`Siege Economy` Substitutes New Economy

The Dean of the School of Management at Yale University, Jeffrey E. Garten said the following for the latest `Strategy + Business` journal which the world-famous consulting company Booz Allen and Hamilton publishes quarterly.

▽Different kind of globalization = Dean Garten said that with the war against terrorism, U.S. backs a different kind of globalization that focuses on the vulnerabilities in an open economic system for strategic purposes, which he names `Siege Economy`.

He prospected that " `siege economy` is more closed than at any time since World War II." and "in place of liberalization, restriction and homeland security will be the philosophy of control." The fight against terrorism leads the economy that emphasized expansion of commerce and liberalization of banking to the `siege economy` which emphasizes the stability of the economic system including security matters. The U.S. has put its focus on the expansion of the market by promoting the North American Free Trade Agreement (NAFTA), founding World Trade Organization (WTO) and strengthening relationships with emerging markets. Its economic assistance to other nations was designed to bring about liberalizing economic reform.

▽`Cold War` in economy = The most conspicuous characteristic of the `siege economy` is the contextual change of the world economy from economic matters to political matters.

▽ Looming trade tensions = Another characteristic of the `siege economy` is the recession of multinational businesses due to international protests against the remilitarization of U.S. foreign policies. Especially, if economic sanctions were applied to a certain country as a part of the war against terrorism, the market of multinational businesses would shrink.

And the cost for security measures for protecting their physical facilities, including people, will increase and impair their competitiveness.

Lastly, Dean Garten advised the U.S. government and businesses by saying, "The `siege economy` based on the war against terrorism which neglects the development of other nations cannot last long. You should keep the balance between an open economy and interest for homeland security."

Dae-In Sun eodls@donga.com