by Chakravarthi Raghavan

Geneva, 4 Feb 2000 -- There is a need to discuss globalization with civil society, and engage them in a dialogue in a constructive, structured and organized way, rather than on streets and public squares, and the UN Conference on Trade and Development would take an initiative to do this, both at Bangkok and afterwards in Geneva, UNCTAD Secretary-General Rubens Ricupero said this week.

Both Ricupero and the President of the Trade and Development Board, Amb. Philippe Petit, stressed that UNCTAD-10 (U-10) will be the first major international economic conference of the century, with the participation of heads of major UN agencies, IMF, World Bank and WTO, and while not negotiating trade agreements and rules, would discuss trade and development and globalization. According to the programme announced for the UNCTAD's tenth session at Bangkok (12-19 Feb), while UNCTAD officials, including Ricupero, will interact with public interest NGOs at an NGO caucus on 7-8 February at the UN regional economic commission headquarters (outside the U-10 conference centre), and the NGOs will have an opportunity to present their views to the Conference plenary.

According to UNCTAD officials, there is also to be an informal meeting for dialogue between the NGOs, the Conference President, Thai Deputy Prime Minister and designated successor to Mike Moore as WTO Director-General Dr.Supachai Panitchpakdi.

But the main conference and the associated events, round-tables, symposia etc for interaction of governments with other actors mainly, if not only, focus on the corporations -- even the so-called small- and medium enterprises (SMEs) of the industrialized world are large corporations compared to the big domestic enterprises of most developing countries -- the international development banks (World Bank and regional development banks) promoting the Corporations, and 'buyers and sellers' in the global market or in South-South trade (mostly again big corporations).

The UN system has been talking for most of this decade of 'civil society', but without being able to define it - mixing up in this phrase public interest non-governmental organizations, labour unions, academics and the private sector, though mostly the transnational corporations.

And the programme of UNCTAD-10 suggests that despite Mr.Ricupero's interest to engage civil society in focused, and organized dialogue over globalization, in terms of the programme announced the scope for such dialogue, between governments and the NGOs, is limited.

At the press conference, both Ricupero and Petit underscored the fact that since UNCTAD would not be negotiating trade rules and agreements, which could only be done at the WTO trade system, the ability to discuss such matters at UNCTAD-X in a wider perspective of trade and development could help promote a consensus.

However, the problem perhaps lies with the governments, particularly from the South, who see some use in dialoguing with their own civil society - NGOs, enterprises etc - in the context of the WTO system, but have difficulties in doing so at a global level, even more because the more well-financed and lobbyist northern groups with their various agendas may dominate the dialogue and become another conditionality for the South and its development.

And the ambivalence of governments to the 'globalization' is illustrated in the agreed portion of the draft plan of action for Bangkok in the assessment portion.

Globalization and interdependence, says the draft Plan of Action for UNCTAD-X, have opened new opportunities, through increased trade liberalization and advancement in technology, for the growth of the world economy and development.

This was a rosy view of globalization that was advanced in the early to mid-1990s (during the era of 'Washington Consensus') and was the prevailing dogma at the time of UNCTAD-IX at Midrand.

But though this view is no longer advanced by the promoters of the Washington Consensus, and they even confess they have made mistakes (for which developing countries pay a price in terms of their debt), the inter-governmental machinery finds it difficult to shake off the past.

Thus, assessment of globalization for UNCTAD-X, still hoes to the line, tempering it with the statement that "with the acceleration in the pace of globalization in the early 1990s came the expectation that growth and development based on global market forces would be more rapid, more sustainable and more widely shared than in the past."

It adds: "The record, however, has been mixed. Some countries have successfully adapted to the changes and benefited from globalization, thanks in part to export-led and FDI absorption strategies."

But has export-led growth or development theories and openness to FDI and FDI-absorption actually helped 'development' of these countries or their 'integration' in a sustainable way into the global economy?

UNCTAD's own analytical reports (like the annual Trade and Development Reports) and the reassessment of neo-liberalism by some mainstream economists have left some big question marks and raised more doubts than answers. And the World Investment Reports are short in analysis and long in conclusions, often by confusing causes and results.

Not many studies based on empirical research seem to be available that positively provide concrete evidence that countries taking the usual advice on measures to liberalise and attract FDI are in fact achieving it or doing better. Nor is there any empirical evidence that FDI and transnational corporations going into developing countries, while providing to their subsidiaries and tied suppliers some technology, have in fact built up core research and development capacity in the host country or even in their subsidiaries.

And while most developing countries look to FDI as a source of foreign savings coming in the shape of capital to augment their domestic savings, there is no clear evidence that they are achieving this. Anecdotal evidence in some countries even suggest that after liberalisation for foreign investmentt, their previously high domestic savings rates have fallen, and the overall ratio of savings and capital accumulation is the same if not less.

The UNCTAD Secretary-general himself in his press conference, and speeches elsewhere has pointed to the fact that in some cases of transnational acquisitions and mergers in Brazil, the existing R & D capacity of the local enterprise acquired has been closed down, thus reducing the country's capacity. At the same time, the only successful Brazilian export in high-tech field, the aircraft exports, is by an enterprise which has kept its own design and R & D, importing most of its parts and ancillaries to produce and export the aircraft.

These no doubt are anecdotal examples.

Yet, the many agencies and organizations promoting FDI and its benefits of technology and superior and modern skills have not been able to document such benefits concretely through empirical evidence.

Says the draft plan of action (after speaking of the success of some to adapt to and benefit from globalization): "nevertheless, many developing countries, especially the LDCs, have not achieved significant or continuous increase in their GDP per capita over the last three decades."

The agreed part of the draft adds: "While domestic factors have played a role, it seems clear that the international environment has not always been conducive to their development efforts. "The income gap is wide between the developed and the developing countries and often within countries."

"Although globalization raises serious problems, with a risk of instability and marginalization, experience so far has shown that it offers new perspectives for integrating developing countries in the world economy."

'Perspective' in nuanced English usage is something less than 'prospects', but it is not clear whether this is the intention of the document or result of redrafting to suggest something new.

But the draft goes on to offer the 'perspective' of integration, in a retrospective look at the recent past: "A series of financial crises has affected the global economy in the 1990s. What became clear particularly through the Asian crisis was that even developing countries which had achieved rapid growth were still vulnerable and that existing international mechanisms were not fully effective in dealing with the crisis. Moreover, contagion resulting from the crisis had a negative impact on international trade worldwide and economic development in many developing countries and countries in transition. While there are indications that recovery is under way, the social consequences of the crisis are still present."

The draft continues, in its assessment part: "There is a growing awareness that recent development strategies promoted mainly by the multilateral financial institutions have limitations for the development process and should, along with certain domestic policies, adapt to evolving global conditions.

"In order to help developing countries to prevent and overcome any negative effect of economic and financial globalization, to reap its benefits and to respond to its challenges and opportunities, there is a need for the international community to reconsider and elaborate development strategies and policies, taking into account development's social, human and environmental dimensions."

"Globalization remains potentially a powerful and dynamic force for growth and development," the document asserts, adding: "Maximizing the benefits of globalization requires sound domestic policies supported by an enabling global environment and by international economic cooperation.

"It also requires that the international community address the imbalances and asymmetries in the international economy. Bilateral and multilateral efforts are also needed to safeguard vulnerable populations, especially during times of economic crisis. Benefits of globalization should be more widely shared among and within countries, as there is no automatic process by which the income levels of developing countries will converge towards those of developed countries.

"The fast pace of financial liberalization has in some cases significantly delinked finance and investment from international trade and has led to high volatility of capital flows. This has weakened the capacity of some developing countries to manage effectively their integration into the world economy. The effects of the volatility need to be addressed by the international community.

"While trade liberalization has generated growth, there is still scope for further opening in many areas of export interest to developing countries. The efficient functioning of a non-discriminatory and competitive market would represent an important contribution to development. Labour markets have not been opened to the same extent as capital markets.

"In order that globalization can contribute to sustained economic growth and sustainable development, intensified international cooperation as well as countries' own national and regional efforts will be essential to address the domestic and external factors of underdevelopment effectively. Taking account of their specific circumstances, liberalization can improve the international competitiveness of developing countries and promote growth."

But beyond reiterations of policies based on faith and theory, the international and intergovernmental institutions have been so far unable to provide some conclusive evidence that could silence critics.

It is not clear from the plan of action whether UNCTAD would get a mandate to take up such work or would it be emasculated by making the institution dependent on extra-budgetary funding and the inevitable donor influence on staffing and outcomes of research.

And even if UNCTAD gets a mandate and funding, would the UN recruitment, staffing and promotion policies enable it to have the ability to deploy competent persons to undertake independent research without preconceived views and conclusions. (SUNS4600)

The above article first appeared in the South-North Development Monitor (SUNS) of which Chakravarthi Raghavan is the Chief Editor.

[c] 2000, SUNS - All rights reserved. May not be reproduced, reprinted or posted to any system or service without specific permission from SUNS. This limitation includes incorporation into a database, distribution via Usenet News, bulletin board systems, mailing lists, print media or broadcast. For information about reproduction or multi-user subscriptions please contact < >