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Globalisation vs nationalism

Stephen Vasciannie

Sunday, October 08, 2017

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The following is an edited version of the keynote presentation givento the 2017 business conference of the Institute of Chartered Accountants of Jamaica on October 6, 2017. The theme of the conference was #MegaTrends 2.0.

The topic of 'Globalisation vs Nationalism' is quite intriguing. This is an important juxtaposition at a conference on “megatrends”, for these are indeed megatrends in international relations. Although we speak of globalisation in everyday exchanges and academics have been pronouncing on the concept for at least two decades, its definition has remained open to argument.

For some analysts, globalisation is almost synonymous with the way we live today. In this approach, all the realities of life, its aspirations and its problems, are placed under one heading — globalisation. Some writers narrow down the concept, but only slightly.

So, for example, Malcolm Walters, writing in the book, offers that globalisation is “a social process in which the constraints of geography on social and cultural arrangements recede and in which people become increasingly aware that they are receding”. It seems, then, that as long as people are coming together, and know that they are coming together, we have globalisation. On the basis of this definition, Columbus and Marco Polo were early agents of globalisation.

This approach to globalisation is too broad. When I speak of globalisation today I have in mind certain features of the post-Cold War international environment. These are:

(1) in the area of trade, the elimination of tariff and other barriers;

(2) in the area of investment, the opening up of each country's economy to foreign competition on fair and equal terms;

(3) the rapid development of technology;

(4) increased migratory flows;

(5) as a matter of philosophy, the view that free markets are generally superior to protectionism by government policy.

So, globalisation equals lower tariffs, open investment policies, technological development, freer migration, and a laissez-faire economic perspective that brings the issues together.

Nationalism, in this context, is easier to define. In brief, it is the idea that you should put your country first. On a range of international issues, countries are summoned to identify the policies that best suit their interests and pursue those interests with open enthusiasm. This is not a new philosophy and, indeed, it is fair to conclude that states have historically placed their interests first.

The modern incarnation of nationalism sometimes seems, however, to have an additional element. Specifically, on some occasions, modern nationalists not only put their interests first, they openly seek to put aside, or even denigrate, the interests of others.

The modern incarnation of nationalism has a substantial political component and is built largely on populist political foundations. This appears to be the case with respect to the electoral victory of President Donald Trump in the USA, the Brexit vote in the UK and, most recently, in the results of the Kurdistan and Catalan plebiscites.

This type of nationalist, populist urge was also evident in some aspects of Bernie Sanders' political campaign for the presidency of the USA in 2016. Accordingly, it is fair to point out that the new nationalism is not necessarily right wing or left wing — it turns on a raw calculation of the national interest of the State.

Now, let's bring the two phenomena together. We may do this by looking at the main prescriptions recommended by globalisation, and by comparing these prescriptions with the approach of the nationalist.

The first issue concerns trade. The supporter of globalisation wants the removal of trade barriers: reduced import duties and removal of non-tariff barriers. Allow Jamaica to export ackees to the US without tariffs and without non-tariff barriers that stifle the export of the product. And for imports, allow motor vehicles and corned beef and computers and milk powder and cable TV services to enter Jamaica without significant duties.

One argument for the globalised approach to trade is that it promotes efficiency. It does this by encouraging competition in the global marketplace. The fittest will survive in some areas, and lesser lights will need to find their comparative advantage in other areas.

For Jamaica, as an exporter, this approach has rarely been to our advantage. Because of our small size and production inflexibilities we have not been able to compete in our traditional export products (such as sugar and bananas) without some degree of protection. So, for Jamaica, the nationalist perspective may be attractive. Our national interest may prompt us to support an anti-globalisation approach. The free market in exports reduces our access to foreign markets and consequently generates unemployment.

For Jamaica, as an importer, the free trade, globalisation approach may also be problematic. This is so because the Jamaican producer, again burdened with small size and production inflexibilities, may not be able to compete with foreign suppliers in the local market. In this environment, the nationalist will call for protection for local producers versus foreigners. Again, the need to generate and preserve local employment is called in aid to support the nationalist position.

In at least one significant respect, however, the nationalist may support the globalised perspective for Jamaica. By requiring the reduction or removal of import duties, globalisation promotes lower prices for foreign goods at home. As a result, the consumer — often the poor consumer — of certain basic goods is better off in purchasing goods. The risk, though, is that the poor consumer may well lose her or his job as a result of globalisation. In this situation, cheaper imports may provide only cold comfort.

Investment

The second feature of globalisation to be considered relates to investment. Those who support globalisation advocate the freeing up of investment flows and the protection of foreign investors in host country economies. So, for example, Jamaica is party to about 12 bilateral investment treaties which safeguard the interests of foreign investors in the country.

These treaties are part of the armoury of globalisation, for there are thousands of them. In essence, they stipulate that the foreign investor is to receive the same treatment as the national investor (national treatment): the same tax regime, the same subsidies (if any), access to the same procurement opportunities, and access to the same range of domestic services.

At the same time, as part of globalisation, the foreign investor from State X will receive “most favoured nation” treatment. So, investors from State X will receive the same treatment as every other of the most favoured foreign investors.

For supporters of globalisation, this approach promotes foreign investment into domestic economies such as Jamaica's. And in turn the increased flow of foreign investment leads to higher levels of employment, increased tax revenues, and encourages innovation.

What is the nationalist perspective on investment? The nationalist position often argues that liberal foreign investment rules hurt domestic investors. So, it is said, national treatment for foreigners will displace Jamaican investors.

It is also argued that foreign capital tends to be footloose — when circumstances require sacrifice, foreign capital often flees to more favourable venues, leaving the previous host country in pressurised circumstances.

It is fair to suggest, however, that in some instances, globalisation's prescription in support of promoting foreign investment will trump nationalist and nativist concerns. If your country's bauxite industry requires foreign capital, there is palpable relief in bauxite communities when the foreign capital becomes available. The provision of employment opportunities will always be a key factor in determining support for either globalisation or nationalism.

Technology

The technological component of globalisation need not detain us as a matter of controversy. Regardless of the underlying approach, enhanced technology should be acceptable to the host country. If anything, the challenge is always how developing countries, such as Jamaica, may bridge the technological divide and acquire appropriate technology; it is not whether technology should be accepted.

Jamaica's efforts to promote logistics and business process outsourcing represent recognition of the enhanced role of technology in economic development. It suggests that governments in developing countries should enhance efforts to promote educational initiatives that emphasise technical knowledge. But I hasten to add that this must not mean throwing out education in areas of knowledge such as the liberal arts and the humanities, including history.

We need to protect the humanities within our educational sector because these areas of study help us to understand who we are as a people and provide us with the foundation for forward movement by recording and assessing where we have been. So, we must rise with the tide of technology, but we should ensure that we avoid the shallows and miseries of an educational system which lacks sensitivity to our social and historical experience.

Migration

Migration flows is, of course, a highly contested area of international discourse. In fact, on one view, the question of migration constitutes the central point of division between persons who support globalisation and those who oppose it.

In this regard, we should note that not all supporters of globalisation wish to promote increased migration. But, if globalisation is to adhere to the notion of free markets, it should also support free movement in labour, just as it supports free movement of capital, goods and services.

Significantly, this issue is central to the question of Brexit. At its core, Brexit may be perceived as an attempt by the United Kingdom to reduce access of (other) European migrants to Britain while maintaining British access to the (wider) European market in goods and services. The so-called “hard Brexit” would ensure that Britain does not bar free migration rights for other Europeans at little or no economic cost.

While the supporter of globalisation may be ambivalent about the question of migration, the nationalist is very often unapologetic in his or her resistance to migrant flows. In some cases, this resistance amounts to xenophobia and racist sentiment, in which whole groups of persons are characterised in negative, fake terms.

Metropolitan countries

Countries such as Jamaica have traditionally been critical of policies in metropolitan countries that restrict migrant flows. This is understandable. Metropolitan countries will have limits in their migration policies. But these countries have traditionally relied on and benefited from foreign labour, and in the case of former colonial powers, may have a duty based on history to provide opportunities for some persons from former colonies.

One question for Jamaica is how we should react to restrictions recently contemplated by nationalist leaders. We may believe that the restrictions are motivated by negative sentiments, and we may be concerned, for instance, about “Fortress Europe”. But, as a matter of law, we may also need to be mindful that migration policy has traditionally been regarded as part of each country's national jurisdiction.

If we challenge this legal position, this could mean, on the principle of fairness, that we will be obliged to allow arrivals into our country on a more liberal basis than we have normally proceeded.

Laissez-faire

On my fifth and final component of globalisation — the philosophical foundation in laissez-faire capitalism — the nationalist tends to have a variable perspective. Specifically, the nationalist is prepared to support protectionism when this leads to the benefit of the country. In some instances, as is the case of Bernie Sanders and supporters, the challenge to free markets may come from the ideological left; but in the main, nationalists of the most recent vintage do not challenge core principles of capitalism.

Jamaica and other Caribbean States face the dilemma of limited options. Globalisation, which continues to provide the prevailing orthodoxy, is a Western construct. Caribbean efforts to oppose globalisation and to retain protectionism have not been marked by success.

This raises the question whether we should embrace the alternative of nationalism. In economic terms, we have always opposed globalisation because of what it has done to our industries. And we have also noted that developed countries have historically developed with some degree of protectionism. But as small countries, we may not, without help, turn the tide away from economic globalisation.

At the same time, Caribbean countries have the means to influence international political discourse. It does this through a willingness to take positions in international affairs based on principle. It also does this through the voting power of Caribbean states in arenas such as the United Nations and the Organization of American States.

No easy answers

The debate on globalisation versus nationalism does not admit easy answers. From the point of view of economics, we should redouble our efforts to promote both foreign and domestic investors, and we could do so through the vehicle of globalisation.

As to trade, it is unlikely that the shifting sands towards protectionism will have an early impact on Jamaica. The likelihood is that arrangements under the World Trade Organization will remain secure. This is not necessarily to our benefit, but it is now the world we have.

Our duty then is to work towards enhancing our production structures and towards the proper identification of our comparative advantage in international trade. This requires us to enhance our educational system, remove our many bureaucratic obstacles to production, continue to tackle crime and its stultifying effects, and take steps to modernize our ways of doing business.

Political

We should not exclude the political components of the contrast between globalisation and nationalism. globalisation, in its current form, promotes a broad view of the world, a view sometimes said to be associated with Western elites. It embraces strong respect for human rights, promotion of democracy throughout the world, efforts to fight global warming, and anti-corruption initiatives. These are important virtues.

But globalisation in this political sense is also vulnerable to criticism. For one thing, it conveys the idea that States which depart from human rights as understood by Western Europe may be pressured into conformity. In some instances, this may be a good thing. In others, however, it may prompt States to oppose good ideas largely on the basis that the “outside world” should not interfere with their domestic concerns.

For another, the globalised acceptance of human rights raises the question whether we should adopt all claims as human rights. The alternative approach, advanced by the nationalist, would be that some rights in one country are not rights in other countries. On this basis, globalisation may be accused of overreaching on some issues. This is a big topic: are human rights universal or are they subject to regional variations that take cultural norms into account? I may be universalist in my perspective, but I respect the possibility that this is not always the correct answer.

Status quo

Finally, does globalisation protect the political interests of the status quo? It may do so — and in recent times, we have seen globalisation challenged by angry societies which share the view that their human development has been stifled by an uncaring philosophy of economic progress. The rich in rich and poor countries are doing well, and that's all that seems to count. This is a fundamental point against the current version of globalisation.

To be fair, it is not at all clear that the nationalist response will solve this problem. But if it forces globalisation's supporters to rethink some of their basic assumptions about human welfare and progress, nationalism — for all its populist faults — will have done the world a service.

Professor Stephen Vasciannie is president of The University of Technology, Jamaica. He is a former Jamaican ambassador to the United States of America and permanent representative of Jamaica to the Organization of American States.

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