Stay open, but tweak domestic policies to cope with globalisation: DPM Tharman
SINGAPORE — Domestic policies are the “real differentiator” in the level of success that countries have in dealing with the effects of open economies and technological changes, Deputy Prime Minister Tharman Shanmugaratnam said yesterday as he pointed to the increasing backlash against globalisation in many advanced countries.
Speaking at the inaugural Singapore-France Economic Forum, Mr Tharman warned against the temptation to close the door to protect industries and jobs in an attempt to help those who have lost out from globalisation, as this option would leave more at the losing end.
Instead, countries should continue to keep their economies open and at the same time implement policies so that globalisation and inclusive societies can co-exist rather than be at odds with each other, he said in his opening address at the two-day forum.
His comments came amid the rise of protectionist politics that have been blamed for contributing to the surprise referendum outcome in June for the United Kingdom to leave the European Union, and Republican candidate Donald Trump’s win earlier this month in the United States presidential election.
“The only positive strategy forward is to stay open, find ways in which we can have increased co-operative internationalisation, but do far more to help those who lose out. That requires active public policies, it requires new public-private partnerships and it requires a new political culture that’s about everyone being on the same boat and that’s about inclusivity not just in economic terms but in social terms,” said Mr Tharman, who is also Coordinating Minister for Economic and Social Policies.
In his roughly 20-minute speech, he cited three areas of public policy that need more attention.
First, while focusing on redistribution to ensure those who lose out do not “fall into a deep ditch”, policymakers should also place greater emphasis on regenerating cities and industries to create jobs amid technological disruption and changes.
Second, there is a need to increase the penetration of innovation, especially among smaller firms, as this is a way to address inequalities and to achieve greater cohesion in societies, Mr Tharman said.
“On the one hand, you know there are remarkable innovations taking place, all around the advanced world ... But the spread of new technologies, ideas and business practices to the rest of the industry has been very slow ... for reasons not well understood. So the gap between the frontier and the rest of the economy has widened,” he said.
He added that many studies have shown that the widening of levels and rates of growth productivity between firms is responsible for much of the inequality around the world.
Finally, Mr Tharman said that technology has brought about changes in the nature of jobs, and this underlines the need to keep re-investing in individuals throughout their careers and to promote life-long learning.