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03.09.2007 The bright future of globalisation - SME Entrepreneur
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The bright future of globalisation - SME Entrepreneur

Within the past few decades, globalisation has proved peerless in creating prosperity and equitable possibilities for people all around the world. According to World Bank estimates, globalisation is the main reason absolute poverty will indeed be halved by the Millennium target date of 2015.

The empowerment of private enterprise, especially SMEs, has had positive consequences both in the western world and in emerging economies. Globalisation is not just about export-led growth. For instance, the current high growth rates in India would not be possible without the 17-20 per cent annual increase in the number of SMEs.

To ensure that SMEs can remain the main drivers of globalisation-led growth, it is important that the west does not balk at carrying out further economic reforms. Politicians in Europe need to seize the opportunity afforded by the current wave of economic growth to restructure archaic elements in labour and product markets. Succumbing to populist protectionist impulses in good times will make the bad times even worse

Market integration in the European Union has been a boon for competitiveness and dynamism. But it is only one side of the coin. Europe needs increasingly to assert itself and its interests on the world stage. The first fifty years of the EU were dominated by economic integration in Europe. The next fifty will need to look further beyond.

The WTO is the best place to start. The Doha round is on life support. The finger is currently pointing to Brazil and India, and these countries need to understand that they will be the biggest losers it the round fails. If it does, Europe needs to be ready to use its economic leverage to advance its own interests in different, bilateral ways. In the subsequent uncertainty, the EU cannot be too timid. We need to provide our companies opportunities to extend their reach outside the single market and provide their products and services for the benefit of the developing economies as well. The Commission has already prepared an outline of this kind of strategy.

For sure, bilateral "spaghetti bowl" trade ties are a second-best alternative to a common multilateral framework. But as EU enlargement has so potently demonstrated, preferential trade deals can decisively influence the development of democratic institutions and liberal values.

Europe is increasingly accumulating responsibility for combating climate change, world poverty, overseas conflicts and the like. This is a tricky strategy. The EU needs to make sure that, in so doing, it doesn't disadvantage or expose itself too much to forces beyond its control. On the other hand, Europe is already strong. If the balance is right, Europe can make sure that its solutions for dealing with these problems become the global norm. Healthy European self-interest can point the way to a beefed-up multilateralism for our global problems.
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