In dealing with this issue, I will recall some guiding concepts of the Secretary-General.
Davos (2001)
"If we cannot make globalization work for all, in the end it will work for none. The unequal distribution of benefits, and the imbalances in global rule-making, which characterize globalization today, inevitably will produce backlash and protectionism. And that, in turn, threatens to undermine and ultimately to unravel the open world economy that has been so painstakingly constructed over the course of the past half-century".
Millennium Report
While there are now "strong and well-enforced rules facilitating the expansion of global markets", efforts to secure "equally valid social objectives - be they labour standards, the environment, human rights or poverty reduction - have lagged behind". As a result, globalization has begun to generate a backlash. "To survive and thrive, a global economy must have a more solid foundation in shared values and institutional practices - it must advance broader and more inclusive, social purposes".
"The rapid pace of change today frequently exceeds the capacity of national and international institutions to adapt. So many things are changing at once that no organization on its own can keep track of them all - especially as the changes generally cut across traditional boundaries between academic disciplines and professional fields of expertise".
"The integrated global context also demands a new degree of policy coherence ... In short it is exceedingly difficult to successfully navigate the transition to a more global world with incomplete and incompatible policy fragments."
As the Secretary-General has so aptly described in the preceding quotes, the rapid intensification of globalization is straining the ability of the multilateral system to respond effectively to a growing range and severity of economic, social and environmental problems. Reform is urgently needed but, to be successful, this has to be based on a basic rethinking of the nature and instruments of global governance. Indeed, we need nothing short of a new multilateral policy paradigm that is in tune with the profoundly changed reality of the new global economy and society.
I have called this endeavour "integrated thinking" since it implies a shift towards an analytical framework that places a premium on understanding the strategic interrelationships between economic, social, environmental and other key variables as well as on the search for integrated and coherent policy solutions. This constitutes a change of the current approach which favours compartmentalised thinking and policy solutions exclusively within the existing mandates of each international organisation supplemented by loose coordination within the ACC. In saying this I am not overlooking the fact that existing international organizations are increasingly recognising that interdependence is growing in importance, that stronger coordination is required nowadays and that many joint projects are underway.
Indeed the annotated agenda of this session clearly recognises the importance of these issues by highlighting the "need to deepen the common understanding of the synergies that had to be fostered among financial, economic, social, cultural, technological and human rights dimensions so as to strengthen the knowledge base for such integrated approaches". An important new impetus has also been given to inter-agency coordination by the need for an effective follow-up to the Millennium Summit Declaration. In addition, the last meeting of the ACC also recognized the importance of coordinated action to identify priority Global Public Goods that could "strengthen international governance, further policy coherence and advance the goals set at the Millennium Summit".
Welcome as this recent shift in thinking is, we also need to recognize that these are still early days and much remains to be done to realise these ambitions. As yet, modes of thinking and policy prescriptions have not really changed fundamentally. It is against this background that I am making the case for more integrated thinking as an essential component of the new style of global governance that I believe is urgently required today.
Why is there this pressing need for integrated thinking? A basic reason is that globalization has been eroding the effectiveness of existing modes of governance based predominantly on the regulation of the economy by the nation state and we are clearly lacking a coherent rules-based international system in socio-economic matters. The vacuum is evident.
At the national level, the effectiveness of monetary and fiscal policies has been reduced because of the greater openness of economies and the concomitant increase in the transnational mobility of capital. While growth and wealth creation are strongly stimulated, macroeconomic stability is more difficult to ensure, implying greater international contagion of economic problems and increased socioeconomic insecurity for many people. These developments, together with the shift of power and political influence from public to private actors that has emerged in the current environment of progressively open societies and freer markets, have made it more difficult for the state to play its traditional rule-making role to achieve common social goals.
There is also the visible rise in social tensions fuelled variously by the hardships felt by losers, resentments over the unfairness of distributional outcomes, growing rejection of the legitimacy of unaccountable private power, and a sense of growing exclusion of non-state actors from governance structures. The latter is, ironically, being felt at a time when the capacity of groups within civil society to organise, disrupt, and communicate has been greatly enhanced by the revolution in information and communications technology.
There has not been a parallel increase of effectiveness in existing structures of global governance. Premised as they are on effective governance within nation states and weak cross-border linkages, their capacity to compensate for growing problems at the national level is limited. For example, the existing financial architecture was not designed to cope with massive short-term flows of capital. Ensuring global economic and financial stability is therefore far more challenging than hitherto. Similarly, the role of development finance is more problematic in a world where official flows are dwarfed by private flows. There are similar challenges in almost all other areas of international action. For example, the scale and speed of contagion effects has increased with respect to infectious diseases as a result of vastly increased cross-border movements of people and goods in the wake of globalization. Similarly, immigration pressures have increased with improved and lower cost transnational transport networks, the telecommunications revolution, and the rise of transnational criminal syndicates. The spill-over effects other countries of civil conflict, the suppression of human rights, labour exploitation, and increased poverty have also increased for the same reasons.
In essence, the growth of global markets has not been accompanied by a commensurate development of agreed rules, regulatory mechanisms, policy coordination, and cooperative action at the international level. As a result, global public "bads" proliferate and intensify at the same time that the growing need for the provision of global public goods remains basically unmet. In social and human terms these deficiencies in global governance aggravate problems of growing inequality and insecurity between and within nations.
But there is a further complication that has to be noted. The problem is not simply one of growing international interdependence per se in an increasing number of areas. It is also that the interdependencies amongst these variables themselves have intensified. For example, the rapid growth in both trade and investment flows have made countries more interdependent while at the same time the interrelationship between the variables themselves has grown stronger. It is thus increasingly difficult to deal with trade issues in isolation from those relating to investment. Similarly, the link between the functioning of the international monetary system and the attainment of social objectives within a country such as the reduction of poverty, strengthening socioeconomic security, and full employment are now more direct and extensive. The financial crises of the past decade have left no doubts on this score.
At the same time, trade and investment flows have become increasingly important determinants of the likelihood of attaining key social objectives. Both trade and investment flows are now key parts of the transmission process for diffusing new technologies to developing countries. The extent to which these countries succeed in absorbing new technologies is central to their ability to capture the benefits being generated by globalization. Another dimension of the interrelationships inherent in this example is that the pattern of diffusion of new technologies across countries, as well as among different social groups within countries, is an important component of inequalities between and within countries. Yet another example of the direct and significant interrelations between apparently unconnected variables arises from the HIV/AIDS pandemic. The international regime of intellectual property rights is being questioned in relation to the ability of poor countries to provide relief to the afflicted in their midst. Moreover, the HIV/AIDS case also highlights the links between health and labour issues since the pandemic has raised issues relating to the supply of labour (especially of skilled labour) and discrimination at work.
Given both increasing global interdependence amongst countries in the case of particular issues, as well as stronger interconnections between issues, traditional piecemeal approaches to policy analysis and operations by international agencies are incapable of delivering the integrated policy solutions that this new situation requires. A narrow focus on a single sector or issue is likely to lead to sub-optimal outcomes in view of the growing significance of side-effects or spill-overs on other important issues. This has the double disadvantage of thwarting other important objectives and of missing out on potential complementarities and synergies. In some areas, governments are receiving conflicting policy advice from different agencies. More generally, this approach is a serious barrier to developing the holistic view that is required for understanding the multifaceted and rapidly evolving process of globalization.
In an era of globalization it is more than ever essential to see, as it were, the global picture clearly. It is equally important to understand current, as well as evolving, interrelationships between different parts of the picture. It is only then our thinking and action can be put in the appropriate overall context. A global and multidimensional phenomenon needs a global and multidimensional understanding.
If the foregoing is accepted then we have to confront hard questions such as: what should we integrate in our thinking? How can we give effect to the results of this new integrated thinking?
The response to the first question is that we should provide room in the policy and research agenda of our institutions for coordinated and substantive work that addresses overarching global problems of the day such as the causes of, and remedies for, the uneven spread of the benefits of globalization both between and within nations and the diverse social dimensions of globalization. This would yield the knowledge base that is necessary to give substance to the objective, that for the moment is just a slogan, of "making globalization work for all" that most of our agencies have recently invoked.
Using integrated thinking to address this question will require that we begin by casting the net widely in order not to prejudge which factors are important and which not. We would thereby avoid the risk of excluding potentially important factors and interrelationships. From this broad base we should then proceed, with an open mind, to select the strategic variables and interrelationships that the research and policy formulation would focus on.
This method of proceeding would, in particular, help to redress the still widely prevalent tendency to deal with economic and social variables in a largely dichotomous way. This has often led to the costly neglect of social and institutional variables from both policy research and prescription. More integrated thinking would have led to better outcomes since it is being increasingly demonstrated that what are traditionally considered non-economic factors such as basic rights, voice in society, social and political institutions, the degree of social protection and the quality of governance exert a strong influence on economic efficiency and outcomes. The ample benefits from the policy complementarities inherent in marshalling all relevant forces available within the multilateral system towards the attainment of desired objectives need not have been sacrificed. At the same time the costs of working at cross purposes in relation to objectives that are in principle complementary could have been avoided.
Like other organizations, I think in particular of the comprehensive approaches to development that have been developed so far, such as the CDF, PRSP and UNDAF. We are trying, within the ILO, to take the first steps to apply this approach to policy integration. The concept of Decent Work now provides the strategic framework for organising all of the ILO's activities. The strategy of achieving Decent Work for all involves the simultaneous pursuit of four key objectives - employment growth, respect for fundamental principles and rights at work, promoting social dialogue and strengthening and extending social protection.
The basic rationale for this strategy lies in positive interrelationships between the four components of Decent Work. Policies to promote the highest possible rate of high productivity employment, through an enabling environment for enterprise creation, are vital for ensuring greater equity in the distribution of the benefits of globalization and economic growth, as well as any poverty reduction strategy. Income from employment, in its wider sense including self-employment and sustainable livelihood, is the predominant determinant of the economic welfare of most of the population. Ensuring full respect for fundamental principles and rights at work supports this goal since it empowers working men and women to exert influence within the enterprise and within society to enhance the quality of work. Policies to extend the coverage of social protection contribute greatly to the reduction of poverty and to attaining a higher degree of socioeconomic security. They also contribute to improved economic performance and to fostering more positive attitudes in workers towards economic and technological change. Social dialogue among employers and organized workers has proven to be a characteristic of many successful enterprises, facilitating the distribution of the benefits of wealth creation in the good times and the way of dealing with many negative market outcomes, in the bad times.
Apart from policy development, research and analysis, integrated thinking also needs to permeate the process of designing, as well as monitoring and evaluating, the rules and institutions that govern the process of globalization. At the design stage the potential impact of a new set of rules or institutions in one area on others needs to be analysed. The social impact of these changes also need to be carefully assessed and fed back to influence decisions. Obviously, the objective function should be to minimise the negative social effects and maximise the positive. The procedures for designing rules and institutions also need to allow for the participation of all relevant stakeholders since it is the best way of ensuring that all pertinent considerations are tabled, and of finding a fair and workable compromise among competing concerns. It is not difficult to see why the above arguments should also apply to the monitoring and evaluation of how these rules and institutions are working.
It is appropriate to conclude with a few thoughts on how the outputs of this new thinking can be applied. If integrated thinking is evenly assimilated across the multilateral system, then an important precondition for more effective partnerships and coordination would already be put in place. The basis for meaningful discourse within the system would exist in the form of a common overall framework within which each agency can situate its own mandate and work and see how it relates to that of others. Effective coordination for policy harmonisation and collective action can be more easily secured. If, as it ought to be, this common framework is broad enough to include the role of other actors such as business, trade unions and civil society, then the necessary task of developing relationships with these other actors will also be greatly facilitated. Such broad linkages are increasingly necessary for attaining common objectives in the current context of globalization.
But at the same time, the multilateral system continues to be centred on government representation and action. So that we also need to understand better and re-evaluate the key function of the State in this new global setting. Continuing to weaken states is not a good answer to the problems of globalization. Protecting laggard bureaucracies that have difficulty modernizing, isn't either. The challenge of developing the contours of an effective modern state is ahead of us.
This approach to coordination and common action can be buttressed in several ways. Firstly, common values and objectives should be developed as explicitly and as clearly as possible since this is the sine qua non for organizing common action. For example, respect of macroeconomic equilibrium, the environment or workers' rights should be part of a common multilateral approach. The UN Conferences of the 90's is a good point of departure for this exercise. Secondly, work should be structured around finding comprehensive solutions to major problems rather than around functional remits. This does not imply that we should downgrade specialisation, which remains indispensable. The problem has not been specialisation per se but fragmented and poorly coordinated specialisation. To borrow an analogy from international trade theory there are no benefits from specialisation, unless there is trade in the products of that specialisation. Thirdly, there should be more frequent and substantive policy dialogue amongst the technical staff in different agencies, centred around the application of integrated thinking to diagnosing and finding solutions to major common problems. Finally, more integrated information systems would greatly facilitate the essential task in each agency of continuously taking into account the ongoing research and operational work of other agencies.
I want to thank you for permitting me to put these ideas before you. If they are of interest, I wish to invite you to think together with us on a limited effort in which we are embarked in the ILO - that of understanding better the social dimension of globalization and, particularly, the relationship of the world of work and the global economy. This is, of course, only a part of the global endeavour of integrated thinking within the multilateral system, but it might help to develop methodologies and expand our common knowledge base of these phenomena.
I also hope that all of us together and through the normal ACC mechanism, can deal with the wider issue raised in this paper. I firmly believe that it will enrich our common tasks and make our policy proposals more responsive to the realities of the beginning of the 21st century.