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Leading Toward a Better World? Filling the Gaps of Globalization

Leading Toward a Better World? Filling the Gaps of Globalization

By Prof. Rosabeth Moss Kanter Special Featured Contributor

Seven months ago the horrible terrorist attacks on the United States precipitated a crisis addressed in the short-term by military actions and security measures. But what will it take in the longer run to lead the world to a better place? We should begin by understanding three significant gaps.

(1) The gap between the promise of global integration and the current reality of divisiveness.

A dozen years ago, it seemed so easy. In 1989, second and third world countries began to be redefined as “emerging markets.” The Berlin Wall came down, Communism fell in Eastern Europe, Asian financial markets deregulated, and Latin American countries democratized and liberalized. Globalization advocates were confident that open markets would guarantee prosperity and peace, that information networks would create a connected world community.

Today, the picture is different – and full of conflict over differences. Western countries are pursuing a war on terrorism sometimes cast, in Samuel Huntington’s words, as a “clash of civilizations.” Conflagration in the Middle East follows implosion in the Balkans. Anti-globalization protestors have brought attention to shortfalls in international institutions.

Rock stars have helped publicize problems of global poverty. And there is a new mood of protectionism, for example, steel tariffs in the U.S.

Instead of having become one connected community, today people could be even more aware of what divides them. The divisiveness may be growing even within rich countries. For example, in the U.S., polls in the mid- to late-1990s reported more negative attitudes toward minorities, women, gays, immigrants and elders than reflected in earlier studies.

For global elites – what I call the “world class” – differences may be blurring, as English becomes the common language of commerce, businesses harmonize standards across countries, and knowledge workers with professional talents compete on a world labor market and move easily across borders. But for others, globalization seems to sharpen contrasts and raise tensions. Understanding differences rather than pretending they don’t exist is critical for conflict resolution.

(2) The gap between macro-policies and micro-opportunities.
Globally, trade has helped reduce inequality across nations. According to World Bank research, growth rates accelerated since 1970s for developing countries that chose to globalize, while negative growth tended to characterize those that didn’t. Higher growth rates have translated into higher incomes for the poorest segments. But cause and effect is not clear. Countries that chose to globalize may have been better equipped in other respects. And global trade benefits some developing countries more than others; China’s trade boom displaces production from other parts of Asia.

Trade policies have often concentrated on monetary issues, large-scale development projects, and, to a lesser degree, foreign aid. But while bringing benefits to some, this approach has not necessarily reached the people most in need. International institutions are under attack for macro-policies that backfire, such as the link often made between IMF policies and the Argentinian crisis.

The World Bank has been criticized for lending to corrupt governments and for investing in too many projects without clear strategies, including large infrastructure projects that remain idle while waiting for foreign companies. Structural adjustments may create stability but not economic growth that reaches the poor.

Meanwhile, expectations on the ground have risen even faster than the ability of macro-strokes to make a difference. Activists in some developing countries are beginning to ask whether adopting Western models of democracy and capitalism are worth it. On my recent visit to Kliptown, an impoverished community in Soweto, a black township outside of Johannesburg, a community worker asked what democracy had brought to his people – who still had no school in the area, no library, no running water, no indoor plumbing, no electricity.

In Poland, the Communist Party is back in new guise. In Latin America, experiencing its second major downturn since 1998, “democracy is holding up, but polls show people to be deeply dissatisfied with its failure to bring jobs, improve living standards, or tackle violent crime,” the Economist editorialized in a warning that anti-democratic populism could return.

Fixation on macro-economic policy by international institutions and on market liberalization by trade advocates has meant neglect of the social and political infrastructure that changes people’s lives and opportunities for the better. This includes education to high standards, health care and eradication of diseases, civil society and effective community-based organizations, training and support for entrepreneurship, and the kind of public sector reform only possible when the people demand it. These kinds of changes not only improve lives, they create an attractive climate for financial investment.

A Council on Foreign Relations report about economic stagnation in the Middle East, a possible root cause of terrorism, argues that lack of private investment is due to public sector barriers. Despite decades of regional trade agreements, intra-regional trade constitutes less than three percent of big Middle Eastern countries except Syria.. Fifty years ago, Egypt’s per capita income equaled that of South Korea; now it is about 20 percent. Something is missing, and that something often involves social change.

(3) The gap between men and women.
There is a gender gap lurking behind many world crises – but not the kind talked about in the United States, involving supposed “Mars-Venus” communication styles or voting preferences. Poverty, lack of education, and epidemic disease too frequently have a female face. The connection between violence and oppression of women has been argued by feminist scholars but it took terrorist attacks in the U.S. to reveal the fate of women under the Taliban regime. (A widely circulated Web joke said that the best way to punish the Taliban would be to send all their women to college.)

In Africa, women are disproportionately affected by AIDS and dying of it; a pernicious rumor in South Africa that AIDS can be cured by sex with a virgin or a baby has led to numerous rapes. Latin America has the highest income disparities in the world in income and in educational attainment. The poor quality of public education has been attributed to poorly-paid teachers – and it’s women who are consigned to work at the bottom of wage scales.

In the developing world, male policy-makers can have a tin ear about solving problems that disproportionately affect women. Members of the Women Waging Peace network, started by Swanee Hunt at Harvard’s Kennedy School, who are accomplished professionals and political office-holders in trouble spots around the world, complain that it is hard to get their voices heard.

South Africa’s President Mbecki has been slow to move on the AIDS crisis, even joining the camp of the deniers of a link between HIV and AIDS. Micro-lending, a process that helps very small community businesses run mostly by women, is only now getting attention, despite its proven success. Access to capital, education, health care, and leadership opportunities for women in developing countries could help reduce violence as well as poverty.

The Challenge: Can Business Help Bridge the Gaps?
In this context, multinational corporations have a new role to play. They are not development agencies, as Lord Browne, BP’s chief executive, has stated. But as employers, producers, marketers, and investors they can work inside countries to raise standards and forge new connections.

Unlike international institutions that deal with governments on high levels, multinational companies
interact with people on the ground every day. To the extent that they seek emerging markets, the problems of developing countries can become business problems.

Multinational companies are faced with ever-higher expectations. UN Secretary-General Kofi Annan looks to multinationals to set higher industry standards, citing the example of the world’s salt manufacturers’ ensuring that salt contains iodine, protecting 90 million newborn children against mental retardation.

Israel’s Ministry of Foreign Affiars has established a “business social responsibility” unit on the premise that businesses are neutral, apolitical actors. Since Arabs shrink from economic projects bearing the stamp of Israel, corporate ventures in education, healthcare, or IT can find potential partners in Palestinian Authority.

As innovators, businesses can find uses of science and technology to tackle social problems, sometime creating new products that bring market benefits Business molds a climate of opinion surrounding government; by refusing to work with corrupt governments, for example, companies can contribute to change.

As employers, companies can embrace diversity, train to a common standard, and mobilize employees to assist with community projects, in collaboration with NGOs for whom business partnerships build new capacity.

In the past, some companies have been part of the problem. Too few are yet part of the solution. But without the active participation of business leaders, it is hard to see how the gaps will be bridged.

Rosabeth Moss Kanter is the Ernest L. Arbuckle Professor of Business Administration at Harvard Business School. Her fifteen books include such best-sellers as Men and Women of the Corporation, The Change Masters, When Giants Learn to Dance,World Class,and Evolve!:

Succeeding in the Digital Culture of Tomorrow. This essay is based on a speech delivered in London on March 21 to a conference of the World Economic Forum and the International Women’s Forum and on Professor Kanter’s introduction of Lord Browne at HBS on April 3.

(c) Copyright 2002 by Rosabeth Moss Kanter. For one-time use only.

April 16, 2002
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