Every cow in the European Union gets daily a $3 subsidy per head while 40 per cent of the humanity lives on less than $2 per day. Can the rising tide of globalization lift all boats and reduce poverty?

These pertinent observations were made by Jean-Pierre Lehmann, professor of the international political economy, IMD at a 3-day convention on "new management frontiers" organized by the Management Association of Pakistan (MAP) last week.

Scholars from business schools, government officials and corporate executives focused on best business practices to meet the challenges of globalization. Yet one of the key issues that came repeatedly under flashlight was the problem of poverty reduction, including unemployment.

Many participants acknowledged that poverty was a corporate issue and that providing employment was critical for social stability. With two billion people of the world living in poverty, it was stated that globalization would be judged on what it is doing to reduce poverty.

If the benefits of globalization are not passed on to the poor, globalization will fail to stand the test of this criteria. In a pertinent remark, the Chairman of Economic and Social Policy Cell Punjab, Sheikh Inamul Haq said, "justice is a very rare commodity in the world today."

One of the major challenges facing the world is a jobless economic growth. US Fed Chairman Alen Greenspan told the US Congress last week that the corporates are making "reasonably high profits" in the midst of what he called a "wage recession" in America.

Corporate restructuring is making business outfits lean and thin as a result of redundancies. High tech has increased productivity with fewer jobs and resulted in loss of customers (unemployed) and considerable industrial capacity remaining unutilized. This has made economic recovery difficult in face of low purchasing power of the consumers. Companies take a myopic view of things. They forget that poverty is a corporate issue.

Related to the issue of unemployment is the problem of mismatch between education and industry in Pakistan. Educational institutions produce skills not required by industry. The outcome is that many educated men and women are without jobs.

"It is human capital that drives the economy," Zarrar R. Zubair, director, Pakistan Institute of Management told the participants and elaborated his remarks with the help of facts and figures.

A World Bank study has revealed that the share of human capital in GDP is 64 per cent, physical capital 16 per cent and natural capital 20 per cent. The speaker stressed that there was need for massive investment in human resources to catch up with the industrially advanced states and for a balanced economic growth.

Literate and healthy worker is required to raise productivity and for realignment of labour in an age of knowledge workers. The real wealth of a nation is its people who are the most neglected.

Globalization is seen from two perspectives. It is a powerful engine of growth" for those who have immensely benefited from it; and it is, "a source of inequities and unfair distribution of profits", for those who have suffered because of it.

The United States has been the largest beneficiary of global free trade since the Second World War, says a US official. Globalization has been driven by multinationals. The popular perception, says the Chairman of the Atlas Group, Yusuf Shirazi is that MNCs know no political, economic and social barriers in fulfilling their company objectives.

It has led to unprecedented concentration of wealth. Just 480 billionaires in the world (including eight from India and none from Pakistan) control $1910 billion wealth, higher than GDP of $3.5 billion in 350 countries.

The underlying problem of globalization is the gap in incomes between the rich and poor nations and between the rich and poor within nation states. Global free markets create an alien market-dominant minority which is seen as the driver of global economic progress. The core problem is, "even playing field" for all international players.

Instead, there is growing protectionism in the West. The US Fed chairman Alan Greenspan told the US Congress last week that "free trade is a very complex and difficult" issue. He advised Americans to give priority to exports and an IMF report on World Economic Outlook released on the same day has called on the Asians to focus on domestic markets.

The West in general and the United States in particular need brainpower, resources and the markets of the developing countries on their own terms. They have failed to grasp the changing ground realities.

In the past fifty years, independent nations have industrialized and acquired economic muscle to stand up to developed states as demonstrated by G-20 led by China, India, South Africa and Brazil at Cancun. The group wants the rules of the game in the international trade to be changed. Unfortunately, the policy-makers in the Western world have a frozen mindset.

Foreign scholars attending the MAP convention advised the developing countries to build a coalition of the South. Despite divergent views, they can work to protect and advance their common interests on multilateral forums. The weak need to hang together.

They should build their clout, lever age and persuade developed states to open up their markets but they should avoid confrontation. The developing states like Pakistan have also to elevate their competitive strength through innovation, quality, price and the range of products offered to their customers in the international market. They should opt for best business practices. Corporate leadership should serve as an agent of change.

By denying the developing states increased inflow of capital, foreign investment and access to their markets, the industrialised West tends to insulate itself from global economy.

In fact foreign credit and investment have declined over the years. So have the leverage of West to influence the developing states. Finding the going tougher at multilateral forums, the USA is seeking bilateral trade.

In countries like Pakistan, foreign investment flows have been low and can come primarily through joint ventures as indicated in a presentation by Yusuf Shirazi on, "How to manage MNCs and local partnership."

He says the partnership harmonizes each others objectives, approaches and cultures and offers local business statesmanship. Locals also provide the "country know-how and know-who." They have a strong local base.

The successful joint ventures have to be seen in the context of market democracy by advocates of globalization. The free markets have created an alien minority-dominant market in several countries, provoking a backlash from the ethnic majority of the host countries.

There is conflict between the market and democracy. Market democracy has made representative democracy irrelevant at heavy social costs and progress. Democratic deficit is a growing problem. Of the 16 Atlas Group companies, eight are joint ventures with six multinationals.

Their combined assets are at Rs25 billion and their total sales is Rs30 billion. The groups pays Rs7 billion in taxes to the government annually, says the Group chairman.

Globalization is inevitable. But the existing world order must be re-organized and changed to serve the deprived nations and peoples. The existing route tends to create one economic crises after another, fragments national societies and divides the global community. The world is paying a heavy price in the form of continuing violence.