Fading Globalization: Against Asymmetry in Liberalization

Fading Globalization

Trade and Investments Stagnate. Unctad Warns against Further Liberalization.

By Hermannus Pfeiffer

[This article originally published October 7, 2003 in Neues Deutschland is translated from the German on the World Wide Web, http://www.nd-online.de/artprint.asp?AID=42443&IDC=3&DB=.]

Neoliberal globalization has failed in the opinion of the UN Conference for Trade and Development (Unctad). At the same time the organization warns of a new liberalization step in relations between North and South. UN General secretary Kofi Annan urges a new thinking.

On first view the “2003 World Trade and Development Report” is hardly sensational. According to the voluminious study, very little was added to world trade and international finance in the past year. A comparison with the 1990s reveals that the stream of globalization is drying up. At that time, trade between continents and countries grew ten percent every year. The growth rates in global trade broke in 2001 and stagnated since 2001. The international financial market has weakened. Long ago in 1996, the capital stream to the South reached its zenith at $200 billion. In 2003 it amounts to $50 billion according to Unctad. Conversely $700 billion flowed out of developing- and transforming countries in capital, interests and profits between 1997 and 2002.

The poor South suffers. The developing countries’ share in international trade decreases. Unctad chief economist Heiner Flassbeck explains the collapse as an “assymetry in liberalization”. While countries of Asia, Africa and South America accepted “heavy burdens” in opening markets, the industrial countries built walls and largely blocked market access for agricultural products. Despite the present imbalances, the US and the European Union pressure on small countries to remove the last trade barriers. In this context, Unctad criticizes the dogmatism of industrial countries. Liberalization of world trade should not be an end-in-itself but only a “means to an end” for “sustainable economic development in all parts of the world.

Optimists of liberalization like the Institute for World Economy in Kiel expect further rapid improvements of globalization when the economy worldwide starts up again. Unctad doesn’t share this belief in progress. In contrast, the special organization of the United Nations domiciled in Geneva and focused on the interaction of trade, capital and the international economy refers the rapid growth of trade during the 1990s to special factors. While the industrial states were partly opened to imports from developing countries, the production of many corporations is interwoven beyond national borders. Expensive purchases on credit abroad had an economic boom. However this growth potential is exhausted today.

The UN trade organization criticizes “neoliberal” globalization since it expands the gulf between North and South. A few winners among developing counrtries face many losers. Only a handful of states are “fully industrialized”, chief economist Flassbeck explains. Many regions are “de-industrialized”. China undoubtedly is one of the winners with an economic growth of eight percent. Only a few enclaves are joined to the international market. The results are very depressing in regions with the most radical liberalization. Economic output fell 0.8 percent in Latin America.

The Unctad report doubts whether a “second generation of neoliberal reforms” will improve the economy all over the world. The organization only offers vague hopes as an alternative. The world economy, that is corporations and the policy of industrial states is presently emphasized according to the Geneva economists, not trade and financial markets. As everybody knows, the UN General secretary hopes for a new thinking.

{The “2003 World Trade and Development Report” can be read on: http://www.unctad.org.]