Editorial comment: Globalisation in a changed world Published: October 5 2001 19:29 | Last Updated: October 5 2001 19:46
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One of the less remarked consequences of the US terrorist attacks has been to halt in its tracks the mass movement against globalisation. As its leaders have been quick to realise, the atrocity's nature has made unsustainable the anti-Americanism and anti-capitalism that pervade their protests. But have last month's events - as some claim - also dealt a terminal blow to globalisation?
A case can be made that, insofar as globalisation is about constraints on the role of governments and the propagation of US-inspired free market values, there has been a turning of the tide. The clearest evidence is the lurch by President George W. Bush's administration away from a laisser-faire economic stance, in favour of fiscal activism, aggressive regulatory intervention and corporate bail-outs. These developments suggest a diminished faith in free markets and a return to bigger government.
But such swings in US policy are not new and this one is much more limited so far than that engineered by President Franklin D. Roosevelt in the 1930s. Furthermore, it has not been accompanied by any US relapse into isolationism. On the contrary, the US is engaged internationally on a scale unimaginable even last summer. Unilateralism has been banished from its agenda.
Whether or not Mr Bush can keep Islamic countries allied with his coalition against terrorism, the crisis has improved US relations with China. It has also spurred Russia to mend fences with Nato and the European Union and to seek faster entry into the World Trade Organisation. Meanwhile, the drive to launch a trade round this year has received increased impetus from Washington and other capitals. These are not signs of a retreat from globalisation.
That said, the attacks will clearly have some effect on global economic integration. Tighter border controls, air travel restrictions, intensified surveillance of electronic communications and other security measures will all add costs and complexity to the international movement of people, goods and services. Stricter US immigration curbs also risk closing off a source of economic dynamism.
Multinationals
However, these constraints look more like potholes than roadblocks. Fears that multi-national companies, whose expansion is a mainspring of globalisation, will wind down their operations appear overdone. Short-term, the economic downturn will undoubtedly depress volumes of foreign direct investment and trade. Corporate investors may also be more wary of unstable countries. But relatively few companies above a certain size can any longer survive only on their home markets. In addition, tougher economic conditions may even cause them to locate more activities in low-cost countries, particularly China.....[more].....
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===== Kevin Dean Buffalo, NY ICQ: 8616001 http://www.yaysoft.com
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