Every Fall Since 1995 a Large Group of Leaders from All Parts of the World Holds a Several

State of the World Forum: ShapingGlobalization

By Maria Nosovets

Every fall since 1995 a large group of leaders from all parts of the world holds a several days convention at which it discusses the most urgent global issues and exchanges ideas for their solutions. Heads of states, business, environmental, spiritual and other non-governmental organizations take on the commitment to engage in multi-stakeholder dialogues to learn each other’s viewpoints and create a network of world citizens who collaborate on improving the world in virtually every sense. This conference is the initiative of Mikhail Gorbachev, its Convening Chair, and is called the State of the World Forum.

Forum 2000

This year’s convention, held in the week of September 4th-10th, had special significance. Given a theme for the first time, it focused on the ongoing process of globalization and its effects on different regions of the world as well as social, ethical, and environmental issues. As the title “Shaping Globalization” suggests, the participants’ goal was to find measures that could be taken to regulate or direct this process in order to allow all nation states and all groups within them have equal access to the benefits of globalization.

The forum was timed to coincide with the United Nations Millennium Summit, the largest gathering of government heads in modern history. By selecting this time the State of the World Forum allowed the Forum 2000 and the Millennium Summit to convene a “global town meeting” in which the leaders of the business sector and the civil society could engage in substantive dialogues with Heads of State concerning issues brought by globalization.

The names of some of co-chairs of the forum included Her Majesty Queen Noor of Jordan; Muhammad Yunus, Managing Director, Grameen Bank; Jane Goodall, primatologist; Thabo Mbeki, President, Republic of South Africa;Wally N'Dow, Secretary General, 1996 UN World Conference on Habitat; Ruud Lubbers, Prime Minister, the Netherlands (1984-1996), Chairman, World Wildlife Fund; and Jose Ramos-Horta, Nobel Peace Prize Laureate. About 1500 more participants joined these distinguished leaders throughout the week in New York Hilton and Towers.

Some of the participants at Forum 2000 included: international financier George Soros, former Joint Chiefs of Staff Chairman Colin Powell, US Web co-founder Joe Firmage, consumer advocate Ralph Nader, spiritual leader Deepak Chopra and many more speakers and panelists representing business, government, labor, science, religion and other fields.

Globalization

In a great abundance of burning issues in the world what made the forum leaders concentrate on such self-regulating matter as globalization? To answer this question Mikhail Gorbachev linked the planet's worsening health to this process and the growing gap between rich and poor it has produced. He emphasized, however, "We cannot just criticize, cannot just blame. We should try to understand what is happening and what we need to do."

According to the State of the World Forum and its review of comprehensive effects of globalization, its pace has increased dramatically and will change the world as radically in the 21st century as democratization changed it in the 20th century. However, the benefits of this process have not reached everyone equally. While some people, particularly in the developed world, have enjoyed economic, educational and cultural gains from globalization, many others who are poor or live in developing world have been left behind and are becoming increasingly marginalized.

“The trick will be to make sure that globalization has as positive an effect on the planet as democratization has had in the last 100 years,” stated Jim Garrison, the president of the State of the World Forum. ”A lot of what globalization has to offer is beneficial but unless we work to protect all of its diverse stakeholders, we are in danger of leaving most people behind.”

In the developed world – particularly in the United States, Western Europe and developed Asian countries – the communications revolution has brought in increased speed and efficiency of business, interactions with partners and markets outside of their political borders, better education opportunities and other benefits.

The developing world, however, is facing a different picture. Insufficient country budgets, inner political chaos, and the lack of access to modern communications systems, have resulted in slow economic growth and high percentage of people living in poverty. The income gap between developed and developing nations is the largest today than it has ever been. The average GNP per capita in western countries is now $25,510 while it is only $520 on average in low-income countries, where 80% of the world population lives.*

Many of the western corporations have sensed the low production costs opportunities in the developing countries. The governments there are not currently capable of offering protection to the workers and many laborers submit themselves to the corporations on the conditions of low wages, lack of pension benefits and health insurance. Many are forced to work long hours in dangerous settings without ample safety precautions.

Cultural aspects of globalization are also of great importance. The communications revolution resulted in the exposure of traditional cultures worldwide to the Western values. Furthermore, large companies such as McDonald’s and Starbucks have branched around the world, bringing western style products and services to regions and cultures that have never experienced them before. Similarly, American and other Western television and radio programming can be found in every country of the world, exposing audiences to Western values and mentality.

Understanding these issues is critical to understanding the direction in which the world is moving and what we can expect in the next century. The State of the World Forum is one of the few organizations truly looking at the “big picture” of globalization. It looks closely at both the causes and the effects of this process.

Economic Growth and International trade

Increasing world trade and international financial flows are the distinguishing characteristics of the globalizing economy. Due to the new trade agreements and advances in technology in recent years the markets have broadened and the speed with which investors finance businesses worldwide has increased.

One of the most unique elements of the world’s economy today is the increased integration of global financial markets. The market liberation in many countries in the 1990s resulted in unprecedented private capital flows to emerging market economies, which many economists believe will result in unsustainable levels of growth. This market integration caused a high degree of interdependence of countries’ economies.

The growth of international trade has reached record levels during the last decade expanding by more than 55% between 1990 and 1998. Trade volume has been more than double real GDP rates during that time, although trade generally dropped beginning with the 1998 Asian crisis, according to the International Monetary Fund.

The increase in exports of goods during the 1990s was most dramatic in developing countries. However, the current performance of the world economy is due primarily to the record expansion in the U.S. A recession or serious slowdown in the U.S. economy without the strengthening of European and Japanese economies could cause disaster for the fragile recoveries that are now taking place in Asia, Latin America and Russia.

Global Financial System

One of the most significant effects of globalization is that on the global financial system and the roles different countries play in it. The evolution is caused primarily by the microeconomic forces in each region. Deregulation, technological advances and pooling of capital generate greater scale and greater capacity, which have led the development of the global financial market into a network of national capital markets centered around two dominant centers, the U.S. and the U.K.

The development of financial markets around these two hubs has increased efficiency and stability of capital flows. It also lowered the risk while creating more unpredictability for smaller countries in terms of access and cost of capital and increased their risk of their currency. Therefore, one of the characteristics of the current structure is that less developed financial markets are more exposed to the effects of capital instability. Many believe that exposure to the global markets has been the cause of financial crises that have inundated many economies in the past few years. What happened in reality?

The role of the changes in the domestic economies in order to stabilize and strengthen them has so far been greatly overlooked. When taking a closer look at elements of asset pricing in the developing countries, health of their financial sector and performance of other productive segments, it becomes evident that the state of the domestic economies was largely responsible for the fiascoes of the financial systems. High risk, unhedged credit practices, underperforming production, limited risk management skills and poor governance resulted in the collection of risky bank portfolios in weak sectors of the economies, unsustainable in the long term. Not being able to adjust quickly to the way new economy demands combined with the lack of policies necessary for the domestic growth aggravated the already precautious situations of financial institutions and led to currency crises and banking sector insolvencies in many developing countries.

The attempt to join the global financial community begins in most developing economies as reform and liberalization. Integration into the global financial system requires a certain degree of “openness”. Under this premise, nations pry open their economies after years of seclusion and undergo a process of reform with the hope of embracing the benefits of global market discipline: lower prices, lower cost of capital, lower transaction costs, all promising to lead to increases in standard of living.

However, these market forces produce a shadow side when they approach national economies: real sector imbalances and weak financial sectors are exposed and can result in financial crisis and repricing of assets such as currency, stock market or capital stock or all three. Macroeconomic factors may also harmfully influence these national economies.

The global financial system means very different things to different people. Benefits and risks are perceived through many conducts, and the choice of how to integrate into the system is highly debated.

Information technology

Information technology (telephone landlines, mobile phone service, fax machines and the Internet) has been another steering force behind globalization. For those with access to it, these communications resources have been a valuable commodity.

However, developing economies have traditionally been underserved in this respect. The average industrial country has 215 fax machines per 1000 residents, while the average developing country has only five per 1000. Similarly, a person in an industrialized country spends an average of 43 minutes on international telephone calls per year, while the average developing world person spends only 3 minutes on average.*

However, the expansion of mobile telephone service around the world has, to some degree, increased access in areas where bringing in ground lines have been difficult. The share of the mobile market held by developing countries nearly quadrupled between 1990 and 1998. In poor countries of South Asia, for example, 72% of the total telephones are mobile phones.

The growth in Internet has been dramatic, but it has been limited primarily to those in developed economies. This trend is also true of the number of phone lines per capita in countries around the world.

Therefore, the educational and economic benefits that these technologies provide are out of reach of the vast majority of those in developing and transition economies.

Culture

The advance of communications technology and the globalization of economies have had astonishing influence on all cultures. Cultural sway among developed, technology-capable countries has been reciprocal, with trade in arts and literature, fashion, movies and television and news information moving across borders freely.

However, those in the developing world have experienced a largely unilateral exposure to Western culture. Western corporations and organizations are disproportionately represented in telecommunications content, meaning that exposure to the intrinsic culture in Western movies, for example, constantly influences the worldview of the audience. While the worldwide movie market is flooded with Hollywood productions, the reverse is not true. On average, 79% of films are imported worldwide. In the Unites States, however, only 22% of films are imported.* A similar trend exists with worldwide television programming.

And the developed countries generate more than one-fifth of the entire world’s music publishing, again a lopsided exchange of cultural goods which may contribute to the erosion of traditional culture in favor of Western trends.

These trends have been a particular influence to young people in developing and transition economies. Traditional cultures such as that found in the Arab world have seen a gap develop between older generations and those that have been exposed to highly appealing (if sometimes misleading) Western influences. Such gaps run the danger of eroding long-standing traditions in favor of modern alternatives.

Health

Globalization has brought with it serious medical consequences. The increase in trade and travel across international borders has exposed many populations to diseases that had been previously unknown in their regions.

One of the main dangers globalization has brought are drug resistant strains rapidly spreading across the globe, the result of the misuse and the overuse of the few remaining drugs available.

Another trend in global public health is the increasing number of developed world health concerns that are being found in the developing world. For example, in 1990, the most important health concerns were lower respiratory infections, diarrheal diseases and conditions arising during perinatal periods. By 2020, major global health threats will match those in the United States and other industrial countries – heart disease, major depression, traffic accidents and cerebrovascular disease, as the recent study of the World Health Organization (WHO) shows.

Other public health concerns include food-borne diseases and diseases transported in consumer goods; the potential for diseases to be caused by environmental toxic waste.

The emergence of AIDS, which originated in Africa, as the number of number one killer of young men aged 15-45 in the United States. Today AIDS is the leading killer in many industrialized countries. However, powerful anti-AIDS drugs are keeping many in these countries alive while millions go untreated and die in impoverished countries across Africa and Asia. Most of the countries in those regions lack both medical facilities needed for the treatment and knowledge necessary for improvement.

Workplace

Workplace habits have also changed dramatically in recent years. In a study published earlier this year, the International Labor Organization (ILO) found that the total number of migrants around the world now surpasses 120 million – up from 75 million in 1965 – and continues to grow.

The exchange of goods and capital between rich and poor countries will not be balanced well enough to suit the needs for employment in poorest countries, the ILO reported. Instead, the social disruption caused by economic restructuring is likely to shape more people loose from their communities and encourage them to look abroad for work.

Interestingly enough, the people most unwilling to embrace globalization are the workers of the developed world. Fear of losing their jobs to the laborers of the third world who accept lower wages, drives them from dissatisfaction to loud demonstrations. The best example are aggressive protests by a coalition of unions and NGOs at the World Trade Organization (WTO) conference in Seattle in December 1999 and at the World Bank and International Monetary Fund (IMF) conferences in Washington, D.C. in April, 2000. The quality of workers’ discontent clearly shows the financial institutions’ failure to communicate effectively with the civil society as well as adjust themselves on the human side of globalization.

Conclusion

Forum 2000 convened in the belief that the future of the global governance must include governments, civil society and the business sector, each operating in their own sphere and coming together in a process of negotiation and mutual deliberation.

During a week of debating on these issues the State of the World Forum created a network of working relationships among the groups of business leaders, heads of state, the organizers of the WTO and the World Bank and representatives of civil society. Further collaboration of these groups is intended to result in better education about globalization throughout the world as well as in establishing a more inclusive consulting mechanism by which major stakeholders can come together to perceive common objectives work on directing globalization towards common good and global governance. .

* - numbers taken from State of the World research,