The Scorecard on Globalization 1980-2000:
Twenty Years of Diminished Progress
Center for Economic Policy & Research
Mark Weisbrot, Dean Baker, Egor Kraev and Judy Chen
July 11, 2001
It is commonly accepted that the increased opening to international trade and financial flows that has occurred in the vast majority of countries in the world has been an overall success. Even critics of globalization have generally accepted that the reforms of the last two decades, in low to middle-income countries, have boosted economic growth rates. They have argued that this growth has left many people behind, and has often been at the expense of the natural environment.
This paper looks at the major economic and social indicators for all countries for which data are available, and compares the last 20 years of globalization (1980-2000) with the previous 20 years (1960-1980). These indicators include: the growth of income per person, life expectancy, mortality among infants, children, and adults, literacy, and education.
For economic growth and almost all of the other indicators, the last 20 years have shown a very clear decline in progress as compared with the previous two decades. For each indicator, countries were divided into five roughly equal groups, according to what level the countries had achieved by the start of the period (1960 or 1980). Among the findings:
Growth: The fall in economic growth rates was most pronounced and across the board for all groups or countries. The poorest group went from a per capita GDP growth rate of 1.9 percent annually in 1960-80, to a decline of 0.5 percent per year (1980-2000). For the middle group (which includes mostly poor countries), there was a sharp decline from an annual per capita growth rate of 3.6 percent to just less than 1 percent. Over a 20-year period, this represents the difference between doubling income per person, versus increasing it by just 21 percent. The other groups also showed substantial declines in growth rates.
Life Expectancy: Progress in life expectancy was also reduced for 4 out of the 5 groups of countries, with the exception of the highest group (life expectancy 69-76 years). The sharpest slowdown was in the second to worst group (life expectancy between 44-53 years). Reduced progress in life expectancy and other health outcomes cannot be explained by the AIDS pandemic.
Infant and Child Mortality: Progress in reducing infant mortality was also considerably slower during the period of globalization (1980-1998) than over the previous two decades. The biggest declines in progress were for the middle to worst performing groups. Progress in reducing child mortality (under 5) was also slower for the middle to worst performing groups of countries.
Education and literacy: Progress in education also slowed during the period of globalization. The rate of growth of primary, secondary, and tertiary (post-secondary) school enrollment was slower for most groups of countries. There are some exceptions, but these tend to be concentrated among the better performing groups of countries. By almost every measure of education, including literacy rates, the middle and poorer performing groups saw less rapid progress in the period of globalization than in the prior two decades. The rate of growth of public spending on education, as a share of GDP, also slowed across all groups of countries.
The purpose of this study is very limited. It simply seeks to clarify the backdrop to debates over the impact of globalization. There has been considerable confusion -- at least in public discourse, if not within the economics profession itself -- over the actual track record of the last two decades. This study has used standard measures of progress in the categories of economic growth, health outcomes, and education to evaluate the record of the last twenty years. The results are overwhelmingly in one direction: in every category, the comparisons show diminished progress overall in the period of globalization as compared with the prior two decades. The few comparisons that show increased rates of progress in the second period nearly all involve groups of countries that were already performing relatively well at the start of the periods being examined. There are almost no instances in which groupings of countries that were performing poorly at the start of the period saw more progress during the era of globalization than in the previous two decades.
As noted above, this evidence does not prove that the policies associated with globalization were responsible for the deterioration in performance. But it does present a very strong prima facie case that some structural and policy changes implemented during the last two decades are at least partly responsible for these declines. In some cases, for example in the transitional economies, the link between policy and outcomes is fairly clear. Russia lost about half of its national income in just a few years in the 1990s, following a program designed to rapidly transform its economy. We also have several prominent cases of mismanaged policy in just the last few years, such as the Asian economic crisis, where liberalization of financial markets led to a rapid inflow and then reversal of capital flows, and the crisis was then worsened by extremely high interest rates, overly tight fiscal policy, and other mistakes.
For most of the low and middle-income countries, the link between policy and outcome remains to be shown. But in any case, there is certainly no evidence in this data that the policies associated with globalization have improved outcomes for developing countries. To argue that this is the case, proponents of these policies would need to show that outcomes would have been even worse in the era of globalization, if developing countries had not adopted these policies.
If the basic facts presented in this paper were well known, discussions of globalization and international economic policy would look very different than the ones we see today. At the very least, the burden of proof would be squarely placed on those who claim success -- by any available measure of human well-being -- for the last two decades of the experiment in globalization. By contrast, in most of the discussions now held, it is assumed that this experiment has largely succeeded, and those who challenge this assumption must bear a high, often insurmountable burden of proof.
Finally, it is worth noting the limited basis of the comparisons used in this analysis. It would have been better to use a broader set of measures. In particular, it would have been desirable to measure national performances on a variety of environmental measures. Unfortunately, there are no widely available sets of data for most of these countries that could be used to provide the basis for such a comparison. If this data could be assembled, it would be an important component of a fuller evaluation of international progress in the era of globalization.
full article at: www.cepr.net/globalization/scorecard_on_globalization.htm
