Articles:
The power of globalisation
01.05.06 Publication: Ushio
Sometimes, we become so preoccupied by what is happening today, that we forget what happened only yesterday. This matters because where we have come from also influences where we are going, and we will fail to understand our direction and destination if we do not pay proper attention to recent history.
This philosophical thought came to me as I was preparing my final editorial as Editor of The Economist. After 13 years as Editor, I have chosen to step down from that post to become an independent writer, commentator and consultant; it seemed to me to be time for a change, both to refresh myself and to make sure that The Economist, my magazine, could be refreshed under a new Editor. I left on March 31st, but my last duty was writing a long editorial, a long letter of farewell to our readers. This has been a tradition at The Economist for more than 100 years.
We all know that globalisation has become a powerful, or perhaps the single most powerful, trend of our time. The Economist was founded 163 years ago precisely to campaign for open trade and globalisation, in the conditions of its era, the mid-19th century. So I decided that globalisation should be the main theme of my editorial. I would look back at what this trend had achieved since 1993 when I took over as Editor and try to look forward at what might be achieved if this trend continues.
I think of myself as quite conscious of history, especially recent history, and quite good at remembering statistics. But even I was surprised by what I found when I checked the statistics showing how the world economy had developed from 1993 to 2006. The first thing that surprised me concerned inflation. These days, especially with Japan having had long-term deflation, or falling prices, and with America and Europe both enjoying quite stable prices, we forget how recently inflation was a big problem in the world, especially in poorer countries. Guess what the overall worldwide inflation rate was in 1993: it was 35%. Last year, the equivalent rate was just 3.7%.
The reason is that more countries are open, trading with one another, and so competition works to hold down prices. More also have governments that use stable, orthodox economic policies, rather than crazy get-rich-quick schemes of the sort that were once popular in Latin America. The result can be seen in the economic growth the world has enjoyed. The growth rate, for the world economy as a whole, in 1993 was just 1.2%. Yet over the next 13 years, of liberalisation and better control of inflation, the annual average rate of growth reached 3%, giving in total a 45% rise in world economic output during the period.
Living standards matter more than mere statistical output. Yet they have risen strongly too. World population has risen by 18% during the period. Living standards, measured by output per head, rose by an average rate of 2.5% a year, giving a total rise of 40%, once the figures are adjusted for purchasing power differences between countries.
What this barrage of numbers also tells us, however, is that this trend is quite new and immature. Barely a decade ago, it had hardly begun and the world was mired in inflation and the mess of dismantling the legacy of communism. Only 17 years ago China, now the darling of economic development, was massacring protesters in Tiananmen Square.
Globalisation has begun to reduce the extreme levels of poverty that blight this planet—but only just. According to estimates by the World Bank, in 1993 about 1.2 billion people were living on merely $1 a day or less, which represented about 22% of world population. By 2001, which is the latest year for which the Bank has numbers, the proportion living on $1 a day had fallen to 17.8%. That is a helpful fall, in a larger world population, but is not a rapid one. The World Bank forecasts that, if current trends persist, then by 2015 the number living on such a meagre income will have fallen to 620m people, or 9% of world population.
What this means, in my view, is two things. The first is that despite the strong global growth of the past 13 years, very little has yet filtered through to the world´s poorest. Some have benefited, especially the poor in fast-developing countries such as China, India and others in Asia, and even some in Latin America and South Africa. But not enough, which means that more must be done to connect the poor to the world economy, through open trading regimes, dismantling of farm subsidies in rich countries such as Japan, the EU and America, and investment in infrastructure such as telecoms and transport. Such infrastructure is essential if people are to be able to sell what they grow and make.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
What this means, in my view, is two things. The first is that despite the strong global growth of the past 13 years, very little has yet filtered through to the world´s poorest. Some have benefited, especially the poor in fast-developing countries such as China, India and others in Asia, and even some in Latin America and South Africa. But not enough, which means that more must be done to connect the poor to the world economy, through open trading regimes, dismantling of farm subsidies in rich countries such as Japan, the EU and America, and investment in infrastructure such as telecoms and transport. Such infrastructure is essential if people are to be able to sell what they grow and make.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
What this means, in my view, is two things. The first is that despite the strong global growth of the past 13 years, very little has yet filtered through to the world´s poorest. Some have benefited, especially the poor in fast-developing countries such as China, India and others in Asia, and even some in Latin America and South Africa. But not enough, which means that more must be done to connect the poor to the world economy, through open trading regimes, dismantling of farm subsidies in rich countries such as Japan, the EU and America, and investment in infrastructure such as telecoms and transport. Such infrastructure is essential if people are to be able to sell what they grow and make.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
—but only just. According to estimates by the World Bank, in 1993 about 1.2 billion people were living on merely $1 a day or less, which represented about 22% of world population. By 2001, which is the latest year for which the Bank has numbers, the proportion living on $1 a day had fallen to 17.8%. That is a helpful fall, in a larger world population, but is not a rapid one. The World Bank forecasts that, if current trends persist, then by 2015 the number living on such a meagre income will have fallen to 620m people, or 9% of world population.
What this means, in my view, is two things. The first is that despite the strong global growth of the past 13 years, very little has yet filtered through to the world´s poorest. Some have benefited, especially the poor in fast-developing countries such as China, India and others in Asia, and even some in Latin America and South Africa. But not enough, which means that more must be done to connect the poor to the world economy, through open trading regimes, dismantling of farm subsidies in rich countries such as Japan, the EU and America, and investment in infrastructure such as telecoms and transport. Such infrastructure is essential if people are to be able to sell what they grow and make.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.
´s poorest. Some have benefited, especially the poor in fast-developing countries such as China, India and others in Asia, and even some in Latin America and South Africa. But not enough, which means that more must be done to connect the poor to the world economy, through open trading regimes, dismantling of farm subsidies in rich countries such as Japan, the EU and America, and investment in infrastructure such as telecoms and transport. Such infrastructure is essential if people are to be able to sell what they grow and make.
The second conclusion is that we must campaign hard and effectively to make sure that these trends of globalisation do continue, and are not put into reverse by protectionists and anti-modernists all around the globe. Globalisation may not be enough by itself to eliminate extreme poverty. But we know from previous experience that without globalisation there is no solution at all to extreme poverty; in fact it would get worse.
The threats to globalisation are clear. In America, China-bashing has taken over from Japan-bashing as the favourite protectionist sport in Congress. In western Europe, especially in France, company takeovers by foreign companies are being blocked for nationalist reasons, and young people have taken to the streets to make mass protests against relaxations to the labour laws. Those relaxations are designed to help create employment for young people on short-term contracts, just as similar methods were used in Japan earlier this decade, and thus to help employers and workers alike compete with cheap goods from China. But they are being opposed, sometimes violently. And even in China there is some growing pressure for the protection of Chinese companies against takeovers by foreign firms.
For the time being, these threats do not pose a serious challenge to globalisation. But small clouds on the horizon can turn into thunderstorms. If they do, and if globalisation is halted or even reversed, then the tragedy will be that all the great promise of the past 13 years will have been destroyed. Let us make sure it doesn´t happen.