GLOBALIZATION AS A CHALLENGE
Developing Countries under Great Transformation
Kenichi Ohno
December 5, 2001
The Asahi Shimbun Evening Edition
The globalization of developing countries is far more than increased contacts with therest of the world through economic liberalization and information technology (IT). Withstrong and weak countries, the power distribution in the real world is highly
asymmetric. The integration of a developing country into the world economy hardly
affects the societies and ideas of industrialized nations, while developing countries areforced to undergo fundamental changes in that process. For them, globalization istantamount to transforming themselves under intense external stimuli so they can beincorporated into the existing global system. Moreover, this task must be accomplishedwithout losing one’s ethnic or national identity. Developing countries are experiencing
the same challenges that Japan went through in the second half of the 19th century
when it opened its doors to the outside world after a long isolation. Anyone who travels
or lives in developing countries, for pleasure or work, will do well to recognize thisdynamic pain by the heart and not just by the head.
While the challenges are similar, developing countries today face a different
environment from that faced by Japan at the start of the Meiji Era (1868-1912).
Compared with Japan in the past, both the government and the private sector of atypical developing country lack competence. Despite that, the newcomers are now urged
to adopt international best practices quickly, among which democracy and the market
economy (especially of the American type) are the most important. However, many
developing countries are unable to control their own destinies effectively under such anintense integration pressure. This tension leads to instabilities like the confusedtransition to market in Russia, the Asian financial crisis and the rebellion of developing
countries against the World Trade Organization. The September 11 terrorist attack was
the most violent reaction of this kind so far.
Vietnam, the country I have been advising in the last several years, also has undergone
drastic changes. Around 1993, Vietnam broke loose from the self-imposed isolation andrejoined the world economy. Since then, the number of foreigners has increased greatly.

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Through investment, aid and tourism, foreigners are now the main driving force of theVietnamese economy. Virtually all houses facing city streets have been converted intoshops and restaurants. Souvenir shops targeting Japanese women have emerged ingreat numbers. Cheap Chinese motorbikes, some legally imported but mostly smuggled,
are flooding the Vietnamese market, prompting even school kids to travel on them andadding to the already bad traffic situation.
If we look beyond these obvious changes, more subtle impacts of global integration canbe detected. An increasing number of children migrate from poor rural villages to Hanoi
to peddle postcards, T-shirts and other petty merchandise on the streets. They sendmoney to their parents back home if they are lucky enough to attract many foreign
customers while avoiding police who catch them for bribes. Some end up pushing drugs
or engaged in other criminal activities. With an inflow of foreigners and their economic
influences, street vendors today face entirely different future prospects from theprevious generation. English and email are their passports to a better life, but whether
they can make use of these new opportunities depends mostly on their own hard work,
plus luck. It is interesting that these youngsters in Hanoi who are routinely exposed toforeigners and foreign products show no sign of embracing foreign cultures except only
superficially. Their attitude toward interpersonal and romantic relationship remains
surprisingly conservative. Compared with Japan, the generation gap in Vietnam isnegligible and, for most, traditional values still dominate. My young Vietnamese friends
giggle and wonder if a foreigner like me can understand their complex way of thinking.
But far from perplexed, I am truly fascinated by the way the Vietnamese people areadjusting to foreign intrusion and new materialism while retaining their spiritual core.
The Vietnamese government is fully aware of the country’s economic position in theinternational pecking order and understands the severity of international competition.
In principle, they are willing to actively participate in the global economy. Their biggest
problem is inability to come up with effective, concrete measures to meet this challenge.
If all trade barriers are removed without careful preparation, most domestic industries
would surely collapse under competitive pressure and mass unemployment would result.
Naturally, the government wishes to strengthen at least some of the industries before
the trade liberalization bites. Although the idea is sound, it is taking too much time forVietnam to choose candidate industries or appropriate measures to support them. Verylittle progress has been made on this in the last several years. The reasons for thispolicy paralysis include a dearth of competent officials, bureaucratic sectionalism and2political interference. Time is running out before they have to face the reality ofinternational integration.
Ideally speaking, my job is to work with a developing country facing a dilemma like thisand contribute to their economic policy. Performing this task well would require
enormous knowledge, experience and patience. Quality of policy advice criticallydepends on how deeply the researcher is versed in the ordinary life and thinking of thepeople in that country. Needless to say, the contents of proposals must be revised as
circumstances change. What bothers me most is that some Western donor countries andinternational organizations with much greater influence than me try too often to fit thecomplexity of development problems into a simple mold. When compelled to choose
between a free economy and a control one, most people would opt for the former. Yet thiskind of abstract debate is useless and even harmful. What developing countries need is
not a general solution but a concrete mix of market and government that suits an
individual case in front of them. Models and data analysis are fine, but logic alone
cannot answer their most urgent questions. To understand what works and what does
not in the context of a particular society, one must somehow become a part of it until one
can hear the voice of that society. If this technique could be transmitted from heart toheart, that would be the ultimate secret of development economics.
Some things in life can be analyzed rationally but many others defy clean solutions.
They must nonetheless be accepted as significant and meaningful. Accelerating
computers and producing high-precision missiles require a lot of rational thinking. But
the drama that unfolds when a society, a complex organic form as it were, meets anothersociety cannot be described adequately with a single framework. In development, it iseven possible that two conflicting ideas are equally true. This irrationality is healthyand should be welcomed. In the 21st century, societies that can live with a great amountof irrationality may be more resilient than those with less tolerance. Japan is theworld’s largest provider of economic assistance and has also begun to give policy advice
on development in recent years. Furthermore, the Japanese people are becoming more
active in nongovernmental organizations to help the poor in the developing world. To
succeed in these endeavors, it is imperative to mobilize all human faculties including
not just reason but also will, feeling, intuition and passion. At the same time, Japan
must decide how to cope with the influential powers in the West that tend to apply auniversal strategy to all developing countries.

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Born in 1957, Kenichi Ohno graduated from Hitotsubashi University's department of economics in1981 and received a Ph.D. in economics from Stanford University in 1987. He was an economist with
the International Monetary Fund and an associate professor at Tsukuba University before he becamea professor at the National Graduate Institute for Policy Studies. He received the first Osaragi JiroAward for Critical Works with his book “Globalization of Developing Countries.”

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