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Opinion & Editorial :

Monday, January 05, 2004


http://www.thejakartapost.com/Archives/ArchivesDet2.asp?FileID=20040105.E02

Rethinking Globalization: Nirvana or


Armageddon?
Yanuar Nugroho,
Director, The Business Watch Indonesia,
Secretary General, Uni Sosial Demokrat
yanuar-n@unisosdem.org

Globalization remains a paradox up to today in our world. It brings about dramatic


economic growth and advancement of technology, but at the same time also causes
unprecedented human and ecological problems. Anthony Giddens (1999) describes
this situation as being like a runaway "juggernaut" with all of us being trapped in it --
neither able to control the course nor to stop it. We may become wealthier and have a
better life, but we also suffer from the "manufactured risks" like new diseases,
computer viruses, etc.

As a result of globalization, foreign trade and investment have grown dramatically.


But inequality remains and the gap both within and between rich and poor countries
seems to be widening.

In 1960, the fifth of the world's people who live in the richest countries had 30 times
more income than the fifth living in the poorest countries. By 1997 this income gap
had more than doubled to 74:1. One-fifth of the world's people live in the high-
income countries that have 86 percent of the world's gross domestic product (GDP),
whereas the poorest fifth received only 1 percent (UNDP, 2002).

Over US$1.5 trillion is exchanged every day in currency markets around the world.
About 95 percent of this total represents speculative transactions that fail to benefit
the world's poorest countries. The real beneficiaries of globalization seem to be the
transnational corporations. Of the top 100 companies, 51 are transnational
corporations. The combined sales of the world's top 200 companies surpass the
combined economies of 182 countries (Hertz, 2001).

It is clear that since globalization has both positive and negative consequences on the
development of societies, it has become a constitutive factor, i.e., it is a result of, but
at the same time also a source, of change.

Consequently, globalization is an irreversible process. Therefore, it hardly makes


sense to adopt a defensive approach in the effort to combat this phenomenon. What is
much more important is the creation, or further refinement, of operative and
institutional tools, not in order to accept globalization as a "force majeure" of which
we are entirely at the mercy, but in order to control it more efficiently by defining a
democratic and humane form of global governance. Why?
Over the past 30 years, 2 billion people were added to the world's population, mostly
in developing countries, with substantial gains in human welfare accompanying the
growth. This included the cutting in half of the infant mortality rate in low and middle
income countries from 11 percent of live births to 6 percent; illiteracy among adults
fell from 47 percent to 25 percent, and for women, from 57 percent to 32 percent.
Real per capita income (in population-weighted 1995 dollars) rose from $989 in 1980
to $1,354 in 2000.

But, some social and environmental trends associated with past development
strategies in the majority of countries are not sustainable. There are still 1.2 billion
people living on less than $1 a day. The average income in the richest 20 countries is
37 times that in the poorest 20 -- a ratio that has doubled in the past 40 years, mainly
because of lack of growth in the poorest countries. More than 1 billion people in low
and middle-income countries lack access to safe water, and 2 billion lack adequate
sanitation, subjecting them to avoidable disease and premature death (WB, 2002).

In Indonesia, absolute poverty (those who live with less than $2 a day) was reduced to
16 percent of population, and only 12 percent of the population above 15 years old is
illiterate. An improvement? Probably, but do not forget: Infant mortality still touches
31 per 1,000 live births, child malnutrition affects 25 percent of the total number of
children under 5 years, and access to improved water sources is available to only 78
percent of the population.

How should we understand this situation? And how should we place the people -- all
humankind -- within the dynamics of globalization?

Let us go back to some fundamentals to properly understand this phenomenon. To


talk about globalization is to talk about the consequential impacts of business and
financial power on society. The reason is clear: All empirical evidence shows that the
present character of globalization in cultural, social or political aspects stands on the
massive expansion of business and financial power.

The fact that it involves the exercise of power, however, does not mean that
globalization is inherently "bad" since the problem is not the presence or absence of
the power (for it is a constant factor in life), but the way it is being used. So, the
problem with globalization is not about "pro" or "anti", for both seem to be self-
defeating. Rather, how to identify the consequential powers involved in globalization,
then how to devise accountability movements aimed at those socially consequential
powers. And in practice, this will be closely related to what we understand as
development.

One lesson we must learn is that people, especially the poor, must be at the center of
development -- not only in the traditional view that people are the engine of change,
but also in the less-traditional sense of development that puts people first. People are
the critical factor in development -- first in terms of their numbers and the social,
health, economic and environmental consequences of their actions; and second, in
terms of the decisions they make concerning domestic issues and the way they live
their lives. People-centered development also means full community participation at
both the decision-making and implementation levels.
Poverty remains intractable despite economic growth in many countries. This partly
reflects the problem of income inequality within countries. Income inequality in turn
reflects inequality of opportunity. What is the cause? At least in part, the still
tragically unmet need for equitable and inclusive investment in human capital -- e.g.,
investment in people through better education and healthcare -- and for wider access
to the infrastructure and capital needed to broaden the basis of opportunity. Here lies a
two-way relationship between poverty and growth. Growth might be a necessary --
but not a sufficient -- condition for poverty reduction, but persistent poverty and
inequality can reduce growth rates.

A second lesson is that development must be sustainable and environmentally sound.


If economic development destroys the earth's natural resource base in the process, it is
self-defeating. But, this is what happens. In Indonesia, 40 percent of Indonesian
forests have been cut down since 1950 and half of the remaining forest has been
utilized for public roads, and timber and oil palm plantations.

The saddening thing is that every minute 5 hectares of forest disappears -- which
means that a forest area equal to the size of a football field vanishes every 12 seconds.
On the other hand, 40 -- 50 million Indonesian people's lives are heavily dependent on
the forests. The impact on habitats is also severe as over the past 10 years the number
of orangutans has decreased by up to 50 percent.

Thus, whatever the economic development argument is, we cannot but take into
account that its practical consequences will directly affect the majority of the people.
Economic development is not considered any longer as part of social development, as
it should be, but precisely the opposite.

So, although difficult, let us put the people first before all the growth and profit
generated by development and globalization.

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