< < <
Date Index
> > >
NYTimes.com Article: Globalization Proves Disappointing
by threehegemons
21 March 2002 14:34 UTC
< < <
Thread Index
> > >
This article from NYTimes.com 
has been sent to you by threehegemons@aol.com.

Winner of the special three hegemons award for headline of the year.

Steven Sherman


/-------------------- advertisement -----------------------\

Presenting the reloadable Starbucks Card.

The Starbucks Card is reloadable from $5 - $500. Fill it up. Use
it. Use it. Then, fill it up again.


Globalization Proves Disappointing

March 21, 2002 



MONTERREY, Mexico, March 20 - The world leaders who have
gathered here to discuss how to fight poverty do not always
see eye to eye on what works best. But many now agree that
the force they once saw as a near panacea - globalization -
has come up short. 

Globalization, or the fast-paced growth of trade and
cross-border investment, has done far less to raise the
incomes of the world's poorest people than the leaders had
hoped, many officials here say. The vast majority of people
living in Africa, Latin America, Central Asia and the
Middle East are no better off today than they were in 1989,
when the fall of the Berlin Wall allowed capitalism to
spread worldwide at a rapid rate. 

Rather than an unstoppable force for development,
globalization now seems more like an economic temptress,
promising riches but often not delivering, in the view of
many of the leaders at the United Nations conference in
this Mexican city, an industrial center. 

"The thing about globalization is that if you blink, you
miss it entirely," said Trevor Manuel, South Africa's
finance minister. "It's not some kind of permanent

When Mr. Manuel and many other officials from around the
world talk about economic integration, they tend to focus
on why it has proved disappointing - why rich countries
keep many trade barriers in place, why Wall Street is
fickle when it comes to investing in emerging markets, why
multinationals ignore even some poor countries that follow
the right policies. 

"You can subject South Africa's policies to the tests of
salt water and fresh water economists, and we will pass
those tests," Mr. Manuel said, speaking of his country's
attempts to create a vibrant capitalist economy. "But that
has not translated into a great flow of investment." 

The perception that markets have failed to lift all boats
fast and high is behind the sudden support for more foreign
aid, as is the recent rockiness in the world economy. The
threat that terrorists can take advantage of the poorest
places as havens also motivates the increase. 

President Bush, who will visit Monterrey beginning
Thursday, has promised to increase America's foreign aid
spending by 50 percent, to $15 billion by 2006, reversing
declines during the so-called decade of globalization.
European nations say they will also boost development
assistance markedly. 

No one predicts a return to the situation that prevailed
before 1980, when governments accounted for the bulk of
capital flowing from rich countries to poor ones. Foreign
aid, at about $50 billion a year, is about a fourth of what
companies now invest in developing countries each year, and
an even smaller fraction of what developing countries earn
from exports. 

But even the leaders of industrial nations say their faith
in globalization was at least partly misplaced. 

President Jacques Chirac of France, speaking to reporters
before attending the Monterrey meeting this week, took
issue with the slogan "trade not aid," which he said
characterized the 1990's view of development. Instead, Mr.
Chirac said, industrial countries should spend more on "aid
for trade." 

"There's no creation of wealth without the necessary
infrastructure - and that infrastructure demands outside
aid," Mr. Chirac said. 

Mr. Chirac and Lionel Jospin, the prime minister, who is
his rival in forthcoming presidential elections, have
detailed competing proposals to tax the profits of
globalization to provide aid funds. 

One of the few officials who still belittles the role of
foreign aid is Treasury Secretary Paul H. O'Neill, who has
doubted its effectiveness and extolled the benefits of the
market. Speaking in Monterrey today, Mr. O'Neill said all
aid doled out last year fell short of what China received
in private foreign investment. 

"If we are going to have real economic development in the
world, most of that will come from capital coming into
those countries to create jobs," Mr. O'Neill said. "We are
not going to do it with welfare." 

Yet Mr. O'Neill's skepticism did not prevent the Bush
administration from backing the largest increase in aid in
recent history. And some recent studies have found that
China is something of an anomaly, one of the only
developing countries whose love for the world market has
been fully requited. 

A World Bank survey released on the eve of the conference
shows that after growing furiously through the early
1990's, annual private capital flows to the developing
world fell from $300 billion in 1997 to just over half that
level last year. Stock and bond markets went into reverse
after the 1997 Asian financial crisis, drawing more money
out of developing countries than they put in. Corporate
foreign investment declined only modestly, but is still
below its 1997 peak. 

That has left some fallen stars among middle-income
countries, like Turkey and Argentina, which are now begging
for both private investment and official aid. Those that
only tasted the fruits of globalization in the 1990's, like
most of Africa and Central Asia, never got a second bite. 

Perhaps aside from China, the only country that appears to
have benefited unambiguously from the trend toward open
markets worldwide is the United States, where a huge inflow
of capital has helped allow Americans to spend more than
they save, and to import more than they export. 

"The trend of globalization is that surplus capital is
moving from the periphery countries to the center, which is
the United States," said George Soros, the financier and
philanthropist who has become a leading critic of

Mr. Soros came to Monterrey to persuade leaders to back his
idea of creating a $27 billion pool that poor countries
could use to finance development, especially when private
capital flows dry up. He said aid is needed to tame the

"The U.S. government view is that markets are always
right," Mr. Soros said. "My view is that markets are almost
always wrong, and they have to be made right."


For information on advertising in e-mail newsletters 
or other creative advertising opportunities with The 
New York Times on the Web, please contact
onlinesales@nytimes.com or visit our online media 
kit at http://www.nytimes.com/adinfo

For general information about NYTimes.com, write to 

Copyright 2002 The New York Times Company

< < <
Date Index
> > >
World Systems Network List Archives
at CSF
Subscribe to World Systems Network < < <
Thread Index
> > >