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How to make globalization truly sustainable

By Fernando Reyes Matta (China Daily)
Updated: 2008-12-11 07:44

The past few days have seen world leaders mobilize in order to bring about much needed confidence and coordination so as to confront the challenges posed by a financial crisis which has rapidly spread evenly affecting developed as well as developing economies.

As such, we have witnessed concrete commitments by G7, G20 and APEC (Asia-Pacific Economic Cooperation) leaders, all of which are cemented upon two undeniable facts: first, the financial system and the multilateral institutions which have been operating since the end of World War II need to be transformed as they no longer are able to serve the purposes for which they were established; second, through an interdependent world, all systems are linked and, one way or another, markets are bound to be affected regardless the country or region that they operate in.

Without any doubt, unlike the crisis which began in Asia and spread to the rest of the world in the late 1990s, the current debacle which evenly affects markets in all corners of the planet at the same time is an example of how globalization has truly emerged as the concept which engulfs political, social, economic and commercial aspects of our development.

In 2006, the World Trade Organization's Director-General Pascal Lamy spoke in Chile on Humanizing Globalization.

When asked what is globalization, he offered a brief yet solid response: Globalization can be defined as a historical stage of accelerated expansion of market capitalism, like the one experienced in the 19th century with the industrial revolution.

It is a fundamental transformation in societies because of the recent technological revolution which has led to a recombining of the economic and social forces on a new territorial dimension.

As with any process in our development, globalization certainly needs constant attention and refinement, lest we concentrate solely on its negative consequences rather than on its positive effects. Among these we can underline the fact that it has enabled both small and large players of economies and nation-states to influence actions and events regardless of their position on the world stage. Globalization has struck down walls of the political as well economic and cultural domains of human development.

It has contributed toward the expansion of innovation, freedom of opinion and of governance, as well as toward breaking down barriers which for centuries differentiated the rich from the poor, the North from the South and the East from the West. Interestingly, it has also increased awareness on issues which need a global solution, such as the threat from terrorism; the risks posed by pandemics and the depredation of our environment, with global warming as the ultimate challenge. Migration, poverty, erosion of our arable land and its ensuing effect on water and other resources and some of the instability faced in some corners of our planet are products of globalization.

The growing interdependence of our thoughts as well as our policies poses many complex issues which need to be addressed in the same manner as we are facing the global financial crisis. But to my understanding, with a need to heed the wise Chinese saying that within every crisis there is also an opportunity.

In the past few months, Chile and China have been striving to actively set forth the basic criteria needed to create a solid triangle for the sustainability of their development models based on three key players: state, market and society.

The first time that this triangular model was spoken of was during the 1995 United Nations Summit on Social Development held in Copenhagen, Denmark.

Now, the time is at hand for all countries to contribute to its position in the necessary new order that should be established, as is being sought by developed as well as by developing nations across the globe.

As such, although the political models may be quite different, governance today for example, in China and in Chile needs to be strengthened in these three fields: a strong, efficient and agile state, with the capacity to regulate and construct the development scheme of the country; a quick, efficient, innovative and productive market, able to generate jobs and just salaries as well as guarantee solid growth levels and, finally, a society whereupon public policies are able to create opportunities for prosperity for all peoples as well as open new fields for men, women and youth to find a source for their well being.

There are certainly some countries which are better prepared today than others to embark upon the road which has been chosen by China and by Chile. But, as we are all on a similar level of dependency as the financial crisis has proven, it is clear that we all stand at a junction where we can initiate a process of development based on one common element which was underlined by economic leaders at the APEC Summit in Peru: an open and fair world market with clear and just rules, as protectionism only adds further complexity to the solutions we all seek for our peoples.

The time has come for mechanisms which have for some time been in place in order to contribute to political as well as economic coordination. Mechanisms such as the Rio Group in Latin America, or the Association of Southeast Asian Nations in Southeast Asia, or the European Union, can lead toward a consensual solution to resolve the current financial crisis as well as engage upon other issues of common necessity and urgency. Without any doubt, the first step is the construction of a new financial order with the ingredients for sustainability in the 21st century.

It certainly is an arduous task for all to face, and it does need clarity regarding the challenges and the means to confront them in a wise and efficient manner. Chile's President Michelle Bachelet recently defined that there are three challenges that must come first in any equation in all nations' quest for development.

The first challenge is to understand that the only effective way forward is through greater international cooperation in the form of renewed collective action. Through cooperation, we can transform global problems into what the United Nations Development Program has termed global public goods. By this, she means agreements that combat present ills with solutions which benefit all humanity and, as a result, lead to improved global governance.

The list of global public goods is long, but let me mention a few. We must seek to avoid international economic crises. We must globalize prosperity if we are to avoid a new era of protectionism. A successful conclusion of the Doha Round, designed to lower trade barriers across the world, will be crucial for overcoming hunger, underdevelopment, and poverty. We must stop climate change and global warming. We must manage a safe transition from a global economy based on non-renewable energy sources into a sustainable one, increasingly based on both traditional and innovative renewable sources. These are some of the global public goods that all the countries, the North and the South, must raise as essential patrimony of the humanity.

Our second challenge is to renew and strengthen multilateralism, making it more efficient, more representative, more transparent, and more accountable. Without multilateral institutions, it will be impossible to consolidate global public goods. In recent years, however, the temptation of unilateralism has weakened multilateral institutions just when they are needed more than ever.

There will have come the hour of beginning to think of creating a "Central World Bank"? Will it be the moment to re-formulate the system of risk evaluation agencies - always so rigorous with the developing countries and so neglected with the economies of the rich countries? These questions and similar others claim multilateral answers, to be effective.

The third challenge for the international community is to ensure a fairer distribution of the benefits of globalization. Globalization is a source of opportunities. However, it also has negative consequences for the weakest communities that are unable to adapt to the new demands of productivity and competitiveness.

Sources of this instability include unemployment, food shortages, poor health, bad education, and the uncertainty of living to a dignified old age. We are facing a crisis due to the absence of social protection networks, deterioration in the quality of life, and higher crime rates in large cities, precisely at a time when a majority of the world is moving to urban centers.

The same concerns are certainly arising through globalization in the United States, Europe, Latin America, Asia, and Africa. How can we compete internationally while still preserving our native peoples and communities in a globalized world? How can we grow without sacrificing the networks that have helped us forge our identities in a world that has no boundaries? How can we strengthen the social cohesion which solidifies our societies and their overall well-being?

A major goal of the globalization process is social cohesion as it will guarantee our individual societies' roles in constructing a solid world governance system, taking into consideration the best that North, South, East and West can offer. The aim is to achieve peace and prosperity, while engaging upon solutions in the fields of sustainable energy and the caring of our environment.

The author is Chile's ambassador to China

(China Daily 12/11/2008 page9)