Making globalization globally advantageous.

One of the most polarizing debates in the world today concerns the effects of globalization. Some of the principle reasons for this is that: a) most people are locked into preconceived notions (Barnevik, 2001), b) the inability to keep a long-term perspective on the effects of globalization, and c) the inability of people on both sides of the debate to see the gray aspects between what they perceive as being "black and white."

Most scholars agree that the phenomenon of globalization is an irreversible one. Globalization has been occurring not only in the field of economics, but also in political and socio-cultural arenas. The ills of globalization have been widely publicized by the vociferous opponents of globalization. However, while many of their arguments are well founded, it is more prudent to understand the reasons for some of the problems of globalization and tackle those issues to minimize their negative impact. In addition, it is important to build on the advantages of globalization and ascertain that a much larger population of the world benefits from the economic, political and social process of globalization.

To fully realize the potential benefits of globalization, certain steps need to be taken at three levels: local (country-level), regional and international levels. The economic disparity between similar neighboring countries such as North & South Korea, Thailand & Myanmar, and Chile & Peru will be minimized only by ardent efforts on all these levels. The information technology (IT) revolution and the "second industrial revolution" that are taking place today are restricted to only a small part of the developing world and, in many cases, to certain small sections of the populations in the developing countries. Until the positive effects of globalization becomes more widespread, the debate on globalization will be understandably won over by its detractors despite the overall long-term advantages of globalization--minimizing poverty and increasing the possibilities of democratization.

At the country level, the first thing many countries need to do is to create a true market economy where open competition and independent government are the norm. All countries in the developing world, and many countries even in the developed world, need to work hard in establishing a true market economy. Across most nations, the governments need to demonstrate strong and responsible fiscal policies that will instill confidence among investors. There is also a need for the governments in developing countries to eliminate corruption and bureaucracy, while providing a fertile ground for foreign investment in their countries. In developed countries, the political leaders need to have the fortitude to convince their populace of the advantages of minimizing/eliminating subsidies in certain domestic sectors of their economy. Tariff and non-tariff barriers (e.g. the CE Mark in Europe) by the developed world have prevented many developing countries from fully participating in the global economy. These barriers have also negatively affected the people in the developed world, since they prevent them from buying commodities at the cheapest price in the global economy.

The demographics in developed countries are often used to defend the tariff and non-tariff barriers. Instead of considering the phenomenon of low birth rates and consequent rapidly aging populations as a disadvantage, developed countries need to view this as an advantage. These countries need to pioneer products and services for this typically affluent section of the population and tap into the global market among the elderly. Also, many developed countries need to focus on improving the productivity in their service industries which will automatically move more of the industrial sectors to the developing countries. Thus, improving service productivity will help both developed and developing countries.

Apart from the possible exceptions of countries such as the U.S., most countries (including the developed ones) need to better nurture the entrepreneurial spirit among small and medium businesses and encourage them to become more actively involved in the global economy. Current international trade is largely dominated by mega-corporations and their subsidies.

Another concern in many developed countries is effective corporate governance. Lack of enforcement of stringent auditing regulations combined with poor ethical standards among some business leaders have lent support to arguments made by the critics of big business and, hence, globalization. Many of the recent corporate scandals in the U.S. and the banking system problems in Japan are hardly the lessons that the developing countries need to emulate in their pursuit of creating a global enterprise.

It is also important for developed countries to realize that the advantages of developing countries go beyond cheap labor. If cheap labor is the only motivation for investors from developed countries, the wealth in the developing countries will be concentrated among the few who can "exploit" the cheap labor. Poverty will decline but the disparity between the poor and the rich will widen. However, some of the R&D and manufacturing investments by MNCs in countries such as India and Brazil have resulted in not only reducing poverty but also in strengthening the middle class in those countries, which in turn has brought about additional indirect advantages.

Strong markets at the regional level can help many developing countries learn "the tricks of the trade." There are scores of developing countries in Asia, Latin America and particularly Sub-Saharan Africa that are yet to realize any benefits whatsoever from globalization. The people in these countries do not see the difference between colonization and globalization, both of which stand for exploitation to them. Some of the successful regional markets such as NAFTA, the European Union and ASEAN have been amongst generally developed countries that put the developing countries at a further disadvantage. Since the developing countries are outside of these regional markets, their exports face tough competition from that of the developed countries in the region. There is a need for developed countries to expand the successful regional markets to include some of the less developed countries and help them export their products more freely to the developed countries.

Strong or stronger regional economic cooperation and FTAs in regions such as Middle East, South Asia and Africa will not only help the developing countries in creating a better investment climate and providing economic clou, but also help in alleviating the political problems that include cross-border hostilities in some regions.

At the global level, it is important for developed countries to show leadership in areas such as caring for the environment, corporate social responsibility, human resource development, etc. At the same time, developing countries need to be given an opportunity to catch up with the social conditions in the developed world and it is unreasonable for developing countries to be put under pressure to elevate social welfare conditions to the levels similar to that of developed countries. Some of the multinational companies have taken the lead in corporate social responsibility in the last few years across all countries that they operate in and they need to continue to demonstrate leadership in this area. This will not only help the proponents of globalization in their debate, but will truly alleviate the situation in the developing countries.

The World Trade Organization is assuming a more important role and greater influence than the U.N. in the world today. Consequently, it warrants certain responsibilities. The WTO and its member countries must be dedicated to finding ways to meet its stated objectives of "conducting trade and economic endeavor with a view to raising the standards of living of the populations of member nations, to ensure full employment of their economies, to promote the steady growth of real incomes and effective demand in their markets, to expand the production of and trade in goods and services, while allowing for the optimal use of the world's reserves in accordance with the objective of sustainable development, and protecting and preserving the environment, and in a manner consistent with the respective needs and concerns of Members at different levels of development."

Mexican intellectual and politician, Castillo Peraza distinguishes between globalization and "worldization"--aliteral translation from Latin (Enrique Iglesias, 1999). He says--"Why do the Latin languages make this distinction? Because for us, the globe is something physical, whereas the worm is a human thing, with people, families, nations in it. Therefore, what we need to try is to humanize globalization, and, in this context, speak a little more about the world." That spirit of pursuing globalization to the advantage of the majority of the people living in the developing world is imperative. Neglecting the majority may prove to be futile, if not disastrous.

REFERENCES

Barnevik, P. (2001) "Growth Spur," Worldlink-The magazine of the World Economic Forum, September/October.

Iglesias, E. (1999) "Advantages and risks of Globalization: the ease of Latin America," The Global Press Meeting, Washington, June.