[stop-imf] IMF's Krueger: Educating globalisation's Luddites

[robert.weissman@essentialinformation.org]

Financial Times (London, England)
April 16, 2004 Friday
London Edition 1

HEADLINE: Educating globalisation's Luddites
BYLINE: By ANNE KRUEGER

One of the great puzzles of contemporary politics is how globalisation
came to have such a bad name. The end of the cold war left governments
around the world struggling to find a new framework for international
relations. It also seems to have left the protest movement in search of a
new focus.

But why pick on globalisation when there is no agreement on what it is?
For some people it is primarily economic and trade integration; others put
more emphasis on cultural aspects. I would argue that it is all these and
more. Globalisation is the increasingly rapid exchange of ideas, people,
and goods made possible by falling transport costs and technological
advances, all leading to the closer integration of the world including -
but not limited to - the economy.

Confusion, though, suits those who want to climb on the bandwagon of
opposition. Many of those involved in the campaigns against globalisation
clearly mean well even if, as some of us think, they are misinformed and
misguided. Others have more questionable motives. As Jagdish Bhagwati says
in his new book, the movement is "a motley crew, a melange of
anti-globalisation protesters . . . appearing to be an undifferentiated
mass."

In Defense of Globalization is an important contribution to an often
incoherent debate. As we expect of Mr Bhagwati, it is cogently argued and
well written. It sets out a persuasive case in favour of globalisation.
And because of Mr Bhagwati's impeccable credentials, there is a better
chance his book will be given a fair hearing than might be the case with
some other authors. Put simply, Mr Bhagwati has "street cred".

Opposition to change is hardly new. The 19th-century English Luddites
bequeathed their name to all who stood against industrial and
technological progress. But the Luddites' position had some logic; their
livelihoods were being threatened, though the progress they opposed stood
to benefit a much larger cross-section of the population. Yet most of
today's protesters, dependent as they are on e-mail and mobile telephones,
are beneficiaries of the technological changes they oppose.

For centuries, technological progress has had an impact on living
standards. What made the 20th century different was the scale and breadth
of the rise in those standards. On a wide range of measures - poverty,
life expectancy, health, education - more people have become better off at
a faster pace in the past 60 years than ever before. All this occurred
within the
multilateral economic framework established at the end of the second world
war.

Trade liberalisation and expansion have been central to the postwar surge
in living standards. The progressive multilateral liberalisation of trade
has driven rapid growth and that, in turn, has accelerated the reduction
of poverty. Yet more than anything else, trade, or rather opposition to
it, is what seems to be inspiring the anti-globalisation movement. Trade
hurts the poor in developing countries, they say, or it costs jobs in
industrial countries.

Indeed, at the margin there will always be some people who find themselves
displaced as the expansion of trade or the advances of technology force
economies to adjust. To make the benefits of trade more convincing, it is
important that we do all we can to make sure that appropriate safety nets
are in place for those individuals. But we must also remember that, while
some are adversely affected by import competition, others benefit from an
increase of industry jobs in the export sector.

It makes no sense to blame globalisation for creating jobs in developing
countries - what the current row about outsourcing amounts to - and for
creating poverty in those countries at the same time. Wages are lower in
developing countries than in the industrial world. But that is what makes
those countries competitive. Globalisation is not a zero-sum game. There
is overwhelming evidence that it creates extra wealth and everyone can
benefit.

Large parts of Africa are in perpetual crisis. Significantly, this is the
continent that has been least involved in the globalisation process. Many
of Africa's problems are attributable to poor macro-economic policies and
high trade barriers. In fact, the highest barriers to trade are now
between developing countries themselves. The World Bank estimates that
about two-thirds of the benefits from a successful Doha round would accrue
to developing countries and would come from trade liberalisation in those
same countries. But the greatest benefits will come from lowering the
protectionist barriers.

The economic achievements of the past few decades have been extraordinary.
To be sure, the rich have got richer. But so have the poor, to a
considerable extent. What the protesters fail to recognise - or choose to
ignore - is that the progress that has been achieved derives from the
policies they now so fiercely oppose. Of course there are downsides, as Mr
Bhagwati readily acknowledges.

We need to do more to reduce the short-term costs associated with
globalisation. But the protesters are actively hindering progress on this
front. Many of them seem almost viscerally opposed to the very
multilateral institutions that offer the best hope of making globalisation
work more effectively and with fewer short-term costs. To this end, Mr
Bhagwati's thoughtful book should give the protesters pause for thought.

The writer is acting managing director of the International Monetary Fund