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The Contemporary Pacific 12.1 (2000) 178-192

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The Pacific Islands and the Globalization Agenda

Stewart Firth

Globalization is now a central theme in the affairs of the Pacific Islands, and Pacific Islands governments are caught up in the rhetoric, the ideology, and the economic policies of globalization. Policymakers in governments and regional organizations pepper their conversations with phrases drawn from that branch of politics called economics. These include "achieving effective private-public sector partnerships," "improving the attractiveness of the foreign investment regime," "facilitating investment transparency," "adopting free and open trade amongst our Island countries," "reducing public sector subsidies," "promoting integration into the world economy," "enabling public enterprises to operate on commercial principles," "providing a policy environment to encourage commercial activity," and "encouraging the development of the private sector so that it assumes a leading role as the primary engine of growth."

Where did this language and these ideas come from? To answer these questions, it is first necessary to define globalization, a term with many meanings in the fin-de-si├Ęcle conversation about the state of the world, signifying everything from the expansion of Europe since Columbus to the emergence of a global, Americanized consumer culture. These wider historical and cultural definitions are too broad to be useful for my argument, which focuses on the economic dimensions of globalization. So I follow two economists, Paul Bairoch and Richard Kozul-Wright, in calling globalization a "process in which the production and financial structures of countries are becoming interlinked by an increasing number of cross-border transactions to create an international division of labor in which national wealth comes, increasingly, to depend on economic agents [End Page 178] in other countries" (1996, 3). Globalization is characterized by huge increases in flows of capital across the world, rapid growth in trade, the emergence of new kinds of trade in services, a technological revolution in communications that makes the globe itself the site of operations for major companies, and the growing influence almost everywhere of market forces.

People agree that these developments should be called globalization, but they disagree about whether globalization is new, to what extent it undermines the power of states, and how governments should respond. I consider these issues one by one.

First, globalization is sometimes thought to be without precedent. In some respects--above all in the speed and volume of global information flows--it has no parallel in history. Yet in other respects the globalization of the present era can be seen as a return to an earlier period of globalization that began in the 1870s and ended in 1914. As in the present, new technologies of transport and communications were combining with capitalism to spread markets worldwide. The parallels with the computerization of the late twentieth century were the railways, telegraphs, and underwater cables of the late nineteenth, linking the world together for the first time. At that time, as now, capital moved freely about the globe in search of the highest returns, and governments did not restrict its flow. Multinational corporations were engaged in direct foreign investment on a scale, which, at more than nine percent of global output in 1913, was comparable with such investment at the end of the twentieth century. Britain, the world's greatest exporter of goods, services, and capital, was a free-trade country and had imposed free trade on many parts of the colonial world. By this interpretation of global economic history, a first era of globalization was interrupted by two world wars, a depression, and a quarter century of government controls and Keynesian regulation from which the world began to emerge only in the 1970s.

Second, experts disagree about whether globalization undermines the power of states. Some say globalization is rapidly rendering national borders irrelevant to economic activity, removing the power of governments over national economies, and ushering in an era when states will cease to matter in a borderless world. Some even say the time is approaching when hundreds of millions of people in a global cyber-economy will interact economically on the Internet, beyond the reach of...


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