Reading Time: 2 min read
Globalisation is facing a growing backlash around the world. The rapid growth in trade, financial and labour flows over recent decades has been blamed for many of the world’s most pressing problems, including growing inequality. But the empirical evidence on the impacts of globalisation is mixed. Some countries have seen an acceleration in economic growth and significant reductions in poverty as a result of liberalisation, while others have seen little acceleration in growth, and in some cases even seen a slowdown. One reason for this may be that, in many countries, the forces of globalisation have only reached tradable sectors, such as manufacturing. Non-tradable sectors, primarily services, remain dominated by monopolies. The resulting high costs for inputs such as electricity and logistical services has reduced the competitiveness of exports and, therefore, undermined the potential benefits of globalisation. As such, the mixed record of globalisation, may not because it has gone too far, but rather that it hasn’t gone far enough to promote competition in the non-tradable sectors.
Dr. Shanta Devarajan, Professor of Practice at Georgetown University’s Walsh School of Foreign Service, Washington DC, expressed these views at an LKI Foreign Policy Round entitled ‘Has Globalisation Gone Too Far—or Not Far Enough?’ held on 6 August 2019 at the Lakshman Kadirgamar Institute of International Relations and Strategic Studies (LKI). Dr. Devarajan recently retired as Senior Director for Development Economics at the World Bank after a long and distinguished career. The event was supported by The Asia Foundation, and drew a diverse group of participants including, Hon. (Dr.) Harsha De Silva, Non Cabinet Minister of Economic Reforms and Public Distribution; Dr. Indrajit Coomaraswamy, Governor of the Central Bank of Sri Lanka; LKI Board members, senior members of the diplomatic corps, academics, government officials, and representatives of the media, think tanks and the private sector.
Dr. Devarajan’s presentation was followed by a discussion moderated by Dr. Ganeshan Wignaraja, Executive Director, LKI. Sri Lanka’s recent attainment of upper-middle income status after over forty years of globalisation and reforms is seen as an important development achievement. Furthermore, it was highlighted that, while several services sectors in Sri Lanka, like telecoms, are already relatively open to competition, some are not. However, the discussion also noted that reforms to these sectors should be part of a coherent national recovery programme to ensure that businesses can retain their competitiveness and minimise job losses. Investments in education and infrastructure, as well as anti-corruption measures, are other key elements of such a national programme. The escalating trade tensions between China and the US were also explored which indicated possible export opportunities for countries like Sri Lanka arising from trade diversion through higher import tariffs.
Photos: Fluke by Ruvin