Oleh/By : DATO' SERI DR. MAHATHIR BIN MOHAMAD
Tempat/Venue : JAKARTA, INDONESIA
Tarikh/Date : 16/09/94
Tajuk/Title : THE INTERNATIONAL CONFERENCE ON
HUMAN RESOURCES DEVELOPMENT WITHIN
THE FRAMEWORK OF INTERNATIONAL
PARTNERSHIP NORTH-SOUTH RELATIONS:
PROBLEMS AND PROSPECTS
May I say how delighted I am to be in Jakarta again, this
vibrant capital of South East Asia's most populous nation.
It is a great honour for me to be invited to address this
international conference organised by the Centre for
Information and Development Studies.
2. I would like, if I may, to share with you some thoughts
on the topic "North-South
Relations: Problems and Prospects".
3. The North-South divide is, as we all know, the per
petuation of the old relations between the imperial powers
of the West and their colonies. Having gained independence,
the former colonies expected to have a relationship as
between equals with their former colonial masters. But they
soon realised that this was not to be. All that has
happened is a name change from being colonies to being the
South and the ex-colonial masters are now called the North.
Oppressive pressures are now less direct and are applied in
the name of democracy and human rights instead. But the
effect is the same. The ex-colonies or the South must submit
to the North, to rules and regulations and policies devised
in the North for the North.
4. So, how do we conduct the relations between the South
and the North? How do we solve the problems arising from
this unequal relations in the context of the present? To do
so we need to review the development in both the South and
the North after colonialism went out of fashion.
5. After gaining independence the majority of the
countries of the South have been embroiled in political
struggles for control of the Government. Initially there
were attempts to practise democratic forms of Government.
But since as colonies they were all governed autocratically
by their colonial masters, it is not surprising that they
found democracy unmanageable. Many chose some form of
one-party state with a bias towards socialism, if not
communism. State enterprises and state control were the
preferred routes for achieving equitable distribution of
wealth among the people.
6. We have now learnt that socialism just does not work.
The idea that the state can provide every need of the people
in a poor country is just unrealistic. A rich country may
be able to do so to a certain extent. But poor countries
just cannot deliver. It is no wonder that many Governments
in the South failed. The socialist ideology rejects direct
foreign investment. Since state enterprises were often
badly run, Governments were forced to subsidise loosing
state and para-statal bodies. Being poor the Governments
were not able to do this adequately. In the meantime the
prices of commodities that are produced in the South keep
decreasing due to their total dependence on the markets
controlled by the North. Their imports of manufactured
goods from the North, on the other hand, kept on
appreciating in price. The terms of trade deteriorated and
the South became poorer than when they were under colonial
rule.
7. Failure to provide for the people's needs and
to achieve economic growth led to political instability.
Governments were changed but the administration did not
improve. As a result the aid received and the loans
obtained were not productively employed. Indebtedness grew
until the flow of funds was reversed, more going North than
South, from the poor to the rich.
8. With the demise of the USSR and Russian adoption of the
free market system, most socialist states in the South had
to jettison their ideology. Besides, they were also
pressured by the Western democracies to adopt a multi-party
system and the free market or face punitive measures.
9. The old problems returned. How do they manage a
democratic Government which neither the people nor the
elites are familiar with? A one-party Government is easy
but to submit to the people's whims merely complicates the
process of Government. The result is political instability.
In some states Governments change with bewildering frequency
without any programme being able to take off.
10. As for the economy, how do countries which have known
only state monopolies, with no private entrepreneurs,
private capital and management skill, switch to the free
market system? If they do succeed at all, all kinds of
pressures are brought to bear on them by the North. Their
Governments are subjected to all kinds of criticisms and
condemnations. They may succeed in embracing democracy and
the free market but they are always found wanting. They are
not democratic enough, they abuse human rights and workers'
rights, they pollute the environment, they are corrupt, etc.
In other words, try as they might, they cannot free
themselves from carping criticisms by the North, and often
times from overt pressures.
11. In the meantime the North, after losing their colonies,
decided to consolidate their position. A European Economic
Community was created which eventually evolved into the
European Union, a trade bloc, pure and simple. While before
the South could deal with separate countries and even play
one against another, they have now to deal with a solid bloc
of rich and highly sophisticated countries. The South
remained as divided as ever. And so commodity prices from
the South could easily be manipulated while the manufactured
goods from Europe go up continuously in price.
12. The United States did not join the Europeans, but then
the U.S. by itself is as rich as the whole of Europe. It
could apply its own pressure without need to get European
concurrence. During the Cold War, the North felt a need to
win over the South for fear of them siding with the Eastern
bloc. But once the Cold War was over, the South lost this
option too and became very vulnerable.
13. Had the North been made up entirely of Europe and
America, the South would really be economically battered.
There was nothing to prevent the North from fixing the
prices of their raw material imports and their exports of
manufactured goods. Their people were continuously
demanding higher standards of living. To meet these demands
they merely increase the prices of their manufactured
products and their profit margins. If the people in the
South could not pay, it was really just too bad.
14. However, Japan emerged as an industrial power with the
ability to produce practically all the manufactured goods
hitherto produced only by the industrialised West. The
Japanese business philosophy differed from that of the West.
They believe in market share rather than margins. Having
overcome their reputation for poor quality goods, they went
on to produce and market quality goods at very low prices.
15. There is no doubt that but for the Japanese business
philosophy, most of the people in the South would not have
been able to afford such products as automobiles and pick-up
trucks, radios and TV sets, and household appliances.
16. Resisted at first, the Japanese finally penetrated the
markets of Europe and America. Suddenly the industrial West
found themselves unable to dominate the very sector that
they created and excelled at. They lost huge segments of
their market, not only in the developing countries but also
within their own countries. Their automobile, steel, and
appliances industries began to shrink. Joblessness
increased so that now the average is 11 percent in Europe
and 7 percent in America. Ironically, it is at such times
of recession that the Governments need to spend more on
unemployment benefits.
17. But they are not about to change their life-styles.
High wages and the dole system continued whether they can
afford them or not. In the European Union, countries which
had low wages were actually subsidised in order to keep
wages as high as in the high cost countries. They would
rather have high unemployment rates in these countries than
allow intra-European competition. The result is that they
remain uncompetitive in the world market.
18. To make matters worse, there emerged in the Far East
more little Japans. South Korea, Taiwan, Hong Kong and
Singapore showed that they are as capable as Japan of
competing with the West. A new term was introduced - The
Newly Industrialising Countries or the NICs - the countries
which can really prevent any return to the good old days of
Western dominance of world trade and the good life. The
labelling is deliberate. Action must be taken against these
NICs to curb their growth.
19. Suddenly the welfare of the people, the workers and the
environment in the NICs and other economically dynamic
developing countries became a matter of concern to the West.
These countries must become democratic, or if they are
already democratic they must be more democratic. They must
practise Western values with regard to human rights and
workers' rights. They must not endanger or damage their
environment.
20. All these care and concerns for human rights
and democracy are laudable except that the obvious results
of applying Western standards would be to knock out the
competitiveness of the manufactured products of these
countries. It must be remembered that about the only
comparative advantage the developing South has is their
lower cost of labour. This lower cost is not due to
exploitation. It is just that the cost of living is low in
these countries. On the other hand, the North has many
advantages. They have the capital, the technology, the rich
domestic market and the management skills. If lower cost of
labour is taken away from the South, the result is not a
level playing field. It would be an acutely tilted playing
field with the South at the lower end. Their economic
progress would come to a dead stop. It is questionable
therefore whether the concern is for the good of the workers
in the South. It is far more likely that it is to protect
jobs in the North.
21. As for Japan, the country that had spoilt the market
dominance of the North, apart from protectionist measures,
pressure was applied to increase the value of the yen.
Although Japan succeeded in countering this initially, the
subsequent squeeze brought about the expected results.
Japan went into recession and all its exports lost their
competitiveness.
22. This is the situation that now prevails in the
relations between the North and the South, the former
colonial powers and the ex-colonial territories. The
problem is that the North cannot quite reconcile itself to
the loss of its colonies and its dominance over the world's
economy. Mere political dominance in a unipolar world is
apparently not enough for the North.
23. The South is not without blame. Enamored with
socialist theories they have largely failed to make
independence bring about stability and prosperity. Far too
much time was expanded on political struggles to gain
control of the Governments. Since every Government was
roundly condemned by the North for all kinds of sins, there
were always aspirants who were encouraged to overthrow the
current Government. And about as soon as a new Government
is set up, it too would be roundly condemned and its
overthrow encouraged. It is a game of musical chairs.
24. Clearly if there is going to be a solution, the
mind-set must be changed, both by the North and the South.
Although it is admitted that the South is more dependent on
the North, to some extent at least, the North is also
dependent on the South. To beggar the South is really not
in the interest of the North.
25. When Japan was rebuilding its shattered economy after
the war, it zeroed in on the developing countries as its
primary market. But these countries were generally poor and
poor people do not make good business clients. Whether by
accident or by design Japan started to invest in production
facilities in the South, in particular the ASEAN countries.
Almost without exception these countries prospered.
Naturally they then became good markets for Japanese
products. Indeed, the Japanese manufacturers tested their
products in South East Asia. And from South East Asia the
Japanese moved on to market their products in Europe and
America.
26. Clearly Japan's investments in South East Asia helped
develop these countries and in return these countries
provided Japan with good markets and helped the process of
Japanese industrialisation. Malaysia, for example, would
not be where it is today without the initial Japanese
investments. It is both the location for massive Japanese
investments and a lucrative market for their goods and
services.
27. Today foreign direct investment is an acknowledged
method to develop a developing country's economy. Of
course, now not only Japan but even the NICs are investing
and contributing towards economic development and wealth
creation everywhere in the South. And new and rich markets
have been the result, markets for the Japanese and the other
countries of the North as
well as for the NICs. Beggar them and the North will lose
the markets.
28. The lesson here is that it pays to help others get
rich. If the North wishes to recover economically, the best
way is to invest and enrich the South. Trying to stifle
their growth by insisting on social clauses and unilateral
import restrictions will merely impoverish the South and
deprive the North of potentially good markets. Worse, the
poor in the South will migrate North. They will go by the
millions to escape poverty at home. Even today the North is
having problems with migrants. Impoverish the South and the
problems will multiply.
29. It is true that a fast developing South can also be a
threat to the North. With their lower cost of labour, they
may push out some of the products of the North. But the
North is too far advanced in technology and too rich in
capital for the South to totally displace the North in the
marketplace. Certain niches are bound to remain with the
North. And these the North can exploit. In the aerospace,
telecommunication and computer fields, to name a few, the
South will always remain far behind. Let the South produce
the garments and other low-tech products in order for them
to grow economically. Instead of trying to force them to
limit their population, help them to provide good education
and to earn a reasonable living. Surely it must have been
noticed that the best way to slow down population growth is
good education and urbanisation of the people. People
living in the towns and cities just cannot afford to have
too many children even though their incomes may be higher.
It is not by accident that poor countries have high birth
rates. If they have no other asset, then they must regard
children as their only asset. It is the only thing they can
have more of without additional capital outlay. What
happens to the children is not of major concern. Any loss
can be made up.
30. What then are the prospects for North-South
relations? The answer is not very good at the moment. They
are not good because the basic premises are all wrong. They
are not good because the strong and the rich are not willing
to change their attitude. They want to perpetuate
colonialism in other forms and by other names. They are not
good because the South is still fumbling with democratic
forms and the complexities of the free market. And for a
long time they will continue to fumble.
31. The South may be weak and poor. But there is no way
they will return to the subservience of the past. They may
not be able to do much but their resentment will be
palpable. Imagine billions of these resentful people
overflowing their borders.
32. In the days of colonialism there were a few in the
North who felt strongly that colonialism was wrong. They
threw their weight behind the people in the colonies.
Gradually their views won acceptance by the majority in the
North. Colonialism became a bad word. And nations which
were victorious in the last war suddenly acceded to the
dismantling of their empires.
33. Is it possible that some intellectuals in the North
will see that the treatment of the South by the North is
wrong and dare to point this out to the peoples and the
Governments of the North? Is it possible that a new
dialogue between North and South be initiated in which both
the North and the South will be guided by more enlightened
people?
34. I do not have an answer. But unless and until there is
a sincere effort to discard entrenched mind-sets, the
prospects for North-South relations are not going to be
good.
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