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Fat cows and hungry humans
By Jawaid Bokhari
April 26:Every cow in
the European Union gets daily a $3 subsidy per
head while 40 per cent of the humanity lives on
less than $2 per day. Can the rising tide of
globalization lift all boats and reduce poverty?
These pertinent observations were made by
Jean-Pierre Lehmann, professor of the
international political economy, IMD at a 3-day
convention on "new management frontiers" organized
by the Management Association of Pakistan (MAP)
last week.
Scholars from business schools, government
officials and corporate executives focused on best
business practices to meet the challenges of
globalization. Yet one of the key issues that came
repeatedly under flashlight was the problem of
poverty reduction, including unemployment.
Many participants acknowledged that poverty was a
corporate issue and that providing employment was
critical for social stability. With two billion
people of the world living in poverty, it was
stated that globalization would be judged on what
it is doing to reduce poverty.
If the benefits of globalization are not passed on
to the poor, globalization will fail to stand the
test of this criteria. In a pertinent remark, the
Chairman of Economic and Social Policy Cell
Punjab, Sheikh Inamul Haq said, "justice is a very
rare commodity in the world today."
One of the major challenges facing the world is a
jobless economic growth. US Fed Chairman Alen
Greenspan told the US Congress last week that the
corporates are making "reasonably high profits" in
the midst of what he called a "wage recession" in
America.
Corporate restructuring is making business outfits
lean and thin as a result of redundancies. High
tech has increased productivity with fewer jobs
and resulted in loss of customers (unemployed) and
considerable industrial capacity remaining
unutilized. This has made economic recovery
difficult in face of low purchasing power of the
consumers. Companies take a myopic view of things.
They forget that poverty is a corporate issue.
Related to the issue of unemployment is the
problem of mismatch between education and industry
in Pakistan. Educational institutions produce
skills not required by industry. The outcome is
that many educated men and women are without jobs.
"It is human capital that drives the economy,"
Zarrar R. Zubair, director, Pakistan Institute of
Management told the participants and elaborated
his remarks with the help of facts and figures.
A World Bank study has revealed that the share of
human capital in GDP is 64 per cent, physical
capital 16 per cent and natural capital 20 per
cent. The speaker stressed that there was need for
massive investment in human resources to catch up
with the industrially advanced states and for a
balanced economic growth.
Literate and healthy worker is required to raise
productivity and for realignment of labour in an
age of knowledge workers. The real wealth of a
nation is its people who are the most neglected.
Globalization is seen from two perspectives. It is
a powerful engine of growth" for those who have
immensely benefited from it; and it is, "a source
of inequities and unfair distribution of profits",
for those who have suffered because of it.
The United States has been the largest beneficiary
of global free trade since the Second World War,
says a US official. Globalization has been driven
by multinationals. The popular perception, says
the Chairman of the Atlas Group, Yusuf Shirazi is
that MNCs know no political, economic and social
barriers in fulfilling their company objectives.
It has led to unprecedented concentration of
wealth. Just 480 billionaires in the world
(including eight from India and none from
Pakistan) control $1910 billion wealth, higher
than GDP of $3.5 billion in 350 countries.
The underlying problem of globalization is the gap
in incomes between the rich and poor nations and
between the rich and poor within nation states.
Global free markets create an alien
market-dominant minority which is seen as the
driver of global economic progress. The core
problem is, "even playing field" for all
international players.
Instead, there is growing protectionism in the
West. The US Fed chairman Alan Greenspan told the
US Congress last week that "free trade is a very
complex and difficult" issue. He advised Americans
to give priority to exports and an IMF report on
World Economic Outlook released on the same day
has called on the Asians to focus on domestic
markets.
The West in general and the United States in
particular need brainpower, resources and the
markets of the developing countries on their own
terms. They have failed to grasp the changing
ground realities.
In the past fifty years, independent nations have
industrialized and acquired economic muscle to
stand up to developed states as demonstrated by
G-20 led by China, India, South Africa and Brazil
at Cancun. The group wants the rules of the game
in the international trade to be changed.
Unfortunately, the policy-makers in the Western
world have a frozen mindset.
Foreign scholars attending the MAP convention
advised the developing countries to build a
coalition of the South. Despite divergent views,
they can work to protect and advance their common
interests on multilateral forums. The weak need to
hang together.
They should build their clout, lever age and
persuade developed states to open up their markets
but they should avoid confrontation. The
developing states like Pakistan have also to
elevate their competitive strength through
innovation, quality, price and the range of
products offered to their customers in the
international market. They should opt for best
business practices. Corporate leadership should
serve as an agent of change.
By denying the developing states increased inflow
of capital, foreign investment and access to their
markets, the industrialised West tends to insulate
itself from global economy.
In fact foreign credit and investment have
declined over the years. So have the leverage of
West to influence the developing states. Finding
the going tougher at multilateral forums, the USA
is seeking bilateral trade.
In countries like Pakistan, foreign investment
flows have been low and can come primarily through
joint ventures as indicated in a presentation by
Yusuf Shirazi on, "How to manage MNCs and local
partnership."
He says the partnership harmonizes each others
objectives, approaches and cultures and offers
local business statesmanship. Locals also provide
the "country know-how and know-who." They have a
strong local base.
The successful joint ventures have to be seen in
the context of market democracy by advocates of
globalization. The free markets have created an
alien minority-dominant market in several
countries, provoking a backlash from the ethnic
majority of the host countries.
There is conflict between the market and
democracy. Market democracy has made
representative democracy irrelevant at heavy
social costs and progress. Democratic deficit is a
growing problem. Of the 16 Atlas Group companies,
eight are joint ventures with six multinationals.
Their combined assets are at Rs25 billion and
their total sales is Rs30 billion. The groups pays
Rs7 billion in taxes to the government annually,
says the Group chairman.
Globalization is inevitable. But the existing
world order must be re-organized and changed to
serve the deprived nations and peoples. The
existing route tends to create one economic crises
after another, fragments national societies and
divides the global community. The world is paying
a heavy price in the form of continuing violence.
The DAWN |
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Pakissan.com; Advisory Point
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