18 NOVEMBER 2002
By the Select Committee on Economic Affairs
INTRODUCTION AND LIST OF CONCLUSIONS AND RECOMMENDATIONS
1. The Select Committee on Economic Affairs was appointed
by the House of Lords on 7 March 2001. It was given the following
terms of reference: "to consider economic affairs".
2. The membership of the Committee, together with
their declarations of interest, is set out in Appendix 1.
Purpose and scope of the
Committee's inquiry into globalisation
3. Meeting the challenge set by its wide-ranging
terms of reference, the Committee announced on 22 March 2001 that
it would undertake an inquiry into economic globalisation.
4. In undertaking this inquiry, the Committee recognises
that it should not replicate the work done elsewhere by academic,
governmental or other institutions which have the resources to
conduct original research. The purpose of the Committee's inquiry
is more general. It is to take forward the debate on globalisation
- a debate described in the White Paper published by the Department
for International Development Eliminating Poverty: Making Globalisation
Work for the Poor as "a serious political debate about
the equitable management of globalisation".
5. Mike Moore, then Director-General of the World
Trade Organisation (WTO), described "globalisation"
in evidence to us as "a sort of slogan" which - unlike
"internationalism" - has a "menacing ring"
(Ev I, Q 1122). The prevalence of the popular belief that globalisation
is a harmful phenomenon is illustrated by the recent and dramatic
emergence of groups protesting against globalisation. The Committee,
sensitive to this anxiety, seeks to examine and to clarify the
diversity of opinion on the extent to which economic globalisation
should be perceived as a threat or an opportunity, and to make
recommendations for change where it seems to the Committee that
the costs of globalisation can be ameliorated.
6. Globalisation is an elusive concept. Many of those
giving evidence made this point. Dr Supachai Panitchpakdi, the
present Director-General of the WTO, for example, advised that
it was sometimes "best to avoid using the word 'globalisation'
as a catch-all word and to be as explicit as possible" (Ev
I, Q 562); and Gerry Rodgers of the International Labour Organisation
(ILO) said: "When it comes to globalisation more generally
I think we have to acknowledge that we are dealing with something
which is rather fuzzy." (Ev II, Q 1238). The Committee is
aware that globalisation is used to describe developments within
a variety of different fields of human activity and interests
- social, political, cultural, environmental as well as economic
- and that these different manifestations of globalisation are
inextricably interconnected. Although our remit is largely to
do with economic matters, we do not take this to mean solely a
concern with the economy as narrowly interpreted. In judging the
effects of globalisation, we have no hesitation, for example,
in bringing health, life expectancy, law and order, and education
into the picture. We recognise that these issues are both indicators
of, and precursors to, successful development.
7. Following the 2001 General Election, the Committee
was reappointed on 28 June 2001 and on 24 July 2001 the Committee
issued a Call for Evidence. The text of the Call for Evidence
is given in Appendix 3.
8. The Committee received over 50 written submissions
in response to the Call for Evidence and, between 17 July 2001
and 10 October 2002 took oral evidence from 56 organisations and
individuals. A list of witnesses is given in Appendix 2. We also
met Stanley Fischer, former First Deputy Managing Director of
the International Monetary Fund (from 1994 to 2001) and Mervyn
King, Deputy Governor of the Bank of England, who assisted us
by providing informal background briefing.
9. During the course of taking evidence, the Committee
visited a number of international organisations in Geneva (the
World Health Organisation, the World Trade Organisation, the International
Labour Organisation and the United Nations Conference on Trade
and Development) and the European Commission in Brussels.
10. The Committee is grateful to those who gave evidence,
written and oral, and recognises that the contribution which it
is able to make to the globalisation debate depends critically
on the quality and range of evidence which it has had the privilege
to receive. The Committee regrets very much that the United States
Government declined to provide evidence. Their reasons are set
out in a letter dated 16 October 2002 which is reproduced in Appendix
11. The Committee is also grateful to its Specialist
Advisers: Professor Anthony Venables, Professor of International
Economics, the London School of Economics, and Professor Michael
Wickens, Professor of Economics, University of York. It would
also like to record its thanks to Mr Martin Stewart who, with
Professor Venables, provided a briefing document for the Committee
at the outset of the inquiry (see Appendix 5), to Mr Adrian Lewis
who assisted in summarising the evidence and to those who contributed
to the organisation of the Committee's visits abroad.
Structure of the Report
12. The next chapter of the report (Chapter 2) sets
out the range of definitions of globalisation - both globalisation
generally and economic globalisation specifically - which have
been given to the Committee in evidence. This is to set the scene
of the globalisation debate. Chapter 2 also considers the question
whether the current period of globalisation differs (and, if so,
how) from previous periods of significant international economic
integration and, as part of that examination, attempts to identify
the driving forces behind current globalisation.
13. Whilst the majority of the evidence we received
favoured globalisation, no witness presented it as a process which
had no harmful effects. In the following chapters of the report
we give an account of the evidence received by the Committee of
some of the concerns about the impact, both internationally and
nationally, of economic globalisation and in each chapter we draw
conclusions and make recommendations. Thus, in Chapters 3 to 7,
we consider, within the context of opening up markets of all kinds,
issues under the following headings:
performance, poverty and inequality;
role of transnational corporations;
of the international trading system; and
international financial system.
14. We begin, however, by setting out an overview
of concerns and a summary of conclusions and recommendations.
Overview of concerns
15. We have become accustomed to reading newspaper
reports about protestors taking to the streets - in Seattle, Washington,
Prague, Nice, Gothenburg and Genoa - to protest against globalisation.
One of the principal motivations of the Committee in undertaking
this inquiry is to examine and attempt to clarify the reasons
which have given rise not only to the anti-globalisation movement
in recent years but also to a more widespread sense of anxiety
that globalisation is harmful.
16. A range of witnesses were asked for their views
about why they believed globalisation has given rise, at the very
least, to public disquiet and, on occasions, violent protest.
Two general remarks can be made about the evidence at the outset:
first, the opinions of witnesses varied and those who were critical
of globalisation cannot be regarded as an homogeneous group; and,
secondly, although some strands of protest are literally anti-globalisation,
in most cases critics of globalisation favour better globalisation
rather than no globalisation.
17. Dr Noreena Hertz, of the Judge Institute, Cambridge
University, for example, told us when asked about the concerns
of the anti-globalisation movement:
"Most people are not anti-globalisation
In some senses it is hard to talk about it as a movement because
it is a movement of movements; there are all these different groups
who are aligned in it, but
by far the majority are not
The way I would define it - and I am
defining it in a very particular way - is as a continuum where,
on the one extreme, you have people who go out on to the streets
of Seattle, Genoa, Prague, Nice, Gothenburg, or the hundreds of
thousands who go out and protest in Latin American countries or
in Africa. Then you might have over here the students who do not
want to buy Nike trainers because they are concerned about buying
things from sweat shops. Then over here you might have the housewives
and Women's Institute members who do not want to buy genetically
modified food because they are concerned about the things they
are giving their kids to eat. Then you have people like Joseph
Stiglitz, the former Chief Economist of the World bank who resigned
because he had come to believe that its programmes were exacerbating
poverty, or even George Soros, who tells me that he sees himself
as part of the anti-globalisation movement." (Ev II, Q 1651).
Dr Hertz continued: "it is a matter of making
globalisation work in a much better way for many more people"
(Ev II, Q 1652).
18. Professor Joseph Stiglitz of Columbia University,
alluding to what is widely perceived to be "a real sense
of hostility towards globalisation", suggested that "it
is not hostility towards globalisation, but it is really hostility
towards the way globalisation has been managed and to a particular
set of economic doctrines that have accompanied globalisation
on the part of some of the international economic institutions."
(Ev I, Q 711).
19. George Monbiot of The Guardian said: "I
feel the protest against what has been called globalisation
has brought together an extraordinary array of concerns, some
of which are mutually contradictory
it is a very broad
and very wobbly coalition indeed
" (Ev II, Q 1348).
Mike Moore also commented this diversity when he described a protest
march in Washington against the World Bank and the IMF, noting
that he had seen "vegetarians
marching with meat farmers"
(Ev II, Q 1122). Mr Moore also indicated his view that not only
was there an absence of consensus amongst the protestors in developed
countries, but that the generality of the protest against globalisation
in the developed countries ran counter to the perception of globalisation
in developing countries: "Half the rich world is protesting
about globalisation and the poor world is protesting about marginalisation
It is hard not to get irritated by middle class indulgences."
(Ev II, Q 1127).
The variety of concerns about globalisation
20. The Committee received a range of evidence about
why people are critical of globalisation, some came from the critics
themselves, some came from those who were the subject of criticism
and some came from commentators. Given the complexity of the concept
of globalisation, inevitably the criticisms were diverse (and,
as George Monbiot noted, not wholly consistent). They included
concerns about the economic consequences of globalisation (such
as income inequality and global shifts in employment), about the
way in which globalisation is managed at an international level
and about broader issues such as cultural homogenisation or environmental
degradation. We acknowledge that the evidence we received will
not have included every criticism to be made of globalisation
but we believe - or we hope - that we have identified the main
1 Eliminating Poverty: Making Globalisation Work
for the Poor, Cm 5006, December 2000, p 14, para 10. Back
Referring to the range of issues included in the United Nations'
Millennium Development Goals (income, education, health, gender
issues, governance and the environment), Nicholas Stern of the
World Bank suggested that they were "not only outcomes that
are desirable in themselves, they create means to higher incomes"
(Ev II, Q 1832). Back
In our Call for Evidence we use the expression "multinational
corporation". It was drawn to our attention that a more commonly
used, and less confusing, term is "transnational corporation".
Throughout the report, therefore, we refer to "transnational
corporations" (or TNCs). We take it to mean the same as "multinational
corporation" (MNC). Back