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Economics and Human Rights: Making Globalization Work for Human Development

By Professor Fantu Cheru; American University

Work in Progress

It has become increasingly evident over the past decade that international policies and initiatives, particularly those processes that drive economic globalization, have negative implications for the universal enjoyment of human rights, notably economic, social and cultural rights. These processes include trade, investment and financial liberalization; the international debt regime; and structural adjustment programs.

As a result, numerous civil society groups and governments (mostly from developing countries) have raised concerns about the need for social and development issues to be taken into account during discussions for any multilateral trade and investment treaty, or in the design of macroeconomic reform programs. These voices have also spoken out about the need to retain and enhance the ‘regulatory’ role of the state. These calls are reinforced by a growing perception that economic and social rights are increasingly being eroded by the momentous disruptions brought about by economic globalization.

While effect of globalization has been extremely positive, particularly for advanced countries and some middle-income countries, the same process is also testing economic management nationally and internationally. What are these challenges?

(a) Financial volatility: Turmoil in the world financial system is the first major crisis of globalization. The crisis of the past three years has underscored our inability to predict or prevent financial difficulties that can pose systemic threats. We are not able to prevent countries in trouble infecting others. The current crisis is undermining confidence in free-market approaches and motivating some governments to reverse course in liberalization.

(b) Marginalization: Many low-income countries find themselves marginalized in the global economy. Ensuring that low-income countries do not miss out on the benefits of globalization is a crucial challenge.

(c) Weakening of the state: the political authority of governments corresponds less and less to the geography of the market. This poses several challenges:

• First, it is more difficult for governments to distinguish between domestic and foreign firms for the purpose of national trade, industrial, and competition policies.
• Second, the growth in intra-firm transactions and the mobility of capital complicates national authority “taxation” policy. This makes it harder to finance social programs. In short, globalization increases the demand for ‘social protection’ while decreasing the capacity of the State to provide it.

Additionally, there is the complex issue of sovereignty. The Vienna Declaration and Programme of Action reaffirms that the protection and promotion of human rights and fundamental freedom is the first responsibility of governments. In view of this primary responsibility,
• What is the impact of the progressive bargaining-away of state ‘sovereignty’ under international trade and investment agreements upon the State’s capacity to proactively fulfil its human rights obligations?
• What are the human rights implications of strengthening state sovereignty, given the past and necessary focus on human rights defense against state abuse?
• To what extent does States use economic globalization as a convenient excuse for failing to fulfill their human rights obligations?
• Where should affected populations go to claim their rights?

Given the complexity of the debate, I will explore the potential of a rights-based aapproach as a strategic entry point for the reprogramming of development cooperation in the era of globalization.

(a) A rights-based approach as a strategic entry point

Human rights obligations bridge ethical standards and the legal obligations of States and other parts of society. Economic, social, cultural, civil and political rights as set out in numerous human rights treaties, creates legal obligations for governments to introduce policies and programs that create the proper environment for these rights to exist. States are bound to respect, fulfil, and protect these rights.

In this era of globalization, is the State still able to fulfil these obligations?
• On the one hand, globalization has diminished the ability of all States to control economic outcomes that affect the well being of their citizens. New global economic power centers challenge state sovereignty over economic resources including capital and labor markets. The influence of new rules and policies can have two directions: they can be supportive for the realization of ESC-rights, but they can be at the same time of negative influence on states’ capacity to guarantee ESC-rights.

• For example, the fast development of new trade rule and regulations during the Uruguay-Round of GATT, new regulations developed since the establishment of the WTO, especially in the sectors of liberalization in the service sector and financial investment are putting sectors of societies at the risk of becoming a victim of high market price volatility or unpredictable market problem. There is a growing gap between the rapid pace of developing multilateral disciplines in trade and financial markets, while a similar pace of developing multilateral instruments for the implementation of ESC-rights is more or less missing.

• On the other hand, states remain the central actors in economic planning even as these forces of economic globalization often pound them. In short, the state still remains the key player with the power to respect, protect, and fulfil economic, social, and political rights of both women and men.

• Economic globalization is therefore not an excuse for a government to shrink their legal duties under international law to promote human development and gender equality. There is a specific duty on State parties to not take retrogressive measures that would not jeopardize economic, social and cultural rights.

In the final analysis, the state is still central in the creation of the proper environment for promoting gender equality in both the public and private spheres. The state can open up the political space so that popular participation can become a reality. And the state can regulate the activities of other transnational economic actors whose practices violate basic human rights protections.

(b) Possible sites of change

At the global level, fundamental reform in global governance is unlikely to happen any time soon. The historical legacy of exploitation, and subsequent mistrust, between the North and the South are difficult to overcome. However, efforts must be made to reemphasize the centrality and primacy of human rights obligations of governments and international organizations in all areas of governance and development, including international and regional trade, investment and financial policies. The realm of trade, finance and investment are not exempt from general human rights obligations, including the obligations of States to promote gender equality.

• One possible instrument could be the formulation of gender equality and human rights rules for intergovernmental organizations and the creation of respective accountability mechanisms. How countries and multilateral institutions incorporate human development and gender equality concerns should be an integral part of macroeconomic policies. This implies a critical look at current macroeconomic models being promoted by financial institutions.

At micro-level, there are two additional issues I want to explore:

(a) The right of participation and recourse of affected groups: human rights cannot be effectively realized unless the right of participation of the affected population in planning, implementation and seeking redress for violations is respected. In the regard, UNDP should continue to support and encourage civil society organizations in promoting human rights agenda at local, national and international levels. Specifically, they should continue to hold governments and international organizations accountable for their obligations to promote human rights and gender equality. Social movements have been singularly responsible for bringing the human development discourse into the operations and activities of key global institutions, the World Bank in particular. As it has done in the past, UNDP should continue to provide support for cross-cultural dialogue between civil society organizations from both the developed and developing countries in order to promote human development and gender equality.

(b) The right to an effective remedy in the appropriate forum: the right to an effective remedy for anyone whose rights have been violated cannot be contracted away by the state nor denied by the operations of intergovernmental institutions. (WB. The Inspection Panel).

Globalization Research Center - Africa