Wednesday, June 08, 2005

Scorecard of Globalisation: 20 Years of Diminished Progress

Most of the accounts of benefits of "economic reforms" and globalization (or whatever is practiced as "globalization" nowadays - a term gaining currency to make this distinction, is "new-liberal globalisation") are of two kinds:

  • They are based on anecdotal accounts, citing the example of a particular country (which often, as the case is, is the current poster-child for the media... E.g., at one time in 1990s, it used to be the "success story" of Argentina... that is, before the country went bankrupt). Similarly, currently, India and China, are the hot favourites, even though, among the transitional economies, both these countries have the most protective regulations and systems, have refused to open their economies in many sectors, and have developed at their own pace. Also, as we saw earlier in a posting on China's Rich-Poor Divide on this blog, even in these fast developing economies, the rich-poor divide is also growing just as fast.

    Many "feel-good", "globalization-shining" books and articles, which blur the boundary between travelogue and serious social study - ranging from Gurucharan Das' India Unbound to the recent bestseller, The World is Flat by Thomas Milton - also fall into this category of euologies to globalization.

  • They cite growth on specific measurable economic parameters (GDP, exports, FX reserves, %age of global trade, specific sectors - e.g. IT exports in India or manufacturing exports from China, etc.) as the evidence of benefits of globalization. However, since societies and countries are not just numerically judged "economies", these aggregates and averages often fail to reveal the total impact of globalisation on the society/ country, and its people.

    To my knowledge, there is at least one substantive study The Scorecard on Globalization 1980-2000: Twenty Years of Diminished Progress, conducted by Centre for Economic and Policy Research, which shows that the social - in fact, even economic - impact of globalisation and economic reforms is harmful to society.

    The complete study is available at:

    In the general, the findings show that
  • overall, the impact of globalisation and economic reforms was negative, and
  • in comparison to rich and developed nations, the less developed societies/ nations were more adversely affected.

    The following are excerpts from the report, and some accompanying graphs:

    "This paper looks at the major economic and social indicators for all countries for which data are available, and compares the last 20 years of globalization (1980-2000) with the previous 20 years (1960-1980). These indicators include: the growth of income per person, life expectancy, mortality among infants, children, and adults, literacy, and education.

    For economic growth and almost all of the other indicators, the last 20 years have shown a very clear decline in progress as compared with the previous two decades. For each indicator, countries were divided into five roughly equal groups, according to what level the countries had achieved by the start of the period (1960 or 1980). Among the findings:

  • Growth: The fall in economic growth rates was most pronounced and across the board for all groups or countries. The poorest group went from a per capita GDP growth rate of 1.9 percent annually in 1960-80, to a decline of 0.5 percent per year (1980-2000). For the middle group (which includes mostly poor countries), there was a sharp decline from an annual per capita growth rate of 3.6 percent to just less than 1 percent. Over a 20-year period, this represents the difference between doubling income per person, versus increasing it by just 21 percent. The other groups also showed substantial declines in growth rates.

  • Life Expectancy: Progress in life expectancy was also reduced for 4 out of the 5 groups of countries, with the exception of the highest group (life expectancy 69-76 years). The sharpest slowdown was in the second to worst group (life expectancy between 44-53 years). Reduced progress in life expectancy and other health outcomes cannot be explained by the AIDS pandemic.

  • Infant and Child Mortality: Progress in reducing infant mortality was also considerably slower during the period of globalization (1980-1998) than over the previous two decades. The biggest declines in progress were for the middle to worst performing groups. Progress in reducing child mortality (under 5) was also slower for the middle to worst performing groups of countries.

  • Education and Literacy: Progress in education also slowed during the period of globalization. The rate of growth of primary, secondary, and tertiary (post-secondary) school enrollment was slower for most groups of countries. There are some exceptions, but these tend to be concentrated among the better performing groups of countries. By almost every measure of education, including literacy rates, the middle and poorer performing groups saw less rapid progress in the period of globalization than in the prior two decades. The rate of growth of public spending on education, as a share of GDP, also slowed across all groups of countries.

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