Thursday, June 03, 2004
The 10 commandments according to Martin Wolf
On the heels of Jagdish Bhagwati's defence of globalisation comes Martin Wolf's tome on Why Globalisation Works. The Financial Times has published an excerpt includes a riposte to the critics and also the 10 commandments of globalisation, according to Martin Wolf.
1. The market economy is the only arrangement capable of generating sustained increases in prosperity, providing the underpinnings of liberal democracy and giving individual human beings the opportunity to strive for what they desire in life.
2. Individual states remain the locus of political debate and legitimacy. Supranational institutions gain their legitimacy and authority from the states that belong to them.
3. It is in the interest of both states and their citizens to participate in international treaty- based regimes and institutions that deliver global public goods, including open markets, environmental protection, health and international security.
4. Such regimes need to be specific and focused. But they also need means of enforcement.
5. The World Trade Organisation has been enormously successful. But it has already strayed too far from its primary function of promoting trade liberalisation. The arguments for a single undertaking binding all members also need to be reconsidered, since that brings into the negotiations a large number of small countries with negligible impact on world trade.
6. The case for regimes covering investment and global competition is strong. But such regimes do not need to be imposed on all the world’s countries. It would be better to create regimes that include fewer countries, but contain higher standards.
7. It is in the long-term interest of countries to integrate into global financial markets. But they need to understand the need for an appropriate exchange rate regime, often a floating rate, and a sound and well-regulated financial system.
8. In the absence of a global lender of last resort, it is necessary to accept standstills and renegotiation of sovereign debt. A particularly strong case can be made for developing ways to write off ‘odious debt’ – debt contracted by politically illegitimate regimes.
9. Official development assistance is very far indeed from a guarantee of successful development. But the sums now provided are so small, a mere 0.22 per cent of the gross domestic product of the donor countries in 2001, that more should help, if used wisely. Aid should go to countries with sound policy regimes, but it should never be large enough to free a government from the need to raise most of its money from its own people.
10. Countries should normally be allowed to learn from their own mistakes, even if that means that some make no progress. But the global community also needs the capacity and will to intervene effectively where states fail altogether.
I cannot wait to read this book. Heck, I havent read the Bhagwati book yet either. Pity it doesnt seem to be available at any bookstore I step into in Kerala. Mind you, everyone of them continue to keep *that* book by Joe Stiglitz ("The IMF and My Discontent", as the Economist called it) on their main display shelves :)
1. The market economy is the only arrangement capable of generating sustained increases in prosperity, providing the underpinnings of liberal democracy and giving individual human beings the opportunity to strive for what they desire in life.
2. Individual states remain the locus of political debate and legitimacy. Supranational institutions gain their legitimacy and authority from the states that belong to them.
3. It is in the interest of both states and their citizens to participate in international treaty- based regimes and institutions that deliver global public goods, including open markets, environmental protection, health and international security.
4. Such regimes need to be specific and focused. But they also need means of enforcement.
5. The World Trade Organisation has been enormously successful. But it has already strayed too far from its primary function of promoting trade liberalisation. The arguments for a single undertaking binding all members also need to be reconsidered, since that brings into the negotiations a large number of small countries with negligible impact on world trade.
6. The case for regimes covering investment and global competition is strong. But such regimes do not need to be imposed on all the world’s countries. It would be better to create regimes that include fewer countries, but contain higher standards.
7. It is in the long-term interest of countries to integrate into global financial markets. But they need to understand the need for an appropriate exchange rate regime, often a floating rate, and a sound and well-regulated financial system.
8. In the absence of a global lender of last resort, it is necessary to accept standstills and renegotiation of sovereign debt. A particularly strong case can be made for developing ways to write off ‘odious debt’ – debt contracted by politically illegitimate regimes.
9. Official development assistance is very far indeed from a guarantee of successful development. But the sums now provided are so small, a mere 0.22 per cent of the gross domestic product of the donor countries in 2001, that more should help, if used wisely. Aid should go to countries with sound policy regimes, but it should never be large enough to free a government from the need to raise most of its money from its own people.
10. Countries should normally be allowed to learn from their own mistakes, even if that means that some make no progress. But the global community also needs the capacity and will to intervene effectively where states fail altogether.
I cannot wait to read this book. Heck, I havent read the Bhagwati book yet either. Pity it doesnt seem to be available at any bookstore I step into in Kerala. Mind you, everyone of them continue to keep *that* book by Joe Stiglitz ("The IMF and My Discontent", as the Economist called it) on their main display shelves :)
