Our Common Humanity in the Information Age. Principles and Values for Development

GLOBALIZATION AND SHARED RESPONSIBILITY
Prof. Dominick Salvatore, Distinguished Professor of Economics, 
Fordham University
In my statement, I will examine how growth can be stimulated and poverty alleviated in 
poor developing countries through (1) globalization, (2) the creation of a New Economy 
(based on information and telecommunications technologies, ICT), and (3) change in 
world governance.
1. Globalization

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There is a great deal of unnecessary disagreement in the world today as to whether 
globalization increased or decreased international inequalities and world poverty.
World Bank data clearly show that during the past two decades of rapid globalization, the 
average annual growth of real per capita income of developing countries that did 
globalize was almost twice as fast as that of rich countries (4.2 percent per year compared 
to 2.2 percent per year, respectively), and almost 4 times as fast as developing countries 
that did not globalize (which grew at an average of only 1.1 percent per year). As a result, 
globalizers reduced poverty and inequalities vis -à-vis rich countries, but non-globalizers 
(which include some of the poorest nations in the world) became poorer relative to both 
globalizers and rich countries. But globalization cannot itself be accused of being the 
direct cause of increased world poverty and inequalities. No one forced China to open up 
to the world economy, but without such opening, China could not have obtained the 
capital, the technology, and the markets that allowed it to achieve such a spectacular 
growth during the past two decades.
Non globalizers became relatively poorer primarily because of internal problems of 
political instability, wars, corruption, HIV, droughts and other natural disasters. What 
globalization can be accused of is of not having permitted all countries to share in the 
great gains and benefits deriving from it. This fundamental problem can be overcome 
only by reforming the entire international economic system to give globalization a more 
human face. Unfortunately, such a reform is not occurring rapidly enough, despite the 
United Nations’ great efforts.
2. Globalization and the New Economy to Increase Growth and Lift Non-Globalizers 
Out of Poverty
In order to increase growth and reduce poverty and international income inequality, poor 
developing countries that did not globalize must open up their economic system to the 
world economy. But to profitably do so, poor countries must create and introduce a New 
Economy in the form of better education, training, and health of their labor force, and 
build better infrastructures, introduce major improvements in ICT, and create more 
flexible labor markets, as well as deregulate their economic system. Let me briefly 
examine each of these requirements.
a. To achieve a major improvement in education, health and training, and to build 
better infra-structures, poor countries require a substantial increase in investments. 
Rich countries can help by providing much more foreign aid than they have in the 
past and, even more importantly, by opening much more widely their markets to 
poor nations’ exports.

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130 | Our Common Humanity in the Information Age 
b. Rich countries can als o be particularly helpful to poor countries with ICT. ICT can 
be a most powerful force in lifting poor countries out of their poverty and in 
overcoming the deep digital divide that has opened between rich countries and the 
globalizers, on the one hand, and the poor non-globalizers, on the other. ICT offers a 
tremendous opportunity because it is less expensive than traditional technologies and 
permits poor countries to skip intermediate technologies (such as traditional 
telephone and computing systems) and jump directly into the more advanced systems 
(cellular phones, laptops, and internet), which provide major and quick 
improvements in labor productivity and growth.
c. In order to reap the full benefits of globalization and the new economy in the form of 
new ICT, poor countries need also to liberalize their labor markets and deregulate 
their economies. It is because of its more flexible labor markets and a less regulated 
economic system that the United States has grown much faster than the large 
continental European countries and Japan during the past decade and was able to get 
much greater benefits from the new economy and ICT.
The U.S. superiority is especially evident in multifactor productivity. This refers to the 
increase in output over and above the greater use of labor and capital, and it is the best 
measure of the “new economy”. Over the past decade, multifactor or total productivity 
grew at an average annual rate of 1.5 percent in the United States as compared to 0.9 
percent in the other G-7 countries.
3. Change in World Governance for a More Equitable Distribution of the Benefits of 
Globalization
Globalization is neither equitable, nor not equitable. It is devoid of ethical values – it only 
looks at efficiency. Economic efficiency is, of course, important, but it cannot and should 
be everything. There are important ethical, social, political, and legal aspects that cannot 
be left entirely to the unfettered market forces. The world can hardly be peaceful and 
tranquil – to say nothing of ethical – when more than one billion people live on less than 
$1 dollar a day and as many as 25,000 children die of starvation each day. Thus, there is a 
serious problem of world governance and of the dire necessity of reforming the entire 
international economic system to give globalization a more human face. Unfortunately, 
such major overhauling of world governance is not occurring rapidly enough despite the 
United Nations’ great efforts.

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