Welcome to the Official page of the State Visit to India

Honourable Governor and Chancellor of Goa University,
Distinguished authorities,
Distinguished Professors and guests,

It is a great pleasure to be here at Goa University. It gives me the greatest honour to be awarded a Honoris Causa degree by your school. I know that this is the first time Goa University awards this degree and it is highly significant for me that this ceremony takes place in the “Kala Academy”, designed by a world renowned architect of Portuguese/Goese origin, Charles Correa.

India stands as a symbol of the new integrated world and one of the countries where growth has been more impressive over the last two and half decades.

Being in India, and being an economics professor myself, I thought it could be of interest to express my views on one of the major economic issues at the outset of the twenty first century: globalisation

A single word that epitomizes, for better or for worse, the economic environment that currently moulds our lives and that will certainly shape our future.

We can think of the original Vasco da Gama trip from Portugal to India, in 1498, as the dawn of globalisation. That trip proved that the Indian and Atlantic Oceans were linked. A new viable trade route was opened between east and west. This fact has contributed greatly to the perception that the globe is a single, unified entity: an idea that is still the basis of today’s notions of globalisation.

I am less interested in a precise definition of the word “globalisation” than in reflecting on how a more integrated world can create a better and more equitable place to live in.

Amartya Sen has said, in his book, Freedom and Development, that "The real debate associated with globalisation is, ultimately, not about the efficiency of markets, nor about the importance of modern technology. The debate, rather, is about inequality of power."

I certainly share his concerns.

To the extent to which globalisation has led to a better allocation of resources at the global scale, it has certainly been a positive force. However, if at the same time it has led or might lead to conferring a much greater share of power to the already powerful, it is a force that needs to be tamed.

This has become a matter of concern with the advent of the last wave of globalisation - usually placed around the last decades of the twentieth century. This wave is characterized by the emergence of information technology in the economy, but above all by the rising participation of developing countries in the global trade flows.

These two events are changing the face of the globe. We now have unprecedented levels of mobility in terms of capital and goods. The internet and global television have contributed to a massive proliferation of information and ideas. And the mobility of people is also becoming a growing feature of today’s world.

As noted by Jagdish Bhagwatti, in his recent book “In Defence of Globalisation”: “long regarded as an issue that could be addressed only gingerly because the right to exclude has traditionally been considered the essential defining aspect of national sovereignty, [migration] has now taken on dimensions and a legitimacy that put it alongside the more conventional international phenomena…”

All these types of mobility have been supported by technological, political, cultural and commercial trends. In general, barriers to trade and technological transfers have been declining and access to learning and knowledge is becoming easier and faster.

This means that, in today’s world, also best practices can be disseminated very fast around the globe.

Goa University, for instance, has access not only to the research and knowledge it produces but it can also easily incorporate the knowledge created in other universities. It is no surprise that we see many new excellent universities springing around the world.

Many diseases are studied at top universities and research institutions, and existing treatments are potentially available to all. The spread of preventive medicine has greatly contributed to improve standards of living in many countries. Infant mortality is declining almost everywhere, as pre-natal care becomes more extensive.

Despite all the problems we still have in the world, it would be wrong to ignore the benefits that globalisation has brought to the health conditions of most human beings.

Our citizens are also enjoying access to cultural products and events which is unprecedented in the history of the world. And this access to knowledge and new cultures comes hand-in-hand with the development of new technologies and products.

These examples show the power of globalisation as a reality and as a force in today’s world. But any force with such presence is bound to produce both good and bad consequences.

Among the most obvious positive consequences of globalisation, a better determination of prices and the correspondent allocation of resources at the global level, has to come at the top. This can be observed in the rapid increase in GDP per capita in the last few years in the countries that have opened themselves to globalisation.

Overall per capita income in developing countries increased by a yearly average of 2.1 per cent, between 1980 and 2005 and, according to the World Bank’s latest report on the “Global Economic Perspectives”, it is projected to increase at an even faster pace, 3.1 per cent, until 2030.

Also, some development economists have shown beyond controversy that large proportions of the world population have been lifted out of poverty, despite strong population growth.

So far, this result has been obtained essentially due to the economic successes of India and China. But the World Bank expects that, thanks to globalisation, until 2030 the number of people living in dire poverty will be cut by half, from 1.1 billion today to 550 million.

Recently, we have been witnessing extraordinary levels of output growth in the world. The economy has grown at a yearly rate of 4 per cent, over the last decade. What is most impressive, this growth has been driven, to a large extent, by developing countries.

The World Bank expects that, over the next 25 years, global output will continue to grow at a fast pace still fuelled by developing countries. The developing countries’ share in global output will thus rise from 20 percent today to around 33 percent in 2030.

Therefore, in aggregate terms, it is safe to say that developing countries that have embraced globalisation have greatly benefited and will continue to benefit from it.

This, of course, is not to ignore the fact that many people may have seen their living standards decline in this process. The lifting of output per capita in many countries does not guarantee, per se, that each and everyone has benefited from globalisation.

The point, though, is that if global output is increasing we should be able to design policies, both at the national and international levels, which distribute fairly the benefits of economic integration.

It is interesting to notice that we now see many countries in the developing world asking for further market openness. In some cases, this is a tremendous shift in the position of their political leaders regarding trade policies and the benefits of globalisation. I consider this is part of a virtuous cycle that is likely to persist as demand for higher-quality education and goods increases, and gains from a stable investment climate and an active participation in the global market become clearer to everyone.

So far I gave you just the rosy part of the picture. However, I agree that globalisation has raised some issues in many societies that need to be addressed by policy makers.

I believe that if we do not deal with these issues properly we risk social unrest and even a backlash, particularly in the form of protectionist policies. It would be unfortunate if the current intensity in international trade and dialogue were to be replaced by more isolationist approaches to development and growth.

Let me share with you my perceptions on what are some of the challenges that globalisation faces today.

I will start with the sheer speed of change and adjustment needs generated in its wake.

In many regions of the world, economic life evolves around a limited number of companies or activities that anchor jobs and wealth creation. If these activities were to be delocalized what would happen to economic life in those regions?

Also, as the labour market becomes more integrated, there will be a downward pressure on some wages and a decrease in job security.

National governments can play an important role here. Governments should adopt policies that protect workers and promote mobility investing more in the qualification of human resources. At the same time, it will be important to promote further economic integration so as to take advantage of the opportunities that the fast development of some markets, will bring about.

A second type of challenge is economic and financial instability. As the global economy becomes more integrated, recessions and financial instability may become global affairs.

Fortunately, in the last few years the global economy appears to have been resilient to single terrifying events, geo-strategic concerns, or even large changes in the price of some key commodities. However, this is not a guarantee of resistance to future shocks.

Pragmatically, we just need to know whether we have the appropriate institutions and instruments to deal with these problems if they show up.

It is also a fair criticism to the globalisation process that it has reduced the span of control by national governments of economic conditions faced by their citizens.

This should force countries to find mechanisms and institutions that deal with the needs of policy coordination. I have personal experience with policy coordination within European Union and it is certainly an exercise that has proved fruitful to the citizens of its member states.

Another challenge posed by globalisation has to do with the risk of an increase in worldwide inequality, as countries with the least stock of human capital tend to stay behind.

Economic policies should incorporate the poor in the growth process, through measures that improve education, training, health and infrastructures. At the international level, countries should mobilize to increase the amount and the effectiveness of development assistance.

In particular, I find it extremely important that a strong investment is made in the education of women. In this context, the Nobel Peace Prize awarded in 2006 to Muhammad Yunus, due to his role in promoting micro credit, pays a tribute to the importance of micro policies to help the poor, and especially women.

Some of the challenges associated with globalisation are, however, more than economic in a narrow sense.

At the forefront I would refer to the environmental issues. As scientific evidence increases on global warming and climate change, the political and economic leaders will be required to create mechanisms to globally address these problems.

In this respect, I believe the greatest challenge is to strengthen international agreements and institutions.

However, these problems need also to be addressed at the national level. Governments that narrowly focus the success of their policies on sheer economic growth, at the expense of the environment, may be undermining long term growth and subjecting their people to costly hazards in the future.

Another issue has to do with increasing demographic pressures around the world. Labour force will continue to grow at a fast pace. According to the World Bank, it will increase from just over 3 billion today to 4.1 billion in 2030.

This increase in the labour force is an opportunity for growth in some countries. Overall, though, these demographic phenomena will create strong pressures on labour markets and social models, both in developing and developed countries.

In line with this, the ability of our societies to deal with cultural and ethnic diversity is a topical issue.

India is a fine example of how this diversity can be dealt with in an open manner. Moreover, with its young population, which is expected to be a key feature of India’s development process during, at least, the next 40 years, you are well placed to make great contributions to the world.

In my view, globalisation is the way of the future, and in spite of the issues it raises, the opportunities that lie on further integration of markets and economies are enormous and exciting.

For this reason, I believe that it is important to keep finding better ways of coordination among countries and to remind our companies and citizens of the competitive challenges that globalisation brings to our societies.

In fact, I have sponsored the creation of a Globalisation Council in Portugal, which first met last November, with the aim of attracting the interest of global players to Portugal and provide a forum in which their views can be shared with Portuguese companies and society at large.

On balance, I believe that the benefits of globalisation far exceed its risks or costs. I am confident that globalisation will help us give our children a better world than the one we have inherited.

I would like to conclude with some personal remarks.

As a Portuguese I believe that creating a true integrated world is an inspiring endeavour for us all.

Europe, in particular, has a special responsibility to accommodate the development needs of a growing number of countries interested in participating in the global economy.

India is observed and studied today as an inspiring country in many ways. Millions of people are being lifted out of poverty in India. Indian professionals, universities and companies are respected abroad.

India is a well functioning democracy with a wide ethnic and religious diversity. India shows that development and individual freedom can be pursued and practiced at the same time.

Portugal is a friend of India, and we wish to show proof of this friendship. Portugal is a natural gateway for India in entering European Union. Portugal is home to a large community of Indian origin, many of them from Goa. They are well integrated and successful.

You are certainly very welcome in our country and I do wish that Indian and Portuguese firms deal with globalisation the right way, with mutual benefits and respect.

Goa, with its diversity and Portuguese heritage, is an example that different peoples can build great things together.

The symbolism associated with the awarding and receiving of this honorary degree shows that our countries and our lands are indeed fraternal places meant to exchange views, ideas and life experiences.

Thank you, Honourable Governor and Chancellor of Goa University, for offering me the opportunity to testify the friendship and closeness between our two lands and peoples.