Global integration depends largely on the global adequacy of capital. Capital is scarce and more so in the developing world. The financial capital available to the developing countries must harmonise with the human capital. Financial capital without the human capital - and for that matter the intellectual capital, is not conducive to producing economic benefits. Therefore, intellectual capital must develop side by side with human capital and financial capital.

High doses of education and training can only result in economic and technological development. The greatest human pride is the pride of wealth of knowledge and its prudent integration with intellectual integrity is the essential ingredient of global integration. Historically speaking, without knowledge, it’s sharing and management any effort made in whatsoever manner has not given any beneficial results. Further, economic attitudes, social behaviour and human expectations must merge within the local norms and social awareness and ethos. The world is getting more conscious of the damage caused by corruption - more the developed world than the developing one - at the highest level not only by loan and aid giving agencies but also the corporate sector; the same applies to lack of intellectual integrity displayed all round. Some western countries have legalised ‘kick-backs’ in dealing with the less developed world, the root cause of corruption whether one accepts it or not! The world on the whole is becoming averse to corruption and the lack of intellectual integrity so much so, that the academics have started thinking of Ethics as a subject as a part of formal education.

At Yale University, a new course, Ethics, Politics and Economics, has been started against ‘Politics, Philosophy and Economics’ at Oxford University. Harvard Business School has introduced a full-fledged subject of study on Ethics. Ethics must not only be at the individual level but also at the collective-government level. This development merely indicates that economic development without socio-political and cultural ethos is no longer valid. Thus the essentials of good governance, transparency, freedom of expression, the free flow of information, a commitment to fight corruption and a well trained well paid civil service are needed as much in the developing world as in the developed world.

Much of the problems of integration of the world economy are more pronounced in developing countries, caused by currency swaps and “flight by night capital”. These are recent trends and are rapidly on the increase. Capital must have deep roots and not exist on a basis of impermanence. It must not be at the cost of local capital and their gains. The reverse has never helped old or new globalism with whatever name it may be called. Movement of capital has been so unpredictable that the world’s largest long Term Capital Management Fund, although managed by an elite of economists - the Nobel laureates and the fund managers of global markets, have failed to judge the inherent strength or weakness of the world economies and particularly of the emerging markets on which basis the entire investment was made. In the absence of such a phenomenon perhaps there would have been no merger of the Bank of Tokyo with the Mitsubishi Bank and several liquidations, consolidations and mergers of the financial institutions in Japan or even the losses of the world’s largest brokerage house - Merrill Lynch. The currency crises, which affected the entire South East Asia, would have not affected the economies of these countries only if such capital was in fixed assets, inherently adding strength to the local economies. Flight of such capital must be checked and regulated. The world financial institutions must ensure that this kind of funding or fund management does not wipe out the progress made with a great deal of toil and effort in the developing economies. The world recession, whenever it may be, has been initiated by the volatile capital markets, the falling currencies and the “flight of capital by night”. Perhaps a minimum period for which this capital is to stay in a county should be ensured and its relevance to the local economy must be defined. If such capital and its movement will remain at the will and whims of the fund managers, surely the world economy will be the sufferer and particularly the economy of the less developing countries. As a result the effective use of capital for economic development of any economy in the West or East, in Latin America, Russia or Asia will not be possible. Such non-permanent capital has always had a short life and its unbridled and continued flight can only be at the cost of natural growth of any economy anywhere in the world.

Globalization, per se, is in question. It is being called new colonialism. Dignitaries like George Shultz say that IMF has not performed in the world’s interest as a whole and should be abolished. WTO is claimed to be only a representative of the 0.01% of the world’s largest corporations. The Economist reports that 80% global of means of production are in control of 1000 large corporations. There has been a crisis in Latin America and South East Asia. There is a famine in Ethiopia and in a dozen other places in addition to disease and deprivation - all over the world.

The Writer is the chairman of Honda Atlas Group.