For richer, for poorer

It is an uneasy alliance when people who are up to their nostrils in debt lie down with the fat cats who keep them afloat. But that's precisely what will happen next month when the richest and poorest economies in Apec sit down together to try to nut out policies that will be mutually beneficial.

What power has Vietnam, the poorest country in Apec, against the might of the US, where a family fridge is bigger than the average Vietnamese kitchen - if the Vietnamese has a kitchen?

What power has China, which now seems to manufacture every piece of clothing sold in this country Ð no matter what the designer label Ð against the guys who own the big brand names and rake in the cash?

The real value of Apec is that it encourages the free exchange of ideas, says Kerrin Vautier, consultant research economist and chairman of the New Zealand committee of research/business advisory group the Pacific Economic Co-operation Council (NZPECC).

"Either way, whether they're large or small, rich or poor, when you see Apec economies round the table everybody has an equal voice. Participation is part of mutual respect Ð any economy that wants to talk has as much right as any other."

Possibly because of Apec's work over the past 10 years, Vautier insists there is now a definite consensus Ð that the Ômore market' approach (reducing rules and regulations, allowing economies to become more open and competitive) is in the long term interest of both large and small economies.

Apec's other big advantage for smaller economies, she says, is in the area of leadership.

Small economies learn from the experience of others, in areas including finance, banking and competition policy.

"Developing economies do need new rules for institutional and corporate governance. They need help in building the institutional capacity to develop." Where Vautier sees danger signals is when large economies attempt to dominate smaller players. "Those of us in PECC are not interested in the imposing of certain countries' standards onto other, quite different economies."

For example, she says, there is a suggestion in the US that every economy should have a competition law along the lines of their own anti-trust model.

"But when you consider a country like Vietnam, it's obvious they're simply not in a position to implement these very sophisticated regimes ... You can't say, like the IMF did to Indonesia, Ôwe want you to have a competition law next week'!"

But isn't the US generally too heavy handed with other nations Ð New Zealand included? What about the lamb tariff debacle?

That, says Vautier, "was not a good signal. If you get many more like that from the major economies it will undermine confidence in Apec ... The larger economies have to set an example. If you're going to be credible in the desire to see the rest of the world loosen their economies, you have to be consistent."

Robert Scollay, director of Auckland University's Apec Study Centre, insists that "the large gap between the trading partners should indicate very substantial potential for trade."

Like Vautier he says the economic and technical co-operation aspects of Apec are "supposed to help poorer economies to develop the capacity they need to enhance their trade".

But is the system working? Not really, according to a 1999 United Nations report, Human Development, Globalisation with a Human Face.

In 1997, says the report, the richest 20 per cent of people in the world had incomes that were 74 times higher than the incomes of the poorest 20 per cent. And that gap has widened; in 1960 the ratio was 30 to 1, and in 1990 it was 60 to 1.

"Competitive markets may well be the best guarantee of efficiency, but not necessarily of equity ... When the market goes too far in dominating social and political outcomes, the opportunities and rewards of globalisation spread unequally and inequitably ... instabilities show up in boom and bust economies, as in the financial crisis in East Asia and its worldwide repercussions, cutting global output by an estimated $US2 trillion in 1998-2000."

The report says: "What the world needs now is wider debate, and the re-examination of global governance ... Recent advances in global governance have been built on concepts and principles of economic efficiency and competitive markets. These are important but not enough ... Open markets require institutions to function, and policies to ensure equitable distribution of benefits and opportunities."