 |
The Way Ahead for Asia By Rajiv Lall Far-Eastern Economic Review January 13, 2000 For Asia, the past half-millennium has been a sorry tale of decline from prosperity to poverty. Today, the region is home to the largest number of poor on earth. How did this happen? China's decline began in the 15th century as it withdrew from the world economy and lost its technological lead in navigation. Likewise, Japan began to lag behind when the Tokugawa Shogunate shut it off from the rest of the world in the mid-17th century. As Asia fell behind in technology, so it did in military power. Military superiority allowed the West to monopolize international commerce and enforce a mercantilist trading system to its advantage. But withdrawal from the global economy alone, and the resulting technological decline, can't explain the relative stagnation of Asia. The West pulled ahead also because it had developed the social and institutional preconditions needed for a capitalist system to thrive. Asia, on the other hand, remained weighed down by social structures and institutions not well adapted to incubate such an economy, and by local leaders lacking in vision or the power to effect change. Thus, the Indian empire never cut itself off from the world, but managed nevertheless, through inept governance, to lose control, first over its trade, and then over its own territory, to the West. Japan's remarkable recovery in the late 19th century further demonstrates the importance of institutions and governance. The Meiji regime revolutionized that country's institutions and re-connected it to the world. It showed how a laggard Asian country could catch up in spite of an unfair trading system. The rest of Asia was unable to follow suit, and it would take several decades and the cathartic events of the 20th century for non-Japan Asia to modernize its economies. The history of the last millennium has taught us that participation in world trade, access to global technology, modernization of domestic institutions and good governance will be key if Asia is to recover its place in the world. This is a tall order. In this column, I have wondered about the prospects of Asia ever being able to catch up. I have argued that, notwithstanding its recent impressive growth, the gap between Asia's poorest and the West has widened, and that the new age of the Internet is likely to further accentuate these disparities, not mitigate them. On the face of it, these trends aren't encouraging for the 1 billion Asians that globalization has left behind. The solution, however, isn't to turn back the clock. On the contrary, history tells us that globalization, irrespective of its distributional consequences, is Asia's lifeline to a brighter future. The solution is to curb the excesses of globalization. And here lies the good news: There exists a potent weapon to do just this--democratization. At first it may seem that democratization is inimical to globalization. As the gap between rich and poor becomes more severe, democratization could force a disruptive backlash such as in Seattle. But any such setback is likely to be only temporary. Greater democratization in both intra- and inter-country affairs is in fact critical to ensuring that globalization doesn't flounder. The reason is simple: Inequality, whether within or across borders, can be made acceptable only through democratic process. Inequality is acceptable as long as it conforms to societal notions of justice. The democratic process prevents those norms from being violated, and is therefore our best hope that globalization will occur in a framework that is generally accepted as fair. The experience of the 20th century is instructive. It shows that progress in intra-country democratization contributes to greater fairness in the conduct of inter-country affairs. Even though globalization was almost as advanced in the 19th century as it is today, the global trading system then was characterized by Western monopolies backed by brute military force. The spread of universal suffrage made it harder for the West to exercise force and eroded popular support for colonialism. As a result, developing countries now have a much greater voice in the world trading system than they did a century ago. But what is the guarantee that democratization will gain momentum in the future? The reality is that the democratization genie cannot be repressed. It will continue its inexorable rise, propelled by the spread of literacy and falling barriers to information flows. Consequently, since 1974, the proportion of countries with democratic governments has doubled to two-thirds, and participation in civil society has grown exponentially through mushrooming non-governmental organizations, many of which are now forging formidable transnational alliances. Seattle wasn't a debacle that presages the death of globalization. It was a watershed that will change the parameters of the debate, and will eventually--for democracy is messy--lead to the creation of a kinder, gentler global economy, one in which all citizens, including Asians, will have a greater voice. A world federation with one country, one vote is not unimaginable in the next millennium. Beam me up Scotty! All Politics is Global By Nayan Chanda Far-Eastern Economic Review July 27, 2000 Mention the word "globalization" and you'll immediately find these examples cited: McDonald's, the Internet, MTV. For authoritarian regimes, such examples may be the extent of the good news. Satellite broadcasts and food outlets can be regulated and controlled; regimes can hope to do the same with the Internet. The bad news for these regimes is that globalization will erode their authority, from the top and the bottom. The late speaker of the U.S. House of Representatives, Tip O'Neill, said "all politics is local." That observation has universal validity: Parochial considerations are often behind decisions with global impact. But if one considers the consequence rather than the cause of political acts, globalization has added a new rule: The impact of what one says and does no longer is confined within the boundaries of one's nation. Words and actions can become a matter of concern, criticism and (less often, it seems) praise from the rest of the world. Thus, globalization, the linkages between economies, companies, people and organizations across the board, now makes corporates and governments accountable to a wider world--even those governments that refuse their own citizens the same accountability at home. A regime that denies this global constituency must live with the "globalized" consequence, as China learnt when its application for a $40 million loan from the World Bank was scuppered after the bank loaded it with conditions inspired by environmental and pro-Tibet pressure groups. There are four reasons why politics today is global. First, the revolution in transportation and communications has dramatically expanded trade and cultural connections. This has vastly increased interdependence. No longer is there absolute independence. And neither can there be autarky--even the last holdout, North Korea, has begun to emerge from its shell. Second, to regulate global contacts, nations have set themselves binding rules. The latest, and by far the most ambitious in history, are those of the World Trade Organization, which has set the ceding of a degree of national sovereignty as the price of doing business. Third, the spread of liberal democracy and the rise of the middle class across the world have resulted in a greater awareness of human-rights issues and of the need for environmental protection. Finally, there is increased scrutiny. The explosion in the number of media outlets, the phenomenon of the Internet and the emergence of non-governmental organizations have created innumerable watchdogs that bring almost everyone under some spotlight. Failure to comply with international rules and, more importantly, norms of behaviour not only invites international criticism and market punishment, but ricochets onto domestic public opinion. The result is that governments must grow accountable to liberal global trading and investment norms. In practice, this requires a profound change in nations' administrative and economic management systems, such as the removal of subsidies to businesses and the creation of transparent and level playing fields in commerce. The upward cession of authority also implies a downward loss. For example, WTO rules that oblige an authoritarian state to create an independent judiciary will result in creating greater space for individuals. WTO pressure to remove subsidies and other state intrusions in the economy will weaken the authority that command-economy states now hold over their citizens. And as a state's fiat power diminishes, citizens soon understand that it is within their means to demand and obtain better services, and indeed, better, cleaner government. The implementation of human-rights covenants, as well as investment rules, will increase pressure for more--and real--freedom of expression. The phenomenal rise of NGOs, which now number in the hundreds of thousands, will heighten the scrutiny of the record of states on governance and the environment. Governments also will find themselves under greater pressure to work for social equity, if only to keep their vociferous domestic and foreign critics at bay. The belief among many Asian governments that they can selectively adopt what they feel to be "good" aspects of globalization and sidestep inconvenient and "bad" ones will be difficult to sustain. The global accountability that comes with the benefits of globalization ultimately will increase pressure by their citizens for domestic accountability. In order to survive and prosper in a globalized world, governments had better accept this new axiom: All politics is global. Copyright C 2001 The International Herald Tribune | www.iht.com |