“A
Non-Economist’s View of Globalization”
REMARKS BY U.S. AMBASSADOR CHARLES A. RAY
at
the
Inaugural Conference
of
the
Economic Institute of Cambodia (EIC)
OCTOBER 29, 2003
I promise
you I will not bore you with charts and statistics about the glories or
perils of globalization. I promise to talk today as a non-economist with
a keen personal interest in globalization.
I just want to give you a few personal
examples of how I see international trade at this very moment:
The shoes I’m wearing are from Italy.
My suit was made in Bangkok with silk from
Vietnam.
I ate Cambodian food for dinner last night on
plates made in the U.S.
Tonight I’ll use the Internet to order a
Hollywood movie that earned more in Bombay than it did in Buffalo. In
fact, it’s increasingly likely that a Hollywood movie is being made and
sold with overseas markets more in mind than the U.S. market.
And that’s just today. What about yesterday
and tomorrow?
What about the music we listen to? The trips
we take? The money we invest?
(Hold up a pencil) Take a look at this simple
pencil. It’s globalization for 1000 riel. The rubber is from Indonesia.
The wood is from America. The tin comes from Africa. The ink printed on
it comes from Europe. All put together somewhere and shipped to Cambodia
for purchase by the American Ambassador. I think I’ll complete the circle
and leave it here after lunch for someone to find and use.
My point is that life itself today is global.
You can’t exist without participating in globalization.
Globalization is changing and affecting
everyone’s life. Change is difficult, no doubt about it. But that
doesn’t mean it’s going to stop.
We are often told that globalization is a race
to the bottom. As with most conventional wisdom, this view is exactly
backwards. I strongly believe that trade is in fact a race to the top.
Benjamin Franklin, one of America’s most
venerable Founding Fathers and my nation’s first diplomat once said: “No
Nation was ever ruined by trade.”
It was true two hundred years ago; it’s true
today.
To me it’s obvious that globalization has
always been with us. From the first tribe that traded sticks and berries
with the neighboring tribe, it’s been a part of the human experience.
Sure, the process feels new, but throughout
history haven’t we seen the constant spread of people, culture, music, and
food? For example, art knows no borders. Music doesn’t stop at
international borders.
People in New York, Tokyo, Nairobi and Bangkok
know many of the same songs, movies and corporate logos. This was not
true in the 19th century and not true even 30 years ago.
Different cultures have more common components than before. The freedom
to be different through globalization also means the freedom to sometimes
choose the same things.
The fashionable image of globalization is that
it is imposed, not chosen. That it destroys local communities and
cultures. And worst of all that it is incompatible with the principles of
democracy and social justice.
More globalization, not less, more free trade,
not less. This is the way to advance the interests of the poorest people
in the world, as well as coincidently, most other people’s interests too.
Globalization defies any simple definition,
but I’m going to give you some simple thoughts about it nonetheless.
I will offer first and foremost some defining
features of globalization. In any competition, especially competitive
trade, it is hard work and individual achievement that counts, not what
your last name is or how much money your parents have. Systems based on
corruption and nepotism will not work in today’s global economy.
And as surely as I can see the positive
features of globalization, I know I can describe to you the opposite of
globalization with all of its obvious implications: governments
intervening to protect pet industries to keep out competitive products,
giving resources and opportunities to cronies, to favored people, growing
inequality, high prices and limited opportunities.
Poverty and inequality – they are worsened by
protectionism, by government intervention, by corruption, meant to protect
the interests of the powerful and wealthy.
Globalization is a scapegoat for chronic
mismanagement, inane regulation and corrupt politicians.
Let me ask you a basic question: How can
social and economic problems be mitigated by economic isolationism?
While I strongly believe that globalization
has always been with us, I just as strongly believe that it is not
inevitable. Its virtues and benefits must be persuasively presented to
ordinary citizens, business leaders, and politicians.
Anecdotes of people losing their jobs are far
more dramatic than the steady reduction of poverty. But it is the steady
reduction of poverty that we should focus on and that I want to emphasize.
Globalization is worth explaining and
defending. It is not a fait accompli or automatic. It is not driven
inevitably forward by technology. It can be reversed.
Globalization rests upon a political
consensus. The World Trade Organization is one clear manifestation of
that consensus.
Want to see the benefits of globalization? Of
international trade? Let’s look at Asia over the last few decades. The
countries of Asia have consistently seen real GDP growth rates at more
than double the rate of growth of the high-income countries. What about
the billions of people in Asia who’ve seen their real incomes rise much
faster than the two percent average experienced in high-income countries.
Look at the countries in SE Asia, which engage
heavily in trade – Singapore, Malaysia, Thailand and Indonesia. And
compare them with those that over the last several decades largely
withdrew from it – Cambodia, Burma, Laos. And tell me which group you
think is richer. Which group has done a better job at reducing poverty?
What do the richest countries in SE Asia have
in common? Simple, it’s trade. Heavy participation in international
trade and investment results in rapid economic growth.
The rich countries of SE Asia (and of the
world) didn’t start by manufacturing high-tech goods. But they did start
with manufacturing. Today’s manufacturing of garments, toys and footwear
can lead into tomorrow’s production of electronics, computer equipment,
and software.
How else to you expect to the race to the top
if you don’t race at all?
Labor-intensive export manufacturing should
not be a dirty word. And it certainly should not be seen as unable to
compete in world markets.
What about the exports from Cambodia’s garment
sector? These exports were worth last year well over a billion dollars to
the Cambodian economy. Cambodia is competing on a level, through its hard
work to respect labor standards, that didn’t even exist a few years ago.
You’re racing to the top in this field and no one is running against you. Another
example from Cambodia, silk weaving from here could be sold in the art
markets of Paris, London and New York. Globalization can give
Cambodian villagers a chance to sustain traditional ways of life and to
revive threatened crafts and culture.
It should be clear that reliance on
labor-intensive export manufacturing not only creates the most jobs but
also reduces poverty rates most rapidly. This structure also favors
female employment, a fact that we see clearly in Cambodia’s garment
sector.
The growth of labor-intensive export
manufacturing is accompanied by all the usual indicators of improved
living standards: better diets, lower infant mortality, longer life
expectancy, . . . I could go on and on.
Isn’t this what we all want for Cambodia?
Jobs and a better life?
As a non-economist, my common sense screams
that globalization is necessary for economic growth and social progress.
But I would point out
that globalization alone, that international trade alone – i.e. the
opportunities and competition of international free markets – cannot by
itself overcome bad government policies, corruption, ethnic conflicts,
etc.
So, I will leave you with a word of advice.
When you read the next article attacking globalization. Take a walk and
look at the goods being traded in the market, talk to your neighbors about
their desire for jobs, and think about your country’s future. And think
about the ways that job creation through trade can reduce poverty.
Decide for yourself if isolation and the
rejection of trade are really ways to create jobs and reduce poverty.
Don’t sit behind your desk -- a desk is a
dangerous place from which to view and judge the world -- or worse yet in
front of your TV and let others decide for you. Don’t make that mistake.
Thank you
