Wednesday, January 11, 2012

Globalization and the Underdeveloped Countries (Like our Homeland Philippines) - UPDATED

“One of the major errors in the whole discussion of economic development has been the tendency to look at the United States or Canada and say that this has worked here, and therefore it must work in the poor countries.” – John Kenneth Galbraith (1908-2006)

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Globalization and Underdeveloped Countries

Hi All,

Here's a caveat from Dr. Mahathir bin Mohamad, the now retired and nationalistic PM of Malaysia who led it to modernity, on unquestioningly adopting or jumping on the bandwagon of Globalization via WTO [the current euphemism and instrument of neocolonialism aka neoliberalism]. Take note of his comment on culture as a main cause for rich-resource, but poor countries.

Of course, remember that the Philippines signed in at the very first day during the 1995 Ramos administration; then Senator Gloria Arroyo was one of the strong proponents for immediate membership. 

Now the Filipinos in the Philippines are in the worst predicament ever.

Below article and interview somewhat dated, but still very applicable and  true for us native Filipinos.

- Bert


By Mahathir Mohamad

Globalization can be a trap for developing nations. They should make every effort to retain control of their own fates, argues Dr. Mahathir bin Mohamad, Prime Minister of Malaysia, in this essay adapted from “Recreating Asia: Visions for a New Century,” edited by Frank-J├╝rgen Richter and Pamela Mar. 

The concept of “globalization” is deceptively simple. The free market must be allowed to function without interference. Governments must remove all barriers that prevent the full and free operation and movement of goods and services, capital, firms and financial institutions across borders.

Globalization is not a law of nature. Globalization is not a God-given, iron-clad law of nature or humanity. It is a set of concepts and policies made by human beings. And therefore it can also be re-conceptualized, reshaped and changed.

In theory, globalization is supposed to be for the good of all. In reality, this concept was designed by the developed countries on behalf of their companies and financial institutions

The purpose: to overcome the regulations set up by developing countries to promote their domestic economy and local firms which had been marginalized during colonialism. In practice, following these policies can bring a country new opportunities for wealth creation. But it also brings new risks that can destroy prosperity in the twinkle of an eye — as we have seen recently in East Asia and later in Argentina.

Countries must make choices.The lesson of recent experience is that a country must carefully choose a combination of policies that best enables it to take the opportunity — while avoiding the pitfalls. That is a task easier said than done. 

A country that is still poor or developing may find that it is not wise to jump blindly into complete integration with the world economy, for this may open it up to many risks that can damage its local economy. It is wiser to engage in a selective and strategic integration with the world market. In this approach, the country itself chooses:— the way and degree it wants to open up,— the timing and sequence of opening up,— the form of cooperation and competition between its local firms and foreign firms,— the particular sectors it wants to liberalize— and those sectors that still need some protection, for the good of the country.

The breaking down of economic barriers as such may not be new (for example, it also took place in the laissez-faire era of the 19th century). What is new in the present age is the globalization also of the policy-making sphere itself. The role of global institutions increasingly, policies that used to be made by national governments are now formulated for developing countries through global processes and institutions, including the IMF, the World Bank and the WTO. 

In my view, their policies tend to favor the agenda of the richer countries that dominate them. Since the policies are usually set in a one-size-fits-all manner, they hinder the ability of the individual country to choose the particular set of policies that suits its own development needs. As a result, developing countries have found it extremely difficult to steer through the turbulent waters of globalization.

Choices for countries
National policies should largely be made by national governments — and not on their behalf by global institutions or other governments. What is important is that countries be given the right and space to review the impact of globalization. And they should be able to decide which aspects to make use of in future — and which aspects to discard. This is a rule of thumb that certainly has served my own country, Malaysia, very well in navigating the troubled waters of recent years.

Importance of government.
As many of those recent events show, it is too dangerous to allow the so-called free market or global institutions, to usurp the role of governments. Allowing them to do so, I am convinced, may well lead countries to prolonged periods of economic slowdown, economic anarchy and social chaos.

“We shall be better and braver and less helpless if we think that we ought to enquire, than we should have been if we indulged in the idle fancy that there was no knowing and no use in seeking to know what we do not know..." – SOCRATES

"Upang maitindig natin ang bantayog ng ating lipunan, kailangang radikal nating baguhin hindi lamang ang ating mga institusyon kundi maging ang ating pag-iisip at pamumuhay. Kailangan ang rebolusyon, hindi lamang sa panlabas, kundi lalo na sa panloob!" -- Apolinario Mabini La Revolucion Filipina (1898)

INTERVIEWER: You've seen on the news bulletins the riots in Seattle, in Quebec -- any great economic summit meeting now is full of protests against a whole variety of things, but it's moving this great army against globalization. What do you think when you see these protests on the streets, and do you support them?

DR. MAHATHIR BIN MOHAMAD: Well, these protests are not carried out by people with the same intention. Each has got his own agenda. The protests coming from the rich countries is because of the fear that it may cost a lot of jobs, because companies might migrate to cheaper countries, produce goods which are much more marketable. The people in the developing countries protest because they fear domination. So the reason for doing this is different, but there is a common desire not to accept globalization and the ideas that created the World Trade Organization (WTO).

INTERVIEWER: Globalization, deregulation is supposed to enrich the world. But at the moment, is it one-sided? Are most of the riches going to the rich countries? What will happen if this divide is not closed?

DR. MAHATHIR BIN MOHAMAD: In the first place, what we see is that globalization is only benefiting the rich. A good example of that is currency trading. It mainly enriches the rich at the expense of the poor, so that is something that we cannot accept. But if it is going to be beneficial, then there must be some regulation. You cannot suddenly be free -- any sudden change would be disruptive. Even if it is a change for the good, it would be disruptive. Now, the whole process should be slowed down in order to allow for countries to adjust to globalization and the effects of globalization. If that is done, and if the views of the poorer countries are given serious consideration, then we can have globalization without the disruption. It may take a little bit longer, but it will not involve the destruction of so many economies as has happened now.

INTERVIEWER: People have described the IMF as being far from impartial. They're Euro-biased, American-biased. They came in after the crisis, and they prescribed a certain medicine. Was it the right kind of medicine, and was the IMF the right [group of] people to be prescribing it?

DR. MAHATHIR BIN MOHAMAD: It wasn't the right kind of medicine. That is why we refused from the very beginning to go to the IMF in order to ask for their help, because we know it's not going to be helpful at all. 

We studied the line that they were taking, and this emphasis on surplus budget, on increasing the interest rate, this increase in the percentage of non-performing loans and all that, these are not for any economy. Because of that we refused to accept the IMF remedy, and we were observing what happened in other countries when they applied the remedy. There was no improvement. The only thing that happens is that these countries have now become more in debt to the IMF, and that is not going to be very good for the future. It is going to take a long time for them to pay off their debts. 

We think that each country should be studied in depth to find out what are the true weaknesses and not just make a sweeping statement that this is due to bad governments, corruption, etc., which is also found in European countries and in America. You should not make a generalized statement like that. What you should do is to study what makes the economy work and how do you remedy the situation. That would be the right thing. 

We felt, right from the word go, that the [head of the] IMF did not know what he was talking about when he talks about bad governance. He was merely trying to ride on the currency crisis because the country, he said, [had] become weakened, they had become poor. The IMF is in a position to extend financial help, and for that financial help [to be given] it was expecting certain obedience, certain submission to its way of doing things.

INTERVIEWER: In a recent speech about the potential new world order, you created a lovely phrase about globalization: "gobbledygook, globaloney, and gobblization." What were you thinking when you said that?

DR. MAHATHIR BIN MOHAMAD: Well, obviously "globaloney" referred to an American [phrase referring to] something that is stupid and silly. It's a lot of baloney. That's what I mean. I mean the whole idea of globalization as it is depicted now has got no basis in fact or even a basis in assessing or understanding how the economies of the countries were. So it was all baloney, as far as we are concerned.

INTERVIEWER: Big picture question: Why are some countries rich and some poor? What role do culture and legal institutions have?

DR. MAHATHIR BIN MOHAMAD: Basically, it is culture. A country may be rich in resources, but if the people do not know how to exploit those resources, how to add value to those resources, then they are going to remain poor. And to add value to resources, there must be a government that is conscious of its duty to develop the country and that is knowledgeable about how to develop the country. A prerequisite would be a stable and peaceful condition within the country. No government can have a richer country if the country is continuously facing turmoil. So some countries have governments which are able to ensure peace and stability and to utilize human resources in order to enrich not only what it has in the country, but also to bring in the raw material in order to add value. That's how countries become rich. It's not due to having rich resources.

"The selfish spirit of commerce knows no country, and feels no passion or principle but that of gain" - Thomas Jefferson, 1809


Former EHM John Perkins Interview

"Certain marks of colonization are still manifested by the people. I have arbitrarily identified these marks as dependence, subservience and compromise." (I add compromise of our homeland and at our peoples' expense)
- Dr. Pura-Santillan Castrence (1905-2007)

PLEASE DONATE CORE/FUNDAMENTAL SUBJECT BOOKS TO OUR HOMELAND (i.e. your hometown public schools, Alma Mater, etc.). Those books that you and/or your children do not need or want; or buy books from your local library during its cheap Book Sales. Also, cargo/door-to-door shipment is best.  It is a small sacrifice.  [clean up your closets or garage - donate books.THANKS!]

I consider these earleir posts and the RECTO READER as essential in knowing and understanding our homeland and ourselves, native, Malay Filipinos; and are therefore always presented in each new post. Click each to open/read.
  2. WHAT IS NATIONALISM [Filipino Nationalism]?
  3. Our Colonial Mentality and Its Roots 
  4. The Miseducation of the Filipino (Formation of our Americanized Mind)
  5. Jose Rizal - Reformist or Revolutionary?
  6. The Purpose of Our Past, Why Study (Our) History?
  7. Studying and Rethinking Our Philippine History
  8. Globalization (Neoliberalism) – The Road to Perdition in Our Homeland
  9. Resisting Globalization (WTO Agreements)
  10. Virtues of De-Globalization
  11. Our Filipino Kind of Religion
  12. Our Filipino Christianity and Our God-concept
  13. When Our Religion Becomes Evil
THE RECTO READER is presented in several postings. Click each to open/read:

NOTE: Recto's cited cases, examples or issues were of his time, of course; but realities in our homeland in the present and the foreseeable future are/expectedly much, much worse. Though I am tempted to update them with current issues, it's best to leave them as they are since Recto's paradigms about our much deepened national predicament still ring relevant, valid and true. In short, Recto saw the forest and never got lost in the trees.- Bert

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