Globalization: Can Poor Nations Catch Up?

Globalization: Can Poor Nations Catch Up?

Photo by Scott Gruber

UCLA Today Online, May 27, 2008

The World Bank has predicted that only 10 developing countries, mostly from East Asia, can catch up with developed countries in the next 100 years.

This article was first published by UCLA Today Online.

By Ajay Singh

ON THE MORNING OF 9/11, as the world was transfixed by television images of the World Trade Center collapsing into rubble, a handful of Chinese entrepreneurs were busy churning out a product that would be seen everywhere in the United States the following day.

Sensing a business opportunity, they were mass-producing a small American flag that still flutters atop many vehicles today, a symbol of the wave of U.S. patriotism unleashed by the 9/11 attacks. The fact that the flags were manufactured and marketed so swiftly is a testament to our fast globalizing world as well as to the well-known entrepreneurial skills of the Chinese.

As Thailand's trade representative at the time, Kantathi Suphamongkhon liked to tell his fellow Thais that it could well have been them – and not the Chinese – who might have flooded the U.S. market with cheap American flags.

The only problem was that Thai businessmen were "too slow and needed to be more imaginative and competitive," Kantathi said in a lecture held at the Kerckhoff Hall Grand Salon. Titled "Globalization: A Blessing or a Curse? A Thai Experience," the May 19 talk was part of the annual Arnold C. Harberger Distinguished Lecture Series on Economic Development, presented by the Burkle Center for International Relations.

Contrary to widespread belief, globalization is not driven mainly by military might or even by multinational companies, said Kantathi, a senior fellow at the Burkle Center and a UC Regents professor who was Thailand's foreign minister in 2005-06. "Modern globalization is a major part of the electronic revolution that has made global communications cheap and acceptable to anyone who has the skills and the strategy to use it," he pointed out.

Although globalization does allow the poor to catch up with the rich, "this new freedom to succeed may not be a blessing for everyone," Kantathi said, citing World Bank statistics that show that during the last 40 years of the 20th century, rich nations were on average 30 times richer than poor nations.

"In 20 years of modern globalization, the World Bank has suggested that this gap between rich and poor countries can go all the way up from 30 to 200 times," Kantathi said. "In fact, the World Bank has predicted that only 10 developing countries, mostly from East Asia, can catch up with developed countries in the next 100 years."

Nations that might be rich in natural resources but lack the necessary technological skills and strategies to succeed in global markets will be "forever cursed," Kantathi warned. "It is one thing to run and catch up with a runner who has started a bit earlier. But it is a very different thing to run and try to catch up with a high-speed train."

So governments of developing nations must help local businesses and people succeed in global markets, he urged. A key part of Thailand's policy, for example, is to create "soft infrastructure," whereby broadband Internet services are introduced to the nation's remotest villages, and efforts made to send university students to study abroad – not just to the English-speaking world but to such technologically advanced nations as Germany, Britain, Russia and some dynamic Eastern European countries.

Thailand has learned a lot from Finland's experience.

"Finland used to be a poor country [that] only used to focus on forestry," Kantathi said.

"Nokia used to do toothpicks, but then it changed strategy. … Finland went into high technology and, as you know, it is now one of the most successful countries in the world."

Published: Tuesday, May 27, 2008