Posted
22nd July 2001
Globalisation Going Down
By
Mark Weisbrot, Dean Baker, Egor Kraev and Judy Chen Mark Weisbrot
and Dean Baker are Co-Directors of the Center for Economic and
Policy Research (CEPR). Egor Kraev and Judy Chen are Research
Associates.
It is commonly accepted that the increased opening to international
trade and financial flows that has occurred in the vast majority
of countries in the world has been an overall success. Even
critics of globalization have generally accepted that the reforms
of the last two decades, in low to middle-income countries,
have boosted economic growth rates.
They
have argued that this growth has left many people behind, and
has often been at the expense of the natural environment. However,
for economic growth and almost all of the other indicators,
the last 20 years have shown a very clear decline in progress
as compared with the previous two decades. For each indicator,
countries were divided into five roughly equal groups, according
to what level the countries had achieved by the start of the
period (1960 or 1980). Among the findings: Growth: The fall
in economic growth rates was most pronounced and across the
board for all groups or countries. The poorest group went from
a per capita GDP growth rate of 1.9 percent annually in 1960-80,
to a decline of 0.5 percent per year (1980-2000). For the middle
group (which includes mostly poor countries), there was a sharp
decline from an annual per capita growth rate of 3.6 percent
to just less than 1 percent. Over a 20-year period, this represents
the difference between doubling income per person, versus increasing
it by just 21 percent.
The
other groups also showed substantial declines in growth rates.
Life Expectancy: Progress in life expectancy was also reduced
for 4 out of the 5 groups of countries, with the exception of
the highest group (life expectancy 69-76 years). The sharpest
slowdown was in the second to worst group (life expectancy between
44-53 years). Reduced progress in life expectancy and other
health outcomes cannot be explained by the AIDS pandemic. Infant
and Child Mortality: Progress in reducing infant mortality was
also considerably slower during the period of globalization
(1980-1998) than over the previous two decades. The biggest
declines in progress were for the middle to worst performing
groups. Progress in reducing child mortality (under 5) was also
slower for the middle to worst performing groups of countries.
Education and literacy: Progress in education also slowed during
the period of globalization.
The rate of growth of primary, secondary, and tertiary (post-secondary)
school enrollment was slower for most groups of countries. There
are some exceptions, but these tend to be concentrated among
the better performing groups of countries. By almost every measure
of education, including literacy rates, the middle and poorer
performing groups saw less rapid progress in the period of globalization
than in the prior two decades. The rate of growth of public
spending on education, as a share of GDP, also slowed across
all groups of countries. In this study, countries are grouped
by their level of the indicator (GDP, life expectancy, etc.)
at the start of each period. We are therefore comparing the
countries that start each period at similar levels, rather than
comparing the same country across the two 20-year periods. This
eliminates the problem that it might be more difficult, for
example, for a country to make the same amount of progress going
forward from an average life expectancy of 65 years, as it made
from a life expectancy of 50 years. The last two decades have
seen a number of important changes in economic policy adopted
throughout much of the world, and especially in the low to middle-income
countries.
Many of these measures fall under the common definition of globalization:
i.e., the removal of tariff and non-tariff barriers to trade,
and capital account liberalization (the removal of restrictions
on international investment flows). Other policies directly
related to globalization have also been implemented over the
last two decades. For example, the International Monetary Fund
and World Bank have increasingly, during this period, required
a number of measures to be adopted by borrowing countries as
a condition of their access to foreign credit. These have included
contractionary monetary policies (higher interest rates and
tighter credit), public spending cuts, privatization of public
enterprises, increasing foreign reserve requirements, and a
long list of "micro-interventions" ranging from user fees for
primary education and health care to removing various government
subsidies. Many poor as well as medium-income countries have
also faced historically unprecedented levels of foreign debt
and debt service.
The
evidence presented in this study
does not prove that the broad decline in progress in the areas
of economic growth, health outcomes, or other social indicators
are a result of any one or more of these policy changes. But
it does present a very strong prima facie case that some structural
and policy changes implemented during the last two decades are
at least partly responsible for these declines. And there is
certainly no evidence in these data that the policies associated
with globalization have improved outcomes for most low to middle-income
countries. To argue that this is the case, it would be necessary
to show that outcomes would have been even worse in the era
of globalization, if countries had not adopted these policies.
The burden of proof would be squarely placed on those who claim
success -- by any available measure of human well-being -- for
the last two decades of the experiment in globalization.....
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