A Hard Look At Global Capitalism

Scratch a street protester in Seattle, Washington, or Prague in the past year, and he'll know everything that's wrong with global capitalism: It wrecks the environment, it chains young women to sewing machines, and it takes the public mining company and sells it off to the President's profiteering friends.

Tap a global investment banker, and he'll leak the next big deal: a certain African state that's opening up its markets just in time for you to get in with your mother's retirement money.

In the decade that has passed since international capital markets replaced government lending as the hot ticket for world development, no other topic has sounded more polarized than the debate over globalism. Wall Street's "hands off the market" is wearing thin, and so are the nyet responses of the critics.

Global capitalism has done enormous good. But the results are uneven, and its boom-or-bust nature exacts a high price. To find out why global capitalism brings out such varying results in different countries, we've spent the past five months looking at its effects around the world.

Led by Senior Writers Pete Engardio and Rose Brady, a team of reporters visited a dozen countries and talked to more than 150 players, from government officials to Colombian tribal leaders and Indonesian sneaker makers. Their multifaceted story reveals a new, more realistic view that is gaining hold as globalization moves on to the next level.

Senior Writer Paul Raeburn reports on the Chad-Cameroon pipeline, the massive ExxonMobil Corp. project that has become a cause celebre in the war against global capitalism. Asian Regional Editor Mark L. Clifford, Beijing Bureau Chief Tiff Roberts, Brussels Correspondent William Echikson, Senior Writer Aaron Bernstein, Singapore Bureau Chief Michael Shari, Asian Editor Sheridan Prasso, and Colombia Correspondent Suzanne Timmons look at global investment and trade and their frequent consequences: sweatshops and disenfranchised indigenous people. Latin American Correspondent Elisabeth Malkin reviews what happens when big money meets bad government in Guatemala. And Asian Economic Correspondent Brian Bremner, European Economic Correspondent David Fairlamb, Mexico City Bureau Chief Geri Smith, and Finance Editor Julia Lichtblau tackle the rough effects of capital flows and how they might be mitigated.

The new realism supports globalism--but recognizes that open markets won't deliver prosperity by themselves. It takes a lot of work to fix banking systems, educate a deep bench of private and government officials, and prosecute corruption. Smart investors also recognize that unless multinational companies shoulder more of the social costs themselves in countries where governments are weak, street protesters will probably set the rules for them.

The big themes raised in this report aren't new to BUSINESS WEEK readers. Our correspondents in key developing markets have been covering the rise of global capitalism for the past decade--great boons and spectacular crashes. This on the scene reporting is the brand of journalism that BUSINESS WEEK does best. Our Special Report launches a series on this vital topic that you'll be seeing in the months ahead.


Our Annual Offshore Fund Scoreboard, also in this issue, contains a lot of new material, thanks to Editors Ina Kichen and Julia Lichtblau and Banita Shinh of our sister company, the Standard & Poor's Micropal group. Complementing our own risk-adjusted performance criteria, we've added qualitative ratings from S&P. Our ratings of the risk of losing money in any fund now use five clear gradings--from Very High to Very Low, and the information section shows in which of seven European countries funds are registered for sale, as befits the new personal investor market taking root in Europe.

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