By The Associated Press
WASHINGTON (AP) -- A growing number of countries are opening their markets as a way toward improved living standards, but an economic downturn could reverse the trend, Federal Reserve chairman Alan Greenspan cautioned Friday.
``Any notable shortfall in economic performance ... runs the risk of reviving sentiment against market-oriented systems,'' Greenspan told colleagues at the central bank's annual retreat in Jackson Hole, Wyo. A text of his speech was distributed in Washington.
Greenspan was quick to point out, however, that ``at present, such a shortfall is not anticipated.''
Since the fall of the Berlin Wall and the collapse of the Soviet Union, countries have turned increasingly to free-market policies, rejecting government-controlled systems like those of communist countries.
Greenspan said the trend has been a major force for boosting living standards around the world and predicted it would continue to do that.
``For now, the process of globalization is being aided by strengthening economic growth,'' the Fed chairman said.
In the economic sense, globalization is a catchall term to describe a system of open-trading markets among nations and strong interconnecting business ties.
Anti-globalists see international groups such as the World Trade Organization and the International Monetary Fund and World Bank as one-world institutions that place business priorities over human rights, labor standards and environmental protection.
Opposition to such increased connections among countries probably would gain strength should positive trends in economic growth falter, Greenspan said.
``It is quite imaginable that support for market-oriented resource allocation will wane and the latent forces of protectionism and state intervention will begin to reassert themselves in many countries, including the United States,'' he added.
Greenspan noted that arguments against global trade have emerged in this country.
In April, members of labor, environmental and human rights groups protested what they viewed as serious flaws in global capitalism at the IMF and World Bank meetings in Washington.
Many of the same groups successfully disrupted meetings last December of the WTO in Seattle.
``Those of us who support continued endeavors to extend market-driven globalization need to understand and, if possible, address the concerns that give rise to the desire to roll back globalization,'' Greenspan said.
Greenspan also bolstered the view of many economists that the sizable pickup in productivity growth over the last several years represents a lasting structural change in the economy.
``It is still difficult to find credible evidence in the United States that the rate of structural productivity growth has stopped increasing,'' he said. Still, he added: ``A tapering off in productivity acceleration is inevitable at some point in the future.''
Productivity, or the amount of output per hour of work, is considered a crucial element to increased living standards, because it lets employers pay workers higher salaries financed by the increased output. Without productivity gains, employers must cover higher wage costs by raising product prices, which boosts inflation and makes increased earnings worth less money.:
