Dissident economists get a hearing

["Ian Murray" <seamus2001@xxxxxxxx>]

[first the Guardian, the People Magazine!]

Published on Friday, August 3, 2001 in the Guardian of London
G8 Owes Us An Answer
New Research Shows That Economic Growth Worldwide Has Actually Slowed
During The Era of Globalization

by Jonathan Steele

The G8 summit in Genoa will be remembered for its police brutality and
the clashes, mostly peaceful but sometimes violent, between protesters
and the Italian security forces.

Yet, paradoxically, on one issue most demonstrators were united with
the rich nations' leaders. In the streets as well as the suites there
was a general belief that globalization has accelerated the world's
economic growth.

Some protesters argued that the growth has been grotesquely uneven,
with little trickling down to Africa. Some said it has increased the
inequalities of income within countries, as well as between poor and
rich ones. Some attacked the fact that faster growth has been
environmentally unsound, creating excessive carbon emissions and
destroying natural habitats.

While the criticisms vary, the underlying assumption is that overall
economic growth has been speeding up. This was also the message
proclaimed by the UN development program, which published its annual
human development report on the eve of Genoa.

"Thirty years of impressive progress," it trumpeted. "Too few people
recognize that the impressive gains in the developing world in the
past 30 years demonstrate the possibility of eradicating poverty."

It was the UNDP which first elaborated the concept of a human
development index as a progressive step away from assessing people's
welfare purely by income measurements. The UNDP added other standards
such as infant mortality, literacy, and gender empowerment.

So it is surprising that its latest report should also push the
complacent line about general growth. How did its authors decide that
the last 30 years is the right period for assessing progress?

In a powerful new paper, The Emperor Has No Growth, a group of
researchers in Washington challenges the conventional view of history.
They have drawn up a globalization scorecard which compares the period
from 1980 to 2000 - the era of Reaganite neo-liberal globalization
when the drive for capital deregulation, privatization, and the
lifting of barriers to international investment was at its height -
with the period from 1960 to 1980 when most developing countries had a
more restrictive and inward-looking economy.

The comparison is dramatic. The researchers took all the UNDP's
indicators and found that between 1980 and 2000 there was "a very
clear decline in progress". The poorest countries went from a per
capita growth rate of 1.9% annually in the 1960-1980 period to a
decline of 0.5% a year between 1980 and 2000. The middle group of
countries did worse, dropping from annual growth of 3.6% to growth of
just under 1% after 1980. The world's richest countries also showed a
slowdown.

For life expectancy, the picture was similar. Only the richest
countries showed a higher rate of improvement in the past 20 years.
Among middle-income and poor countries progress in reducing child
mortality and raising school enrollments was faster before 1980.

Impressive though their evidence is, the paper's authors draw
deliberately modest conclusions. They say they cannot prove the
liberalization of trade and capital flows has caused the decline in
progress.

Nor can they link it to particular policy prescriptions by the
International Monetary Fund and the World Bank, such as public
spending cuts, user fees for health and education, and increased
foreign exchange requirements. But they do insist the burden of proof
must be squarely placed on those who claim success for the neo-liberal
experiment.

Their call is welcome. It chimes in with the views of other
non-governmental organizations, such as the British-based World
Development Movement, as well as many developing countries'
governments.

The G8 wants the next big push for its version of globalization to
come in November when the World Trade Organization is due to meet in
Qatar. After Genoa, Clare Short, Britain's development minister, used
the unworthy tactic of trying to dismiss the protesters as
middle-class European interferers in contrast to informed African
leaders.

She seemed unaware that on the eve of Genoa, 30 African countries,
including the regional giants South Africa and Nigeria, signed a
declaration in Addis Ababa rejecting new powers for the WTO.

They also called for existing trade agreements to be implemented fully
rather than in their partial form, which discriminates in favor of the
EU and other rich countries. Their position has more support from the
developmental NGOs than from the G8. So let us have a bit more humble
pie from the G8, and an honest review of the reasons for their poor
record on growth and social progress before they plunge further into
error.

. The Emperor Has No Growth, Center for Economic and Policy Research,
available at www.cepr.net