Saturday, March 11, 2006

"Ports Deal Shows Roadblocks for Globalization"

The WSJ has a major "Page One" article[pay site] today that says: Foreign Buyers, Not Trade, Spark a Political Backlash; Angst from Bolivia to France. Excerpts:

"Not so long ago, the globalization of business looked like an unstoppable steamroller. But the steamroller has run into some big roadblocks.....The new bidders are targeting sensitive industries such as port management, energy, banking and utilities -- businesses once owned, in some cases, by governments. The ensuing uproar reflects not just xenophobia stoked by fears of terrorism, but a broader anxiety among workers in developed countries: that their livelihoods are threatened by imports, immigrants and low-wage workers.

If this backlash doesn't fade, it could disrupt a world economy that has become increasingly interdependent. The risk to the U.S., in particular, is that it will discourage the flow of foreign money on which the U.S. economy depends, potentially raising interest rates and slowing the pace of economic growth.........Mainstream economists and senior government officials in the U.S. and elsewhere often welcome globalization. It can bring outside expertise and capital to domestic industries, lift living standards and create more efficient global supply chains. But the outrage over the ports deal shows that many voters think they aren't benefiting from globalization and, in fact, blame it for their economic insecurities.

Raghuram Rajan, chief economist for the International Monetary Fund, cites fear of terrorism, fear of unskilled labor taking away good jobs in rich countries and shock at the types of companies that are now up for grabs. As deals get bigger, he says, the target companies are "more central to a country and are raising fundamental questions."

It may be hard for the U.S. to turn its back on foreign investors, not just because it needs to finance its overseas borrowing, but because of evidence that such investment creates jobs.

Mr. Manzullo, the Republican opponent of the DP World deal, represents a heavily industrial corner of northwest Illinois centered around Rockford, which has been hit hard by the downturn in U.S. manufacturing. The region's saviors have been foreign investors fromChina, Israel, Italy and Germany who have swooped in to buy bankrupt companies.

Across the state, more than 250,000 people now work for foreign-owned companies. "People in my district are very aware that we live in an international economy," says Mr. Manzullo. But the ports deal, he said, "went right to the gut.""


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