Edward Seaga, Contributor
The most dominant driver of change in the present era is the ballooning of international trade. Since the first oil shock in 1974, industrial countries have been forced to re-order their production regimes, trading patterns and international relations to compensate for the huge increase in the cost of oil. This global adjustment of the world economy launched "globalisation". The industrial nations realised the need to reorganise their own business dealings at all levels: production, trade and finance, to maximise all margins possible from their own inter-relations to compensate for the greater costs.
Centrepiece
Globalisation became the mantra. As an all-embracing concept it was designed to be global in reach with its own regime for a new world trading system. The World Trade Organisation (WTO) became the centrepiece and pursuit of expansion in trade, the Holy Grail.
The WTO deals with issues between rich and poor nations, developed and developing, as the mechanism for solving trade disputes and establishing new trading regimes. Previously, many developing countries had to seek protection for their exports through preferential tariffs or quotas determined by importing nations, usually previous colonial powers. Consistently, in these negotiations, steeped in the accusations of historical exploitation, the powerful traditional partners would win because they held the better bargaining options. For these powerful partners, there were always options of changing sources of supply, or, more radically, changing products to cheaper artificial substitutes. Examples abound. Chips from the Jamaican logwood tree lost the export market to make dyes. Chemical dyes, which were cheaper, more varied in colour and more readily available, became artificial substitutes. Tin, copper and rubber were extensively replaced by plastics and composite materials. Fabrics from new chemical polymers, widely replaced cotton, linen and wool with new types of fibres. Sugar cane in the tropics is now facing low-sugar artificial substitutes or high yiel sugar products in the North.
There is comfort in the fact that the WTO mechanism is a better facility to get results than using the Non-Aligned Movement/New International Development Order approach since, compared to Third World ideological pressure groups, it relies less on political clout and more on judicial reasoning.
This restructuring of the global dynamics of trade and finance is happening at the same time that the developing countries are carrying out their own restructuring of the global map of geo-economic strength. Led by concentrated oil wealth in the Middle East, the region is now being transformed from an area of poverty. This is a mineral based dynamic. So, too, is the hitherto no-growth and low-growth condition of former socialist Russia, which is now surging into a leading growth position helped greatly by its oil, gold and diamond mineral resources.
People skills
However, there is another resource which is driving development in the poorer areas of the world: people skills, not mineral resources. The large surplus of manpower in China enabling cheap manufacturing is rapidly turning the country into the "factory of the world". India, with its technically educated skills, has become an international resource base for information technology and other professional skills. Other countries in South East Asia: Singapore, Malaysia, South Korea, Thailand, Hong Kong, and Taiwan are pursuing developed country status based on an abundant skill base. While none of these countries has reached developed status, they are on the road to attaining higher levels of performance to alleviate poverty. All these countries are mega-growth performers, most averaging eight per cent to ten per cent per annum in GDP, the strongest performance in the world.
These areas: India, China and the South East Asian group have changed the prospects of a vast geographical area for the better, using the development of skills as their driver of development. Add those countries driven by mineral resource extraction: Russia, the Middle East, North Africa, and the economic map of a broad expanse of geography begins to look spectacular.
This leaves the Islamic countries in Asia and Africa (excluding South Africa and Botswana) as the remaining sick children in the global hospital. In the out-patients department is a diminishing number of countries: Brazil, Trinidad, Barbados, Bahamas, Bermuda, Costa Rica, the Dominican Republic, Chile and some assorted Caribbean islands, showing the way in moving up the economic ladder through significant growth and other strong development performance.
In short, the geo-economic map is changing, driven by the great demand of burgeoning international trade. Certainly, there are now much less geographical areas of economic concern than existed two decades ago.
Mineral producing countries of the South now have powerful trading partners in the South - notably China and India. They are no longer hostages to the bargaining power of the industrial countries of the North.
Manpower deficiency
Indeed, in this new wave of expansion, the North now finds itself dependent on the South, this time for a different reason. Stagnant population growth is creating a manpower deficiency in Europe which has to be filled if Europe is to continue to grow. This additional manpower can only come from countries with surplus skilled labour, that is developing countries of the South. Filling this gap will help to reduce poverty in many poorer countries. Jamaica, for instance, needs to increase its migration and remittance flows by an additional 10,000 Jamaicans finding work overseas annually, increasing the existing rate by 50 per cent. This would be a decisive solution to the unemployment problem and a boost to economic performance. The new blue card to be issued by the European Union countries will be a counterpart to the fabled American green card as a work and residential permit to open wide the doors of migrant employment.
But in this global setting, how are countries of the Islamic world, the poorest of the poor in Africa and those lagging behind in Latin American and the Caribbean to be influenced by the push and pull of expanding international trade. This is where the admirably prepared work on achieving millennium goals, 'The End of Poverty' by Jeffrey Sachs and his team, can best play a role.
The theme of this work is the need for enhanced financial aid to provide health, education, proper infrastructure and to raise the standard of living and quality of life of the poor. The global costs, for the first time, were computed. The need for much more aid has long been an enduring call for the rich to help the poor. But the calls fall on indifferent ears. The indifference is being interpreted as a waning of interest in the welfare of the poor, whether individuals or nations. This may be so. My view is that donor countries have become somewhat fatigued by aid flows which fail to produce expected results. The corrupt systems of government in many of the beneficiary countries lead to the self-justifying arguments that no good can come of adding more aid.
In my experience as Prime Minister in the 1980s, I was able to make full use of international financial and technical cooperation by projectising the needs into specific packages for assistance. The response was always more positive when bilateral and multilateral agencies were presented with strategically selected crucial projects. Maybe the next step by Jeffrey Sachs is to prepare outlines of specific projects, not mega-programmes, for presentation to international donors instead of seeking the usual topping-up of global programme assistance. If this works, then virtually all sections of the globe would have some development momentum. It is a much more viable route than depending on the social consciousness of donors to drive development.
The real bottom-line is that globally the world is now a giant marketplace driven intensely by the expansion of trade and the demand for skills. Surplus non-tradeable goods and excess untrained manpower cannot successfully promote the push to open wide the golden gates and let prosperity in.
Edward Seaga is a former Prime Minister. He is now a Distinguished Fellow at the UWI. Email: odf@uwimona.edu.jm.
