved children under five. 98 per cent of those who died of communicable diseases lived in developing countries.

Communicable diseases represent seven out of the top ten causes of child deaths in developing countries. How can globalisation help? The answer lies in the steps needed to fight communicable diseases.

Interruption of transmission of the vector, be it HIV, SARS, Polio or Malaria, is the first step. Vaccinations and immunisation is the second. Post curative healthcare and administering of medicine is the third measure followed by proper nutrition and sanitary living conditions.

All these measures require the free flow of information and economic resources. Governments should cease to cling to political economies and open their doors to liberalised trade.

They should create a basic health infrastructure and educate the people on global information sharing with regard to proper sanitation.

Inviting multinationals wherever feasible and acceptable would free borders to encourage the flow of pharmaceuticals. Global health involves epidemiology, economics, demography and sociology and an open approach to free trade is the correct recipe that would help fight disease.

Until these three things - the eradication of poverty, war and communicable disease - are accomplished through globalisation, we cannot really say the world is flat.

(The writer is Coordinator, Air Transport Programmes, International Civil Aviation Organization, Montreal, Quebec, Canada)