Acton Commentary

Creativity and Capital


In his recent best-selling book, Cuentos Chinos , South-American journalist Andrés Oppenheimer noted that the engine of progress in the twenty-first-century global economy is not simply free commerce but also involves the power of competition.

To profit from the undisputable advantages of globalization, a minimal infrastructure must exist along with adequate juridical conditions, including a respect for the right to own property, and human capital with adequate talents and qualifications. If these elements are missing, many countries, as has already happened, lose the advantage of globalization and remain behind. That necessarily means that the State must have an active role in creating the conditions necessary to benefit from globalization. Permit me to underline, within these conditions, the role of human capital.

About one year ago I was invited to a meeting of a group of businessmen who work in textiles from North America, who wanted to take advantage of the treaty for free commerce in my country that we were about to sign with the United States. These businessmen wanted to know how many professionals were being prepared at the university that I direct because they were very interested in having bilingual professionals who spoke English. I proposed that they ask around to other businesses in the United States that also wanted to benefit from this upcoming treaty to see how many bi-lingual workers they might need. They said, “This is the wrong question to ask. You tell us how many bilingual professionals you can give us, and we will tell you how much we will invest in your country in the upcoming years.”

This experience opened by eyes. I finally understood why, for example, a multinational company like Intel, which produces microchips internationally, established its operations in Costa Rica in 1994. Today, Intel has more than $2 billion in exports yearly - more than all of Nicaragua's exports put together. The company is also creating jobs for more than 30,000 people. And the biggest reason why Intel established itself in Costa Rica is because this nation has the highest level of education in all of Central America.

Giving priority to the theme of “human capital” was eloquently expressed by Pope John Paul II in Centesimus Annus , when he said, “Whereas at one time the decisive factor of production was the land, and later capital — understood as a total complex of the instruments of production — today the decisive factor is increasingly man himself.” But then John Paul II adds this note in reference to globalization: “However, the risks and problems connected with this kind of process should be pointed out ... The fact is that many people, perhaps the majority today, do not have the means which would enable them to take their place in an effective and humanly dignified way within a productive system in which work is truly central. They have no possibility of acquiring the basic knowledge which would enable them to express their creativity and develop their potential.”

This imbalance in the development of human resources, if not corrected, will negatively impact many countries, impeding them from enjoying the benefits of globalization. It is worth underlining that the process of globalization, an extraordinary blessing, can produce or intensify marginalization and social inequality, whether it occurs among nations or within nations. In sub-Saharan Africa, we can see that the quality of life has diminished or remained the same. This happened despite the fact that many of these countries were able to balance their books, control inflation and combat corruption. The fact is that they were not able to attract a sufficient number of investments.

Poor countries like Nicaragua and many African countries do not have enough internal capital to help them emerge. They need to attract investments. The level of education of a country's human resources is essential for attracting capital. The State must assume an active role in improving the conditions of its citizens, of those sectors of activity that are handicapped in a competitive market. If this is not done and juridical conditions are not created sufficiently strong, opening one's country to the world economy can, in some cases, destroy more jobs than will be created.

This theme of education and the necessity of creating favorable conditions is a call to international solidarity. Centesimus Annus echoes this: “Stronger nations must offer weaker ones opportunities for taking their place in international life, and the latter must learn how to use these opportunities by making the necessary efforts and sacrifices and by ensuring political and economic stability, the certainty of better prospects for the future, the improvement of workers' skills, and the training of competent business leaders who are conscious of their responsibilities.”

Sometimes, more than giving assistance, it is fundamental that developed countries stop subsidizing their own farmers and open the doors for produce from poorer countries. Particularly scandalous is the case we see in the United States where the government subsidizes farmers and at the same time it insists on eliminating subsidies for the industrial products of poor countries. For some underdeveloped countries, the best help that they can receive are not donations but better access to markets of rich nations.