Paper for ‘New Zealand’s Role in World Affairs’ Conference, VUW, 5 December, 2003.
Keywords: Globalisation & Trade;
A few months ago I was awarded a three year Marden Grant to study globalisation and New Zealand’s role in it. It is a topic I have been long working upon, developing out of my earlier study of the New Zealand economy summarised in my book In Stormy Seas: The Post-War New Zealand Economy, whose theme can be summarised as ‘the fate of New Zealand will be largely a consequence of what happens overseas, together with our ability to seize the opportunities and manage the problems those events.’
Globalisation presents a definitional problem. Many writers avoid defining it analytically, instead characterising it by a series of particular phenomenon such as increasing trade, or capital flows, or logos, or international inequality; or to particular international institutions such as the World Trade Organisation or the International Monetary Fund and the World Bank or the European Union, or multinational corporations; or to particular policies such as free trade, liberalised capital movements, and so on. The London Economist described globalisation as ‘international capitalism’: many anti-globalisers might agree, perhaps adding ‘together with US hegemony’, or even ‘imperialism’.
Stanley Fischer, one time chief economist at the IMF, describes globalisation as ‘the ongoing process of greater interdependence among countries and their citizens’. Joseph Stiglitz, who held a similar position at the World Bank, defines globalisation as ‘the closer integration of countries of the world as a result of lowering transportation and communication, costs, and the removal of artificial man-made barriers.’ Both are focussed on contemporary phenomenon. But it is important that we take a historical perspective. Scholars argue that Nineteenth century globalisation was in many ways a more powerful and pervasive phenomenon that late twentieth century at least among peoples of European origin.
In the end a simple phenomenon-based definition like Fischer’s, may be the most fruitful. We follow Stiglitz, albeit also covering the nineteenth century, with globalisation is the closer integration of nations and regions. However, for an economist, a definition is not sufficient. We need a process, a mechanism. This study is organised around the analytical proposition of globalisation as the consequences of the reductions in the costs of distance.
That these falls have been dramatic is easily demonstrated by considering world centred on New Zealand. One hundred and fifty years ago it took three months to sail from Britain to New Zealand – carrying goods, people and information. Changes since then has reduced the shipping time to about three weeks, quartering distance in the world. But people, and light valuable goods can fly to Britain in under two days, a more than 98 percent reduction. Information can be zipped around the world virtually instantaneously.
If these changes are not spectacular enough, think of the changes for meat and dairy products. One hundred and fifty years ago, one could not ship them to Britain at all. The introduction of refrigeration reduced the cost of distance from – effectively – infinity to a small proportion of the products’ costs of production, and transformed New Zealand’s economy and society.
There is another lesson here. The cost of distance does not diminish uniformly for all products, people, and information, and therein lies its problem. I wont pursue this further here, except to say that the costs of distance are analogous to a tariff, and so all the economists’ theories of protection are available and useful. (Recall that the costs of distance are sometimes called ‘natural protection’.) But because there are only partial reductions in tariffs, and the reductions are at different rates for different products, the relevant theory is far more complicated and far more subtle than the crude theories that underpin free trade.
I shall be working on the theory, elaborating its insights as part of the Marsden project. Additional to the theoretical development, the work program looks like this:
2004
New Zealand and nineteenth century globalisation.
A Fulbright distinguished Visiting Fellowship to spend three months in the United States studying aspects of globalisation.
2005
New Zealand and twentieth century globalisation.
I hope to spend time in Europe studying the European Union which is a particularly interesting form of globalisation.
2006
New Zealand and twenty-first century globalisation.
My travel plans for 2006 are unclear, but probably should include Asia if there are the resources.
There are number of subsidiary themes. A central one is the changing role of the nation state in the international community. I am interested in the parallel of the creation of nation states in the nineteenth century in part to impose a common rule of economic law, and the creation of such supranational organisations such the WTO which are imposing a parallel rule of law across nation states.
Another theme is the possibility of convergence: whether globalisation forces countries to adopt common policies and eliminates cultural differences, or whether some independence, some choice of national living style, is possible.
Some countries are likely to appear prominently. For instance I expect to pay particular attention to the history of Germany, whose nation state is a creation of nineteenth century globalisation, and yet the same processes may have modified it out of recognition by the end of the twenty-first century. Intriguingly German culture is at least 500 years old, and seems likely to outlast Germany as we know it. Another interesting example is Canada whose trading relationship makes it an integral part of the North American economy, and yet the country maintains a nation state and a separate identity. It appears to be a contradiction of the inevitably of convergence. If I have time I’d also like to look at the Pacific Islands in a globalising world. (Australia, and Geoffrey Blainey’s notion ‘the tyranny of distance’, is of course an integral part of the study.) I am also interested in the diaspora as a globalisation phenomenon which maintains a national culture while becoming physically, if not emotionally, detached from a location. I hope we can do some work on the New Zealand one.
There are many relevant topics I will not have time to study. For instance, diminishing costs of distance has altered diplomacy as is evident by the way that MFAT has changed its operations over the years. Militarily, the invasion of Iraq is a very different logistic operation from the sort of thing which happened under the nineteenth century British Empire.
I mention also that the Marsden Grant, generous as it is in New Zealand terms, only funds some of my time. I am hoping to use some of the unpaid time for practical contract work relevant to the general project. One of the great advantages of being a consultant is the stimulus one gets from such projects. I have two underway at the moment.
The Marsden criteria includes a requirement that the research program should include an element of technology transfer. If my past record is an indication, there will be a number of publications, but the import of the Marsden requirements is that there should also be person-to-person transfer (an issue, incidentally, which is important in globalisation since the requirements of such personal intimacy limit the effectiveness of, say, electronic communications.) But because I have no academic sinecure I dont have graduates students or departmental colleagues to practice such a transfer.
Instead I proposed to Marsden that I would establish a New Zealand Centre for Globalisation Studies, to enable all New Zealand academics to participate in a broader research program. It will be a virtual, web-based centre which I hope will enable all academics interested in the phenomenon to participate, irrespective of where they are based: universities, research institutes, and independent scholars. Those outside the country will also be welcome to be involved, and hopefully it will become an interface between the New Zealand academy and the rest of the world in this multi-disciplinary area. Participants will not have to buy into my research framework of diminishing distance. Instead, the centre should attract scholars from all relevant disciplines and encourage mutual intercourse within and between disciplines and institutions, thereby enhancing the national research effort on globalisation, including in those areas about which I have not the time or inclination to pursue.
Unfortunately, there is not much funding for the Centre, only enough for a web-master, plus my time (which means less of it for research). But perhaps the Centre is an experiment, a test of the central thesis that distance is changing the way the world relates and can relate. I expect an announcement about the formal establishment of the Centre early in the year, but there will some public activity before then. You may want to note I have reserved www.nzglobalisation.ac.nz as the website.
In the interim, you can keep in touch via my website where you will also find, among other things, my published work on my globalisation research program, and further details of the Marsden application and grant, which will help me progress it.