The author: Alfredo Toro Hardy. GLO Fellow, Venezuelan Scholar and Diplomat. More Info.

The Interviewer: Klaus F. Zimmermann/GLO President. Hardy and Zimmermann have been both Rockefeller Foundation Bellagio Center Resident Scholars in Fall 2017. Zimmermann has written the Preface in the book: Text.

GLO: Globalization seems to be under political pressure around the globe. How does it affect Latin America?

Alfredo Toro Hardy: Two powerful forces are measuring their strength by acting upon globalization.  One of them pushes globalization forward, while the other hinders its advance and promotes its demise. At this point in time, it is not clear which of them will end up prevailing.

China’s economic umbrella and Asia’s middle class, whose expansion is estimated to represent 80 percent of the world’s middle class increase up to 2030, remain as the fundamental driving forces of globalization. On the other hand, though, we find populism and the displacement that disruptive technologies bring with them. While populism creates boundaries and discourages free trade, the Fourth Industrial Revolution advances towards a decoupling between developed and developing economies. Under these two very different but converging impulses, globalization is bound to loose ground.

Uncertainty hinders Latin America’s strategic vision. If the future entailed a re-launching of globalization, it would seem obvious that the region should follow along its lines, positioning itself in the best possible terms so as to increase its potential benefits. However, if globalization is entering into a declining phase, Latin America would need to look for options.

Latin America faces, therefore, not only a dramatic uncertainty as a result of forces beyond its control, but also the need to anticipate, to the best of its abilities, unforeseen events to which it will have to act or react upon.

GLO: How can Latin America adapt best in the future?

Alfredo Toro Hardy: As said, Latin America finds itself at the crossroads of the pro and the anti globalization forces. Were the rules of the game to change now, the region would certainly suffer. Uncertainty, however, is an even greater challenge because positioning itself and planning ahead amid conflicting signs, becomes extremely difficult.

Globalization emerged as a result of political intention and technological feasibility. Now, it finds itself seriously challenged for the very same reasons. In both cases, political intention and technological feasibility are clearly identified with developed economies. 

What kind of route map can Latin America follow amid this confusing situation? To begin with, it is necessary to analyze the forces that push for and against globalization, trying to measure their respective strength, convergence capacity, and potential impact. This requires, at the same time, looking into the flaws, weaknesses and contradictions of such forces. With these elements in hand, it might be easier to envisage where the trends are leading to and, by extension, where Latin America might end up standing.

However, there seems to be no alternative to playing in both directions, with the aim of minimizing costs and maximizing opportunities. Within this highly fluid situation, pragmatism, resilience, creativeness, imagination, and the joining together of Latin American forces, will have to guide the region’s actions in the foreseeable future.

GLO: What are the challenges for globalization to become profitable for Latin America?

Alfredo Toro Hardy: The curious equation formed by protectionism, populism, political rage, algorithms, deep learning, robots, 3D printing, nanotechnology, indoor and vertical farming, an emerging post animal food industry, and renewable energy, among other elements, may end up suctioning the oxygen of globalization. It is not only that trade barriers emerge, but that it will make no sense to look for cheaper manufactures, products or services afar, when it would become possible to generate them locally at competitive prices.

A decoupling world economy, like the one that may emerge under such equation, presents no benefit for Latin America. Finding a path under such scenario would become extremely stressful and challenging. However, globalization has not been a rose garden for the region. Much to the contrary, it has imposed upon it the need to reconvert into labor-intensive manufacturing or to go back in time to commodities producing. Both of those options have being far from satisfactory.

A globalization that becomes profitable for Latin America would entail the possibility of overcoming such limitations, while opening a path towards a much more international service oriented economy and a more value added manufacturing. Unfortunately, at this point in time options are narrowing not widening.

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The Preface to the book has been provided by Klaus F. Zimmermann, who is the President of the GLO. He writes in the book:

“As so often in the history of mankind, the fate of globalization is currently at stake. It looks that, again, the world is at a crossroad between development or contraction. The economic and political polarizations within or between countries, the rise of populism and in the number of instable democracies, the tensions resulting from migration, inequality, robotization and the demands of emerging economies like China, India and (perhaps) Brazil require attention. Protectionism, EU-skepticism, nationalism, racism, and rejections of economic multilateralism and multicultural approaches are more and more important again. Only few critical observers of the world are not concerned about the current strength and the unclear directions of the driving forces behind which are only slowly understood.

            Globalization is much more than the persistent global integration of the flow of goods, capital and labor. It also merges cultures and enforces permanent and immediate exchange of knowledge and sentiments. Latin America was once forced into globalization and moved in unprepared, stumbling. It survived by adapting. It is an export-based economy. Moving out is likely to be very costly in economic terms. Is this unavoidable or are there alternatives?

            Globalization, as is widely perceived, mainly benefits liberal democracies. But is this really true? The Chinese pro-globalization strategy certainly questions this position. And if globalization collapses in parts of the world, does it make sense to follow like lemmings. Or is it not better to go on as much as possible, making use of the potentials of globalization? In other words, if the United Kingdom wants Brexit, why should the remaining European Union give up its ambitions?

            Globalization will not end, since economic advantages and constraints will enforce its rise, as it materialized over the entire history of mankind. The rise of homo sapiens over thousands of years has taken place due to a superior brain, excellent language abilities and a tremendous talent to collaborate. But, of course, mistakes of humans as of political and social organizations can cause a break of further globalization for some time. In many ways, the current world is not much more open than it was before World War I. In any case: Those nations and continents ignoring historical lessons will eventually fall behind.

            Alfredo Toro Hardy offers us some advanced training. The author of this book deserves significant attention: After a long and successful career as top diplomat, ambassador and global scholar, he is exploiting his deep knowledge and experience acquired over a worklife to tackle some of the most pressing issues of our time.

            I have had the privilege to learn him and his lovely wife during a joint tenure as a Rockefeller Foundation Bellagio Center Resident Scholar in 2017. During this period, we have had many inspiring and fruitful exchanges about the future of our worlds and the challenges of life. I have always been impressed by his deep insights in complex issues and his balanced views on controversial or even explosive topics.

            In his unique way, Alfredo Toro Hardy, develops the perspectives of his continent in this world at the crossroads as the Voice of Latin America. Chapter by chapter, he sharpens our views for the challenges to come and the strengths, Latin America is able to mobilize. What is the right path for the continent? As the author states (p. 388): “Fast moving nations, indeed, appeared to be the better prepared to take advantage from a rapidly moving global market-place.” It is ‘flexibility, stupid’, making the difference. Investing in the technological advances in the fields of knowledge transfer, communications and transportations still make sense. And the continent needs to embrace, not to fight the upcoming digital economy.

            Hence, Alfredo Toro Hardy suggests that (p. 393) “pragmatism, resilience, creativeness, imagination, and the joining together of Latin American forces, will have to guide the region’s actions in the foreseeable future.” This implies to develop the integration of the Latin American markets even further through free trade agreements while keeping open to the global economy, in particular to the European Union. Certainly, institutions like the Inter-American Development Bank and the Economic Commission for Latin America can be instruments to foster the process.

Klaus F. Zimmermann , President of the Global Labor Organization, Professor Emeritus, Bonn University, UNU-MERIT & Maastricht University, Rockefeller Foundation Policy Fellow 2017″

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