Take the European Union. It
was born in large part from a desire to secure economic and monetary
independence from the United States while fostering peace, co-operation
and economic and social progress among Europe's main protagonists. It
now has a single (albeit still evolving) market for goods, services,
people and capital, while the euro has been introduced as the single
legal currency in 12 EU countries. Moreover, despite widespread concern
inside and outside the EU about the risk of increased European protectionism,
the average level of its trade protection against non-EU countries has
continued to decline. In terms of international institutional set-ups,
the EU is the most complete model of regional integration and it marks
one of the most significant achievements of the last four decades. |
Another boon to Europe came
from the unification of Germany in October 1990 and the shift of former
Soviet bloc countries towards market economies. But this transition has
had a less significant impact on world economic relationships than expected.
A greater impact was to come from the emergence of high growth markets
in Asia, notwithstanding their financial crisis of the late 1990s. |
Nevertheless, the dissolution
of the former Soviet bloc and the rapid economic development of China,
which has started to open its market to foreign trade and investment,
have changed the basic framework for international economic co-operation
and reduced the risk of worldwide military confrontation. |
| China's opening up has given new promise to the burgeoning regional economic and monetary co-operation in Asia that also involves Japan, Korea and member countries of the Association of Southeast Asian Nations (ASEAN). This, and arrangements like the EU and the North American Free Trade Agreement (NAFTA), have raised the question of how to reconcile regionalism with the multilateral efforts towards liberalisation of international trade and investment that have been key to achieving prosperity in the post-war era. |
Meanwhile, greater regional integration and globalisation
present their own challenges. The latter, more often than the former, has
been blamed by many as a cause of social and environmental distress, including
job losses for unskilled workers, widening income disparity within and
across countries, and deteriorating ecological and social standards, as
well as increasing the instability of the international financial system.
There is also a growing concern about ageing populations in most OECD countries
and the economic, social and political strains that will arise in 2010-30
when the baby-boom generation reaches retirement. Policy response to these
challenges should involve cutting across traditional boundaries of economic,
financial and social disciplines. |
No country has got all the answers. Even in the United States
where spectacular overall economic growth in recent years has been accompanied
by a soaring political and cultural influence around the world, the country's
growing income inequality, its endemic violence and other deep social problems
have raised serious doubts about the sense, let alone desirability, of
the universal application of the so-called US model. At the same time,
there has been delay in structural reforms that are needed to help Japan,
Germany and several other European countries to remain efficient in the
new age of globalisation and to meet the challenges of population ageing. |
In all of these countries, social conflicts in the reform
process and inward-looking, myopic politics for balancing economic and
social concerns run the risk of compromising the needs of partner countries
and narrowing the scope for international co-operation. This would undermine
other objectives too, including development assistance efforts required
to reduce poverty in less developed regions of Africa, Asia and Latin America
and so tackle the source of so much domestic insecurity and perhaps international
terrorism. Domestic policy formation and execution in rich countries and
international policy co-operation in pursuit of economic prosperity and
security must be buttressed by a better understanding of social partners'
needs and wishes and of the economic and social concerns of all peoples
around
the globe. |
References Shigehara, K. (1977), "Good news on globalization", The Journal of Commerce, 25 July 1997. "Globalisation, technologie et emploi", Le Figaro, 7 November 1997. "Die negative Einstellung zur Globalisierung überwinden", Handelsblatt, 9 January 1998. Shigehara, K. (1998), "New Policies for Dealing with Ageing", OECD Observer No. 212, June/July 1998. Shigehara, K. (2002), "Developments in International Policy Co-operation and Japan's Tasks: An Insider's Views", Research Institute of Economy, Trade and Industry, 23 July 2002; see http://www.rieti.go.jp/en/ Originally published OECD Observer No. 235, December 2002 |