Ian Boyne, Contributor
THE AUTHORITATIVE Global Competitiveness Report, published by the World Economic Forum in Geneva, has exploded the myth that corruption in developing countries is largely confined to the public sector.
In the 632-page report issued at the end of last year, it is stated that "Behind the conventional definition of corruption (as the abuse of public office for private gain) lies the image of a predatory state, seen as a huge, outstretched hand, extorting firms for the benefit of politicians, high officials and bureaucrats." But the report states that research carried out over the past six years "argues for balancing the focus to include the important role of private firms since the evidence suggests that many firms collude with politicians for their mutual benefit. Even in strong states, such as in rich OECD countries, powerful conglomerates can have significant influence on shaping regulatory policy."
Continues the Global Competitiveness Report 2005-2006, subtitled 'Policies Underpinning Rising Prosperity': "Money in politics is at the heart of the interplay between corporate and public sectors, in terms of institutional outcomes and within it the role played by political finances in exerting undue influence." The report says a common fallacy is to "focus solely on the failings of the public sector. The reality is much more complex since powerful private interests often exert undue influence in shaping public policy, institutions and state legislation."
UNDERSTANDING CORRUPTION
The Jamaican media don't understand this. When they think in terms of 'investigative journalism', they only think in terms of state corruption, or the corrupt acts of politicians. How many corporate scandals have been uncovered in Jamaica? How many corporate companies have been investigated? How much private sector abuse has come to light? Is the Jamaican corporate sector pristine pure?
In the previous Global Competitiveness Report, empirical evidence was presented to demonstrate that many powerful private firms engage in undue influence to shape state policies, laws and regulations for their own benefit.
Another myth that the latest Global Competitiveness Report dynamites is the view that the high tax rates in the Scandinavian countries act as deterrent to competitiveness and productivity. Apart from Finland and the United States which rank first and second, respectively, in the global competitiveness ranking, the third and fourth places go to Sweden and Denmark, two notable Scandinavian countries in terms of social welfare spending and high taxation.
Iceland and Norway are not far behind at seventh and ninth place: "These countries share a number of characteristics which make them extremely competitive," informs the report, citing the very healthy economic environment and highly transparent and efficient public institutions. "There is no evidence that relatively high tax rates are preventing these countries from competing effectively in world markets or from delivering to their respective populations some of the highest standards of living in the world."
HOW JAMAICA ADDS UP
Continues the report: "Indeed, the high levels of Government tax revenue have delivered world-class educational establishments, an extensive safety net and a highly motivated and skilled labour force." The neo-liberals ought to take note of this.
The World Economic Forum, which annually brings together the world's most distinguished statesmen, academics and intellectuals, uses a number of criteria for determining competitiveness. These have to do with infrastructure, the macroeconomy, health and primary education, higher education and training, market efficiency, technological readiness, business sophistication and innovation. The Global Competitiveness Report gives an overall ranking for the 117 countries assessed (Jamaica is at 70) and then >
disaggregates the rankings.
For Jamaica, the country ranks a dismal 99 in terms of the macroeconomic environment, 116 out of 117 in terms of crime, as well as business costs of crime and violence, and 94 in terms of the reliability of police services. We rank 93 in terms of the quality of math and science education, 103 in terms of Government surplus/deficit, 113 in terms of Government debt and 104 in terms of inflation for 2004.
In terms of the tax burden, Jamaica ranks 113, and 105 in terms of money laundering through the banks, and 89 in terms of interest rate spread.
But the country's rankings are not uniformly dismal. We rank 16 in terms of private sector employment of women, 35 in financial market sophistication, 26 in terms of foreign ownership restrictions, 27 in terms of the availability of cellular phones, 40 in terms of the intensity of local competition, 16 out of 92 non-core innovators in the technology transfer sub-index.
TOPS IN QUALITY
Singapore holds the number one position in terms of quality of institutions and technological readiness. Singapore performs admirably in terms of ethics, protection of property rights, controlling corruption, Government efficiency and the reduction of red tape. In terms of its number one position in technological readiness, its high Internet penetration and high level of technological absorption by firms, as well as the highly regulatory environment for information and communications technology are cited as reasons for its supremacy among the 117 countries assessed.
Japan holds the number one spot in the world in terms of its health, primary education and business sophistication pillars. Japan is also the top country in the world in terms of the quality of its basic human capital. The United States has first place on the market efficiency and innovation pillars of global competitiveness. In terms of the quality of its scientific research institutions, corporate spending on research and development, availability of scientists and engineers and the capacity for innovation, the United States has no equal.
Denmark holds the number one spot in terms of the infrastructural pillar - high-quality railroads, ports, telephones, air transport and electricity supply. Interestingly, Chile ranks number one in terms of the macroeconomy pillar. Public debt has been reduced remarkably to only 12 of GDP in 2004 and growth performance has been impressive. The top spot for the higher education and training pillar goes to Finland, which has the overall top spot on the Global Competitiveness Index.
Interestingly, despite their being star performers on the world stage today, grabbing more attention these days than the Asian Tigers, China and India rank only 49th and 50th in the Global Competitiveness rankings. These countries have serious institutional weaknesses. Venezuela has dropped from the 62nd position in 2001 to the 89th position in the latest ranking. Venezuela ranks 115th in terms of its inflation record and has the distinction of having the worst property rights climate in the world - 117th out of 117 countries. It runs huge budget deficits, despite its massive oil revenues, suggesting a badly managed country.
GLOBALISATION
The most engaging and intellectually challenging of the chapters written by world-renowned economists and development thinkers is by the intellectual gadfly of globalisation, Jagdish Bhagwati. In a chapter titled 'Globalisation as an Agent of Prosperity', Bhagwati, the most renowned defender of globalisation, frontally and aggressively takes on the anti-globalisation critics, continuing an intellectual battle of which he has been at the forefront and which he deftly engages in his latest book, In Defence of Globalisation (which is a must-read for those interested in development studies).
Bhagwati complains that critics of globalisation frequently cite worsening poverty rates, environmental degradation, the erosion of labour rights, rising inequality and the worsening condition of women as globalisation's failures.
Bhagwati takes on these issues with commendable scholarly force.
"In the anti-globalisation circles, there is a general tendency to blame globalisation for all shortfalls in social agendas." Bhagwati rejects the view that globalisation lacks a human face. He maintains it has a human face, though scarred by the anti-globalisation forces. He cites practical examples where globalisation helps to improve the social agenda.
Rights and benefits for women may be guaranteed by legislation. Primary school enrolment might be mandated for all, including girls. "But it will often amount to a row of beans, unless a growing economy gives women the economic independence to leave abusive situations."
Bhagwati goes on with flawless logic: "A battered wife who cannot find a new job is less likely to take advantage of legislation that says a husband cannot beat his wife. And no matter what the legislation says, an impoverished parent is unlikely to send a child to school if the economy is stagnant. In short, empowerment ... proceeds from political democracy and economic prosperity, the principal tools for aiding the poor."
SOCIAL DEVELOPMENT
Of course, whether globalisation really helps with the employment challenge is another matter, but Bhagwati's major point that economic growth is critical to social development is impatient of debate. He points to the now common examples of poverty reduction through neo-liberal reforms: China and India. In China and India, over 300 million have been pulled out of poverty since the opening up of these economies.
Poverty declined from an estimated 28 per cent in China in 1978 to nine per cent in 1998, and in India from 51 per cent in 1977-78 to 26 per cent in 1999-2000. Economic growth rates in China and India have been 10 per cent and six per cent over the last two decades, a triumphant story for the pro-globalisation forces.
Of course, brilliant progressive economists like Dani Rodrik from Harvard have contested these examples, showing that the roots of their transformation started before the opening up, and emphasising out that they have not followed the classic neo-liberal prescriptions.
Bhagwati agrees that some reforms need to be made to capitalist globalisation. He cites, for example, the fact that developing countries don't have the type of adjustment programmes and social assistance which exist in developed countries.
Says he, in a parting shot at the anti-globalisation critics: "The critics of globalisation think of themselves as waking us up from what they see as our complacency and disturbing our comfort with the process of globalisation. However, public action will not succeed unless it reflects not only passion but reason. Reason and analysis require that we abandon the conviction that globalisation lacks a human face ..."
The debate, however, is not over.
Ian Boyne is a veteran journalist. You can reach him at ianboyne1@yahoo.com.
