"Coca-ColoNisation" of the Third World
by Thalif Deen
United Nations, June 2 - A New York Times columnist once argued that globalisation and free market economies had triggered such a wave of economic prosperity that no two countries with McDonalds restaurants would ever go to war.
He based his theory on the fact that the physical presence of the US-based fast food chain in developing countries - along with Coca Cola, Pepsi Cola, Kentucky Fried Chicken and Cable News Network (CNN) - was an enduring symbol of open markets.
But the theory was proved wrong in March when 19 nations belonging to the North Atlantic Treaty Organisation (NATO) went to war against Yugoslavia.
All the countries involved have scores of McDonalds' outlets. In fact, when a wave of anti-Americanism swept through Yugoslavia, one of the first targets trashed by protesters was the McDonalds restaurant in downtown Belgrade!
Just as Britain, Portugal, France and the Netherlands, among others, exploited their colonies in a bygone era, the corporate giants of the USA and Western Europe are now viewed as modern-day economic colonialists.
Americans have even coined a word for it: "coca-coloNisation."
At the United Nations last week, Deputy Secretary-General Louise Frechette of Canada argued that like almost everything in life, the phenomenon of globalisation has good and bad sides to it.
"It brings up many opportunities to learn from each other, and to benefit from a wider range of choices. But it can also seem very threatening," she told delegates.
She pointed out that as a result of globalisation, workers suddenly found their jobs were obsolete through imported technology or foreign competition. Parents found their children attracted by products and role models from alien cultures.
"Instead of widening our choices, globalisation can seem to be forcing us all into the same shallow, consumerist culture -- giving us the same appetites but leaving us more than ever unequal in our ability to satisfy them. Many millions of people have yet to feel its benefits at all," she noted.
As a result of globalisation, all Third World markets have been susceptible to external manipulation as happened in Southeast Asia in 1997 when the economies of Thailand, Indonesia, South Korea, and to a lesser extent Malaysia and the Philippines, took a severe beating. According to Malcolm Knight, an IMF deputy director, financial globalisation has triggered a heavy flow of investments both to developing nations and to East European countries.
In the 1970s and 1980s, total net capital flows to this group of countries averaged only about $10 billion to $20 billion annually, or about one percent of their combined gross domestic product (GDP).
By 1991, as the concept of globalisation spread across the world, capital flows rose to $120 billion, reaching a hefty $280 billion in 1997. In 1998, however, it dropped to $234 billion, as a direct result of the financial crises in Southeast Asia, Brazil and later in Russia.
Knight wrote in the current issue of the IMF publication, Finance and Development, that the experience of the past two decades demonstrated that international financial markets were subject to unpredictable swings, costly crises and contagion. As the recent financial crises have amply demonstrated, he said, "financial globalisation also carries very large risks, because instability in one country can now spread almost instantly to others."
Knight said that, if properly managed, the globalisation of financial markets can create a virtuous circle in which market discipline is strengthened thereby enhancing the soundness of financial systems in Third World and East European countries.
But there were grave deficiencies in the financial systems of many of these countries, as well as important information gaps in global markets, he added.
At the 1995 Social Summit in Copenhagen, the international community set targets to alleviate poverty and reduce unemployment worldwide. In its final declaration, the Summit concluded that one billion people in the world were living in abject poverty at that time.
Since then, 300 million people have swelled the ranks of the destitute, notwithstanding globalisation.
Speaking on behalf of the 133 developing nations of the Group of 77, Guyanese Finance Minister Bharat Jagdeo said that the consequences of globalisation - or more accurately, of global capitalism and the liberalisation of the world economy - had led to financial crises in many countries and to serious uncertainty for the future. "While a few were able to enjoy rapid economic progress for a while, the majority are faced with the threat of elimination from the market place", he said.
Jagdeo described the forces of globalisation as "very much like a roller-coaster ride" offering fast thrills but little security. The experience thus far proved that, unless the globalisation process was better managed, "the impact on weak, Third World economies could be disastrous," he warned. (IPS)
The above article by the Inter Press Service appeared in the South-North Development Monitor (SUNS).