Making globalisation work: Better lives for all
We are faced with a paradox: never before in the course of human history have we enjoyed better standards of living, working and health as we do in this present period of globalisation–and still many people turn against globalisation. Why?
This paradox is what we will dissect and discuss at this year’s OECD Ministerial Council Meeting (MCM). It is my hope that the deliberations at the meeting and the work of the OECD will contribute to enlighten the debate on globalisation and thereby facilitate a work-for-all-approach.
Let’s start out by reminding ourselves about what globalisation is. It is the process of further integration of our economies and societies regarding the exchange of goods, services, capital, people and ideas. This development has been going on for centuries and has accelerated, mainly due to technological progress.
The wave of globalisation since the Second World War has created more opportunities for the people of the world than at any time previously and has lifted more people out of poverty globally than at any other time in history. Life expectancy is rising and literacy levels have never been higher. This is true for both advanced and less advanced economies. There is no doubt that the world today is a much better place than before. Globalisation has provided present generations with more possibilities than that of their parents–my own included. And the future too looks bright for the vast majority of the global population.
In addition, many of the problems we are faced with demand global co-operation–on climate change, poverty reduction, security and migration, for instance. Actually, to address these issues we will need more globalisation, not less.
Yet, it seems that an increasing number of people do not look upon globalisation as a benefit, but as a threat.
They see their jobs being lost, and replaced by machines, or outsourced to other countries or taken over by immigrants. And when they look out their windows, each new day seems to hold fewer possibilities for them than the day before.
Are these people blind? Do they not understand how happy they are supposed to be?
The answer is simple: they are not blind. And they are not stupid either. What they see is the flipside of the coin: the gap has widened between those who benefit from globalisation and possess the energy and the skills to embrace the new developments, and those who do not.
If we want globalisation to work, we must bridge this gap. We cannot neglect the problems of inequality that globalisation has also produced. We cannot ignore the genuine concerns of millions of people.
We must narrow the gap by widening the possibilities for more people around the world.
Clearly, our domestic policies will have to adapt to the rapid transitions that globalisation brings. Ultimately, it is the responsibility for governments how to distribute the benefits of globalisation domestically. It is also a domestic responsibility to put programmes in place that alleviate the effects of disruption as demand for skills shifts from one category of labour to another, such as making sure that the people in need of assistance have access to adequate further education, and the social benefits or other types of interventions needed to support them.
Like most countries, Denmark continues to seek responses to the challenges brought about by globalisation and rapid technological change. To me, and to most Danes, the premise has always been that globalisation cannot be halted, either internationally or at our borders. Trying to pretend otherwise would prove very costly.
In Denmark, as part of our ongoing national dialogue, we have established a Disruption Council where these questions are discussed among concerned parties, including the labour market partners and professional experts. We realise that we have to keep upgrading our skills and respond to change in order to adapt to new circumstances. We are aware that the Danish “flexcurity” model is very instrumental in this regard, but we also recognise that this approach cannot be adopted just anywhere. Instead, each country will have to build on its own traditions and economic structures. However, we have always been open to sharing our experiences to inspire others.
The OECD is in my view uniquely placed to facilitate the search for answers in this very complex debate on globalisation. With its fact-based approach and vast knowledge base, the OECD can inspire member countries and international organisations as we debate the challenges and opportunities of globalisation. The MCM can highlight some of the best policy practices and structural reforms that are necessary to create better lives for the citizens of the OECD area and beyond.
It is obvious that the answer to the side effects of globalisation is not to reduce international co-operation and competition.
The answer is to ensure that international co-operation and competition help reduce extreme inequality and resolve the problems of tomorrow.
Climate change is a case in point and the Paris Climate Agreement is a milestone in the international co-operation in that respect. So are the UN Sustainable Development Goals (SDG), that set an agenda for each country to fulfil nationally or in co-operation with others.
International trade agreements provide a framework for a level playing field for countries to exchange goods and services. Today, many trade agreements also seek to include provisions on labour, social and environmental issues.
Among other issues, international co-operation has to address market distorting behaviour, aggressive tax avoidance and irresponsible business conduct. Some of these issues are addressed in standards set through frameworks such as the OECD Guidelines on Corporate Governance of State-Owned Enterprises, Multinational Enterprises Guidelines and the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Sharing (BEPS), that will be signed at a separate international event on 7 June 2017 at the OECD.
These are but a few examples. In some cases new initiatives will be needed to help alleviate the effects of the divides brought about by globalisation, while in other cases the standards or treaties need to be broadened in membership.
I hope the OECD Forum and MCM will be an important milestone in the international debate on how to make globalisation work for all. Though it will be but a step in a process, it is my conviction that an evidence-based approach such as that taken at the OECD is the best way to address the true problems we face. This will be to the benefit of all.
©OECD Yearbook 2017. See www.oecd.org/forum/oecdyearbook
Lars Løkke Rasmussen
© OECD Yearbook