The Challenges of Globalization
by Peter D. Sutherland and John W. Sewell

Concerns over the negative impacts of globalization are beginning to stir even at the highest levels. A surprising dissent was recently issued by John Sewell, president of the Overseas Development Council [ODC, 1875 Connecticut Ave., NW, No. 1012, Washington, DC 20009, (202) 234-8701, www.odc.org] and ODC Chair Peter Sutherland. Sutherland is also a Goldman Sachs general partner and a chair of British Petroleum. The following was excerpted from their joint report, “The Challenges of Globalization.”

Globalism has raised living standards for many but has made life more difficult for those dislocated by change, and threatens to leave a significant part of the world behind.

The foremost challenge of globalization is to ensure that its fruits extend to all countries and peoples. There are nearly 4 billion people who live in countries with a per capita GDP of less than $1,500 a year. The greatest promise of globalization is that it will help lift those people out of poverty and turn them into consumers.

The second great challenge of globalization is the fear that the growth it brings is inherently and dangerously destabilizing. A recent study by the Institute of International Finance confirmed growth in income disparity between low- and high- skilled workers. [T]echnological change is the overwhelming reason, and trade and international competition are minor factors.

Many problems [are] complicated by globalized trade, investment, technology and communication. Among these problems are environmental degradation, disease, migration, crime and terrorism.

In an era when government no longer guarantees employment for large segments of an economy, the relationship between the individual and the state has fundamentally changed. Increasingly, a government’s very ability to execute a particular fiscal or monetary policy is inhibited by the larger forces of globalization.

Some have [concluded that] globalization is usurping the powers of national governments and that free markets are disenfranchising the individual. Some have declared the death of the nation-state and would recognize transnational corporations and large banks as the new co-rulers of our world.

“Globalism… threatens to leave a significant part of the world behind.”

There is no doubt that the globalization of trade and investments has in some ways weakened the independence of action of national governments and made life less predictable for many individuals.

[Unfortunately, the authors’ recommended cure is just more of the same old medicine – editors]

We propose a global economic summit among a representative group of world leaders representing the old industrial countries, the emerging economic powers, and those countries that face the prospect of marginalization. The summit would take place before the end of 1999.

The logistics and sheer expense of the process alone require that participation be limited [to] about two dozen governments…. In addition, it might be useful to include the heads of the World Bank, International Monetary Fund, World Trade Organization and United Nations.

[The summit would address such questions as: What] is the impact of looser workplace standards in the developing world? Does the free market development necessarily lead to environmental degradation? Does the added growth contribute to the growing volume of pollutants generated by rapid economic growth? These questions and many more posed by globalization yield no easy answers.