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Deglobalization & anti-globalization
Tuesday, 03 March 2009 12:16

East Asia was one part of the world that got it right.  In recent decades, most of the region launched off on export-led development strategies and experienced historic reductions in poverty.  In this way, it stands out, and stands head and shoulders above Africa and Latin America.

But what goes up must come.  And so we now have de-globalization, a horrible word coined by Philippine economist Walden Bello.  As the Economist highlighted in its 19 February edition, trade is crashing.  According to IATA, air cargo traffic (representing one-third of the value of world trade) was down over 20% in the year to December 2008.  Exports by East Asian tigers like Singapore and Taiwan are in free fall, while export factories in China are closing daily.  International tourism is also declining. 

Financial deglobalization is in full force as flows of private debt and equity to the developing world are falling even faster than trade.  Major efforts have been deployed to keep Korea and now Indonesia afloat.  As multinational enterprises incur losses, flows of foreign direct investment are drying up.  And perhaps of greatest concern to Asian countries like the Philippines, Indonesia, Bangladesh and India is the dramatic rise in world unemployment which provides a direct hit to migrant workers and their remittances back home. 

So antiglobalization has awoken in East Asia, the region which was the one true globalization winner.  According to Bello, "people in East Asia are beginning to realise that they aren't only experiencing an economic downturn, but living through the end of an era.  The model of export-oriented development, launched in East Asia by Korea and Tiawan over 40 years ago, may now be over."

Even more moderate commentators acknowledge that the US will inevitably have to learn to save again, and that East Asia will have to become more reliant on domestic demand for its growth.  This sounds fine, if it can be done, but it would also mean that East Asian economies would lose the benefit of the many dynamic gains from trade and investment, gains like technology transfer, innovation and demanding product standards.

Bello predicts a "coming fury" from the sudden end of the export era which could have ugly consequences.  "East Asia may be entering a period of radical protest and social revolution that went out of style when export-oriented industrialisation became the fashion three decades ago."  Even before the crisis, China was plagued by scattered protests arising from land grabs, unpaid wages and environment disasters.  And leaders in countries like Thailand and Malaysia do not have the same firm grip on society that they used to have.

Martin Khor of Malaysia's Third World Network is protesting that the export-led development model was taught to Asia by the US, IMF and World Bank, and is now being undermined by the US induced crisis.  This is being exacerbated by the US's Buy America provision in its stimulus package.  And developing countries will not have the resources to compete with the subsidised US multinational enterprises. 

In short, the present financial and economic crisis is perceived as a victory for Asia's anti-globalization voices.  And the fact that many bad bankers are being saved along with bad banks only confirms the perceived injustices of globalization.

The tragedy is that notwithstanding the crisis, most of the poverty reduction gains in East Asia will remain.  Globalization will leave South Koreans much better off than North Koreans, Thais better off than Burmese etc.  But, people take progress for granted and forget from whence they came.

Does globalization have any recent solace in Asia?  Yes, indeed, "Slumdog Millionaire" winning the Oscar for the best film at Hollywood's Oscars.  This highlights the power of Asian culture and creativity to seduce the world.  It also demonstrates that there is a lot more to cultural globalization than Americanisation. 

References:

Foreign Policy in Focus -- www.fpif.org

The Economist -- www.economist.com

Democracy Now! -- www.democracynow.org


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