Global Policy Forum

By Louis Uchitelle

The moderator was blunt, almost tactless. Dani Rodrik, Harvard economist, could have just three minutes at the podium - less time than other panelists - to speak out as the designated challenger of globalization as it is practiced today. The prevailing laissez-faire practices - free trade through lower tariffs, unrestricted competition, privatization of state enterprises, no restrictions on foreign investment - are strongly supported by the corporate executives and government leaders who regularly attend the World Economic Forum, which wrapped up its last session in New York last week.

Facing these chieftains at a packed session high in the Waldorf-Astoria hotel, Rodrik chose to use his precious minutes not to criticize current practices but to suggest some new ideas that were not even on the agenda for the next free trade agreement now being negotiated.

"There is no single, simple model of globalization," Rodrik said, rejecting the standard view that a nation that opens its economy and keeps government's role to a minimum invariably experiences more rapid economic growth and rising incomes. It is the guiding principle for the negotiations now under way for a new trade agreement, which the more than 100 nations in the World Trade Organization voted to seek when they met in Doha, Qatar, in November.

Protests have rallied tens of thousands of people against globalization and above all against its laissez-faire guiding principle. But the alternative visions that are starting to be offered are not coming from the streets. They are coming instead from Rodrik, a professor at the John F. Kennedy School of Government, and a handful of other economists, sociologists and political scientists. Their new ideas are still general and inchoate, but this time Rodrik put a very specific one on the table.

Because of political pressures in the developed countries, the Doha agenda is silent on the issue of labor mobility. That is a mistake, Rodrik argued. The next free trade agreement should include rules that allow people from poor countries to work for three to five years in rich countries, he said, sending home part of their pay and eventually going home themselves to use their newly acquired skills to help spur economic growth and lift incomes.

"That would yield gains for poor countries that would surpass all the gains in income that are likely to be achieved from the proposals that are on the agenda," Rodrik said.

He and his colleagues stress that for them, too, globalization - integrating economies across the globe - is the correct final goal. Getting there is the trick.

The free traders argue that China, India, Taiwan and Vietnam are examples of countries that increased economic growth and reduced income inequality by opening markets. But Rodrik and his colleagues insist that reality is more subtle, that these countries did not, in fact, open their markets until they had gotten the formula right, and in many cases they are still careful not to expose industries to lopsided competition from corporations in rich countries.

"We do not propose to work out a single intellectual and policy program," Rodrik and his colleagues declare in a policy statement to be published soon.

Globalization, they suggest, should mix together many different tactics. Governments must have a role in helping native businesses compete. Experimentation and decentralization are essential. Local institutions should be enlisted, not ignored. And the next trade agreement should recognize that some national industries or regions within a country globalize more quickly than others.

"I do not think there is any dispute anymore that economies need the discipline of connection to world markets," said Charles Sabel, a professor of law and social science at Columbia University. "But it does not follow that nations have to sign up for every one of the free traders' rules."

For Sabel, China is a wonderful example "of an extremely complex system of market openness and closure." Indian industries - textile manufacturers, for example, and companies that make bicycle parts - still draw on publicly financed research institutes founded in the days of Mahatma Gandhi. The institutes now help companies upgrade software, for example, in preparation for competing on world markets. And Chile, for all its reputation as a free-market model, developed a series of world-class agricultural industries not by suddenly exposing them to market forces, but through government help.

"These examples seem so banal," said Robert Wade, a political economist at the London School of Economics, "but very little attention is given to them in the globalization literature."

A favorite example for Wade involves television manufacturing in Taiwan. Philips Electronics has a plant there, but imported the glass for the tubes from a Philips plant abroad. Taiwan has an Industrial Development Bureau whose 100 engineers keep tabs on the capabilities of many Taiwanese companies.

The engineers felt that with a little help from Philips, several Taiwanese glass companies could raise quality and produce glass up to the necessary standard, Wade said. When the bureau's engineers presented this idea to Philips, the company turned them down, arguing that it already had a fine supply of glass.

"The bureau did not threaten Philips," Wade said. "But all the applications to import glass, which previously had been approved quickly, were delayed, for a week, then two weeks, then three weeks, then four weeks. Philips eventually got the message and helped the local firms upgrade. Now, that upgraded glass is also being exported into the global market."

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