Has globalization accelerated economic growth?

By Jonathan Steele

LONDON: The G-8 summit in Genoa will be remembered for its police brutality and the clashes, mostly peaceful but sometimes violent, between protesters and the Italian security forces. Yet, paradoxically, on one issue most demonstrators were united with the rich nations' leaders. In the streets as well as the suites there was a general belief that globalization has accelerated the world's economic growth.

Some protesters argued that the growth has been grotesquely uneven, with little trickling down to Africa. Some said it has increased the inequalities of income within countries, as well as between poor and rich ones. Some attacked the fact that faster growth has been environmentally unsound, creating excessive carbon emissions and destroying natural habitats.

While the criticisms vary, the underlying assumption is that overall economic growth has been speeding up. This was also the message proclaimed by the UN Development Program (UNDP), which published its annual human development report on the eve of Genoa. "Thirty years of impressive progress," it trumpeted. "Too few people recognize that the impressive gains in the developing world in the past 30 years demonstrate the possibility of eradicating poverty."

It was the UNDP which first elaborated the concept of a human development index as a progressive step away from assessing people's welfare purely by income measurements. The UNDP added other standards such as infant mortality, literacy, and gender empowerment. So it is surprising that its latest report should also push the complacent line about general growth. How did its authors decide that the last 30 years is the right period for assessing progress?

In a powerful new paper, The Emperor Has No Growth, a group of researchers in Washington challenges the conventional view of history. They have drawn up a globalization scorecard which compares the period from 1980 to 2000 -- the era of Reaganite neo-liberal globalization when the drive for capital deregulation, privatization, and the lifting of barriers to international investment was at its height -- with the period from 1960 to 1980 when most developing countries had a more restrictive and inward-looking economy.

The comparison is dramatic. The researchers took all the UNDP's indicators and found that between 1980 and 2000 there was "a very clear decline in progress". The poorest countries went from a per capita growth rate of 1.9 percent annually in the 1960-1980 period to a decline of 0.5 percent a year between 1980 and 2000. The middle group of countries did worse, dropping from annual growth of 3.6 percent to growth of just under 1 percent after 1980. The world's richest countries also showed a slowdown.

For life expectancy, the picture was similar. Only the richest countries showed a higher rate of improvement in the past 20 years. Among middle-income and poor countries progress in reducing child mortality and raising school enrollments was faster before 1980.

Impressive though their evidence is, the paper's authors draw deliberately modest conclusions. They say they cannot prove the liberalization of trade and capital flows has caused the decline in progress.

Nor can they link it to particular policy prescriptions by the International Monetary Fund and the World Bank, such as public spending cuts, user fees for health and education, and increased foreign exchange requirements. But they do insist the burden of proof must be squarely placed on those who claim success for the neo-liberal experiment.

Their call is welcome. It chimes in with the views of other non-governmental organizations, such as the British-based World Development Movement, as well as many developing countries' governments.

The G-8 wants the next big push for its version of globalization to come in November when the World Trade Organization is due to meet in Qatar. After Genoa, Clare Short, Britain's development minister, used the unworthy tactic of trying to dismiss the protesters as middle-class European interferers in contrast to informed African leaders. She seemed unaware that on the eve of Genoa, 30 African countries, including the regional giants South Africa and Nigeria, signed a declaration in Addis Ababa rejecting new powers for the WTO.

They also called for existing trade agreements to be implemented fully rather than in their partial form, which discriminates in favor of the EU and other rich countries. Their position has more support from the developmental NGOs than from the G-8. So let us have a bit more humble pie from the G-8, and an honest review of the reasons for their poor record on growth and social progress before they plunge further into error.

-- Guardian News Service