Hamish McRae: We need to see more globalisation, not less, to spread its benefits

'International trade has been the great driver of prosperity for the past half-century'
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The Independent Online

How can the world be persuaded to accept that, on balance, the force that we call "globalisation" is of great benefit to the world and if we retreat from it, the poorest will be the hardest hit?

There will be an opportunity in nine days' time at the World Trade Organisation summit meeting in Doha – assuming that the meeting does indeed go ahead, for there are serious security concerns. Sadly, that opportunity will probably be missed. Instead of coming out with a convincing, determined defence of the economic forces that have given the world the greatest burst of prosperity it has ever known, there will be cramped discussions about the minutiae of trade rules that will fail to sell to world opinion the need to press on with yet more liberal trade policies.

One of the most extraordinary features of these tangled times is the juxtaposition of the casual acceptance of the freedoms and products of globalisation and the suspicion, even hatred towards the system that produces those products. Protesters travel thousands of miles to the distant cities where the WTO or the G7 meet – Seattle or Genoa – to protest against globalisation and its agents, the multinational corporations. Yet they take for granted both their freedom to travel and the aircraft that take them there, the first being one of the key features of globalisation, the second the product of one of two multinational corporations. Having arrived, they then rely on the global media groups to make their protests known to the rest of the world.

Then there is anti-Americanism, which is very similar to anti-globalisation. One of the most potent forms this takes is the belief that the US is trying to impose its values on the rest of the world and that this must be resisted. Mercifully, we don't often hear people trying to justify the attacks on the World Trade Centre on those grounds. Still, even decent people who are appalled by what happened do sometimes find themselves irritated by Hollywood values, the appearance of a McDonald's on the street corner or by the many imperfections of Windows.

While no one is forced to go to a movie, buy a hamburger or even use Windows, in practice we often do. We find it difficult not to accept these practical aspects of globalisation. As for the wider benefits – freedom to travel around the world or use drugs developed by multinationals – well, we would be aghast if these benefits of globalisation were no longer available.

Yet many people do not have those freedoms: more than half the world's population is not free to travel in the way that we in the rich West take for granted. A third do not even have access to basic drugs. Those people need more globalisation, not less.

So how can the benefits of globalisation be spread? Take this checklist of the four main aspects of globalisation: freedom of movement of trade, of investment, of ideas and of people.

International trade has been the great driver of prosperity for the past half century, rising at roughly double the rate of growth of the world economy. Now, with the notable exception of agriculture, world trade is fairly free. There are, however, profound inequalities: producers of raw materials (with the exception of oil) have lost ground against manufacturers, while low-technology manufacturers have lost against high-technology ones. But you cannot fix that by trade restrictions; if anything, it is the other way round. The best way to rebalance power is to allow freer trade in commodities produced by developing countries, such as food and textiles. Agriculture is one of the issues that Doha is supposed to be tackling, but do not expect great progress. The farmers of the rich world are too important a lobby.

International investment has become the force pushing globalisation forward and has brought prosperity to many countries in astonishingly short time. Freer trade and foreign investment has enabled parts of East Asia to leap from developing to developed status in little more than a generation. But money is cowardly. Countries with few skills or with a history of political instability find themselves excluded. International investment enables countries to jump the gap between rich and poor, but for those that fail, the gap is wider than ever.

Doha cannot fix this. The WTO can try to promote greater freedom of investment flows, which is on the agenda, but if we are to have a more equal world we need to understand why investment flows to some places and not others and then tackle the root causes of this inequality. We have to identify comparative advantage, create conditions for sustaining investment flows, build markets, support political conditions that bring prosperity. Extreme challenge: why is Gaza not as prosperous as Singapore and what circumstances would enable it to be so?

Freedom of trade in ideas? Ah, this in the jargon of trade talks is called "intellectual property" and the US as the dominant producer of such property wants to protect the patents and royalties that maintain property value, except when the US wants to break a patent right itself. To caricature only slightly, it wants to hold up the price of anti-Aids drugs for Africa but it threatened to bust the patent that Bayer has on the anti-anthrax drug Cipro.

One of the big tasks of Doha is to find a way of balancing the need to reward drug companies for developing drugs that are needed for world health problems with the need for those drugs to be supplied at affordable rates. You do not want a world where drug companies put all their effort into lifestyle drugs such as Viagra merely because profits are greater but you also do not want half the world's population denied access to vital products because of onerous patent rights.

And the global movement of people? That is likely to move in the opposite direction, for the most obvious and saddest of reasons. At the moment, the world's population is divided into two groups: those who can travel and those who cannot. It is hard to envisage a world where anyone could take a job anywhere in the world, but ultimately that is what true globalisation implies.

Western democracies are not going to have that. But if the enemies of globalisation are to be conquered, then we need to be fair and honest about the criteria we apply to the movements of people. Those two adjectives – fair and honest – have not been in great evidence in recent months.

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