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    Chapter III Globalization merits and demerits

    The East Asian growth overviewed in Chapter I and the business dynamism arising from the IT revolution in Chapter II symbolize the way in which the world economy has continued to develop on the wings of expanding trade and investment and a growing trend toward globalization1. At the same time, the swift spread of globalization and the continuous growth of the world economy have amplified a number of distortions within and between countries, provoking environmental destruction, for example, as well as widening the income gap between the rich and poor and causing growing concern over employment. It is argued in some quarters that such distortions are caused by the expansion of world trade and investment. An extreme representation of this position was the series of large-scale demonstrations staged by extremist NGOs at the WTO Seattle Ministerial in 1999. These NGOs target key meetings such as the WTO, which exemplifies the free trade system, and international development institutions such as the World Bank and the IMF under the banner of “anti-globalization”. As such meetings attract world media attention, they are viewed by the NGOs in question as prime opportunities to put across their positions.

    As the world economy has developed, it has also made more apparent the downsides of globalization. A serious response to these will be vital in ensuring sustainable world economic growth. At the same time, it would be too hasty to draw a conclusion that all problems could be resolved by halting globalization. The particular causes of each problem need to be analyzed and global mechanisms developed accordingly for a more comprehensive response. In terms of policy responses, the best course would be to ensure that distortions simply do not arise, but where these do emerge, safety nets need to be set in place to provide relief.

    In this chapter, Section 1 overviews the distortions which are accompanying world economic development, as well as the activities of NGOs expressing concern over these. Section 2 discusses employment, the North-South divide, deforestation and food safety. The causes of these problems are highlighted, as well as steps to combat them, followed by a discussion of safety net development. Finally, Section 3 focuses on the environment, one of the most critical issues in ensuring sustained world economic growth amidst ongoing globalization. This chapter looks specifically at the current state and remaining issues for 1 “Globalization” is an abstract concept which is used in different ways by different people. To economists, it signifies a greater tendency toward cross-border economic activities, while politicians and historians use the same term to discuss the post-Cold War global spread of Anglo-Saxon liberalism. In some cases, it is applied more vaguely to recent world economic growth and market economy advocacy. This is evidence of the way in which the growing international movement of goods, money, people and information is impacting globally not just on the economy but a whole range of areas— politics, society, and culture, for example—leading to a greater heterogeneity in the international community and in international relations. This White Paper takes an economic perspective on globalization, defining it as the global penetration of market economy.

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    integrating sustainable economic growth with environmental protection.

    Section 1 Globalization demerits and international NGO action

        【【【【Key points】】】】

    1. Globalization merits and demerits  While the postwar world economy has grown on the strength of expanding trade and investment, a wide range of social problems—employment, the North-South gap, deforestation and food safety, for example—have also become evident. As the world economy develops along the course of globalization, various distortions are beginning to emerge, and we will have to deal with these problems if we are to achieve sustainable growth. Concerns over these distortions, which range from employment issues through to environmental and cultural issues, have recently come to be collectively labeled “anti- globalization”.

    2. NGO action attracts international attention  With concern over globalization being a global issue, internationally active NGOs and other groups are playing a greater role in this regard than single sovereign states or certain groups within a country. NGO areas of concern, agendas and methods are in fact highly diverse, with some NGOs engaging in large-scale anti-government demonstrations while others look for solutions to problems in partnership with government. Some NGOs have drawn international attention through massive anti-globalization demonstrations at international conferences, a prime example occurring at the time of the Seattle WTO Ministerial Conference. Many NGOs, however, are contributing to society specialist knowledge and skills in specialized areas, with the share of NGOs directly or indirectly involved in World Bank projects growing from 20 percent in FY1989 to 52 percent in FY1999.

     The end of the Cold War has gradually broken down information control worldwide, and in recent years information technology and international media have made enormous steps forward. In consequence, interest in issues such as the environment and poverty is growing worldwide, with international NGO action in these areas becoming more active. The evolution of the Internet in particular has strengthened NGOs’ ability to communicate information and has opened the way for the creation of world networks, elevating NGOs into an increasingly powerful international force.

    1. Globalization merits and demerits (1) Distortions accompanying contemporary world economic development The world economic order which began with the post-WWII Bretton Woods and GATT regimes learnt from the failure of pre-war economic blocs and instead chose market economy and trade and investment liberalization as its guiding principles. As a result, the world has become much more interdependent, while the world economy has expanded

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    substantially. Since the 1980s in particular, when the Cold War began to draw to a close and trade and investment barriers were lowered or removed worldwide, cross-border flows of goods, money, people and information have grown on a global scale, deepening the interdependence of the world economy still further and also powering it ahead. However, the forward progress of globalization and the world economy has also brought to the serious problems such as employment, income disparities, the North-South gap, deforestation and food safety. For example, the North-South gap has actually widened, with the African nations in particular struggling with sluggish economic growth since 1970. In terms of deforestation too, forests a third the size of Japan are being lost every year. World economic development has therefore had its demerits, and the human race must deal with these promptly to ensure the sustainable growth of the world economy in the years to come.

    (2) Globalization-related concerns A number of concerns regarding the distortions which have accompanied world economic development have been expressed under the banner of “anti-globalization”. Just before the introduction of European single currency, the international epitome of regional economic integration, France experienced a wave of opposition to the various economic policies which the government had designed to expedite this integration. At the end of 1995, a nationwide labor strike threw the country into a turmoil. The WTO Ministerial Conference held in Seattle from 30 November through 3 December 1999 drew numerous NGOs from around the world to tout their “anti-globalization” stance. Subsequently, too, NGOs and other “anti-globalization” groups from various countries have gathered at international conferences such as the annual meetings of the IMF and the World Bank to register vociferous protests. Fig. 3.1.1 categorizes the main concerns expressed under the anti-globalization banner, from which it is apparent that the term embraces a wide range of issues from the economic through to the social.

    2. NGO action attracts international attention (1) International NGOs a growing force (a) NGO diversity As seen above, just as problems associated with globalization are occurring on a global scale, the primary agents in expressing concern over such problems are no longer countries or certain groups within a country so much as international NGOs and other organizations on the same scale, which have become highly visible. At the same time, the blanket term “NGO” does not reflect the diversity of these groups’ agendas, activities and approaches. Where some NGOs engage in massive anti-government demonstrations, others work in partnership with government to resolve issues. Two outstanding examples are Amnesty International, an international organization for the protection of human rights which was awarded the Nobel Peace Prize in 1977, and Médecins Sans Frontières, an international medical assistance group which received the same award in 1999. A think tank2 which distributed a questionnaire to NGOs expressing their opposition at the 1999 Seattle WTO 2 The Japan Research Institute, Ltd. (2001).

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    Ministerial found that by far the greatest area of concern was the environment, followed by poverty, food safety, agriculture, and then labor (Fig. 3.1.2).

    Figure3.1.1 Main concerns over globalization Main concerns Substance

    Trade and investment liberalization loses j