Sustainable Social Development in a Period of Rapid Globalization: Challenges, Opportunities and Policy Options

Chapter 1: Sustainable Social Development and Globalization: An Overview

Globalization – the growing integration of economies and societies around the world – is a complex process that is variously affecting different regions, countries and areas and their populations. To some, globalization is an inevitable, technologically-driven process that is increasing economic and political relations between people of different countries and areas. For them, it is seen not only as a natural phenomenon, but also as something good for the world. To others, there is a much deeper concern about the related challenges and possible risks associated with the globalization process. It is widely perceived that the process produces both “winners” and “losers”.

This study is concerned with the period of rapid globalization which began after the Second World War and further accelerated in the decades of the 1980s and 1990s. The process of rapid globalization is marked by the growth and spread of global corporations, accelerated by new information and communications technology, all of which can and is bringing about greater cultural and social integration and cross-border flows of finance, trade, knowledge, labour, pollution and other forces.

This chapter presents an overview of the socio-economic trends and a selective review of progress and developments in the ESCAP region in the last two decades of the twentieth century. Following a brief discussion of important aspects of globalization, the linkages between social development and globalization are broadly explored in the context of changing demographics and social institutions: population growth and mobility; ageing of the population; urbanization; changes in employment and labour market structure; changing family roles; the ongoing process of democratization; the remarkable rise of civil society; and issues of governance and private sector roles.

A. GLOBALIZATION OF TRADE AND FINANCE

Globalization means different things to different people simply because it is a ­historic and multidimensional process of socio-economic transformation at many levels of society.

To many economists, globalization, at its most basic level, involves the growth of international trade and finance. The process includes the expansion of foreign direct investment (FDI), multinational corporations, integration of world markets and the resulting financial flows.

Growth in trade has consistently outpaced the expansion of the global economy since the Second World War. As shown in box I.1, the world economy has grown 6-fold since 1950, rising from $6.7 trillion to $41.6 trillion in 1998. Exports increased 17-fold over this period, reaching $5.4 trillion in 1998. While exports of goods accounted for only 5 per cent of the gross world product in 1950, by 1998 this figure had climbed to 13 per cent. This expansion in trade is reflected in the increased number of transnational corporations, the growth of which has also soared in recent decades.

It is generally perceived that global economic development since the late 1970s and especially since the mid-1980s has been accompanied by the following: (a) a rise in the ratio of world trade to production, (b) an increase in global FDI flows and a rise in the share of such flows directed towards developing countries and (c) above all by the globalization of finance or the sharp increase in cross-border flows of purely financial capital in the form of debt, portfolio investment in stock markets and investment in currencies.

There are, however, differences in the degree to which these processes worked during the 1980s and 1990s. Although the Uruguay Round agreement on trade was signed in 1994 and implemented from 1995, trade integration has not accelerated very much since that time. Much of the increase in the ratio of trade to production at the global level and in the developed and developing countries occurred between 1970 and 1980, influenced substantially by the sharp rise in oil prices beginning in late 1973. The ratio then declined globally during the 1980s; it rose between 1990 and 1997, before subsequently stagnating, owing to a fall in the trade-to-GDP ratio in developing countries as a group, because of the deflationary aftermath of the financial crises of the late 1990s.

The really substantial expansion in cross-border flows in the 1990s occurred in capital flows, with FDI rising throughout the decade (during both “boom” and “bust” subperiods), whereas portfolio investments and debt flows rose initially during the decade only to decline after 1997. Thus, the globalization of trade and finance in the 1990s was pre-eminently a process that was ensured through large flows of finance and fixed investment across borders, especially into developing countries.

International trade, FDI and capital market flows raise their own issues and consequences. They provide potential benefits on the one hand and involve costs or risks on the other, thus implying different assessments and policies. Most agencies generally favour greater openness to trade and FDI because there are positive implications for economic growth and the costs or risks are low or can be managed and mitigated. There is greater caution, however, for other financial or capital market flows. Characterized by high volatility, these flows can promote boom-and-bust cycles and financial crises, which can in turn lead to a larger economic crisis, such as the one that occurred in South-East Asia and East Asia and elsewhere starting in mid-1997. With regard to these types of capital flows, the emphasis must first be on the development and strengthening of domestic institutions and policies that reduce the risk of financial crisis before undertaking an orderly and carefully sequenced capital account opening. Others have called for the consideration of stronger measures such as a currency transaction tax on these types of foreign exchange flows.

B. GLOBALIZATION AS SOCIAL, CULTURAL AND POLITICAL CROSS-BORDER FLOWS OF PEOPLE, KNOWLEDGE AND TECHNOLOGY

Too often the focus on globalization is on the cross-border flows of trade and capital, but there are other significant movements as well, involving people, knowledge and techno­logy. One observer argues that globalization comprises four elements: investment, industry, information and individuals (Ohmae 1995). The movement of people and knowledge/technology may be seen as the real driver and cause of globalization, generating institutional and social changes that are taking place within and beyond the geographic borders of nation States. Such movements are much more difficult to quantify than the impact of trade and finance flows.

Despite national restrictions on the movement of labour, the number of workers moving from country to country in search of better employment opportunities is growing globally. Between 1965 and 1990, the proportion of labour forces around the world that was foreign-born increased by about half. Workers’ remittances reached $58 billion in 1996. More people are travelling for tourism than ever before. Between 1950 and 1998, the numbers increased from 25 million to 635 million people a year.

People are increasingly interacting across borders, not only for commercial reasons, but also in matters of technology, culture and governance. Travel, the Internet and the media have stimulated exponential growth in the exchange of ideas and information. People today engage more than ever in associations that span national borders – from informal networks to formal organizations.

Globalization is driven by both “push-up” and “push-down” trends. The emergence of the World Economic Forum and other international structures, such as the World Trade Organization (WTO), and the increasing collaboration between the United Nations, WTO, the Bretton Woods institutions and the private sector in the Global Compact, reflect globalization from “above”. Globalization pulls power from the government down to civil society, but it also pushes power out past national borders to other regions and into the global domain.

These movements and meetings of people reflect that character of globalization, which the United Nations Secretary-General in a statement delivered at the closing session of the World Social Forum in early 2002 referred to as the potential of “partnerships for change” among government, business and civil society. Although nascent in many respects, there are institutional and social changes taking place within and beyond the geographic borders of nation States, although these are difficult to quantify. Institutional changes generated by globalization include modifications in policy, in industrial organization, in the regionalization of States and in the administration of laws and regulations that govern the behaviour of economic agents. States seem to be moving from regulating to investing in crucially needed public goods; from privatization to “publicization”; from Governments to “governance”, that is development of a space in which both public and private providers of services are driven by public interest and shared policy; and from building up the institutions of the State to building up public institutions.

As to the globalization of knowledge and technology, there is an emerging trend towards the development of a “knowledge economy”, one that is based more on knowledge than the conventional, resource-based economies. The capacity to access information and transfer it cheaply and instantaneously to individuals who put a high value on that information and are willing to pay for it makes this period of rapid globalization distinctive and opens up many possibilities and some problems for the future.

Although globalization of investment, industry, information and individuals is ­proceeding rapidly, it is an uneven process. Not all peoples and countries are participating in, contributing to or benefiting from globalization in a balanced way. The new rules of globalization – and the players writing them – focus on integrating global markets, then neglecting the needs of people that markets cannot meet.

C. GROWTH IN ASIA AND THE PACIFIC IN

A PERIOD OF RAPID GLOBALIZATION

During the rapid globalization years of the 1990s, evidence of economic growth in the Asian and Pacific region has been mixed. Although developing countries as a group recorded a slightly higher rate of growth during the 1990s when compared with the 1980s, this rate was not very different from that in the 1970s. What is remarkable is the consistent increase in the rate of growth of developing Asia, which is quite different from the experience of all the other regional groupings. Except in 1998, the region’s GDP grew at over 6 per cent per annum, whereas that of Latin America grew at 3.4 per cent and Sub-Saharan Africa at 2.4 per cent.

However, there are three aspects of this Asian experience that are worth noting. First, the Asian newly industrialized economies (NIEs), which were growth leaders in the Asia-Pacific region, recorded a significant deterioration in the rate of growth of GDP in the 1990s when compared with the previous two decades. Second, as the most recent estimates of the International Monetary Fund (IMF) show, the high growth in developing Asia has been sustained largely by the two largest developing economies in the region, China and India. Furthermore, a comparison of the estimated growth rates for the decades 1983-1992 and 1993-2002 points to a deceleration in growth in developing Asia as well. Third, GDP growth rates in 8 of 22 Asian developing countries decelerated between the 1980s and 1990s.

As previously mentioned, the remarkable growth performance of the region as a whole was influenced largely by the continued dynamism of China and the better performance of South Asia after decades of slow growth. The “tigers” of South-East Asia, including Malaysia, Singapore and Thailand, recorded remarkable and sustained growth for most of the 1990s until they were hit by the financial crisis of 1997. Recovery from that crisis has been fairly rapid, demonstrating the resilience of those economies and the favourable external environment, which permitted strong export-led recovery. Moreover, it should be noted that those countries and China have recorded high rates of domestic savings over an extended period. These rates have ranged from 30 to 50 per cent of GDP. Gross domestic savings rates in South Asia have been lower, averaging about 20 per cent. The high savers were also the countries that had high growth.

The economies in transition in Central Asia were severely affected by the break-up of the Union of Soviet Socialist Republics. These economies contracted sharply as they went through a painful process of adjustment. Modest growth resumed in the middle of the 1990s, but these economies remain fragile as they implement programmes to deepen reforms to become market-oriented economies.

As to the developing Pacific island economies, growth figures were discouraging in the 1980s and early 1990s. Average growth during the 1980s was approximately 2 per cent, and during the 1990s approximately 3.5 per cent. The five-year period leading up to 1999 was the most volatile, witnessing serious macroeconomic instability and fluctuation in real GDP owing to the effects of the Asian crisis and the vagaries of nature. Per capita GDP declined over those five years. However, starting in 1995, many countries in the subregion undertook major reforms that supported a gradual recovery beginning in 1998. In 1999, the year of recovery for the Pacific, the highest growth rate since 1994 was recorded. The GDP growth rate remained positive in 2000.

D. POVERTY REDUCTION IN A PERIOD OF

RAPID GLOBALIZATION

A major concern for many Governments in the region is the impact of globalization on social development. Have the living conditions of populations in the region, especially the poor and the vulnerable, improved or deteriorated in this period of rapid globalization? What are the challenges, opportunities and policy options for making greater progress towards social development goals, in this period of rapid globalization? More important, how can progress in the field of social development be sustained?

1. Poverty and social equity

In the ESCAP region as a whole, poverty, as measured by income/consumption standards, was declining in the 1990s. Poverty reduction in East Asia, South-East Asia and the Pacific was quite significant (27.6 per cent of the population to 15.3 per cent) in the 1990s. However, poverty reduction has been slow in South Asia (44 per cent of the population to 40 per cent) while the incidence of poverty has risen in Central Asia (1.6 per cent of the population to 5.1 per cent). The sharp reduction in the incidence of poverty in East Asia and the Pacific as a whole, as well as China in particular, has meant that the number of people classified as “income-poor” in these countries and areas also fell quite substantially during the 1990s. However, in South Asia, which is characterized by large populations and a high incidence of poverty, the smaller reduction in poverty incidence has not helped to prevent an increase in the number of income-poor. The largest number of poor people is in South Asia, particularly in India. Moreover, between 1996 and 1998, during which time East Asia was afflicted by the 1997 financial crisis, poverty rose marginally in the whole of East Asia and significantly in China, resulting in an increase in the number of income-poor in those countries. Currently, 800 million people, two thirds of the world’s poor, live in the Asian and Pacific region (ESCAP 2001d:15).

Additionally, income equality appears to have deteriorated in most countries and areas of the ESCAP region in the 1980s and 1990s. Of the 13 countries for which more or less comparable data are available, only in three were there slight improvements in the ratios of the richest 20 per cent to the poorest 20 per cent. In the remaining 10 countries, the ratios widened by 0.1 percentage point at one end and by 7.0 percentage points at the other. The average retrogression among the 13 countries as a whole was 1.6 percentage points (see chapter II for details of the countries and areas concerned).

2. Human poverty

Poverty is measured by more than just inadequate income levels. Poverty is a deprivation of essential productive assets and opportunities to which every human should be entitled. Everyone should have access to basic education and primary health services. Poor households should have the ability to sustain themselves by their labour and be reasonably rewarded, as well as have some protection from external shocks.

Beyond income and basic services, individuals and societies are also poor and tend to remain so if they are not empowered to participate in making the decisions that shape their lives. Poverty is thus better measured in terms of basic education, health care, nutrition, water and sanitation, as well as income, employment and wages. In addition, the poor may not have acquired essential assets because they live in a remote or resource-poor area, or because they are vulnerable on account of age, health, living environment or occupation. They may be denied access to assets because they belong to an ethnic minority or a community considered socially inferior, or simply because they are females or have a disability. At a broader level, poverty may stem from situations where gross inequality of asset distribution persists because of vested interests and entrenched power structures. Finally, essential assets may not be available to the poor because of a lack of political will to address the poverty situation, inadequate governance and inappropriate public policies and programmes.

Similarly, equity involves more than the distribution of income and wealth. Equity is also about the distribution of human capital, such as health and education, and productive assets including land, productive inputs, savings and credit. Markets and jobs are often difficult to access because of low capabilities and geographical and social exclusion. ­Limited education affects the ability of the poor to get jobs and to access information that could improve the quality of their lives. Poor health, because of inadequate nutrition and health services, further limits the prospects of work for the poor and prevents them from realizing their mental and physical potential. This fragile position is exacerbated by income insecurity.

In a landmark event in 2000, the United Nations adopted the Millennium Declaration and established the millennium development goals, most of which are to be realized by 2015. These goals include the reduction of extreme poverty and the worst forms of human deprivation such as hunger, child and maternal mortality, and lack of access to health services, education and safe water. An assessment of how the ESCAP region has progressed in meeting these goals is provided in chapter II. The targets on halving the incidence of hunger and malnutrition by 2015 deserve special mention. Currently, 515 million Asians are chronically undernourished, accounting for about two thirds of the world’s hungry people. Child malnutrition exacts its highest debilitating toll in the Asian and Pacific region, especially in South Asia. Of the required annual reduction of 20 million hungry people at the global level needed to meet the development goal of halving the incidence of hunger by 2015, 14 million such people are living in the Asian and Pacific region. However, this annual reduction target is not being met. It is estimated that more than half of the young children in South Asia suffer from protein-energy malnutrition, which is about five times the prevalence in the western hemisphere, at least three times the prevalence in the Middle East and more than twice that of East Asia. It is recognized that malnutrition is a major cause of child mortality. The rate of low birth-weight babies, which is alarmingly high in South Asia, also reflects the poor nutritional status of mothers. The United Nations Subcommittee on Nutrition has rightly warned that nutritionally deprived infants and children will suffer from handicaps in brain development, thereby producing serious repercussions on the intellectual potential of countries in this region.

In the developing Pacific island economies, Fiji, Papua New Guinea, Solomon Islands and Vanuatu suffer the most widespread poverty. Cook Islands, Samoa, Tonga and Tuvalu rank higher in socio-economic measures and exhibit little poverty. The Federated States of Micronesia, Kiribati and Nauru rank in the middle range of both socio-economic development and poverty. Papua New Guinea, Solomon Islands and Vanuatu score poorly on the UNDP (1999b) Human Poverty Index compared with 72 other developing countries. Populations in these countries have poor access to safe water and health services, and high percentages of underweight children under five years old.

3. Rural poverty

In most countries of the ESCAP region, the incidence of poverty was higher in rural than in urban areas. Asia alone has two thirds of the world’s rural poor, concentrated mainly in South Asia. One ESCAP study estimates that, in terms of numbers, there were 560 million rural poor people in the region in 1998 compared with 240 million urban poor (ESCAP 2001d). However, an emerging trend, in the context of generally declining poverty levels, is that the absolute number of urban poor is increasing while the proportion of the urban poor in the total urban population is declining. One explanation for this phenomenon is the migration of the rural poor to urban areas.

The urban and rural poor also have differential access to physical, financial and human assets. In contrast with the urban poor, the rural poor have less access to safe drinking water, adequate sanitation and health care. As chapter II will discuss, in most of the countries in the region there is a clear disparity between the rural and urban poor in terms of access to these basic services.

The environment of the rural poor is characterized by several interconnected markets: for agricultural produce and for agri-inputs; for production support (agricultural extension) or financial services; for information; for assets, including land and water; for labour; and for food and other consumer goods. Additionally, the trend both domestically and internationally is towards greater reliance on market mechanisms in all spheres of economic activity, including agriculture. This process of commercialization implies a greater reliance on markets for both inputs and outputs, as well as for food. However, the terms upon which the rural poor enter and participate in these markets are often inequitable. Many of the poor are currently passive participants, often obliged to sell at low prices immediately after harvest and buy at high prices with little choice of where they conduct transactions, with whom and on what terms. With the liberalization of domestic markets and the globalization of international markets, these markets have become more open, with more choices, but also more complex and uncertain.

Market liberalization programmes have been advocated in many developing countries in the region as a way of removing previous policy distortions that hindered agricultural performance. However, while they have improved prices for many agricultural producers, they have not necessarily tackled other “generic” problems such as agro-ecological conditions, the state of infrastructure (roads, communications, irrigation), the availability of finance within commodity systems, appropriate technology and the impact of government policy.

At the international level, liberalization has not benefited developing country agriculture substantially, because of the limits to trade expansion generated by restricted access to developed and developing country markets. For those developing countries that were expecting to gain from liberalized agricultural export trade, this outcome has been a major setback. Moreover, because agricultural growth is one of the important means of attaining poverty reduction, this aspect of trade expansion indirectly contributed to a slowing of the pace of poverty alleviation.

4. Gender equity

Poverty has a woman’s face. Of the 1.3 billion people in the world living in poverty, 70 per cent are women (UNDP 1997a); two thirds of the 800 million poor in Asia are women (ADB 2000a). Between the period 1965-1970 and the mid-1980s, the number of rural women living in poverty increased by 48 per cent, whereas the number of rural men living in poverty increased by 30 per cent (Jazairy and others 1992).

Gender disparity and discrimination are still common. In many Asian countries, one effect of gender inequality is the remarkably low ratio of females to males. While the worldwide ratio of women to men is 98.5 to 100, in the Asian region it is 95.7 to 100. India had 32 million “missing women” in 1986, and China had a somewhat higher estimate of 36 million missing women during the same period. Female infanticide, the neglect of female children and son preference are some of the practices that have led to the excess female mortality and the low ratio of females to males in these countries.

One very important area where negative impacts in gender terms deserve special attention is food security. It is a critical issue throughout South Asia, China and Indonesia as well as in several other parts of the ESCAP region. Structural adjustment programmes and their attendant processes – emphasis on the export of primary commodities along with cuts in food and other subsidies, the commercialization of agriculture, etc. – have led to higher food prices and declining food security, especially in peasant households. It is widely acknow­ledged in many Asian societies that when household access to food declines, women and girls face disproportionately excessive cuts in their food consumption.

Perhaps the most critical of the issues related to women’s poverty is the many forms of violence against women. One aspect of this deserves urgent attention – the trafficking of women and girls. During the past decade, this form of trafficking has become an issue of growing concern in this region, especially in South-East Asia. It has been conservatively estimated that at least 200,000 to 225,000 women and children from South-East Asia are trafficked annually, a figure representing nearly one third of the global trafficking trade. Women and girls who are victims of this international trade are at an increased risk of further violence, as well as unwanted pregnancy and sexually transmitted infection, including ­infection with the human immunodeficiency virus (HIV) and acquired immunodeficiency syndrome (AIDS) (IOM 2000).

5. Poverty and the environment

It is widely acknowledged that in the Asian and Pacific region the linkages between poverty, environment and development are both clear and serious. The nature or lack of development and the resulting poverty have been accompanied by environmental degradation, which in turn worsens poverty.

Environmental damage almost always affects the poor more severely. Floods, deforestation, industrial and transport pollution, water pollution and contamination, erosion, etc., affect not just the livelihood but the physical health and lives of the poor. The dependence of the poor, especially the rural poor, on resources from the environment is self-evident. As to the urban poor, all over the region, they generally live or work near polluting factories and roads, dumpsites and slums beside contaminated running water. Ironically, although the poor are hardest hit by environmental damage, they are seldom the ones responsible for the damage.

Recognizing that environmental degradation is a major causal factor enhancing poverty, the Millennium Summit adopted the specific goal of ensuring environmental sustainability and reaffirmed support for the principles of sustainable development, including those set out in Agenda 21.

Currently, the environmental challenges that this region faces are the following:

• Land degradation problems;
• Threats to the rich biodiversity of Asia and the Pacific from habitat alteration for cultivation, commercial logging, direct harvesting for export, the introduction of exotic species, pollution and global warming, as well as a range of economic and social pressures exacerbating these problems;
• Marine environmental protection;
• High water withdrawal as a percentage of available water, indicating
  water stress in a number of subregions;
• The deteriorating quality of urban air, transboundary air pollution, including haze caused by forest fires (notably in South-East Asia) and acid rain (notably in North-East Asia), and the impacts of global warming and climate change on various key socio-economic sectors (e.g., agriculture and human health);
• Magnitude and urgency of energy requirements;
• Adequate provision of a livelihood and basic infrastructure to sustain a healthy life and maintain a healthy environment;
• Development and management of human settlements in the region.

6. Poverty and vulnerability

Social risk and vulnerability, especially in the context of rapid globalization, have received renewed attention in recent years. Vulnerability to poverty is an important dimension of poverty and deprivation, but it is also a cause of deprivation. Many individuals, households and population groups, while not currently “in poverty”, are vulnerable to events that could easily push them into poverty: a bad harvest, a lost job, an unexpected expense, an illness or an economic downturn. Vulnerability may also be seen as determined by the options available to households and individuals to make a living, by the risks they face and by their ability to handle such risks.

As recent experience has demonstrated, it is not just the extremely poor who are vulnerable. Some of the more successful East and South-East Asian countries witnessed a reversal in poverty alleviation and human development as a result of the 1997 financial crisis. An example of the “new” or transitional poor created by the crisis is in the Republic of Korea, where between December 1997 and March 1999, 64 per cent of the country’s 6 million-strong middle class slid down to the low-income bracket.

It is the poor that are affected most adversely by natural or social shocks. They are the ones who are located in the most calamity-prone areas, live in the most vulnerable shelters, are prone to crop and employment loss in times of crisis and have no safety nets on which to fall back when adversely affected. Furthermore, already being at the margin of subsistence, even a small external shock is sufficient to push them into a situation where their survival is threatened. For these reasons, poverty and vulnerability are inextricably intertwined.

E. EMPLOYMENT EXPANSION

There was much optimism in the early 1990s that liberalization and globalization would have a favourable impact on employment and growth in developing countries. The rate and efficiency of investment were expected to improve in developing countries and financial liberalization was also expected to enhance the savings rate, contributing to even higher levels of investment. Deregulation and trade liberalization, by increasing internal and external competition, were expected to ensure the efficiency of such investment in terms of technology choice, scale and operation. The positive impact this would have on growth was expected to contribute to employment expansion.

Overall, however, the process of globalization has not been uniformly positive in terms of employment generation in the Asian and Pacific region. Employment expansion is driven not just by growth, or the expansion of output.

Between 1960 and 1995, the crude activity rate (CAR) for Asia as a whole increased only a little, from 47.5 per cent to 49.8 per cent. All of the increase in CAR is attributable to increased female labour-force participation. The CAR for females increased from 36.2 per cent to 40.6 per cent. However, these trends vary greatly by subregion and country.

It is clear that the economies that have participated most actively in global economic processes have expanded overall employment the most significantly. These include Hong Kong, China; Indonesia; Japan; Malaysia; the Republic of Korea; Singapore; and Thailand. While employment expanded greatly in China between 1960 and 1995, much of the stimulus came from internal reform as well as from the effects of international trade and investment.

International trade has stimulated female employment in much of Asia engaged in manufactured textiles, garments, electronic and electrical products and other household items for export.

As to FDI, even in countries with moderate success in attracting such investments, the FDI flows were not of the type that would fuel optimistic expectations with regard to output, exports and employment growth. A substantial part of FDI flows into developing countries after the liberalization of foreign investment rules was aimed at either increasing the share of foreign investors in firms they already controlled or purchasing outright a controlling stake in domestic firms that controlled a large share of the domestic market. Thus, foreign investment in these areas neither contributed to exports nor substantially to net additional employment.

During the period of rapid economic growth and employment expansion, the sectoral structure of labour forces in the region also shifted significantly towards industrial and service employment. In Asia as a whole, the proportion of the labour force employed in agriculture declined from 76 per cent in 1960 to 62 per cent in 1990. During that period, the proportion in industrial employment increased from 10 to 17 per cent, and the proportion in services from under 15 to over 21 per cent. While a much higher proportion of women than men work in agriculture, they shifted to industrial and service employment at about the same pace as men.

Employment trends clearly indicated a gender dimension. For most of the region (barring a few important exceptions such as India), the period between 1985 and 1997 witnessed a massive increase in the labour-force participation rate of women. This process was most marked in South-East Asia, which was also the most dynamic in its export activity.

Despite the growing involvement of women in the wage economy in Asia, they have continued to remain dominant in unpaid household work. The sheer fact that women continue to be the dominant suppliers of unpaid family labour is likely to be of growing significance in view of the current reliance on adjustment policies, which shift more economic activity onto unpaid family labour.

Evidence shows, however, that the “feminization of work” (whereby the female share of employment continuously increases) really peaked somewhere in the early 1990s. Thereafter, the process seemed to fade out. This is interesting because it refers very clearly to the period before the effects of the 1997 financial crisis began to make themselves felt.

It is obvious that one of the important reasons for preferring women workers in many export-related activities in particular has been the lower reservation and offer wages of women. The gender differentials are particularly sharp in the case of Malaysia, the Republic of Korea and Singapore, where the average female wages are just above half those paid to male workers.

The issue of paid and unpaid child labour, especially of girls, is also a concern. Asia has the largest child labour population in the world, estimated at 120 million children between the ages of 5 and 14 years working full time. For more than twice that many (an estimated 250 million), work is at least a secondary activity. This situation indicates that the rapid economic growth in some sectors and regions, along with widespread poverty, has involved using children not only in agricultural but also in commercial and industrial activities.

It appears that, just as the Asian economic boom was based largely on the paid labour of women workers, the pattern of adjustment to the crisis and associated slump in economic activity and employment may rely heavily on the unpaid labour of women. Adjustment packages tend to intensify the workload of women by increasing their participation in formal and informal labour markets. Women often assume the responsibility for “making ends meet” when real household incomes fall and therefore become the category of workers that dominates in the adjustment, because of the decline in their effective received wages.

F. SOCIAL INTEGRATION AND SOCIAL MOBILAZATION

Rapid social changes, erosion of family and community structures, demographic trends and forces of globalization have placed constraints on the attainment of social integration. Social integration and social mobilization policies are aimed at addressing the issues of social exclusion and societal instability at the level of families and households, communities and neighbourhoods, civil society, networks of associations, States and regions. At the most basic level, as discussed in the foregoing sections, social exclusion refers to growing numbers of people who lack opportunities and do not have access to the services, benefits and rights which others in this world enjoy. The exclusion is an involuntary and coercive inequality. The enhancement of social integration was adopted as one of the core goals of the World Summit for Social Development.

Despite the opportunities inherent in rapid globalization in the past two decades, appropriately 2 billion people are excluded from its benefits (World Bank, 2002). But the forces of globalization, coupled with demographic dynamics, place added pressure on trends of social exclusion and discord in the ESCAP region. These processes include poverty in its different forms, growing inequalities and changing labour-market conditions, increased population movement, the ageing of populations, the prevalence of people with disabilities, the HIV/AIDS epidemic, and crisis and adjustments, and potential for conflicts. They present challenges to building socially inclusive societies and prevent some people from achieving their full human development, sustainable livelihood, decent employment, minimum earnings and consumption, among other productive assets.

On a positive note, globalization has contributed to the strengthening of people’s organizations and civil society in general. Until recently, in countries characterized by authoritarian rule, the kind of independent association necessary to constitute a civil society was generally proscribed. In many countries, people pursued their interests through channels controlled by the Government. This situation is changing markedly, with more political systems and as economic crisis reduces the capacity of many Governments to maintain “clientelistic” or corporate structures of representation and control. Citizens’ initiatives are being encouraged by the international development community, which is currently committed to strengthening non-governmental organizations (NGOs) by channelling an increasing proportion of available funds for aid and relief to that sector. Certain aspects of globalization greatly favour the creation of new associations and interest groups in societies as well as networks of them to offer mutual support and resources. Such cooperation is particularly visible in fields such as environmental protection, equality for women and human rights. International links are also forged between some trade union and farmers’ organizations in countries of the North and South, as they forge collaborative efforts to meet the challenges of the internationalization of production. Neither democracy nor development can be achieved without effective organization of people to pursue common interests. The awakening of civil society in many parts of the region will foster development.

Institutions, laws, procedures and norms enable people to express their concerns and advocate for their interests within a predictable and relatively equitable context. This forms the basis of good governance. Efficient administration of public resources is an additional element in this definition. Contemporary concern with exclusion and social disintegration reflects the challenges to governance in meeting the basic needs of the citizens. Inefficiency, neglect and corruption have destabilized many Governments around the region over the course of the past few years. At the same time, however, even the most honest and efficient political systems have had to confront the enormous challenges of globalization, market integration and slow growth.

G. SOCIAL PROTECTION SYSTEMS

The experience from the 1997 financial crisis has shown that many of the countries affected did not have in place effective schemes to ensure adequate social protection against the macroeconomic shocks and other risks and vulnerabilities associated with the forces of globalization. Many countries in the ESCAP region discovered, painfully, that their lack of proper social protection systems had made their working populations vulnerable to excessive risk, increased the incidence and depth of their poverty and undermined their longer-term human capital investment efforts. Those with some social protection schemes in place are finding it difficult to sustain them financially and they are not adequate to meet the existing and emerging challenges.

Demographic trends have important implications for social protection policies and programmes. In 2000, the ESCAP region was home to more than 3.7 billion people, or 62 per cent of the total global population of 6.1 billion people. The region also contains the two most populous countries in the world: China, with a population of 1.3 billion, and India, with 1 billion. The number of countries in the region with 100 million inhabitants or more also increased from five in 1975 to seven in 2000.

A demographic transition is under way in the region, with a progressive decrease in the number of young children and a progressive increase in the number of elderly people. In the ESCAP region as a whole, the proportion of persons aged 60 years and older is expected to increase from 9 per cent in 2000 to 15 per cent in 2025. The proportion of older persons in the total population is likely to be much greater in East and North-East Asia, and North and Central Asia than in the other subregions.

Another feature of demographic dynamics is the prospect of urbanization. Between 1990 and 2000, urban areas absorbed nearly two thirds of the total population growth in the ESCAP region. In the next two decades, the total population of the ESCAP region will increase by 800 million, to approximately 4.6 billion, and the urban population will increase by 760 million, to about 2.2 billion. Most of this population increase in the ESCAP region (nearly 40 million per year on average) will be absorbed by urban areas.

Increasing urbanization and the changing age structure will be particularly significant in most countries in the ESCAP region, with the exception of the developed countries and those in North and Central Asia. Rural-to-urban migration will swell the youth population of the cities or urban areas of those countries in the coming decades. In the years 2000-2015 there will be a predominance of children and young entrants to the labour market.

Issues concerning the protection of labour migrants have also arisen. Theoretically, overseas labour migration can bring employment and financial benefits to the migrants and their families. However, the many recruitment agencies and the difficulties in regulating them have resulted in migrants being cheated of their savings and their salaries. Migrants overseas are often very vulnerable to exploitation because they do not know the language or the laws of the host country or how to seek redress for grievances. Unauthorized migrants are especially vulnerable, as they fear expulsion.

Female migrant workers, mainly employed as domestic and service workers, are vulnerable to sexual exploitation by their employers. Male migrants workers are concentrated in construction or industry, and engage in somewhat hazardous occupations, where injuries could leave them in debt as they often lack health insurance.

While Governments may accept that a certain number of international labour migrants may be beneficial for the economy, few have comprehensive policies to enable them to derive the maximum mutual benefits from the large migration flows or to deal with the consequences of possible long-term permanent settlement of migrant workers.

Poor population groups in developing countries are for the most part not reached by formal social protection systems. In fact, more than half the world’s population is not covered by any type of formal social protection, with Asia being far worse as compared with other parts of the world, except Africa. In South Asia, statutory security coverage is estimated at 5 to 10 per cent of the working population and the coverage is decreasing in some countries. In South-East Asia and East Asia, coverage varies between 10 per cent in Cambodia and 100 per cent in the Republic of Korea. The formal social protection systems in most South Pacific countries (Fiji, Kiribati, Papua New Guinea, Samoa, Solomon Islands, Vanuatu and recently Tonga) are limited in their coverage as well. Overall, social protection remains at dismally low levels in the region.

The poor are largely dependent on social protection mechanisms provided by non-State institutions, including family and kin, community, religious bodies, NGOs, savings and credit groups, and forms of “traditional” insurance such as burial societies. Among the lessons learned from the 1997 crisis is that the informal, family and community-based mechanisms, on which traditional societies rely as the main form of social protection, cannot cope with nationwide shocks that bring down a great number of households simultaneously.

The issue of the “fiscal crisis of the State” is a major issue facing most countries in the region. Most are constrained by scarce resources, in particular government revenues, in implementing social protection schemes. In some cases, this is a result of trade liberalization policies which restrict many sources of revenue (for example, tariffs) that were previously available to Governments to fund public social expenditures. In addition to the increasing restrictions on trade tariffs, there is a broad-based move away from payroll taxes towards indirect taxation, in favour of companies. A further significant trend is the increasing capacity of transnational corporations to find ways of reducing tax demands through ­practices such as transfer pricing.

H. ICT for the social empowerment of the rural poor

Information and communications technology (ICT) is a key enabler of globalization. It enables an efficient and cost-effective flow of information, products, people and capital across national and regional boundaries. ICT is not a panacea for rural development problems, but it has the potential to help the rural poor to leapfrog some of the traditional barriers to development.

Development experiences in and outside this region provide ample evidence that ICT could play an important role in poverty alleviation. Modern technology has much to offer in meeting the information-communication needs of rural communities. ICT can improve the access of the poor to health, microcredit and government services, create direct employment opportunities, provide training and education to people and support the poor in the production, storage and marketing of farm and non-farm products. ICT can also facilitate the generation and exchange of community-based information and stimulate the establishment of small and medium-sized enterprises and expand their market base. It can break barriers to knowledge by providing demand-driven information and services to the rural poor. Access to information is a key to building human capabilities. The real benefits of ICT lie in its ability to make possible powerful social and economic interventions by making critical information easily available. ICT can also break barriers to participation. The poor are traditionally isolated and lack the means to take collective action, but with ICT, poor communities have been empowered to voice their concerns to responsible groups that can take action to help them.

The challenge before developing countries in the region is to develop an appropriate national policy framework that would enable the disadvantaged persons and rural poor, who comprise the majority of their citizens, to benefit from ICT. Experience with pro-poor ICT initiatives has demonstrated that ICT has the potential to help the rural poor to transcend some of the traditional barriers to development.