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VII ICCEES World Congress in Berlin, July 25-30th 2005
Miller & Duckett: The Open Economy and its Enemies
Public Attitudes towards Economic and Cultural Openness
in East Europe and East Asia
The Open Economy and its Enemies[(]
Public Attitudes towards Economic and Cultural Openness
in East Europe and East Asia
William Miller & Jane Duckett
University of Glasgow
PageWhy public attitudes matter / 3
The debate about valid reasons for public discontent / 5
Key empirical questions: the extent, nature, causes, and consequences of public discontent / 8
Modelling the causes and consequences of public discontent / 10
Four countries: two global regions, two levels of development / 21
Methodology: surveys and focus-groups, public and officials / 23
Findings / 25
Conclusions / 33
There have been few more contentious subjects thanglobalization. It has generated intense debates about whether it brings benefits or problems to people around the world. These debates, whether conducted in the books of economists from Stiglitz to Bhagwati or transformed into street protests around the meetings of international organisations such as the IMF or G8, have predominantly reflected the concerns of people in the West. Though many of those debates include voices that claim to defend the interests of people in the developing world, the voices of those people themselves have rarely been directly heard. Neither the media, nor Western protestors and academics have yet thoroughly investigated and reported their views.
Our study focuses on public attitudes towards globalization or openness, not in mature western democracies with highly developed economies but rather in developing, or what are termed ‘transitional’, countries. Our aim is to complement the well-publicised views of western academics, activists, international organisations and pressure-groups about globalization – valuable though these are – by listening to the views of the public in selected developing/transitional countries in east Asia and east Europe. We accept that the public’s perceptions and attitudes may be right or wrong, coherent or incoherent. But either way, they matter. They deserve respect and they demand attention.
This is not a study of globalization or openness, nor of the case for or against it. We will briefly review the arguments of some distinguished critics and proponents of globalization but only by way of introduction to public opinion. Our focus is on public perceptions and public attitudes towards openness in developing or ‘transitional’ countries: in particular, on the extent, nature, causes – and consequences – of public discontent with a more open economy.
Nor is it a study of active resistance to globalization or openness; instead we focus on public support for active protest and resistance to the abuses and injustices associated with opening-up the economy.
Globalization – in Stiglitz’s (2002, p.9) working-definition: ‘fundamentally globalization is the closer integration of countries and peoples of the world’ – is a process usually viewed ‘from above’. Our own perspective is less Olympian. We are interested in globalization not as a world-wide process but from the perspective of the public, as an external challenge to their country. For them, and for us, the key questions are about greater economic and cultural ‘openness’ to an external, rapidly integrating world though these public attitudes towards openness, if and where they are influential, may affect whether globalization continues or is reined in. By ‘openness’ we mean participation in multi-national or supra-national organisations, and an inward flow of foreign ideas, customs, symbols, capital, and personnel as well as foreign technology, economic goods and services.
Our aim is therefore to:
· Present an integrated account of both the causes and the consequences of public discontent with (or enthusiasm for) a domestic market-economy and an internationally open-economy.
· Pay equal attention to public attitudes towards cultural openness and economic openness – and look closely at the relation between the two.
· Outline and test – comparatively – a large number of models that purport to explain the causes and consequences of discontent. Many would pass a less comparative test, but few survive our comparative test.
We shall also:
· Contrast public attitudes in the most successful (east Asia) and the least successful (east Europe) regions of the world – as judged either by their economic development or their (UNDP calculated) ‘human development’ since the 1980s.
· Investigate whether (and more especially, where) the attitudes of government officials represent or misrepresent the attitudes of their public.
But listening to the public requires us to go beyond standard interview surveys with pre-formulated questions and answers and give people the opportunity to express themselves in their own way: to reformulate the questions in the mould of their minds rather than ours, to dispute the preconceptions built into our questions, to re-focus from what we think important to what they think important, to perversely but insistently misinterpret our questions (as they sometimes rather revealingly do), to speak at length when they feel engaged and to give cursory answers when they do not. Statistical analysis is essential but insufficient. So we have based our study on:
· Large scale surveys, with a multiplicity of questions and at least 2000 respondents (1500 of the public and 500 officials) in each of the four countries in our study, enough therefore to provide definitive statistical results: in all a total of 10,338 interviews.
· Full transcripts of 16 lengthy focus-group discussions, which guided the content of the subsequent survey questionnaires and provide deeper meaning, understanding and interpretation of the survey findings.
Why public attitudes matter
From a democratic perspective, grass-roots public opinion in developing/transition countries is important in itself. But even in countries that are only partially democratic, grass-roots opinion can be important. It can always influence, even if it cannot determine policy. Even in only partially democratic societies the climate of public opinion affects elites and policy. It constitutes the background against which national and international elites and activists must operate. And it not only sets the frame for elite choice, it also influences elite opinion itself.
In particular, development economists have argued that public opinion is important for the sustainability of economic openness and market-oriented policies. Public discontent and support for resistance to outside influences can affect political stability, encourage protectionism, and discourage inward investment. The UNDP has argued that opening-up economies has spurred economic growth in the short run, but in a form that threatens longer-term development: ‘increasing the concentration of income, resources and wealth among people, corporations and countries’, ‘dismantling institutions of social protection’, letting ‘criminals reap the benefits of globalization’, and thus stimulating ‘social tensions that threaten political stability and community cohesion’.(UNDP 1999)
In turn, the instability caused by the injustices of an open economy may ultimately restrict future development since stability-seeking investors avoid areas of conflict.(Alesina and Perotti; Garrett; Klak and Myers; see also Muller). Alesina and Perotti argue that governments should therefore encourage inward investment (and thus development) by increasing political stability through ‘maintaining public support for market openness.’ In a series of influential papers Rodrik (1996,1997,1998) also advocated greater emphasis on ‘social safety nets’ and measures to ‘root out corruption’ in order to offset the naturally perverse distributional and social consequences of globalization that provoke public discontent and thereby threaten longer-term stability and development.
Threats to the environment (Kelly) or to local culture (Appadurai, 1990) may also provoke public reactions that damage prospects for long-term development. A strong sense of national/cultural identity may reinforce social cohesion and thus assist development in the short-term. But the cultural openness that goes with economic development may provoke fears (justified or not) that national/cultural identity is threatened, stimulate public reactions against an open economy as a by-product of cultural fright, and thus perhaps threaten economic development in the longer-term.
However, it is public support for (or reaction against) openness that is itself the key socio-political precondition for maintaining an open economy rather than the specific factors – economic, cultural or environmental – that may influence that support. Perceptions of increasing inequality, for example, are likely to lead to political instability if inequality is attributed to the policy decisions or corrupt behaviour of local political actors. They are likely to fuel demands for autarky or protection if inequality is attributed to globalization. But they are likely to have relatively little effect on the political conditions for development if inequality is attributed to chance, to misfortune, or to circumstances beyond anyone’s control. In a similar way perceptions of corruption, environmental damage or cultural threat may have different consequences depending upon the way they are viewed by the public. How ordinary citizens feel about the downside of an open economy – quite apart from their perceptions of the downside itself – may have a significant impact on its sustainability.
Quite apart from the intrinsic importance of the ordinary public in a democratic perspective, elites and activists operate against the background of the wider public. Relatively few of the ordinary public get regularly involved in political action of any kind, least of all in active protest or resistance. Nonetheless their discontent – or contentment – matters. Across the mass public, the consequences of individual discontent may be regarded as trivial – nothing more than demotivation, lack of commitment, slow or bad workmanship, even purely ‘psychological’ or attitudinal reactions, mere grumbling to friends and family. Individually, such reactions have little or no impact. But when multiplied by millions, grumbling or enthusiasm can create a climate that may significantly promote or inhibit openness and development. Moreover, as the literature on protest indicates, a general climate of public support or disapproval has a very significant impact upon whether the relatively few potential activists are encouraged into actual activity or discouraged from it: the general climate of public opinion acts as a trigger for the behaviour of potential activists.
There is a profoundly undemocratic view that the public does not have sufficiently well-formed views on such abstract issues as globalization or openness to make them worthy of serious study. There is an element of truth in that. But ordinary people do have views, often strongly held, about the ownership and use of land or other natural resources, about the availability of foreign goods, about the ubiquity of advertisements for foreign goods (and the language used in them), about foreign films and TV, and about the influx of foreign companies, foreign employers, foreign managers, foreign immigrants or ‘guest’ workers, or foreign ideas and customs into their own country. Indeed ordinary people have strong views – sometimes benign but often xenophobic – about foreigners and ‘foreignness’ in general. Whatever the factual or moral status of their views, they are significant for public policy, for public order, and ultimately for development. They should be heard, and heard directly rather than inferred from inspired speculation, fascinating anecdotes or press reports of ‘newsworthy’ incidents.
The debate about valid reasons for public discontent
Critics: For a time, Joseph Stiglitz’s Globalization and its Discontents (Stiglitz, 2002) succeeded in almost equating economic openness and ‘globalization’ with ‘discontent’. There is indeed no shortage of well-informed and well-argued criticism of opening-up the economies of developing or transitional states. The ILO report (Feb 2004) A fair Globalization – Creating Opportunities for All argues that the potential of globalization is ‘immense’ though ‘not realized… …the unfairness of the key rules of trade and finance reflect a serious democratic deficit at the heart of the system…financial and economic considerations have consistently predominated over social ones’; and ‘seen through the eyes of the vast majority of men and women around the world, globalization has not met their simple aspiration for decent jobs, livelihoods and a better future for their children’.
Successive UNDP reports (1999, 2002) have pointed to increasing inequality exacerbated by ‘dismantling institutions of social protection’ (UNDP 1999 Report), brought about by the privatisation of public services (Pollock & Price 2000) as well as by a decline in transfer payments. Within countries, marketisation has increased inequality between ethnic groups and bred ‘ethnic hatred’ by allowing ethnic minorities in places like Indonesia to dominate impoverished indigenous majorities (Chua, 2003). And in developed countries, neo-liberalism and globalisation have cut the demand for unskilled workers and so increased inequality in them also (Goodman, Johnson and Webb, 1997: pp.281-2). Globalization has led to a world divided between ‘tourists and vagabonds’ (Bauman 1997, p.93).
The 2002 UNDP report reviewed progress over the decade of the 1990s and highlighted a widening gap between rich and poor, between countries and regions as well as amongst individuals. Over that decade East Asia showed the greatest rise in both GDP per capita and HDI (Human Development Index). East Europe and the CIS showed the greatest drop in GDP per capita, and was indeed the only region to show a drop in HDI (a particularly sharp drop in 1990-95 followed by only a slight recovery in 1995-2000).
These inequalities are not just the result of some impartial ‘invisible hand’ however. Power remained in the hands of the elite in highly developed countries (Hirst and Thompson, p.2) who defined globalisation in terms of their ‘Washington consensus’ of US-style free-markets and democracy (Gray 1998 p.215).
Elliot asserts that ‘the west talks about free trade but its approach can be summed up in four words: you liberalise, we subsidise’ whereas history, he claims, shows the USA, Germany, Japan, Taiwan, South Korea ‘all built up industrial strength in well-protected domestic markets’ (Larry Elliot ‘Sweet Nothings’ Guardian 16nov02 p.20). Monbiot criticises US drug firms as ‘companies now demanding intellectual property rights (who) were built up without them’ (G 12mar02 ‘Patent Nonsense’ p.15)
Even the central claim that opening the economy stimulates economic growth is disputed. A CEPR (2001) analysis of UNDP data, comparing the period before and after 1980 claims that economic growth actually slowed during the ‘era of globalization’. And after subtracting the identifiable economic costs of development, Saldivar (2001, p.10) claims that while US GDP steadily increased, ‘genuine progress’ even in the USA peaked in the 1970s and has declined steadily since then: ‘growth does not equal progress’. Rodrik (2002, p.9) also attacks studies that ‘purport to show that globalizers grow faster’ as ‘misleading…the countries used as exemplars of globalizers in these studies, China, India, and Vietnam…remain among the most protectionist in the world’.