We’re going global, while others want to stay local

Sep 13, 2016 10.00AM |
 

by Kwan Jin Yao

FOR a Prime Minister who has always preferred to discuss local social policies throughout his past 12 National Day Rally speeches, Mr Lee Hsien Loong’s focus on globalisation and the developments around the world may signal a blind spot many Singaporeans have.

Mr Lee started his English speech by talking about the economy, and in his next section detailed geopolitical concerns too. In fact, his two references to globalisation were related to economic and (geo)political considerations: first, on the influence of technological disruption, threatening traditional businesses and jobs; second, the events which led to Britain’s referendum and exit from the European Union – or Brexit – and the lessons for Singapore.

Singapore may have benefited from globalisation, but not only have the benefits been taken for granted, the country in general seems oblivious to movements to de-globalise. And yet, because Singapore is so reliant on trade and migration flows – trade as a percentage of gross domestic product was 326 per cent in 2015 (just behind Hong Kong and Luxembourg), and non-residents now make up almost 30 per cent of Singapore’s total population – it has to play a more proactive role to preserve the status quo.

“If something goes wrong with globalisation, the most vulnerable country in the world, by far, is Singapore,” Dean of the Lee Kuan Yew School of Public Policy (LKYSPP) Kishore Mahbubani said, at the first of three public lectures on the challenges to globalisation, organised by the postgraduate school between August 30 and September 2 this year. “And ask yourself, when you go to any hawker stall, or when you go to eat char kway teow, is anybody worrying about this? Here we are, when the global system is under a major threat, and the most exposed country in the world thinks everything is fine,” he added.

 

The Brexit and Trump challenges

That the global system is under threat – especially in Western societies – is epitomised by Brexit and the rise of Donald Trump in the United States presidential election. Professor Danny Quah, Li Ka Shing Professor of Economics at the LKYSPP, argued at the first lecture (Aug 30) that this phenomenon is peculiar, “because the West is the one that has gained greatly from efficient production, from lower-priced goods available in bewildering variety, from the fresh ideas, cultural transfusion, and entrepreneurial energy, from immigrants into the West.” He added: “The grand divide in Western politics now… is no longer between right and left, between conservative and liberal. Instead, it is between the camp that is closed, and the camp, small and diminishing, that is open to globalisation.”

Both Professor Mahbubani and Professor Quah agreed that many governments in the West did not adequately prepare their populations for the implications of trade and migration, and have therefore contributed to the rising tide of populist politics. Globalisation, in the view of the pro-Brexit camp and Trump supporters who demand national protectionism, has only facilitated the outflow of job opportunities and companies from Britain and the United States. So even if it is true that overall wealth and productivity have increased, persisting socio-economic inequalities have only widened.

It is also no coincidence that many who oppose globalisation are often low-skilled or low-income workers, who have either lost jobs through outsourcing, or seen their wages stagnate for years. Professor Quah summarised these conceptions: “The Trump-Brexit rhetoric, while inchoate and illogical, has struck a chord. And it has struck a chord with people who feel that they are now powerless. And this powerlessness has transmitted to an illogic in their own thinking. The well-off in British and American societies are the ones who have benefited disproportionately from globalisation, but it is poor migrants, not the very rich, who have attracted the ire of the Trump-Brexit supporters.”

So if globalisation is now under threat in the West, and if Western governments are incapable of assisting the displaced and the disenfranchised, should the world – including Singapore – look to the East for new champions of globalisation? And how should governments manage its pros and cons?

 

The rise of China and India

Could China provide leadership in this regard? While new endeavours such as the One Belt, One Road initiative and the Asian Infrastructure Investment Bank may signal progress, China as the biggest beneficiary of globalisation has been reluctant. “The Chinese are reluctant to do so, partly for cultural reasons,” Professor Mahbubani remarked. “At the same time, the Chinese have a larger geopolitical concern, [to not] wake up the United States too early to the rise of China, by seizing leadership that would frighten America, and therefore lead to an American containment policy in China.”

Perhaps India then, in the future? Dr Shashi Tharoor – a second-term Indian parliamentarian and former Under-Secretary General of the United Nations – spoke at the LKYSPP (Aug 31) on the role of India within a cooperative, networked, and multi-polar world order.

“Today, to be a young person in India,” Dr Tharoor mused, illustrating the every-day experience of globalisation, he would “be waking up to an alarm clock made in Taiwan perhaps, China maybe; downing a cup of tea from leaves first planted by the British; donning jeans designed in America; taking a Japanese scooter, or a Korean car; getting to a corporate office, or a university like [the LKYSPP], where your official reports may be printed with German-invented technology, on paper first pulped in Sweden; calling friends on a Finnish mobile phone, or a Chinese one, to invite them to an Italian pizza, or even what you think of as an Indian meal, featuring naan, that came to us from Persia, tandoori chicken, taught to us by rulers in Uzbekistan, or potatoes and green chilis, that first came to India 400 years ago from Latin America.”

In other words, to thrive in a networked and interdependent world, there is no escaping globalisation. And governments would have to seize the opportunities of the twenty-first century, while managing the threats.

In other words, to thrive in a networked and interdependent world, there is no escaping globalisation. And governments would have to seize the opportunities of the twenty-first century, while managing the threats. India will no doubt continue to cooperate and to engage with key players, to shape an emerging global network, though it may have to attend to domestic concerns first. Citing his own words from a previous forum, Dr. Tharoor asked: “How can [India] be a superpower, if we are still super poor?”

 

Singapore as a champion of globalisation

In late August this year, Deputy Prime Minister and Coordinating Minister for Economic and Social Policies Tharman Shanmugaratnam – at the invitation of Indian Prime Minister Narendra Modi – delivered a 46-minute lecture titled “Fulfilling India’s Potential in the Global Economy” in capital New Delhi, to the entire Indian Cabinet, senior government officials, state chief ministers, and public intellectuals.

The lecture was a frank assessment of a country now seeking rapid economic transformation. “India’s potential is still unfulfilled,” Mr Shanmugaratnam said. “India needs to grow by eight to 10 per cent over the next 20 years, if it is to create jobs for a youthful population, if it is to reduce the tremendous under-employment of its population, and if it is to achieve inclusive growth, including a significant shift of people from the lower-income group to the middle-income group.” When explaining India’s four challenges – the lack of an export orientation, the large numbers still in low-productivity agriculture, the little growth in formal jobs, and very few large firms – the Deputy Prime Minister stressed the importance of globalisation too, and how India should take advantage of it.

This invitation to India reflects both Mr Shanmugaratnam’s reputation, and also the decades-long success of Singaporean policies and institutions, which – to a large extent – benefited from international integration. If success is to be sustained, then globalisation has to remain a feature.

And as the government champions globalisation and its benefits, it too remains cognisant of the costs, to avoid the events unfolding in Britain and the United States. At the third public event of the week (Sept 2), celebrating LKYSPP’s twelfth anniversary, Minister for Social and Family Development Tan Chuan-Jin said: “Singapore is not immune to the forces that drive Britain’s exit, that fuels Trump’s incredible rise, and agitates Hillary Clinton’s vacillation on the [Trans-Pacific Partnership].”

“So what if our unemployment is three per cent. To the person affected, it is 100 per cent ,” the minister added, as he explained the need to provide social assistance to workers who may be disadvantaged by globalisation, while at the same time keeping Singapore’s economy open for competition.

Striking a balance between threats and opportunities – and furthermore between the political, economic, and social spheres – will remain a challenge for governments. That Mr Lee and others have brought greater attention to the challenge is a good start, but the discourse has to continue.

 

Featured image Singapore Panorama by Wikimedia Commons user Someformofhuman. (CC BY-SA 3.0)

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