GLOBALIZATION – AN ASSET OR LIABILITY

Caribbean Latin American Action Conference
December, 5th 2000
Miami, Florida

Presented by: Michael L. Alberga

     Continued technological advances, coupled with the growing movement to relax or remove protectionist policies to trade, and the ensuing free movement of capital, has l created an opportunity for economic expansion in Latin American and Caribbean countries.  The ability to expand GDP provided, sound free market economic policies are pursued, has been enthusiastically embraced in our region which, unfortunately, has been unable to achieve sustained economic development for any protracted period, for various reasons.  

     The growing ability of the G-7 and other industrialized nations to produce has necessitated their acknowledgement that expansion is limited only by the capability of potential markets to absorb their goods and services.  The more vibrant the cross-border exchange of goods and commodities, the more likely that their economies will be able to produce further wealth, enhancing the well-being of their respective nations.   

     Our region has an opportunity to break away from the last three hundred years of the colonial era and to reap the benefits from this important engine of growth known as globalization, if we are given an opportunity to play the game on a level playing field.   

     Globalization should be regarded as the beginning of an economic revolution with very different players and with very few rules.   

     The G-7 and developed countries see this revolution as an opportunity to expand their markets not only in goods and other tangible commodities, but also to expand their expertise and dominance in financial services and other intangibles. The lesser developed countries regard the revolution as providing an opportunity for increased capital inflow to expand their economies, while enhancing their ability to produce goods and services at a more attractive cost than the developed nations, thus providing a less tilted field for them to compete with industrial giants.   

     Every player in the game sees this force as leading to the goal of wealth enhancement and improvement of the lives of their nationals. For these competing expectations to be balanced it is essential that a set of rules and standards which are acceptable to all players be created sooner rather than later. If we fail in this effort the possibility of lasting economic expansion, which has escaped the Latin American and Caribbean region, may be lost.

     Unfortunately, developments over the last five years have begun to demonstrate that certain of the more developed nations view globalization as an opportunity for them to compete in other countries markets.   As soon as competition from outside forces show signs of being able to impact on their nationals by creating a more attractive environment for capital to be more productively deployed, competition becomes unfair.   Economic power is brought to bear to reverse the advances of the lesser developed regions who dare to compete within areas regarded as the domain of the developed nations.

     An example of this type of behaviour is evident in the increasing dictatorial and terrorist like behaviour of Non-Governmental Organisations controlled by some of the most powerful developed nations.   These organisations who are increasingly being run by bureaucrats appointed from more developed countries, propose courses of action against countries who dare to offer alternatives and are able to compete effectively.  These initiatives which are designed to destroy competition with them, are inconsistent with the free market movement which has been embraced by the more developed nations.

     These disturbing developments, such as the OECD's initiative on Harmful Tax Competition, the main aim of which is to prohibit capital flow from high tax nations to low tax or no tax countries, abrogate the rule of law, disregard national sovereignty and put in place procedures to remove the right to privacy. Such movements are being put forward with threats to use their economic might to bring to heel all of those who do not agree. This behaviour endangers the very foundation of the force which we all seek to harness.

     The OECD's initiatives have carefully avoided any reference to a number of regimes in their own member countries which provide similar benefits to third country nationals, such as those complained of with the exception that they provide them on a much larger scale.  This raises the question as to whether three hundred years of history will repeat itself.   Will we have a newer, more gentler and sophisticated type of invader who will control our telecommunications, financial service, high tech and other industrial endeavors. Can we look forward to rules being made under which we will operate which, instead of taking our raw material to build an industrialized society, seek to remove the profits from our economies by extra territorial taxation, thus supporting economies and citizens of the more industrialized nations while we remain economically dependant instead of independent.

     The OECD is not alone in this thought process, it has many cousins and relatives who are marching towards the same goal through different paths.  This type of disguised protectionism should be resisted.   It is likely to be applied in other countries in different forms whose industries or potential growth pose a threat to the current dominance of the OECD member nations. 

     It is in the interest of all the industrialized,  the lesser developed and smaller nations to begin the process with the view to creating rules and standards which are not dictated by the powerful and economically advantaged but which have regard to the sovereign needs, the rights to privacy, the cultural differences of individuals and the rule of law.  We should not expect that all will benefit equally but demand that all will have a level playing field.  An equal opportunity for our region to participate in global markets and consequently raise the standard of living of the citizens in our individual countries, large and small, is not too much to request.

     Globalization envisages democracy in a larger sense.  Like any strong democratic society to be successful the voices of all nations must be heard and the votes of all the nations should be counted.  The denial of these basic rights in the formulation of the rules for a global market place by the world's powerful and economic advantaged and the enforcement of their will on others outside their national borders under threat of punitive sanctions is a troubling development.

     Unless globalization encompasses our right to encourage development and the movement of capital into areas where it believes it can be best deployed for productive purposes without arbitrary rules made by others designed to extract the fruits of our labour being profits, by extra territorial taxation thus depriving us of the capital to reinvest, we will have embraced a liability greater than our current debt problems and we will find ourselves economically re-colonized.

     Should we, in the light of what is now evident, continue to enthusiastically embrace the liberating force of Globalization without adequately providing for its path we risk the economic enslavement of our future generations.   History will record a generation which allowed a valuable asset to be converted into a long-term liability.  

     The organizers of this great event, The Caribbean Latin American Forum, are well placed to provide a vehicle from which dialogue may begin and in which the world's leading industrialized nation and our neighbour who regularly comes to our aid in times of need and to whom we look towards for guidance, the United States of America should now play a leading role.

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