101467
Making Globalization & Trade work for the Developing World
by
James D. Wolfensohn
President
The World Bank Group
Washington, D.C., December 6, 2001
Well, thank you very much, Mr. Harlan, and Ambassadors, and Senator
Sarbanes. I've also been called a lot of other things, I'd like you to
know, in my time here in Washington, and lest you feel that there isn't a
countervailing set of opinions, I've been described as the man that broke
the Bank.
I've been described in many other less-attractive ways, but whatever
attaches to me, personally, I represent and work with an organization
that you should all be proud of as being centered in the city. It is an
organization that comprises 10,000 people, is 55 years old, and was
formed, as you will remember, at the Bretton Wood meetings, designed
originally for reconstruction after World War II. It is owned by more
than 180 countries, of which the United States is a major shareholder
with about 18 percent. It has different elements that reach not just to
the poorest countries with the International Development Association, but
that also work with the private sector, through IFC [International
Finance Corporation], and MIGA [Multilateral Investment Guarantee
Agency].
So we are an organization that is resident here and takes a very active
part in the community, in schools and in working with drug addicts, as
well as former drug addicts, of whom we're very proud to say we've hired
more than 23. They are brought into our fold, doing such things as
cleaning up the river.
This is not a distant organization. This is an organization that is a
good citizen, is concerned with what is going on around the world. I am
very honored to be speaking to this club because you are our local club,
and it's a pleasure to be with you.
The subject today is not the Bank and not our role in Washington, it is
about globalization and some of the issues which are going on currently,
which I guess must be of some interest, given the turnout. I have almost
15 or 20 minutes to cover the globe and then to take questions. So let me
give you the brief version of what could take us days to discuss.
Let me set the context. The context is that we live in a planet of 6
billion people, of whom 4.8 billion or 80 percent of the world live in
what we call developing countries. They are the countries that, for many
of us, were thought to exist outside the wall. This was the wall that
separated the developed world, in which the United States, Europe and
Japan are so active, from all of those countries out there, which were
Africa, Central Asia, good parts of Latin America, and those countries
like India and China, with 2.2 billion people between them, who are a
long way away and didn't really impinge on us very much.
This was the sort of image of the '50s and '60s, an image of a world
divided, an image of a world that was North-South or developed and
developing, and which was very comfortable for all of us. Comfortable
because, if you went out into this world, as I've done in my career, your
friends would be generous with you, as you took the trips to Nigeria or
to Central Asia or other places, and say, "You're doing God's work, Jim."
And then you'd come, and they'd say, "Why don't you get into the
investment banking business and make some real money."
Well, I guess I did that, not by design, but by the need that I had at
that moment to really try, as I did, to bring together these two worlds
of development of the world for the developed countries.
That trend, which I clearly recognized early in my life, has become very
much more apparent in what we call globalization or, as some would say,
integration of these worlds; integration in the sense that it is no
longer possible to think of issues in these two convenient caps. We're
linked by the environment, we're linked by health, we're linked by crime,
we're linked by migration, we're linked by trade, and we're linked by
finance, and more recently it's clear we're linked by violence, and we're
linked by poverty.
For those that were not aware on September the 10th, it became apparent
that issues that relate to developing countries are not distant issues,
but in a real sense are domestic issues. Surely, on September the 11th,
when we have the image of the World Trade Center collapsing and more near
to us the image of an attack on the Pentagon, those of us that thought
there was a wall between those two worlds must at least be challenged to
think that there is no wall and that these issues are now linked.
A lot of our citizens are very concerned about this issue of
globalization because it's difficult. It's uncomfortable. It's something
that most of us are not educated to know about. Very few people knew a
lot about the "–Stans" in Central Asia. Not a lot of people knew about
Islam. Not a lot of people know in any depth about China or India, which,
after all, in two countries constitute a third of the world's population.
Not a lot of people have given a lot of thought to poverty. Poverty which
is reflected by the numbers of 3 billion people living under $2 a day on
our planet, i.e. half the world, and 1.2 billion people living under $1 a
day or what we call absolute poverty.
Now you could say that those issues are distant issues, and in terms of
overseas development assistance or concern about global equity or concern
about justice or technical considerations or religious considerations
that might drive you, they were nonetheless fringe issues. So that may
have been true in perception on September the 10th, but I suggest to you
that with September the 11th, we have to reassess the terms of the way in
which we approach the world.
My view on the aftermath of September 11th is that while it is important
to bring down the terrorists, in all their forms, and to follow the money
and to deal with the al Qaeda network, all of which is essential, this is
symptomatic relief for a set of issues which is much deeper because if we
catch Osama bin Laden, if we break the al Qaeda network in its current
form, we're still left with the issues of poverty, of inequity, and hate.
And make no mistake, there are many people out there who were cheering at
the disaster which befell our country.
So it's not an issue that we can put off. It's an issue which is present,
and it's also not a static issue. I had the privilege in Genoa of meeting
with the leaders of the G-7, along with Kofi Annan and leaders of three
or four developing countries: Nigeria, South Africa, Algeria and
Bangladesh.
When I was asked to sum up some of the discussion at dinner, I started by
saying to the G-7 leaders, "I hope you gentlemen understand that 25 years
from now, when your successors are sitting at this table, you will be
representing the same number of people or less than you represent today,
and the people on this side of the table will be representing 2 billion
more." Because in the next 25 years, our planet will grow from 6 to 8
billion, and in that period of time, all the 2 billion, save, maybe 50
million, will go to the developing countries.
So these are the dynamics of an issue which is already serious: they are
optimistic if you can turn it to good avail, but problematic if we turn
our backs on it. That dynamic issue is one that we cannot avoid, and it
presents us with both opportunity, opportunity for good, or real dangers
for our kids, for peace and security.
Most of us in this room will get through the next few years without
either knowing or being affected by it. For a few years, we can get away
with it. But the challenge of globalization, of integration, of having
foreign issues be domestic issues, which is unrecognized in most
political communities of the OECD countries, that challenge is both
inevitable, certain, and important, and for me that was the message of
September the 11th.
Now what is it that we can do about it? Globalization can be addressed in
a number of ways, as it has been addressed in three cycles in the past;
in the late 1800s, in the mid part of the 1900s, and from 1980 to the
year 2000. In the last cycle, we saw significant growth in the OECD
countries and significant growth to about 3 billion people in the
developing countries. The 3 billion people in around 24 countries saw
their GDP growth go from 1 percent to 5 percent, they saw significant
reductions in poverty, they saw a jump in educational levels, they saw
declines in mortality of infants and of mothers, and generally found
great opportunities with an openness to a globalized economy. But for
very many countries, often small, often landlocked, often with
problematic governments, with 2 billion people, nearly 40 or 47 countries
of which are in sub-Saharan Africa, there's been decline. In various
parts of the Islamic world and Central Asia, and in the former Soviet
Union, and in some parts of this hemisphere, we have seen that decline.
Again, I would suggest to you that these are not distant issues. The
issues are stability in Africa, the issue of the stability in Central
Asia, in terms both of the Islamic world, the Arab world and sources of
energy.
Putting aside any smaller
these countries that will
globalized economy surely
rich and poor, privileged
ethical questions, which I would hope we don't,
not profit from development in today's
understand significantly the difference between
and non-privileged, arrogant and non-arrogant.
For many of them the view of the United States is one where there is
great distance, great envy, and where we, along with other countries in
the OECD, have done a very limited job in terms of reaching out, of
caring about cultures, of giving respect or listening or trying to see
what it's like in those countries so that we're not imposing ourselves on
them, but so that we become part of their globalized community.
We have a seven-point plan which we announced yesterday, which is not
vastly different from other people's plans on how you deal with it. Very
broadly, with regard to the issues of growth and globalization in these
countries, one deals with them by ensuring, first, that these countries
have a framework, and a government system, and fight corruption, and have
a judicial and financial system which functions so that the countries
themselves have a chance of making it because they can affect investment,
and because they can responsibly move forward, not because of something
imposed by us, but because of something that is demanded within the
countries themselves.
Then there are other things which need to go along with a comprehensive
approach to development which the countries need to lead. But we, too, on
our side, in the developed world, need to recognize that there needs to
be help, not based on charity, but based on self-interest, which clearly
has to be in trade, clearly has to be in increasing the level of overseas
development assistance, clearly has to be in capacity building, and
clearly has to be in terms of giving some respect, and listening and
educating themselves.
We cannot assume that everybody wants to be American or wants to live in
a community like ours. We can't even assume that our values are better
than theirs. I've just met with 200 Afghans in Islamabad and have been
deeply impressed by the resilience, by the sense of history, by the
commitment of the people who turned up from nowhere for this meeting.
These are not savages. These are cultured people. These are people that
have existed under the most difficult conditions and who have a better
sense than we do about what is needed in those countries, and it is not
to smother them with money. It's to deal with land mines, it's to deal
with education, it's to deal with gender issues, and it's to build
slowly.
What we need to do is to address the plans of pushing everything onto
Overseas Development Assistance (ODA) or the Doha round, but we should
also address our state of mind and the way in which we approach things,
and forget our prejudices. We should also address the way in which we
educate our children and the sort of society we create if we're going to
be true global leaders.
In our country, we do have a remarkable sense of values and a remarkable
sense of openness, but we do, from time to time, demonstrate a modest
amount of arrogance to the rest of the world or disinterest. If we are to
be true leaders, then we have to go beyond ODA and beyond trade, all of
which is crucial to be true leaders in terms of the way in which we reach
out and the way in which we think about our regions.
I suggest to you that that means that we have to start thinking, - and it
will take education, and it will take leadership of the type that Senator
Sarbanes, I know, can give, to get the electorate to understand- that
these so-called foreign issues are, in fact, domestic issues, and that's
a change of mind. We have to start thinking that those issues are not
fringe issues which deserve the last 2 cents in the budget, and that we
cannot guide our country by looking inwardly, and that as the most
powerful country on earth, we have a responsibility ethically and
morally, but also in terms of self-interest.
I believe this passionately, and I believe that it is too little
understood but that with good leadership, perhaps it can be better
understood. The game is not just to win a debate that is either
philosophical or economic, what we are talking about is peace and
security and if not for us, for our kids.
So, for me, those are the things that are on my mind. And I am delighted
that I had a chance to share some of these thoughts with you because I
know the leadership will come from this club to ensure that this message,
in some form or another, gets out and that, together, we can help make
the world a better place.
Thanks very much.
Question and Answer Session
Question: How do you assess the significance of the recently concluded
WTO meeting in Doha? Will the concessions made by the U.S. and the
Europeans on agriculture, pharmaceuticals and steel measurably improve
the prospects for the developing nations?
Answer: Well, we have to see what the final form of the concessions is.
Today, just to take agriculture, we spend $350 billion a year in
subsidies. The total overseas development assistance is $50 billion a
year. So we have seven times the amount of subsidies against countries
that we're trying to help develop. It makes zero sense. What happened in
Doha was to create the opportunity for negotiations, and it is my hope
that over time they will reach a point where openness of market is seen
to be what it is, fundamental to the question of development. But it is
only an opening. We do not yet have the results. It's my hope that we
will move toward those results.
Questions: What is the World Bank's involvement in Afghanistan and how
has it been impacted by the war?
Answer: We were in Afghanistan in the '80s, and in the period of the
Taliban we were only on the fringes because they didn't want us. But we
are now the lead agency, along with UNDP, and the Asian Development Bank,
and the whole reconstruction effort. We have already done work in terms
of trying to do a preliminary assessment. As I said, we had meetings in
Islamabad this week. We've got a crack team together on it. In over 35
countries, we have post-conflict teams, so we're very familiar with what
needs to be done, and our role will be to try and assist the Afghan
government and the Afghan authorities when they come in to build their
country. It will not be to design a plan in Washington that we impose on
Afghanistan. It will be to work with the Afghans to build the sort of
country they want.
Question: Do any predominantly Muslim countries have the educated
workforce and infrastructure to develop a successful economy?
Answer: Oh, I think they do. Many of them have a strong problem with
expatriation of their people who populate the United States and other
places. There is no intellectual barrier to be Islamic or Arab which
makes you different from anyone else in this room. As a matter of fact,
you may be interested to know that we have recently, in the Bank,
established what we call a global gateway for information and
communications technology on knowledge-based information on the whole
field of development. We are setting up country gateways so that each
country will have a sort of portal in relation to what goes on in their
country. We started it yesterday, and my colleagues tell me that far and
away the best portal so far has been developed in Gaza and West Bank. So
it's innovative, it's terrific, and if ever we could get peace in the
area, it's quite evident that the resources are there.If we go back on
the first round of globalization, I should tell you that globalization
came to the West from China and Islam and that Islam developed
mathematics, and the philosophy and many of the things that we are now
building from. So I have a high regard for that. When I go to Central
Asia or for any of you that have been there, you will recognize the
source of many of the things that we have. So I don't think that there is
any mental problem. I think it's a problem of opportunity.
Question: With the expected 2-billion population increase in the next 20
years, what is the World Bank doing to discourage population growth in
impoverished countries?
Answer: Well, particularly in the presence of a political audience, let
me say immediately that we are not jumping into the question of some
aspects that are quite controversial, but what we are doing is focusing
on the single issue of education of women. There is no single more
important issue in the whole field of development than education of women
and girls. You cannot succeed in development unless you deal with that
issue, and you have to do it as a matter of morality, but you have to do
it also as a matter of development. The obvious conclusion is that if you
have an educated group of women, then the birth rate comes down, both
because of their involvement in commerce and in better protections, but
also because they are better educated, and they can keep their husbands
in check, which is important. So we deal with it that way and try and
stay off some of the more controversial issues, on which I do have strong
views, but will not express in here.
Question: Especially given its international charge, the World Bank has
been involved as a corporate citizen in the Washington region. Do you
have a strategic approach or particular focus for your involvement in the
local scenario?
Answer: The answer is no, but 6 years ago I accelerated something that we
had been doing here on and off for quite some time, quite apart from
support of the United Fund drive. I, basically, said to a number of
people in town, from the Mayor on down, that we had a fantastic force in
the Bank that was skilled in urban planning, urban development,
education, health, and it was crazy that there wasn't a volunteer effort
on the part of our people, and so we just opened the door. As a matter of
fact, just yesterday I chaired a session, because we are participating in
a wonderful program on rebuilding homes for people who live in lessharmonious areas, where they need roofs, and they need cleaning up, and
for $3- or $4,000 a home, in terms of materials, we can fix up a home. So
that was accidental. One of my colleagues found it, and now we have 200
people working in it, and we did 10 homes last year, and we are planning
on some more. So we are basically responding to the needs that we see,
and the single strategy is to be involved. Beyond that, it's pretty
random, I'm afraid. But, again, it's much better for me not to impose a
plan on my colleagues, but to build on their interests, and so that's
what we're doing. I think it's valuable for the District, but it's also
clearly valuable for my colleagues, many of whom come from countries
where that is not the tradition, where the state provides everything. So
this issue of volunteerism is also helping me with my colleagues, in
terms of having a different approach to life.
Question: The young people who protested in Seattle, Quebec City and
elsewhere seem to view globalization not only as an economic raw deal,
but as a cultural threat to poor nations. What arguments would you make
to college-age students who attempt to disabuse them of this notion?
Answer: Well, a lot of college students think of globalization as
capitalism and the use of multinational corporations to impose themselves
in countries. That is a significant oversimplification.
The first thing that we are trying to do is to encourage corporations to
understand that sensitivities of the local community and community
responsibility is part of good business. We have got a really swelling
group of companies that are working with us on business and social
responsibility.
But beyond that, the issue of globalization is not something that either
the students or we can turn back. The issue is how do you assist
countries to benefit from the globalization that I described, and there
the evidence is quite clear. The countries that have sought to deal with
this, in an effective and integrated way, 24 of them particularly, have
brought 5-percent growth to 3 billion people, and they're not
complaining. The others are being left behind, and we have to deal with
them.
But I would say one thing on which I have had difficulties, even in the
Bank, but which is now becoming a little more understood, which is that
I've been maintaining for 6 years that you cannot have effective
development unless you have cultural sensitivity, that unless you build
what you're doing based on the history and culture of the places in which
you are operating, you load the dice against yourself significantly. I
must tell you that a good many of the Finance Ministers did not share
that view in the past, nor did they share the view, which of course I
did, which was to establish a dialogue of the religions.
With the Archbishop of Canterbury, I have run two global conferences on
faith and development, where we've had the leaders of 30 or 40 different
religious groups coming together to talk about development and faith, not
to make the Bank a religious organization, but to bring together the
strength of the religions, which are fundamental in nearly every one of
these countries, so that at least there is an understanding on the human
aspects of the development process, and that was less understood than I
would have hoped prior to September 11th, also. On September the 12th, I
think the situation had changed.
I believe strongly in the proposition that a culture-based approach and
one that is sensitive -which is why I came back and keep saying we have
to open our minds to be sensitive to cultural and other differences- that
unless you have that, there is no way of building friendship, to start
with, and you need friendship and understanding both ways. It's not just
money. This is not a clinical activity, this is a human activity. And if
it's a human activity, you must understand culture.
Mr. Harlan: The time is up. I think that was a very excellent way to end
our program. One more thing before you leave. On behalf of the Economic
Club, we'd like to present you with this token of our appreciation, a
Steuben eagle, and hope that you will continue to break the record and
come back one more time.
Mr. Wolfensohn: Thank you very much.