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In a keynote address at HBS, the next Director-General of the World Trade Organization expressed a strong commitment to the globalization process, as well as acknowledgement of the concerns raised in recent protests.
Supachai Panitchpakdi, an economist and deputy prime minister of Thailand, will become Director-General of the WTO effective in 2002. Supachai is the first Asian and the first person from a developing nation chosen to lead one of the three Bretton Woods institutions. (The two others are the World Bank and the International Monetary Fund.)
Arriving at HBS directly from Davos, Switzerland, where he had been attending the World Economic Forum, Supachai told the Asia Business Conference audience that he doesn't believe in reversing the globalization process. "But we must listen to those who oppose," he declared. He insisted that leaders of the process "synchronize the debate" so that they can manage the globalization process in a way that provides balanced benefit for countries around the world.
"Most of us who have been educated in the western world and who have practiced trade policies in the past, or who have worked with international bodies and corporations, wouldn't doubt for a moment the positive consequences of globalization," he told the audience.
"But one must admit that in the past couple of years, with the crisis in Asia, there is now a case that must be studied that could point to some shortcomings in the process of globalization." Supachai went on to discuss globalization's effect on the situation in Southeast Asia and in his native Thailand. Thailand experienced "unprecedented" economic growth in late '80s and early '90s, Supachai told the HBS audience, with growth at 8 to 10 percent per year.
"At the same time, we ... maintained inflation and government markets [were] under control. It was an economic boom based on reasonable economic balances. So how come we had to go through this economic meltdown?" he asked rhetorically.
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| I don't believe in reversing the globalization process, but we must listen to those who oppose. | |
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| —Supachai Panitchpakdi |
Supachai then pointed towards the risks of increased global interdependence, observing that globalization creates interdependence among nations that can make them more vulnerable individually; national policies exert less control and government mistakes are amplified.
"Even if [as a nation] you have some control over your own policies, sometimes you cannot use those policies against the tide of globalization," said Supachai. "If the mistakes committed by some of the past governments of Thailand had been committed a decade ago, we would have seen a 10-percent devaluation in Thailand. There would not have been a financial crisis in Asia. There would not have been the contagious crisis that we have witnessed in the last three years all across Asia into Latin America, and even hitting some parts of the United States.
"Because of the globalization process, all shortcomings and all mistakes and errors made by governments around the world were magnified many, many times," Supachai warned. "One of the lessons that we have learned in Asia is that, of course, governments will always make mistakes.
"But beware. Be careful. This time your mistakes will not lead to an easy, complacent position. You will be punished ten times more than you used to be punished."
Supachai used the last part of his talk at HBS to map out a series of points that he sees as crucial to a positive process of globalization.
He encouraged Bretton Woods organizations to clarify and secure the benefits of globalization by working together with organizations more critical of the process. He also stressed the value of strengthening multilateral trade agreements in the face of conflicting regional agreements.
Turning his comments to the private sector, Supachai stressed the need to look closely at hedge funds and foreign direct investment. He recommended that the destabilizing risks of the hedge fund industry be tracked in a manner that can provide warning signals in the future. He also expressed concern that a large percentage of direct investment in developing nations comes from multinational company acquisitions, which could induce feelings of nationalism in the countries involved that may reverse any positive effects of globalization.
After reviewing his economic and political priorities, Supachai ended his talk by reciting several lines from the Indian epic Mahabharata, as if to serve as a powerful plea for leaders to place global unity above the forces of commerce.
"This is mine," Supachai recited. "That is another's. Such reckonings are for the narrow-minded. For to the noble hearted, the whole world is one family."
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