By M. Bakri Musa

Chapter 5: Understanding Globalization (Cont’d)

Trading in Money

Malaysia cannot modernize its financial sector and capital markets in part because its leaders are stuck in the pre-globalization mindset, especially in their attitude towards money and capital. While to consumers everywhere money is now simply a convenient medium of commercial transaction, to Mahathir and other Third World nationalists it assumes a more important symbolic function. Currency represents the nation’s sovereignty. It is instructive that one of the first orders of business for many newly independent nations is to declare a new currency or to rename its old one. Malaysia has the ringgit, and to symbolize its new beginning, prints a portrait of its king on the paper notes. Money is no longer simply money, rather a powerful symbol of the nation’s sovereignty.

It is this symbolic attachment to the currency that irrationally dictates many economic policies. Governments often go to extreme lengths to defend the value of their currency when market conditions dictate otherwise, as happened in Thailand and Malaysia during the 1997 crisis. They forget that the value of a currency is a reflection of consumers’ and investors’ confidence in the underlying economy. A weak economy will have a weak currency, regardless of the nationalistic frenzy used to whip support for it. Malaysia lost billions and nearly exhausted its foreign exchange reserves in the early part of the 1997 economic crisis trying to defend the value of the ringgit, only to admit finally that the market was correct.
Read the rest of this entry »

By M. Bakri Musa

Chapter 5: Understanding Globalization (Cont’d)

Missing the Japanese Lesson

In truth many misread the Japanese success story. As Harvard’s Michael Porter observes in his book, The Competitive Advantage of Nations, the successful Japanese companies that now dominate global markets – the Sonys, Olympus, and Toyotas – had survived rigorous competition at home. They competed aggressively among themselves and only the most vigorous, those who have mastered the art of satisfying their customers and reducing the costs, go on to conquer the world. Meanwhile their “protected” industries – their banks and other financial institutions – are wallowing in misery, unable to compete beyond their shores.

As a result of its commitment to foreign trade, Malaysia enjoyed a boom in direct foreign investments in the 1980s and 90s. These later investors were chiefly in manufacturing, especially semiconductors. They were welcomed because, quite apart from the employment opportunities provided and foreign exchange earned, they spread the “Made in Malaysia” brand names worldwide. Malaysians also discovered that being a factory worker, even a foreign-owned one, was much more agreeable to working the land under the blistering sun. Indeed those foreign employers, yes even those companies owned by our former colonizers, were much more enlightened and generous with their benefits than native ones!
Read the rest of this entry »

By M. Bakri Musa

Chapter 5: Understanding Globalization

Foreign Investments in the Third World

Countries like Malaysia that were once colonized are rightly sensitive about their independence. Thus they tend to look upon foreigners, including investors, with suspicion. The typical Third World initial experience with foreign investors had been with companies of imperial powers. These companies were concerned primarily with plantations and extractive industries. In Malaysia they were involved in rubber plantations and tin mining. The exploitative nature of such investments was quite obvious. Rubber, tin, and other precious commodities were exported to Britain where they were turned into high-value manufactured goods and then sold back in Malaysia and elsewhere at exorbitant prices. Meanwhile the rubber tappers and tin miners were paid pittance for their efforts. The bulk of the profits were kept in Britain with little if any repatriated to Malaysia. No wonder such investments became easy targets for the nationalists.

Even though those early investments were clearly lopsided and exploitative (asymmetric, to use a modern phrase), nonetheless Malaysia benefited immensely. First, the country would never have known that it was capable of growing rubber had the British not started the plantations. Rubber is not indigenous to the country; the British brought the seedlings from South America via London’s Kew Gardens.
Read the rest of this entry »

By M. Bakri Musa

Chapter 5: Understanding Globalization

Leveling Effects of Globalization

What critics in the West fear most about globalization is its leveling effect. It means that an uneducated American will fare as badly as an illiterate Indonesian, but at the same time, a skillful Indian programmer can compete equally with his American counterpart. The much coddled and highly unionized American workers panic when they discover that Mexicans earning a fraction of the wages can do the same work just as efficiently and skillfully. Consequently many major American manufacturers are moving their plants to Mexico. It is this aspect of globalization that is most feared by America’s Pat Buchanans and Ralph Naders.

Manufacturing jobs are not the only ones heading south. Typists in India do the transcriptions for many American hospitals. My medical dictation at the local hospital is digitized, encrypted, and then transmitted via Internet to India, where it is downloaded and transcribed, and then re-transmitted back to America, ready for my patients’ charts by the next morning. Many of these typists are Indian doctors who found that they could earn more as medical transcriptionists working for American companies than as practicing physicians paid by the Indian government. Looked at differently, American capitalists value these Indian physicians for their typing skills while the Indian government does not value their healing skills.
Read the rest of this entry »

Chapter 5: Understanding Globalization

Earlier Forms Of Globalization

Globalization is not a new concept. There have been other globalizing trends in the past. Imperialism was one form, based essentially on the “White Man’s burden” to enlighten the dark world. The ensuing economic bounty to the colonizers is not to be dismissed. The world of the 19th and 20th Centuries was carved according to imperial dictates.

The legacy of colonialism is such that today Malays in Malaysia, having been under British rule, know more about Britain than about their kindred across the strait in Sumatra. Malays in Sumatra in turn, being under the Dutch, know more about Amsterdam than Kuala Lumpur even though imperial forces have long left the region. Colonialism was able to break longstanding cultural and ethnic ties. Another ready example is Hong Kong where its residents, though ethnically and culturally Chinese, feel more at home in Britain than Mainland China. Quite apart from their choices of names, there is a gulf separating Hong Kong’s Christina Chin with her affected British accent from Beijing’s Jeng Zoumin. They each view the world very differently; one ignores such differences at one’s own peril.

The difference between today’s globalization and the colonialism of yore is that with the latter, there was no choice. Colonialism was imposed; the colonized had no say on the matter. It was premised on the supremacy of the colonialists over the natives, or more crudely, the White man over the colored. Colonialism’s globalizing trends were restricted to within territories controlled by that particular power. There was freedom of trade and movement of people only within the colonial empire but not beyond. British colonies were integrated only with Britain.

Like colonialism, today’s globalization is also broad and transcends race and geography. But unlike colonization where there was no choice on the part of the colonized, in today’s globalized world no nation is forced to join in. It is completely voluntary. Read the rest of this entry »

By M. Bakri Musa

Chapter 5: Understanding Globalization

There is no doubt that globalization is an idea whose time has come….[But] the fact that [it] has come…does not mean we should sit by and watch as the predators destroy us.
—Mahathir bin Mohamad, Prime Minister of Malaysia

The one dominant force shaping the world today is globalization. That is, the increasing integration of markets, economies, infrastructures, and other institutions into one world standard. As a consequence, there is increasingly free movement of goods, capital, services, and ideas across borders.

Globalization, observes the World Bank, is not just an economic phenomenon. While the accounting of benefits and costs of globalization depends very much on one’s perspective, there is no question that it is a relentless and inevitable tidal wave. And like any tidal wave, one is more likely to survive and even thrive, if prepared. A non-swimmer will be swept away and drowned, but a skillful surfer will exhilaratingly ride the crest.
Read the rest of this entry »

By M. Bakri Musa

Chapter 4: Modern Model States

The Relevant Lessons For Malaysia (Cont’d)

Moving on to South Korea, it is an example of what sheer determination, discipline, and an obsession with learning and education could do for a nation. When General Park took over, he whipped the nation into strict discipline and regimentation, with a single-minded purpose of economic growth and competitiveness. Being an ethnically and culturally homogeneous society, Park was able to ramrod through many changes without giving rise to sectarian dissatisfaction. In Malaysia, with its racial diversity, any political or social initiative inevitably would be analyzed into which race would benefit more and which group would lose. This invariably leads to the politics of envy and resentment. No such problems arose in South Korea.

As Korean society changed however, Park remained the same. Pursuing the army analogy, even though his initial recruits were now disciplined and accomplished officers, Park still treated them as if they were still a bunch of raw recruits. The Koreans expected greater political and personal freedom commensurate with their economic gains, but the military-backed Park and his successors still persisted with their authoritarian mindset.
Read the rest of this entry »

By M. Bakri Musa

Chapter 4: Modern Model States

The Relevant Lessons For Malaysia (Cont’d)

A few years ago I was a guest teacher for the senior class in the school near my village in Malaysia where I once taught briefly as a temporary teacher. What an experience! I was taken aback at how passive and quiet the class was. There was no spunk or energy. In an attempt to stimulate some discussions I uttered some really silly and outrageous remarks just to get a reaction. Alas, none was forthcoming.

These students had such reverence for their teachers that they did not dare question me. More startling, when one brave soul attempted to challenge my statement, the others quickly put her down, saying in effect that questioning what I said was tantamount to being disrespectful, and thus sinful. It is this psychological effect imparted by the religious teachers that is so devastating.
Read the rest of this entry »

By M. Bakri Musa

Chapter 4: Modern Model States

The Relevant Lessons For Malaysia

At first glance, Malaysians cannot readily identify with any of these three countries. Although they differ in a number of significant ways, nonetheless each has important lessons to offer Malaysia.

The most obvious difference is that none of three countries have multiracial societies and the accompanying interracial problems. South Korea is ethnically and culturally homogeneous. There may be some tension between the Buddhist majority and the Christian minority, but that does not lead to serious social or religious conflict. Polarizations and schisms in Korean society are more along regional and class lines.

Argentina is also deeply divided along class lines; between landowners and workers, and urban and rural dwellers. Ethnic differences are not significant as they are all essentially Europeans. Granted there are significant differences between the Germans and the Italians Argentineans (language, culture, religion), but those are of not of the same scale as the differences between Malays and Chinese.
Read the rest of this entry »

By M. Bakri Musa

Chapter 4: Modern Model States

Don’t Cry For Argentina (Cont’d)

Argentineans today must be wondering where they had gone wrong. How could they mess up such a wonderful country? With such promising attributes and rich resources, it would take a real effort to screw things up. The Argentineans did not accidentally stumble their way down; they must have deliberately taken that path of self-destruction.

I deliberately choose this Latin American country as a negative example, of how not to proceed; or how to mess things up royally. To see how far Argentina had fallen, a cursory review o f its history would suffice.

In the early 20th century Argentina enjoyed a standard of living much higher than that of Western Europe. Capital and labor poured in to tap the country’s wealth. United States too had a massive influx of European immigrants at that time. Unlike America however, Argentina did not have a dominant culture into which the immigrants wished to assimilate. Thus the Italians in Argentina pretty well maintained their own culture and value system, as did the Spaniards and other Europeans.
Read the rest of this entry »

By M. Bakri Musa

Chapter 4: Modern Model States

Don’t Cry For Argentina

Argentina, like the rest of Latin America, conjures a certain indelible image. The phrase Banana Republic is both evocative and descriptive: a country dependent on a single commodity. It is banana for Honduras, sugar for Cuba, tin for Bolivia, and meat for Argentina. It also refers to military dictators in their crisp uniforms seizing power every now and then. Indeed such khaki attires are now chic, a trademark of the Banana Republic brand. Alas, these caricatures are all close to the truth.

There have been many ready explanations for Latin America’s social and political instabilities. These range from cultural, racial, religious, and even geographical. The famous Latin temper seems a reasonable enough explanation. Then there is the entrenched role of the Catholic Church. The cultural explanation, once favored, is now being resurrected. After all it was the “laid back” Southern Europeans rather than the presumably more “cultured” Anglo Saxons who colonized Latin America.
Read the rest of this entry »

By M. Bakri Musa

Chapter 4: Modern Model States

The Celtic Tiger (Cont’d)

Liberalization went beyond the economic sphere. It was Lemass’s political genius to use old-style nationalism, an inherent part of the Irish character, to forge progressive changes. A considerable part of that change involved a marked curtailment in the role of the Church both in the affairs of the state and in the lives of individuals. Thus birth control and sale of oral contraceptives were legalized in1979, despite severe opposition from the Church.

With the widespread use of birth control and the increasing participation of women in the workforce, Ireland’s former dizzyingly high birthrate declined substantially. The large unruly brood of yore is now replaced by one considerably smaller, but much better clothed, housed, and educated.
Read the rest of this entry »

By M. Bakri Musa

Chapter 4: Modern Model States

The Celtic Tiger

Ireland is synonymous with emigration. Throughout the 19th and 20th Centuries Ireland’s biggest “export” was its people; they were desperate to escape the wretched conditions of their homeland. Only recently was this trend reversed, with Irish émigrés returning to work in the republic’s burgeoning hi-tech and other industries.

In absolute numbers, the Irish immigrants were not large; there were far more Chinese and Indians who emigrated. But as a percentage of their home population, the number of Irish who left was truly staggering. During the Great Famine of 1845-48, out of a population of eight million, two million left: one in four! Imagine what would have happened had a quarter of China’s population left!
Read the rest of this entry »