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Globalization pulls world economy down

To listen to the believers in so-called globalization, the last two decades got the world economy off to its most powerful expansion in modern history with countless millions worldwide thrust into prosperity. The numbers however tell a far different story.

By SANDRA NICOLAS
Bulatlat.com

The global economy is undoubtedly careening towards recession. It’s all the International Monetary Fund (IMF) can do to hack away at its forecasts for 2001 global growth every time its World Economic Outlook comes out. Last year’s autumn edition forecast 4.2% which was lowered to 3.2% in April this year then lowered again to 2.7% in September.

The rich-country club Organization for Economic Cooperation and Development (OECD) meanwhile has said that the world economy will be lucky to grow by 2% in 2001. Global growth in 2000 was 4.1%.

Politicians, analysts and commentators the world over are beside themselves with anxiety, dismayed at how things could go so wrong so quickly. Looking at how the world’s people have fared in the last two decades, however, better perhaps to ask when things were ever right with globalization.

The impending slump was heralded by some spectacular numbers. Numbers which, earlier, globalists rattled off with awe. Over US$ 1.5 trillion flowed across international borders everyday compared to the piddling US$ 80 billion daily average in 1980. There were over US$ 250 billion in private financial flows to the neocolonies in 1997 compared to just US$ 44 billion at the start of the decade.

Trade lagged but annual merchandise exports still amounted to US$ 6.2 trillion in 2000 compared to US$ 1.8 trillion in 1983. Still, world trade in the last decade grew twice as fast as world gross domestic product (GDP). Sparkling office high-rises sprouted in backwater countries and cell phones, laptop computers and urban sport-utility vehicles became de rigueur.

Growth of output per person

But what were things really like? If it promised nothing else, “globalization” was going to turbo-charge the growth rates of any country which embraced it. Yet world economic growth in 1980-2000, the heyday of so-called globalization, actually slowed dramatically compared to the previous two decades. Average growth of output per person was only 33% compared to 83% from 1960-1980.

Predictably, the slowdown was most marked in the maldeveloped South. Most of the three-fourths of the world that saw their per capita rate of growth fall by at least five percentage points in 1980-2000 from 1960-1980 were countries that were poor to begin with. Worst off was Latin American where growth in GDP per capita fell to 6% from 75% and sub-Saharan Africa where it fell from 36% to negative 15%.

And it’s not even as if the benefits from growth were shared evenly. On the contrary, the ruling classes worldwide reaped the gains while the vast mass of workers and peasant put up with ever greater oppression and exploitation. Even the United Nations Development Program (UNDP) concedes that the ratio of the incomes of the top and bottom 20% of the world’s population worsened from 45:1 in 1980 to 74:1 in 1997.

The drift to market fundamentalism hit the world’s working people hard on two fronts. Their incomes and livelihoods suffered from their being at the losing end of capitalist and semi-feudal exploitation.

At the same time, they were increasingly deprived of health and education as governments privatized these crucial social services; the rate of growth public spending on these public goods, as a percentage of GDP, slowed. These resulted in drastically slowing progress in terms of life expectancy, infant and child mortality, school enrolment and literacy. Bulatlat.com

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