will talk about developing nations in danger of being left behind in the globalization process. This does not mean that no parts of the developed world are experiencing the same problem. The demonstrations in Seattle against the WTO, in Washington against the IMF and IBRD, and in Australia and Switzerland against the World Economic Forum are ample evidence of that. But larger parts of the developing world are definitely being left behind.
Sub-Saharan Africa: Hardly Touched So Far
There are two big groups among developing nations. One group is hardly being touched by globalization, including most countries of sub-Saharan Africa. In order for them to benefit from globalization in the future, a great deal of effort will have to be undertaken by themselves. In many of these countries, peace has to be restored and a modicum of domestic stability achieved. Policies have to be right and a certain level of institutionalization has to take place. A certain level of economic development and growth has to happen before globalization is going to touch them.
The international community can help in various ways. ODA (Official Development Assistance) and technical assistance are still very relevant and should focus on education and health care. Debt relief, as has been promised, is critical for these countries to fund their development. Aid programs to eradicate diseases such as malaria and tuberculosis are also very important. Public and private sector cooperation from the West is critical for these efforts to save their populace. Of course, it is true that these countries and their leaders first have to help themselves before outside assistance will have any meaningful impact. Without some political stability and security, a certain level of institutional development, and at least some economic growth, there is almost nothing that outsiders can do. A lot of aid and assistance to these countries has been squandered due to the lack of some of these basic factors.
East Asia, Latin America: Real Benefits, But Havoc Created
In the other group of developing countries globalization has had an impact. Some countries have benefited, especially in East Asia and Latin America. Most of the countries in East Asia have benefited tremendously from opening up their economies to the influence of globalization. They have been able to change their socioeconomic structures and reduce poverty. In Indonesia, for instance, the number of people living below the poverty line has been reduced from 40 percent of the total population in the 1970s to only 11 percent in 1997. This is a tremendous improvement. China has done even better. The financial crisis increased the number of people living below the poverty line, but to a lesser extent than initially thought to be the case.
While the benefits are real, the havoc globalization created in Latin America in the 1980s—even before the impact of full-fledged globalization—and in East Asia since 1997 has been quite dramatic. These experiences suggest that certain policies and institutions have to be in place in these countries before they can benefit from globalization in a more enduring way.
In Indonesia, the changes that have resulted from the opening up of the economy are felt in every aspect of life. In the socioeconomic field, the changes have created a dualistic society. There is a divide between the 20 percent of the people who have benefited from globalization—basically the middle class—and the 80 percent who have been left behind. This 80 percent benefits somewhat from the trickling down effect, but Indonesia is experiencing a widening income gap. This poses a real political problem.
In the sociopolitical field, globalization has created a middle class that is more assertive and independent from the government. They demand a more flexible political system, which in most cases can be offered only by a real democratic system. In the sociocultural field, values are changing very fast, resulting in the alienation of some of the populace who then try to protect themselves behind traditional values based on religion, race, and ethnicity. These changes have created greater divides in society at-large and have caused more political problems.
In retrospect, Indonesia’s troubles are obviously related closely to domestic political developments. The crisis in 1997 was preceded by a very authoritarian political system. Rules and institutions, and the flexible political system necessary to cope with globalization, did not exist. Socioeconomic and sociopolitical changes are required before Indonesia can benefit more fully from globalization. Transparency, accountability, good governance, the rule of law, flexible political institutions, and adequate financial institutions (including the right sequencing of the process of opening up the financial system) are prerequisites that must exist in conjunction with the globalization process. Inequality is a special concern that can be overcome by special policies and measures, especially in the education and training fields. These policies and measures are critical for workers that lack skills, and small and medium-sized enterprises that lack technology. So, as in the case of the first group of countries, domestic policies and institutions are critical for reaping the benefits of globalization.
The international community can and should help those developing countries disrupted by globalization willing to continue to be part of the globalized world to become healthy again. If most of them cannot overcome the setbacks they are now enduring, then support for globalization will be set back and fewer countries in the developing world will stay partners of the West.
What do these countries expect from the international community, particularly the West?
• First, global fairness. The developing world expects a level-playing field in trade, especially access to Western markets for textiles, footwear, and agricultural products.
• Second, global ethics. It is hoped that good governance is valid not only for governments, but also for the private sector, which has caused so much damage to the environment and in the treatment of their labor. Cooperation between the public and private sectors in these areas can lead to the establishment of rules of good governance and to overcoming the problem of training and education, and the problem of healthcare for the people.
• Third is review and renewal of global rules and institutions. Since the Bretton Woods institutions were established in 1944, dramatic changes have taken place and many more countries now take part in these regimes. One very obvious problem is in the area of international finance. Short-term movements of funds have caused havoc in the developing world. Another issue relates to the role of the IMF and the need for greater transparency and accountability. The developing world feels that, in the development of global rules and institutions, the West has been too dominant. Therefore, it is only fair to demand some changes. Corrections are also needed in the field of trade. New conditionalities—environmental and labor standards—to be included in the next round of WTO negotiations are strongly rejected because they may be a disguise for protectionism. Environmental and labor issues are important, but they have to be handled separately and by the appropriate institutions, such as the ILO in regard to labor standards.
Globalization Potentially Beneficial, But Requires Corrections
As was evident at the recent Porto Alegre World Social Forum in Brazil, there are different perspectives on the impact of globalization and economic liberalization. The “globalizers” tend to look at the impact of globalization at the aggregate national level and in a macroeconomic sense, while the “globalizees” tend to see concrete cases of poverty, starvation, or complete deprivation of basic human needs. A second difference in perspective is the timeframe. While the “globalizers” usually refer to the medium to long term (five to ten years or more) for overcoming the inequality gap, for the “globalizees” the problem is one of the coming days or months, because the impact could be a calamity for a family, a village, or a region. But some agreements were reached in the dialogue at Porto Alegre; and, except for some NGOs that hold extreme views, the process of globalization has been accepted as potentially beneficial, albeit requiring a lot of corrections.
NGOs should not be considered enemies. There are various kinds of NGOs and many perform very useful roles in correcting and criticizing governments. But to expect that they will replace governments is also wrong. They do not pretend to replace governments, so to expect them to fulfill the conditions expected of governments, such as democratic representation, transparency, and accountability might be the wrong approach. If NGOs are not credible, public opinion will gradually deflate their importance and discount their views. There are good and bad NGOs, just as there are good and bad governments, but to deny their role because there are bad NGOs is not going to be effective in dealing with them. In some developing countries, their role is crucial to continuing democratic change and, for that reason alone, their existence and role has to be respected.
