Corporate Globalization and the Poor

Author: Marcie Ley

Topic: General News

By Russell Mokhiber and Robert Weissman

100,000 or more activists could converge in Washington, DC this September for the annual meetings of the World Bank and IMF. See http://www.abolishthebank.org/ and http://www.globalizethis.org/

George Bush has thrown down the gauntlet, issuing a public challenge to the anti-corporate globalization movement. When hundreds of thousands last month demonstrated against the G-8 meeting of rich country leaders in Genoa, Italy, George Bush decried the activists, saying it was the advocates of corporate globalization who genuinely are seeking to advance the interests of the world's poor.

It's not enough to mock Bush's pretension of being a defender of the poor by pointing out that, through his giant tax cut, the president has overseen one of the history's great transfers of wealth to the rich in U.S. history. Critics must respond to his claims.

Unfortunately, that turns out to be a remarkably easy challenge to meet. The last 20 years of corporate globalization, even measured by the preferred indicators of the International Monetary Fund (IMF) and World Bank, have been a disaster for the world's poor.

Over the last two decades, Latin America has experienced stagnant growth, and African countries have seen incomes plummet. The only developing countries that have done well in the last two decades are those Asian countries that ignored the standard prescriptions of the IMF and World Bank.

The Washington, D.C.-based Center for Economic and Policy Research (CEPR) has published compelling data comparing growth rates from 1980 to 2000 (during the period of ascending IMF/World Bank power, when countries throughout the developing world adhered to the IMF/Bank structural adjustment policy package of slashing government spending, privatizating government-owned enterprises, liberalizing trade, orienting economies to exports and opening up countries to exploitative foreign investment) with the previous 20 year period (when many poor countries focused more on developing their own productive capacity and meeting local needs).

The results: "89 countries -- 77 percent, or more than three-fourths -- saw their per capita rate of growth fall by at least five percentage points from the period (1960-1980) to the period (1980-2000). Only 14 countries -- 13 percent -- saw their per capita rate of growth rise by that much from (1960-1980) to (1980-2000)."

CEPR found that the growth slowdown has been so severe that "18 countries -- including several in Africa -- would have more than twice as much income per person as they have today, if they had maintained the rate of growth in the last two decades that they had in the previous two decades. The average Mexican would have nearly twice as much income today, and the average Brazilian much more than twice as much, if not for the slowdown of economic growth over the last two decades."

A follow-up CEPR study used a similar methodology to look at social indicators. CEPR found that progress in reducing infant mortality, reducing child mortality, increasing literacy and increasing access to education has all slowed during the period of corporate globalization, especially in developing countries.

The CEPR global comparisons across time show the bottomline, combined effect of the specific policy components of corporate-friendly policies imposed by the IMF and World Bank and enforced by free trade agreements. These include the following:

• Trade Liberalization -- The elimination of tariff protections for agriculture and industries in developing countries often leads to mass layoffs and displacement of the rural poor. In Mexico, for example, opening to U.S. agriculture imports has forced millions of poor farmers, who find themselves unable to compete with Cargill and Archer Daniels Midland, off the land.
• Privatization -- IMF and World Bank structural adjustment policies typically call for the sell off of government-owned enterprises to private owners, often foreign investors. Privatization is regularly associated with layoffs and pay cuts for workers in the privatized enterprises.
• Cuts in government spending -- Reductions in government spending frequently reduce the ability of the government to provide services to the poor, exacerbating the social pain from rural displacement and industrial layoffs.
• Imposition of user fees -- Many IMF and World Bank loans and programs call for the imposition of "user fees" -- charges for the use of government-provided services like schools, health clinics and clean drinking water. For very poor people, even modest charges may result in the denial of access to services.
• Export promotion -- Under structural adjustment programs, countries undertake a variety of measures to promote exports, at the expense of production for domestic needs. In the rural sector, the export orientation is often associated with the displacement of poor people who grow food for their own consumption, as their land is taken over by large plantations growing crops for foreign markets.
• Higher interest rates -- Attractive to foreign investors, higher interest rates exert a recessionary effect on national economies, leading to higher rates of joblessness. Small businesses, often operated by women, find it more difficult to gain access to affordable credit, and often are unable to survive.

Advancing the interests of the poor has nothing to do with the corporate globalization agenda. This agenda is driven first by profit-seeking, and second by ideology.

But the corporate globalizers are nothing if not ambitious. They are seeking now to push fast-track negotiating authority through the U.S. Congress, to force all of Latin America into a NAFTA-style trade and investment agreement, launch a new World Trade Organization negotiating round, and intensify the IMF and World Bank's ability to impose structural adjustment through a sham debt relief process.

To lessen preventable human suffering, it is imperative that the protesters continue to build the movement against corporate globalization, with everything from street protests to citizen lobbying of Congress.

Another world is indeed possible, as the protesters are asserting. But for now the immediate challenge is to stop the corporate globalizers from making the existing one worse.

[Russell Mokhiber is editor of the Washington, D.C.-based Corporate Crime Reporter. Robert Weissman is editor of the Washington, D.C.-based Multinational Monitor. They are co-authors of Corporate Predators: The Hunt for MegaProfits and the Attack on Democracy (Monroe, Maine: Common Courage Press, 1999). (c) Russell Mokhiber and Robert Weissman]

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