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Published: November 29, 2005

 
 

Best Business Books 2005: Globalization

Forces for Fairness

About midway through Jeffrey D. Sachs’s brilliant manifesto, The End of Poverty: Economic Possibilities for Our Time (Penguin Press, 2005), the author, the director of Columbia University’s Earth Institute and noted economic advisor to developing countries, recalls an epiphany he had in 1994 while lecturing academics in India about the benefits of globalization. Having just steered Bolivia and Poland through financial crises and having helped them devise and implement successful economic liberalization reforms, Professor Sachs had every right to extol the virtues of foreign investment and lower tariffs. Yet as he waxed eloquent about open borders, he noticed a dour look in the eyes of his audience. It was then that he recalled a central fact of Indian history: India was once owned by a private company, the East India Company, which later transferred the country, in its entirety, to the British Crown.

Although Professor Sachs tells the story to stress the importance of historical context in economic development, it also puts the history of globalization in context. Globalization is not a modern technological phenomenon ordained by the Internet or cheaper airfares. Globalization — or, more precisely, long-distance and cross-border trade and commerce — has waxed and waned through the ages, manifesting itself in different ways at different times, and creating “winners” and “losers” each time. In contrast to many past books about globalization, which exalt the process or warn of its pitfalls, this year’s crop is less doctrinaire. For the authors of the five books discussed here — four academics and one consultant — there are both devils and angels in the details of increasing global business and in its consequences for developing and developed countries. Their concern is how to encourage the angels and diminish the impact of the devils. Or, to ask the question more explicitly: How can global capitalism be made more fair?

Diagnostic Perspective
Few people have more experience trying to create optimal conditions for economic growth than Jeffrey Sachs. He spent the 1980s advising governments that were undergoing major economic transitions, helping them handle macroeconomic challenges such as price stabilization. In Bolivia, he won renown for eliminating hyperinflation. In Poland, he designed a plan to reintegrate Poland’s economy with Europe’s and led efforts to cancel some of Poland’s debt. His less successful experience in Russia led to a widely publicized battle with the International Monetary Fund (IMF). More recently, he has been working on country-specific microeconomic challenges with the World Bank, local authorities, and nongovernmental organizations — and helping to spearhead the United Nations’ Millennium Project to eradicate extreme poverty (defined as an earned income of less than US$1 a day) by 2025.

In The End of Poverty — my choice as the year’s best book on globalization — Professor Sachs presents an unusually comprehensive and satisfying portrait of the global economy, and a convincing argument that good policies can go a long way toward bringing about the end of poverty on earth. His subject has been a vexing problem since the world first turned its attention to the plight of impoverished nations after World War II. As chronicled by many authors, countless billions of dollars in development assistance over the last 50 years have produced mixed results. Early postwar development efforts focused on such capital-intensive projects as building dams, roads, and factories on the theory that poor countries were rich in labor but starved for capital. Foreign aid was expected to fill a “financing gap.” When these efforts failed to produce the hoped-for results, policymakers, inspired by new models for economic growth in the 1970s and 1980s, turned toward building human capital through training and education, again with mixed effect. A third front in the war on poverty took the form of the “green revolution” championed by Normal Borlaug of the Rockefeller Foundation, who won the Nobel Peace Prize for his work in 1970. Improved agricultural techniques promoted by Mr. Borlaug and others helped end famine in many countries, notably India. Despite the success stories of East Asia, China, and now India, however, the problems of poverty — hunger, health epidemics, war — have grown worse in many countries, compounded by bad loans and corruption.

 
 
 
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