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Benefits and challenges of globalisation

By Peter Costello - posted Wednesday, 15 August 2001

Globalisation is a description of the fact that countries and their citizens are affected by other people, or governments, or businesses, or decision-makers all around the world. And because communication is faster, and transport cheaper, the connections are more immediate and more intense than ever before. The telephone which first connected suburbs now connects the world and optic fibre transmits data, money, email, knowledge from business to business, home to business, home to home across the world.

As I have previously argued globalisation is not a value, it is a process. Globalisation describes what is happening. And ranting against globalisation is like ranting against the telephone. You can use the telephone for good or for ill. So too the wider process (of which the telephone is part) can be a force for good or ill.

Of all the countries in the world where this should be well understood, it should be in Australia. The founding of the colonies in Australia was an example of globalisation. At the end of the 18th Century as its economy strengthened, its technological capacity developed, Britain was able to establish and maintain a settlement 12,000 nautical miles from its global centre in London. It couldn't do this in the 16th Century where its capacity to maintain colonies extended only 3,000 nautical miles to North America.


Foreign investment arrived here in Port Jackson in 1788 with the first fleet. It was investment in construction, agriculture, livestock and government infrastructure. Of course at that stage it was government rather than private investment, but overseas private investment followed thereafter. In the early years it came principally from London. We used the savings of others to invest in and build our economy. Australia is here as a result of globalisation and foreign investment.

None of this is to say that all the consequences have been without blemish, nor to say that we should not try and direct this process to maximise our benefits in the future. In fact I think we should. But we should come at it from the right starting point. A country which is open to trade, investment, technological transfer, is going to be more prosperous and a better place to live than one that is not.

There is a self-styled anti-globalisation movement that pretends to the contrary.

This movement likes to protest against the meeting of any organisation that has the word `world' in its name – the "World" Trade Organisation (Seattle December 1999), the "World" Bank (Washington April 2000), the "World" Economic Forum (Melbourne September 2000).

Yet these demonstrations are organised on the Internet, otherwise known as the "World" Wide Web, its members fly the One "World" airline network to get to anti-globalisation rallies and they organise demonstrations for "world" wide television coverage.

Some of these people are committed leftists. They are not against internationalism. They are against international markets for capital. They wouldn't mind a bit of internationalism of the socialist variety. Some of the protestors are Christians who are members of the Roman Catholic Church (which has a global hierarchy here on earth) or the World Wide Anglican Communion. Some are environmentalists who protest against globalisation, and demand international agreement on global warming. They think `global' and act `global' and protest against globalisation.


Of course there are countries that have sought to close their borders to foreign investment and erect barriers to trade. But it is unlikely you will hear the demonstrators extolling the virtues of them:- countries like North Korea, Albania or Cuba. And one wouldn't want to run an anti-globalisation demonstration, indeed any demonstration, in a country that prefers the closed - as opposed to the open – society.

One of the constant claims made against the process described as "globalisation" is that it is making the world's rich, richer and the world's poor, poorer. Let me say at the outset that I am interested in making the world's poor, richer. If there are policies that can pull the world's poor out of poverty and increase their standards of health care and education, it does not concern me that in the process the world's rich become richer too. Rising living standards in the developed world would be another reason to pursue these policies. However, it would concern me if rising living standards in the developed world were the cause of deterioration for the world's poor.

Experience shows us that open markets, trade liberalisation, and the economic growth which it has facilitated is boosting the living standards of the world's poor.

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This is an edited extract from an address to The Sydney Institute on Wednesday, 25 July 2001. Click here for the full transcript.

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About the Author

Peter Costello AO is a former, and longest serving, Commonwealth Treasurer. He is a company director and a corporate advisor with the boutique firm ECG Financial Pty Ltd which advises on mergers and acquisitions, foreign investment, competition and regulatory issues.

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