FORUM (Spotlight Weekly)

Sobering Analysis of the Impact of Globalization in South Asia

This year's South Asian Human Development Report builds on UNDP's corporate Human Development Report of 1999 which was focussed on globalization. It reflects also country specific work carried out by UNDP in Nepal aimed at assessing the impact of globalization on human development in our host country and at formulating relevant policy recommendations. As one follow-up to this work we are currently working jointly with His Majesty's Government on a review of the policy environment for foreign investment in Nepal.

The benefits of globalization are obvious: faster growth, higher living standards, new opportunities. Yet a backlash has begun because these benefits are unequally distributed, and because the global market is not yet underpinned by broadly based rules reflecting shared social objectives.

In this new world, groups and individuals more and more often interact directly across frontiers, without involving the state. New technologies create opportunities for mutual understanding and common action. But there are new dangers. Crime, narcotics, terrorism, pollution, disease, weapons, refugees and migrants all move across borders faster and in greater numbers than in the past. People feel threatened by events far away. They are also more aware of injustice and brutality in distant countries, and expect states to do something about them. If we are to get the best out of globalization and avoid the worst, we must learn to govern better, and how to govern better together.

Competitive markets may be the best guarantee of efficiency, but not necessarily of equity. Liberalization and privatization can be a step to competitive markets ñ but not a guarantee of them. And markets are neither the first nor the last word in human development. Many activities and goods critical to human development are provided outside the market ñ but these are being squeezed by the pressures of global competition. There is a fiscal squeeze on public goods, a time squeeze on care activities and an incentive squeeze on the environment.

When the market goes too far in dominating social and political outcomes, the opportunities and rewards of globalization spread unequally and inequitably ñ concentrating power and wealth in a select group of people, nations and corporations, marginalizing the others.

The challenge of globalization in the new century is not to stop the expansion of global markets. The challenge is to find the rules and institutions for stronger governance ñ local, national, regional and global ñ to preserve the advantages of global markets and competition, but also to provide enough space for human, community and environmental resources to ensure that globalization works for people- not just for profits. Globalization with:

*Ethics ñ less violation of human rights, not more.

*Equity ñ less disparity within and between nations, not more.

*Inclusion ñ less marginalization of people and countries, not more.

*Human security - less instability of societies and less vulnerability

of people, not more.

*Sustainability ñ less environmental destruction, not more.

*Development ñ less poverty and deprivation, not more.

The South Asian Human Development Report 2001 presents a sobering analysis of the impact of globalization in South Asia:

- Globalization in South Asia has focussed on integrating markets without improving the living conditions of the vast majority of South Asians.

- South Asia's integration with the trade and capital markets has extended considerably, yet South Asia remains among the least integrated regions in the world.

- Globalizations in South Asia have not been accompanied by reduction of poverty or improvement in Human Development.

- Economic reform programmes have failed to increase growth substantially or achieve macro-economic balance and there is a worldwide movement for forming regional trading blocks yet intra-regional trade within South Asia is very low compared to such trade in other regional groupings.

Of all the valuable recommendations given in the South Asian Human Development Report 2001 and the corporate UNDP Human Development Report 1999 on globalization none are perhaps more important and relevant than the ones dealing with education and training. Nations will only be able to benefit from the knowledge revolution if they succeed in developing their human resources, not only at primary and secondary, but also at tertiary levels. And this includes, of course, the education of boys and girls.

Three other particularly relevant recommendations are:

1. Stronger global action is needed to tackle global threats to human security including the fight against terrorism, trafficking of women and children and HIV/AIDS. The Conventions signed and Declaration adopted at the 11th SAARC Summit are particularly relevant in this context.

2. The global community needs to take decisive action to move the global economy in the direction of a level playing field. Continued trade barriers in areas like agriculture and textiles where developing countries have a real comparative advantage are supported by annual global subsidies that cost the developing world more than three times as much in lost trade than it receives in ODA every year. That is why it is imperative as a first step that all OECD members follow through on stated commitments and offer duty and quota free excess to LDCs. The costs are miniscule but the potential benefits enormous, particularly given the fact that agriculture makes up more than a third of GDP in LDC's and employs more than half the labour force.

3. A more coherent and more democratic architecture needs to be built for global governance in the 21st century. This could include a reorganized World Trade Organization that ensures both free and fair international trade with a mandate extending to global trade policy with anti-trust provisions and a code of conduct for multinational cooperations. A broader UN system, including a two-chamber General Assembly to allow for civil society representation could also go a long way in ensuring that the voices of the downtrodden and under-privileged are heard.

(This article is based on the speech by UNDP Resident Representative, Dr. Henning Karcher, on the occasion of the launch of the South Asian Human Development Report 2001)