Alexander Rinnooy Kan, March 22 2011
Although most people aren’t aware of it on a daily basis, we live in a highly globalised world. The products we use are assembled all over the world; billions of dollar circulate around the world every day via the global markets, and national economies are becoming more and more interlinked every year. Not only has this process brought us great prosperity and reduced absolute poverty in the world since the 1980s, it has also made countries increasingly dependent on each other. A recent event that showed this was the 2008 financial crisis. However, what are exactly the consequences of globalisation for the Netherlands? And how do these consequences relate to the ‘globalisation stress’ that has arisen over the last years? That is what Alexander Rinnooy Kan, chairman of the Dutch Social Economic Council (SER) addressed in the Who’s in Town lecture Sustainable Globalisation on March 22, 2011.
Dr. Kan started his lecture by constructing a base for understanding globalisation and its effects. The definition of globalisation was quickly given and the theory was briefly described, as the speaker assumed that “you more or less know what globalisation is, and I hope that this lecture can add to that”. Dr. Kan then continued by stating the main points of his presentation. Firstly, he cited the title of Friedman’s famous book ‘The world is flat’ to declare the exact opposite: globalisation has not made the world flat. Indeed, differences matter more than ever in a globalised world, as there is profit to be made in being interestingly different. Secondly, if it weren’t for China, the success story of recent globalisation would have looked much bleaker; in fact, it can be doubted whether globalisation would have been a success at all.
Although there have been three phases of globalisation in the past one and a half century, the last phase – starting in the 1980s with the economic boom of China and India – is the most special. Not only is the scale of international investments very large, outsourcing of the production process and Research & Development have become the norm, leading to the ‘unbundling’ of products and services. Dr. Kan gave the example of radiologists in Europe, which are becoming ‘outclassed’ by expert radiologists from India who carry out the analysis of MRI scans while the Western world is sleeping.
Not only has globalisation changed the production chains of goods and services, it has also lead to increased prosperity and, as has been mentioned earlier, decline of absolute poverty. However, dr. Kan warned, there is a large ‘China factor’ at play here: the disproportional growth of China has caused the world absolute poverty to decline, while the continent of Africa has gained 60 million people who earn less than $1 a day over the past decades. Moreover, income and equality have not always been positively affected by globalisation, as especially in the UK and US inequality has increased during the last globalisation period.
Do these effects then justify the fear of globalisation that has arisen recently? No, dr. Kan firmly stated, this fear is irrational and fundamentally incorrect. Dr. Kan continued by taking the Netherlands as an example. The typically Dutch trader’s attitude has caused the Netherlands to profit hugely from globalisation. The SER study on the effects of globalisation on the Netherlands showed that due to the effects of globalisation, the Dutch income distribution has been stable for the past 15 years. Also, even though 4000 jobs have been lost due to globalisation, 23,000 jobs have been created due to economic collaboration with China. Moreover, even within a transnational framework such as the European Union, the influence a country has on policy making and integration, e.g. national health care or immigration policies, has been preserved. Thus, the fear that globalisation causes the Netherlands to lose control over their own destiny is fundamentally wrong and irrational.
In his presentation, dr. Kan alternated between referring to statistics, giving examples and telling anecdotes. Along with small jokes and his ability to answer most questions from the audience, this made the lecture accessible to students from all disciplines. As a result, there were many questions from the audience that touched on many different topics. However, it was this amount of questions that formed the weak point of the lecture; by answering them during the lecture, the discussion eventually took place during the lecture. Consequently, the two hours were up before dr. Kan was able to finish his presentation on globalisation in the Netherlands. Nevertheless, during these two hours dr. Kan had given an effective description of the global effects of globalisation, and the points he did make are sure to be pondered over by tonight’s audience.
By: Koen van Bemmelen
