Int. Herald Tribune
Structures to help steer Globalization

By Klaus Schwab and Claude Smadja

Paris, Thursday, January 27, 2000


DAVOS, Switzerland - Globalization does not reduce cultural or ethnic differences. People do not think or react in an identical way because they can eat the same kind of fast food in Beijing, Delhi or Paris. In fact, globalization is heightening the need for communities and countries to assert more strongly their ethnic and cultural differences.

So we are not seeing the convergence of cultures in a smoothly running global village. The real issue is how to manage diversity in a world of close contact among cultural identities and ethnic practices that will not melt away.

Also, we now know that, left to its logic, globalization widens the gap at the national as well as the international level between those equipped to benefit from it and those left on the sidelines. In the developed world, technology and finance are the clear winners of globalization, while labor, in the traditional sense of the term, is a loser. So the clear challenge is one of wealth distribution.

Who has a say in defining and discussing the global agenda? As the Seattle fiasco showed, emerging market economies and developing countries are less and less inclined to accept that globalization should proceed according to the priorities and agenda set only by the United States and Europe.

The question is whether we shall be able in the coming years to create a multilateral system for global governance with enough credibility and legitimacy to function as a framework for consensus building and decision-making.

It is worrisome that in the last few years multilateralism has not progressed. Actually, it is on the wane. Multilateralism has been used in too many cases to provide a convenient cover or international blessing for actions or initiatives designed with only national interests in mind.

If it is to work, a truly multilateral system will have to integrate different regional sensitivities, priorities and interests in a way that makes different countries, regardless of their size or economic mass, feel that they have a good possibility of having their say and expressing their interests.

If you think this wishful thinking, consider the alternative.

Seattle may have been a turning point. The important factor is what happened inside the convention center. Up to now, every time a negotiation of this kind was deadlocked, the assumption was that the mere prospect of everybody going back home empty-handed would compel the parties to reach an agreement, unsatisfactory as it might be. This did not work last month, and it will work less and less in the future.

Developing countries learned from the experience of the Uruguay Round. They realize that without reliable mediating mechanisms they will have to make their voice heard in a more significant way than in the past.

Can multilateralism develop with the United States being in such a dominant position in the military, economic, technological and financial domains? The U.S. approach to multilateralism has been an on-and-off one. The mood in the public as well as in Washington has so far been ambivalent about accepting the disciplines and constraints involved whenever the go-it-alone option is not taken.

And a multilateral system supposes that other protagonists are willing to do their share. Will Europe at some stage be able to assert a true international identity? What will the terms be for full integration of China in the world systems, and how best can China be made a contributing factor for stability? Does the emergence of a new leadership in Russia mean that Moscow could become more at ease in getting involved in multilateral processes? How can emerging economies in Asia, Latin America and Africa be made much more integral parts of the structures and mechanisms for global governance?

The creation of the Group of 20 structure to involve not only industrialized countries but also emerging market economies in economic coordination is definitely the kind of initiative that needs to be nurtured. The discussion on redefinition of the role of the IMF fits into the same kind of effort toward new concepts of global governance.

Considerable difficulties and resistance can be expected. There is no denying the change of mind-set that trying to put in place the new multilateral structures for global governance requires. But there is not much of an alternative if we want to avoid globalization running amok and becoming a very dangerous zero-sum game.

Mr. Schwab is president and founder of the World Economic Forum and Mr. Smadja is its managing director.




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