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Globalization

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Globalization (or globalisation) describes an ongoing process by which regional economies,
societies, and cultures have become integrated through a globe-spanning network of
communication and execution. The term is sometimes used to refer specifically to economic
globalization: the integration of national economies into the international economy through trade,
foreign direct investment, capital flows, migration, and the spread of technology.[1] However,
globalization is usually recognised as being driven by a combination of economic, technological,
sociocultural, political, and biological factors.[2] The term can also refer to the transnational
circulation of ideas, languages, or popular culture through acculturation.

Contents
[hide]
• 1 Definitions
• 2 History
• 3 Modern globalization
• 4 Measuring globalization
• 5 Effects of globalization
○ 5.1 Cultural effects
○ 5.2 Negative effects
 5.2.1 Effect on disease
 5.2.2 Brain drain
 5.2.3 Economic liberalization
 5.2.4 Effect on Income disparity
 5.2.5 Effect on environmental degradation
 5.2.6 Food security
 5.2.7 Drug and illicit goods trade
 5.2.8 Sweatshops
• 6 Pro-globalization (globalism)
• 7 Anti-globalization
○ 7.1 International Social Forums
• 8 See also
• 9 References
• 10 Further reading
• 11 External links
○ 11.1 Multimedia

[edit] Definitions
An early description of globalization was penned by the American entrepreneur-turned-minister
Charles Taze Russell who coined the term 'corporate giants' in 1897.[3] However, it was not until
the 1960s that the term began to be widely used by economists and other social scientists. It had
achieved widespread use in the mainstream press by the later half of the 1980s. Since its
inception, the concept of globalisation has inspired numerous competing definitions and
interpretations.[4]

The United Nations Building


The United Nations ESCWA has written that globalization "is a widely-used term that can be
defined in a number of different ways. When used in an economic context, it refers to the
reduction and removal of barriers between national borders in order to facilitate the flow of
goods, capital, services and labour... although considerable barriers remain to the flow of
labour... Globalization is not a new phenomenon. It began in the late nineteenth century, but it
slowed down during the period from the start of the First World War until the third quarter of the
twentieth century. This slowdown can be attributed to the inwardlooking policies pursued by a
number of countries in order to protect their respective industries... however, the pace of
globalization picked up rapidly during the fourth quarter of the twentieth century..."[5]
Saskia Sassen writes that "a good part of globalization consists of an enormous variety of micro-
processes that begin to denationalize what had been constructed as national — whether policies,
capital, political subjectivities, urban spaces, temporal frames, or any other of a variety of
dynamics and domains."[6]
Tom G. Palmer of the Cato Institute defines globalization as "the diminution or elimination of
state-enforced restrictions on exchanges across borders and the increasingly integrated and
complex global system of production and exchange that has emerged as a result."[7]
Thomas L. Friedman has examined the impact of the "flattening" of the world, and argues that
globalized trade, outsourcing, supply-chaining, and political forces have changed the world
permanently, for both better and worse. He also argues that the pace of globalization is
quickening and will continue to have a growing impact on business organization and practice.[8]
HSBC is the largest bank in the world and operates across the globe.[9][10]
Noam Chomsky argues that the word globalization is also used, in a doctrinal sense, to describe
the neoliberal form of economic globalization.[11]
Herman E. Daly argues that sometimes the terms internationalization and globalization are used
interchangeably but there is a significant formal difference. The term "internationalization" (or
internationalisation) refers to the importance of international trade, relations, treaties etc. owing
to the (hypothetical) immobility of labor and capital between or among nations.[citation needed]
Finally, Takis Fotopoulos argues that globalisation is the result of systemic trends manifesting
the market economy’s grow-or-die dynamic, following the rapid expansion of transnational
corporations. Because these trends have not been offset effectively by counter-tendencies that
could have emanated from trade-union action and other forms of political activity, the outcome
has been globalisation. This is a multi-faceted and irreversible phenomenon within the system of
the market economy and it is expressed as: economic globalisation, namely, the opening and
deregulation of commodity, capital and labour markets which led to the present form of
neoliberal globalisation; political globalisation, i.e., the emergence of a transnational elite and the
phasing out of the all powerful-nation state of the statist period; cultural globalisation, i.e., the
worldwide homogenisation of culture; ideological globalisation; technological globalisation;
social globalisation.[12]
[edit] History
The historical origins of globalization are the subject of on-going debate. Though some scholars
situate the origins of globalization in the modern era, others regard it as a phenomenon with a
long history.
Perhaps the most extreme proponent of a deep historical origin for globalization was Andre
Gunder Frank, an economist associated with dependency theory. Frank argued that a form of
globalization has been in existence since the rise of trade links between Sumer and the Indus
Valley Civilization in the third millennium B.C.[13] Critics of this idea point out that it rests upon
an overly-broad definition of globalization.
Extent of the Silk Road
An early form of globalized economics and culture existed during the Hellenistic Age, when
commercialized urban centers were focused around the axis of Greek culture over a wide range
that stretched from India to Spain, with such cities as Alexandria, Athens, and Antioch at its
center. Trade was widespread during that period, and it is the first time the idea of a
cosmopolitan culture (from Greek "Cosmopolis", meaning "world city") emerged.
Others have perceived an early form of globalization in the trade links between the Roman
Empire, the Parthian Empire, and the Han Dynasty. The increasing articulation of commercial
links between these powers inspired the development of the Silk Road, which started in western
China, reached the boundaries of the Parthian empire, and continued onwards towards Rome.[14]
The Islamic Golden Age was also an important early stage of globalization, when Jewish and
Muslim traders and explorers established a sustained economy across the Old World resulting in
a globalization of crops, trade, knowledge and technology. Globally significant crops such as
sugar and cotton became widely cultivated across the Muslim world in this period, while the
necessity of learning Arabic and completing the Hajj created a cosmopolitan culture.[15]
The advent of the Mongol Empire, though destabilizing to the commercial centers of the Middle
East and China, greatly facilitated travel along the Silk Road. This permitted travelers and
missionaries such as Marco Polo to journey successfully (and profitably) from one end of
Eurasia to the other. The so-called Pax Mongolica of the thirteenth century had several other
notable globalizing effects. It witnessed the creation of the first international postal service, as
well as the rapid transmission of epidemic diseases such as bubonic plague across the newly
unified regions of Central Asia.[16] These pre-modern phases of global or hemispheric exchange
are sometimes known as archaic globalization. Up to the sixteenth century, however, even the
largest systems of international exchange were limited to the Old World.
The Age of Discovery brought a broad change in globalization, being the first period in which
Eurasia and Africa engaged in substantial cultural, material and biologic exchange with the New
World.[17] It began in the late 15th century, when the two Kingdoms of the Iberian Peninsula -
Portugal and Castile - sent the first exploratory voyages[18] around the Horn of Africa and to the
Americas, "discovered" in 1492 by Christopher Columbus. Shortly before the turn of the 16th
century, Portuguese started establishing trading posts (factories) from Africa to Asia and Brazil,
to deal with the trade of local products like gold, spices and timber, introducing an international
business center under a royal monopoly, the House of India.[19] Global integration continued with
the European colonization of the Americas initiating the Columbian Exchange,[20] the enormous
widespread exchange of plants, animals, foods, human populations (including slaves),
communicable diseases, and culture between the Eastern and Western hemispheres. It was one of
the most significant global events concerning ecology, agriculture, and culture in history.
Colonial empires in 1800 (animated map, 1492 to present)
This phase is sometimes known as proto-globalization. It was characterized by the rise of
maritime European empires, in the 16th and 17th centuries, first the Portuguese and Spanish
Empires, and later the Dutch and British Empires. In the 17th century, globalization became also
a private business phenomenon when chartered companies like British East India Company
(founded in 1600), often described as the first multinational corporation, as well as the Dutch
East India Company (founded in 1602) were established. Because of the large investment and
financing needs and high risks involved in international trade, the British East India Company
became the first company in the world to share risk and enable joint ownership of companies
through the issuance of shares of stock: an important driver for globalization.[citation needed]

Great Britain grew rich in the 19th century as the first global economic superpower, because of
its superior manufacturing technology and improved global communications such as steamships
and railroads.
The 19th century witnessed the advent of globalization approaching its modern form.
Industrialization allowed cheap production of household items using economies of scale, while
rapid population growth created sustained demand for commodities. Globalization in this period
was decisively shaped by nineteenth-century imperialism. After the Opium Wars and the
completion of British conquest of India, vast populations of these regions became ready
consumers of European exports. It was in this period that areas of sub-Saharan Africa and the
Pacific islands were incorporated into the world system. Meanwhile, the conquest of new parts of
the globe, notably sub-Saharan Africa, by Europeans yielded valuable natural resources such as
rubber, diamonds and coal and helped fuel trade and investment between the European imperial
powers, their colonies, and the United States.[citation needed] Said John Maynard Keynes,[21]

The first phase of "modern globalization" began to break down at the beginning of the 20th
century, with the first world war. The novelist VM Yeates criticised the financial forces of
globalisation as a factor in creating World War I.[22] The final death knell for this phase came
during the gold standard crisis and Great Depression in the late 1920s and early 1930s.[citation needed]
In the middle decades of the twentieth century globalization was largely driven by the global
expansion of multinational corporations based in the United States and Europe, and worldwide
exchange of new developments in science, technology and products, with most significant
inventions of this time having their origins in the Western world according to Encyclopedia
Britannica.[23] Worldwide export of western culture went through the new mass media: film,
radio and television and recorded music. Development and growth of international transport and
telecommunication played a decisive role in modern globalization.
In late 2000s, much of the industrialized world entered into a deep recession.[24] Some analysts
say the world is going through a period of deglobalization after years of increasing economic
integration.[25][26] Up to 45% of global wealth had been destroyed by the global financial crisis in
little less than a year and a half.[27] China has recently become the world’s largest exporter
surpassing Germany.[28]
[edit] Modern globalization
Globalization, since World War II, is largely the result of planning by politicians to break down
borders hampering trade to increase prosperity and interdependence thereby decreasing the
chance of future war[citation needed]. Their work led to the Bretton Woods conference, an agreement
by the world's leading politicians to lay down the framework for international commerce and
finance, and the founding of several international institutions intended to oversee the processes
of globalization.
These institutions include the International Bank for Reconstruction and Development (the
World Bank), and the International Monetary Fund. Globalization has been facilitated by
advances in technology which have reduced the costs of trade, and trade negotiation rounds,
originally under the auspices of the General Agreement on Tariffs and Trade (GATT), which led
to a series of agreements to remove restrictions on free trade.
Since World War II, barriers to international trade have been considerably lowered through
international agreements — GATT. Particular initiatives carried out as a result of GATT and the
World Trade Organization (WTO), for which GATT is the foundation, have included:
• Promotion of free trade:
○ elimination of tariffs; creation of free trade zones with small or no tariffs
○ Reduced transportation costs, especially resulting from development of
containerization for ocean shipping.
○ Reduction or elimination of capital controls
○ Reduction, elimination, or harmonization of subsidies for local businesses
○ Creation of subsidies for global corporations
○ Harmonization of intellectual property laws across the majority of states, with
more restrictions
○ Supranational recognition of intellectual property restrictions (e.g. patents granted
by China would be recognized in the United States)
Cultural globalization, driven by communication technology and the worldwide marketing of
Western cultural industries, was understood at first as a process of homogenization, as the global
domination of American culture at the expense of traditional diversity. However, a contrasting
trend soon became evident in the emergence of movements protesting against globalization and
giving new momentum to the defense of local uniqueness, individuality, and identity, but largely
without success.[29]
The Uruguay Round (1986 to 1994)[30] led to a treaty to create the WTO to mediate trade disputes
and set up a uniform platform of trading. Other bilateral and multilateral trade agreements,
including sections of Europe's Maastricht Treaty and the North American Free Trade Agreement
(NAFTA) have also been signed in pursuit of the goal of reducing tariffs and barriers to trade.
World exports rose from 8.5% in 1970, to 16.2% of total gross world product in 2001.[31]
[edit] Measuring globalization
Looking specifically at economic globalization, demonstrates that it can be measured in different
ways. These center around the four main economic flows that characterize globalization:
• Goods and services, e.g., exports plus imports as a proportion of national income or per
capita of population
• Labor/people, e.g., net migration rates; inward or outward migration flows, weighted by
population
• Capital, e.g., inward or outward direct investment as a proportion of national income or
per head of population
• Technology, e.g., international research & development flows; proportion of populations
(and rates of change thereof) using particular inventions (especially 'factor-neutral'
technological advances such as the telephone, motorcar, broadband)
As globalization is not only an economic phenomenon, a multivariate approach to measuring
globalization is the recent index calculated by the Swiss think tank KOF. The index measures the
three main dimensions of globalization: economic, social, and political. In addition to three
indices measuring these dimensions, an overall index of globalization and sub-indices referring
to actual economic flows, economic restrictions, data on personal contact, data on information
flows, and data on cultural proximity is calculated. Data is available on a yearly basis for 122
countries, as detailed in Dreher, Gaston and Martens (2008).[32] According to the index, the
world's most globalized country is Belgium, followed by Austria, Sweden, the United Kingdom
and the Netherlands. The least globalized countries according to the KOF-index are Haiti,
Myanmar, the Central African Republic and Burundi.[33]
A.T. Kearney and Foreign Policy Magazine jointly publish another Globalization Index.
According to the 2006 index, Singapore, Ireland, Switzerland, the Netherlands, Canada and
Denmark are the most globalized, while Indonesia, India and Iran are the least globalized among
countries listed.
[edit] Effects of globalization
Globalization has various aspects which affect the world in several different ways such as:
• Industrial - emergence of worldwide production markets and broader access to a range of
foreign products for consumers and companies. Particularly movement of material and
goods between and within national boundaries. International trade in manufactured goods
increased more than 100 times (from $95 billion to $12 trillion) in the 50 years since
1955.[34] China’s trade with Africa rose sevenfold during 2000-07 alone.[35][36]
• Financial - emergence of worldwide financial markets and better access to external
financing for borrowers. By the early part of the 21st century more than $1.5 trillion in
national currencies were traded daily to support the expanded levels of trade and
investment.[37] As these worldwide structures grew more quickly than any transnational
regulatory regime, the instability of the global financial infrastructure dramatically
increased, as evidenced by the Financial crisis of 2007–2010.[38]

As of 2005–2007, the Port of Shanghai holds the title as the World's busiest port.[39][40][41]
• Economic - realization of a global common market, based on the freedom of exchange of
goods and capital.[42] The interconnectedness of these markets, however meant that an
economic collapse in any one given country could not be contained.[citation needed]

India is right now home of almost every well known I.T company around the globe. Four
Indians were among the world's top 10 richest in 2008, worth a combined $160 billion.[43]
In 2007, China had 415,000 millionaires and India 123,000.[44]
• Health Policy - On the global scale, health becomes a commodity. In developing nations
under the demands of Structural Adjustment Programs, health systems are fragmented
and privatized. Global health policy makers have shifted during the 1990s from United
Nations players to financial institutions. The result of this power transition is an increase
in privatization in the health sector. This privatization fragments health policy by
crowding it with many players with many private interests. These fragmented policy
players emphasize partnerships, specific interventions to combat specific problems (as
opposed to comprehensive health strategies). Influenced by global trade and global
economy, health policy is directed by technological advances and innovative medical
trade. Global priorities, in this situation, are sometimes at odds with national priorities
where increased health infrastructure and basic primary care are of more value to the
public than privatized care for the wealthy.[45]
Britain is a country of rich diversity. As of 2008, 40% of London's total population was
from an ethnic minority group. The latest official figures show that in 2008, 590,000
people arrived to live in the UK whilst 427,000 left, meaning that net inward migration
was 163,000.[46]
• Political - some use "globalization" to mean the creation of a world government which
regulates the relationships among governments and guarantees the rights arising from
social and economic globalization.[47] Politically, the United States has enjoyed a position
of power among the world powers, in part because of its strong and wealthy economy.
With the influence of globalization and with the help of The United States’ own
economy, the People's Republic of China has experienced some tremendous growth
within the past decade. If China continues to grow at the rate projected by the trends, then
it is very likely that in the next twenty years, there will be a major reallocation of power
among the world leaders. China will have enough wealth, industry, and technology to
rival the United States for the position of leading world power.[48]
• Informational - increase in information flows between geographically remote locations.
Arguably this is a technological change with the advent of fibre optic communications,
satellites, and increased availability of telephone and Internet.
• Language - the most popular language is Mandarin (845 million speakers) followed by
Spanish (329 million speakers) and English (328 million speakers).[49]
○ About 35% of the world's mail, telexes, and cables are in English.
○ Approximately 40% of the world's radio programs are in English.
○ About 50% of all Internet traffic uses English.[50]
• Competition - Survival in the new global business market calls for improved productivity
and increased competition. Due to the market becoming worldwide, companies in various
industries have to upgrade their products and use technology skillfully in order to face
increased competition.[51]
• Ecological - the advent of global environmental challenges that might be solved with
international cooperation, such as climate change, cross-boundary water and air pollution,
over-fishing of the ocean, and the spread of invasive species. Since many factories are
built in developing countries with less environmental regulation, globalism and free trade
may increase pollution. On the other hand, economic development historically required a
"dirty" industrial stage, and it is argued that developing countries should not, via
regulation, be prohibited from increasing their standard of living.

The construction of continental hotels is a major consequence of globalization process in


affiliation with tourism and travel industry, Dariush Grand Hotel, Kish, Iran
• Cultural - growth of cross-cultural contacts; advent of new categories of consciousness
and identities which embodies cultural diffusion, the desire to increase one's standard of
living and enjoy foreign products and ideas, adopt new technology and practices, and
participate in a "world culture". Some bemoan the resulting consumerism and loss of
languages. Also see Transformation of culture.
○ Spreading of multiculturalism, and better individual access to cultural diversity
(e.g. through the export of Hollywood and, to a lesser extent, Bollywood movies).
Some consider such "imported" culture a danger, since it may supplant the local
culture, causing reduction in diversity or even assimilation. Others consider
multiculturalism to promote peace and understanding between peoples. A third
position gaining popuilarity is the notion that multiculturalism to a new form of
monoculture in which no distinctions exist and everyone just shift between
various lifestyles in terms of music, cloth and other aspects once more firmly
attached to a single culture. Thusly not mere cultural assimilation as mentioned
above but the obliteration of culture as we know it today.[52][53]
○ Greater international travel and tourism. WHO estimates that up to 500,000
people are on planes at any one time.[54] In 2008, there were over 922 million
international tourist arrivals, with a growth of 1.9% as compared to 2007.[55]
○ Greater immigration,[56] including illegal immigration.[57] The IOM estimates there
are more than 200 million migrants around the world today.[58] Newly available
data show that remittance flows to developing countries reached $328 billion in
2008.[59]
○ Spread of local consumer products (e.g., food) to other countries (often adapted to
their culture).
○ Worldwide fads and pop culture such as Pokémon, Sudoku, Numa Numa,
Origami, Idol series, YouTube, Orkut, Facebook, and MySpace. Accessible to
those who have Internet or Television, leaving out a substantial segment of the
Earth's population.
○ Worldwide sporting events such as FIFA World Cup and the Olympic Games.
○ Incorporation of multinational corporations in to new media. As the sponsors of
the All-Blacks rugby team, Adidas had created a parallel website with a
downloadable interactive rugby game for its fans to play and compete.[60]
• Social - development of the system of non-governmental organisations as main agents of
global public policy, including humanitarian aid and developmental efforts.[61]
• Technical
○ Development of a Global Information System, global telecommunications
infrastructure and greater transborder data flow, using such technologies as the
Internet, communication satellites, submarine fiber optic cable, and wireless
telephones
○ Increase in the number of standards applied globally; e.g., copyright laws, patents
and world trade agreements.
• Legal/Ethical
○ The creation of the international criminal court and international justice
movements.
○ Crime importation and raising awareness of global crime-fighting efforts and
cooperation.
○ The emergence of Global administrative law.
• Religious
○ The spread and increased interrelations of various religious groups, ideas, and
practices and their ideas of the meanings and values of particular spaces.[62]
[edit] Cultural effects

Globalization has had an impact on different cultures around the world.

Japanese McDonald's fast food as an evidence of corporate globalization and the integration of
the same into different cultures.
Culture is defined as patterns of human activity and the symbols that give these activities
significance. Culture is what people eat, how they dress, beliefs they hold, and activities they
practice. Globalization has joined different cultures and made it into something different. As Erla
Zwingle, from the National Geographic article titled “Globalization” states, “When cultures
receive outside influences, they ignore some and adopt others, and then almost immediately start
to transform them.”[63]
One classic culture aspect is food. Someone in America can be eating Japanese noodles for lunch
while someone in Sydney, Australia is eating classic Italian meatballs. India is known for its
curry and exotic spices. France is known for its cheeses. America is known for its burgers and
fries. McDonalds is an American company which is now a global enterprise with 31,000
locations worldwide. This company is just one example of food causing cultural influence on the
global scale.
Another common practice brought about by globalization is the usage of Chinese symbol in
tattoos. These tattoos are popular with today’s youth despite the lack of social acceptance of
tattoos in China.[64] Also, there is a lack of comprehension in the meaning of Chinese characters
that people get,[65] making this an example of cultural appropriation.
The internet breaks down cultural boundaries across the world by enabling easy, near-
instantaneous communication between people anywhere in a variety of digital forms and media.
The Internet is associated with the process of cultural globalization because it allows interaction
and communication between people with very different lifestyles and from very different
cultures. Photo sharing websites allow interaction even where language would otherwise be a
barrier.
[edit] Negative effects
See also: Alter-globalization, Participatory economics, and Global Justice Movement
Globalization has been one of the most hotly debated topics in international economics over the
past few years. Globalization has also generated significant international opposition over
concerns that it has increased inequality and environmental degradation.[66] In the Midwestern
United States, globalization has eaten away at its competitive edge in industry and agriculture,
lowering the quality of life in locations that have not adapted to the change.[67]
[edit] Effect on disease
Globalization, the flow of information, goods, capital and people across political and geographic
boundaries, has also helped to spread some of the deadliest infectious diseases known to humans.
[68]
Modern modes of transportation allow more people and products to travel around the world at
a faster pace, they also open the airways to the transcontinental movement of infectious disease
vectors.[69] One example of this occurring is AIDS/HIV.[70]
[edit] Brain drain
Opportunities in richer countries drives talent away, leading to brain drains. Brain drain has cost
the African continent over $4 billion in the employment of 150,000 expatriate professionals
annually.[71] Indian students going abroad for their higher studies costs India a foreign exchange
outflow of $10 billion annually.[72]
[edit] Economic liberalization
Further information: Neoliberalism
The World today is so interconnected that the collapse of the subprime mortgage market in the
U.S. has led to a global financial crisis and recession on a scale not seen since the Great
Depression.[73] Government deregulation and failed regulation of Wall Street's investment banks
were important contributors to the subprime mortgage crisis.[74][75]
A flood of consumer goods such as televisions, radios, bicycles, and textiles into the United
States, Europe, and Japan has helped fuel the economic expansion of Asian tiger economies in
recent decades.[76] However, Chinese textile and clothing exports have recently encountered
criticism from Europe, the United States and some African countries.[77][78] In South Africa, some
300,000 textile workers have lost their jobs due to the influx of Chinese goods.[79] A total of 3.2
million – one in six U.S. factory jobs – have disappeared since the start of 2000.[80]
[edit] Effect on Income disparity
A study by the World Institute for Development Economics Research at United Nations
University reports that the richest 1% of adults alone owned 40% of global assets in the year
2000. The three richest people possess more financial assets than the poorest 10% of the world's
population, combined [5][citation needed]. The combined wealth of the 10 million millionaires grew to
nearly $41 trillion in 2008.[81] In 2001, 46.4% of people in sub-Saharan Africa were living in
extreme poverty.[82] Nearly half of all Indian children are undernourished.[83]
[edit] Effect on environmental degradation

Burning forest in Brazil. The removal of forest to make way for cattle ranching was the leading
cause of deforestation in the Brazilian Amazon from the mid 1960s. Recently, soybeans have
become one of the most important contributors to deforestation in the Brazilian Amazon.[84]
The Worldwatch Institute said the booming economies of China and India are planetary powers
that are shaping the global biosphere. In 2007, China has overtaken the United States as the
world's biggest producer of CO2.[85] At present rates, tropical rainforests in Indonesia would be
logged out in 10 years, Papua New Guinea in 13 to 16 years.[86] A major source of deforestation
is the logging industry, driven spectacularly by China and Japan.[87] Thriving economies such as
China and India are quickly becoming large oil consumers.[88][89] China has seen oil consumption
grow by 8% yearly since 2002, doubling from 1996–2006.[90] Crude oil prices in the last several
years have steadily risen from about $25 a barrel in August 2003 to over $140 a barrel in July
2008.[91] State of the World 2006 report said the two countries' high economic growth hid a
reality of severe pollution. The report states:
The world's ecological capacity is simply insufficient to satisfy the ambitions of China,
India, Japan, Europe and the United States as well as the aspirations of the rest of the
world in a sustainable way[92]
Without more recycling, zinc could be used up by 2037, both indium and hafnium could run out
by 2017, and terbium could be gone before 2012.[93] It said that if China and India were to
consume as much resources per capita as United States or Japan in 2030 together they would
require a full planet Earth to meet their needs.[94] In the longterm these effects can lead to
increased conflict over dwindling resources[95] and in the worst case a Malthusian catastrophe.
[edit] Food security
The head of the International Food Policy Research Institute, stated in 2008 that the gradual
change in diet among newly prosperous populations is the most important factor underpinning
the rise in global food prices.[96] From 1950 to 1984, as the Green Revolution transformed
agriculture around the world, grain production increased by over 250%.[97] The world population
has grown by about 4 billion since the beginning of the Green Revolution and most believe that,
without the Revolution, there would be greater famine and malnutrition than the UN presently
documents (approximately 850 million people suffering from chronic malnutrition in 2005).[98][99]
It is becoming increasingly difficult to maintain food security in a world beset by a confluence of
"peak" phenomena, namely peak oil, peak water, peak phosphorus, peak grain and peak fish.
Growing populations, falling energy sources and food shortages will create the "perfect storm"
by 2030, according to the UK government chief scientist. He said food reserves are at a 50-year
low but the world requires 50% more energy, food and water by 2030.[100][101] The world will
have to produce 70% more food by 2050 to feed a projected extra 2.3 billion people and as
incomes rise, the United Nations' Food and Agriculture Organisation (FAO) warned.[102]
The journal Science published a four-year study in November 2006, which predicted that, at
prevailing trends, the world would run out of wild-caught seafood in 2048.[103]
[edit] Drug and illicit goods trade
The United Nations Office on Drugs and Crime (UNODC) issued a report that the global drug
trade generates more than $320 billion a year in revenues.[104] Worldwide, the UN estimates there
are more than 50 million regular users of heroin, cocaine and synthetic drugs.[105] The
international trade of endangered species is second only to drug trafficking.[106] Traditional
Chinese medicine often incorporates ingredients from all parts of plants, the leaf, stem, flower,
root, and also ingredients from animals and minerals. The use of parts of endangered species
(such as seahorses, rhinoceros horns, saiga antelope horns, and tiger bones and claws) has
created controversy and resulted in a black market of poachers who hunt restricted animals.[107]
[108]
In 2003, 29% of open sea fisheries were in a state of collapse.[109]
[edit] Sweatshops

A maquila in Mexico
It can be said that globalization is the door that opens up an otherwise resource-poor country to
the international market. Where a country has little material or physical product harvested or
mined from its own soil, large corporations see an opportunity to take advantage of the “export
poverty” of such a nation. Where the majority of the earliest occurrences of economic
globalization are recorded as being the expansion of businesses and corporate growth, in many
poorer nations globalization is actually the result of the foreign businesses investing in the
country to take advantage of the lower wage rate: even though investing, by increasing the
Capital Stock of the country, increases their wage rate.
One example used by anti-globalization protestors is the use of sweatshops by manufacturers.
According to Global Exchange these “Sweat Shops” are widely used by sports shoe
manufacturers and mentions one company in particular – Nike.[110] There are factories set up in
the poor countries where employees agree to work for low wages. Then if labour laws alter in
those countries and stricter rules govern the manufacturing process the factories are closed down
and relocated to other nations with more conservative, laissez-faire economic policies.[citation needed]
There are several agencies that have been set up worldwide specifically designed to focus on
anti-sweatshop campaigns and education of such. In the USA, the National Labor Committee has
proposed a number of bills as part of the The Decent Working Conditions and Fair Competition
Act, which have thus far failed in Congress. The legislation would legally require companies to
respect human and worker rights by prohibiting the import, sale, or export of sweatshop goods.
[111]

Specifically, these core standards include no child labor, no forced labor, freedom of association,
right to organize and bargain collectively, as well as the right to decent working conditions.[112]
Tiziana Terranova has stated that globalization has brought a culture of "free labour". In a digital
sense, it is where the individuals (contributing capital) exploits and eventually "exhausts the
means through which labour can sustain itself". For example, in the area of digital media
(animations, hosting chat rooms, designing games), where it is often less glamourous than it may
sound. In the gaming industry, a Chinese Gold Market has been established.[113]
[edit] Pro-globalization (globalism)
Supporters of free trade claim that it increases economic prosperity as well as opportunity,
especially among developing nations, enhances civil liberties and leads to a more efficient
allocation of resources. Economic theories of comparative advantage suggest that free trade leads
to a more efficient allocation of resources, with all countries involved in the trade benefiting. In
general, this leads to lower prices, more employment, higher output and a higher standard of
living for those in developing countries.[114][115]
Dr. Francesco Stipo, Director of the USA Club of Rome suggests that “the world government
should reflect the political and economic balances of world nations. A world confederation
would not supersede the authority of the State governments but rather complement it, as both the
States and the world authority would have power within their sphere of competence".[116]
Proponents of laissez-faire capitalism, and some libertarians, say that higher degrees of political
and economic freedom in the form of democracy and capitalism in the developed world are ends
in themselves and also produce higher levels of material wealth. They see globalization as the
beneficial spread of liberty and capitalism.[114]
Supporters of democratic globalization are sometimes called pro-globalists. They believe that the
first phase of globalization, which was market-oriented, should be followed by a phase of
building global political institutions representing the will of world citizens. The difference from
other globalists is that they do not define in advance any ideology to orient this will, but would
leave it to the free choice of those citizens via a democratic process.[citation needed]
Some, such as former Canadian Senator Douglas Roche, O.C., simply view globalization as
inevitable and advocate creating institutions such as a directly-elected United Nations
Parliamentary Assembly to exercise oversight over unelected international bodies.
[edit] Anti-globalization
Main article: Anti-globalization movement
See also: Alter-globalization, Participatory economics, and Global Justice Movement
The "anti-globalization movement" is a term used to describe the political group who oppose the
neoliberal version of globalization, while criticisms of globalization are some of the reasons used
to justify this group's stance.
"Anti-globalization" may also involve the process or actions taken by a state or its people in
order to demonstrate its sovereignty and practice democratic decision-making. Anti-globalization
may occur in order to maintain barriers to the international transfer of people, goods and beliefs,
particularly free market deregulation, encouraged by organizations such as the International
Monetary Fund or the World Trade Organization. Moreover, as Naomi Klein argues in her book
No Logo, anti-globalism can denote either a single social movement or an umbrella term that
encompasses a number of separate social movements[117] such as nationalists and socialists. In
either case, participants stand in opposition to the unregulated political power of large, multi-
national corporations, as the corporations exercise power through leveraging trade agreements
which in some instances damage the democratic rights of citizens[citation needed], the environment
particularly air quality index and rain forests[citation needed], as well as national government's
sovereignty to determine labor rights,[citation needed] including the right to form a union, and health
and safety legislation, or laws as they may otherwise infringe on cultural practices and traditions
of developing countries.[citation needed]
Some people who are labeled "anti-globalist" or "sceptics" (Hirst and Thompson)[118] consider the
term to be too vague and inaccurate.[119][120] Podobnik states that "the vast majority of groups that
participate in these protests draw on international networks of support, and they generally call for
forms of globalization that enhance democratic representation, human rights, and
egalitarianism."
Joseph Stiglitz and Andrew Charlton write:[121]

Some members aligned with this viewpoint prefer instead to describe themselves as the "Global
Justice Movement", the "Anti-Corporate-Globalization Movement", the "Movement of
Movements" (a popular term in Italy), the "Alter-globalization" movement (popular in France),
the "Counter-Globalization" movement, and a number of other terms.
Critiques of the current wave of economic globalization typically look at both the damage to the
planet, in terms of the perceived unsustainable harm done to the biosphere, as well as the
perceived human costs, such as poverty, inequality, miscegenation, injustice and the erosion of
traditional culture which, the critics contend, all occur as a result of the economic
transformations related to globalization. They challenge directly the metrics, such as GDP, used
to measure progress promulgated by institutions such as the World Bank, and look to other
measures, such as the Happy Planet Index,[122] created by the New Economics Foundation.[123]
They point to a "multitude of interconnected fatal consequences–social disintegration, a
breakdown of democracy, more rapid and extensive deterioration of the environment, the spread
of new diseases, increasing poverty and alienation"[124] which they claim are the unintended but
very real consequences of globalization.
The terms globalization and anti-globalization are used in various ways. Noam Chomsky
believes that[125][126]
Critics argue that:
• Poorer countries suffering disadvantages: While it is true that globalization encourages
free trade among countries, there are also negative consequences because some countries
try to save their national markets. The main export of poorer countries is usually
agricultural goods. Larger countries often subsidise their farmers (like the EU Common
Agricultural Policy), which lowers the market price for the poor farmer's crops compared
to what it would be under free trade.[127]
• Exploitation of foreign impoverished workers: The deterioration of protections for
weaker nations by stronger industrialized powers has resulted in the exploitation of the
people in those nations to become cheap labor. Due to the lack of protections, companies
from powerful industrialized nations are able to offer workers enough salary to entice
them to endure extremely long hours and unsafe working conditions, though economists
question if consenting workers in a competitive employers' market can be decried as
"exploited". It is true that the workers are free to leave their jobs, but in many poorer
countries, this would mean starvation for the worker, and possible even his/her family if
their previous jobs were unavailable.[128]
• The shift to outsourcing: The low cost of offshore workers have enticed corporations to
buy goods and services from foreign countries. The laid off manufacturing sector workers
are forced into the service sector where wages and benefits are low, but turnover is high .
[citation needed]
This has contributed to the deterioration of the middle class[citation needed] which is
a major factor in the increasing economic inequality in the United States .[citation needed]
Families that were once part of the middle class are forced into lower positions by
massive layoffs and outsourcing to another country. This also means that people in the
lower class have a much harder time climbing out of poverty because of the absence of
the middle class as a stepping stone.[129]
• Weak labor unions: The surplus in cheap labor coupled with an ever growing number of
companies in transition has caused a weakening of labor unions in the United States.
Unions lose their effectiveness when their membership begins to decline. As a result
unions hold less power over corporations that are able to easily replace workers, often for
lower wages, and have the option to not offer unionized jobs anymore.[127]
• Increase exploitation of child labor: for example, a country that experiencing increases
in labor demand because of globalization and an increase the demand for goods produced
by children, will experience greater a demand for child labor. This can be "hazardous" or
“exploitive”, e.g., quarrying, salvage, cash cropping but also includes the trafficking of
children, children in bondage or forced labor, prostitution, pornography and other illicit
activities.[130]
In December 2007, World Bank economist Branko Milanovic has called much previous
empirical research on global poverty and inequality into question because, according to him,
improved estimates of purchasing power parity indicate that developing countries are worse off
than previously believed. Milanovic remarks that "literally hundreds of scholarly papers on
convergence or divergence of countries’ incomes have been published in the last decade based
on what we know now were faulty numbers." With the new data, possibly economists will revise
calculations, and he also believed that there are considerable implications estimates of global
inequality and poverty levels. Global inequality was estimated at around 65 Gini points, whereas
the new numbers indicate global inequality to be at 70 on the Gini scale.[131]
The critics of globalization typically emphasize that globalization is a process that is mediated
according to corporate interests, and typically raise the possibility of alternative global
institutions and policies, which they believe address the moral claims of poor and working
classes throughout the globe, as well as environmental concerns in a more equitable way.[132]
The movement is very broad[citation needed], including church groups, national liberation factions,
peasant unionists, intellectuals, artists, protectionists, anarchists, those in support of
relocalization and others. Some are reformist, (arguing for a more moderate form of capitalism)
while others are more revolutionary (arguing for what they believe is a more humane system
than capitalism) and others are reactionary, believing globalization destroys national industry and
jobs.
One of the key points made by critics of recent economic globalization is that income inequality,
both between and within nations, is increasing as a result of these processes. One article from
2001 found that significantly, in 7 out of 8 metrics, income inequality has increased in the twenty
years ending 2001. Also, "incomes in the lower deciles of world income distribution have
probably fallen absolutely since the 1980s". Furthermore, the World Bank's figures on absolute
poverty were challenged. The article was skeptical of the World Bank's claim that the number of
people living on less than $1 a day has held steady at 1.2 billion from 1987 to 1998, because of
biased methodology.[133]
A chart that gave the inequality a very visible and comprehensible form, the so-called
'champagne glass' effect,[134] was contained in the 1992 United Nations Development Program
Report, which showed the distribution of global income to be very uneven, with the richest 20%
of the world's population controlling 82.7% of the world's income.[135]

Distribution of world GDP, 1989

Quintile of Population Income

Richest 20% 82.7%

Second 20% 11.7%

Third 20% 2.3%

Fourth 20% 2.4%


Poorest 20% 0.2%

Source: United Nations Development Program. 1992 Human Development Report[136]


Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with
more financial leverage (i.e. the rich) at the expense of the poor.[137]
Americanization related to a period of high political American clout and of significant growth of
America's shops, markets and object being brought into other countries. So globalization, a much
more diversified phenomenon, relates to a multilateral political world and to the increase of
objects, markets and so on into each others countries.
Critics of globalization talk of Westernization. A 2005 UNESCO report[138] showed that cultural
exchange is becoming more frequent from Eastern Asia but . In 2002, China was the third largest
exporter of cultural goods, after the UK and US. Between 1994 and 2002, both North America's
and the European Union's shares of cultural exports declined, while Asia's cultural exports grew
to surpass North America. Related factors are the fact that Asia's population and area are several
times that of North America.
Some opponents of globalization see the phenomenon as the promotion of corporatist interests.
[139]
They also claim that the increasing autonomy and strength of corporate entities shapes the
political policy of countries.[140][141]
[edit] International Social Forums
See main articles: European Social Forum, the Asian Social Forum,(Africa Social Forum),
World Social Forum (WSF).
The first WSF in 2001 was an initiative of the administration of Porto Alegre in Brazil. The
slogan of the World Social Forum was "Another World Is Possible". It was here that the WSF's
Charter of Principles was adopted to provide a framework for the forums.
The WSF became a periodic meeting: in 2002 and 2003 it was held again in Porto Alegre and
became a rallying point for worldwide protest against the American invasion of Iraq. In 2004 it
was moved to Mumbai (formerly known as Bombay, in India), to make it more accessible to the
populations of Asia and Africa. This last appointment saw the participation of 75,000 delegates.
In the meantime, regional forums took place following the example of the WSF, adopting its
Charter of Principles. The first European Social Forum (ESF) was held in November 2002 in
Florence. The slogan was "Against the war, against racism and against neo-liberalism". It saw
the participation of 60,000 delegates and ended with a huge demonstration against the war
(1,000,000 people according to the organizers). The other two ESFs took place in Paris and
London, in 2003 and 2004 respectively.
Recently there has been some discussion behind the movement about the role of the social
forums. Some see them as a "popular university", an occasion to make many people aware of the
problems of globalization. Others would prefer that delegates concentrate their efforts on the
coordination and organization of the movement and on the planning of new campaigns. However
it has often been argued that in the dominated countries (most of the world) the WSF is little
more than an 'NGO fair' driven by Northern NGOs and donors most of which are hostile to
popular movements of the poor.[142]
[edit] See also
• Alter-globalization
• American Imperialism
• Archaic globalization
• Civilizing mission
• Columbian Exchange
• Cultural assimilation
• Deglobalization
• Development criticism
• Globalism
• Global information system
• Globality
• Great Transition
• Interdependence
• New world order (politics)
• Postmodernism
• Impact of globalization on women in China
• Transnational cinema
• Vermeer's Hat: The Seventeenth Century and the Dawn of the Global World
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133.^ Wade, Robert Hunter. 'The Rising Inequality of World Income Distribution', Finance &
Development, Vol 38, No 4 December 2001
134.^ Xabier Gorostiaga,"World has become a 'champagne glass' globalization will fill it fuller for
a wealthy few' National Catholic Reporter, Jan 27, 1995 '
135.^ United Nations Development Program. 1992 Human Development Report, 1992 (New York,
Oxford University Press)
136.^ "Human Development Report 1992". http://hdr.undp.org/reports/global/1992/en/. Retrieved
2007-07-08.
137.^ NAFTA at 10, Jeff Faux, Economic Policy Institute, D.C.
138.^ 2005 UNESCO report
139.^ Lee, Laurence (17 May 2007). "WTO blamed for India grain suicides". Al Jazeera.
http://english.aljazeera.net/NR/exeres/2ED53A8B-1058-49CF-B9FF-3D96639456D1.htm.
Retrieved 2007-05-17.
140.^ Bakan, Joel (2004). The Corporation. New York, New York: Simon & Schuster. ISBN 0-
7432-4744-2.
141.^ Perkins, John (2004). Confessions of an Economic Hit Man. San Francisco, California:
Berrett-Koehler. ISBN 1-57675-301-8.
142.^ Pambazuka News

[edit] Further reading


• Barbara, Christopher (2008). International legal personality: Panacea or pandemonium?
Theorizing about the individual and the state in the era of globalization. Saarbrücken: Verlag
Dr. Müller. ISBN 3639115147. http://www.amazon.com/International-legal-personality-
pandemonium-globalization/dp/3639115147/ref=sr_1_2?
ie=UTF8&s=books&qid=1230743211&sr=1-2.
• Barzilai, Gad (2008). Beyond Relativism: Where is Political Power in Legal Pluralism. The
Berkeley Electronic Press. pp. 395–416. http://www.bepress.com/til/default/vol9/iss2/art4/.
• Bastardas-Boada, Albert (2002), “World Language Policy in the Era of Globalization:
Diversity and Intercommunication from the Perspective of 'Complexity'", Noves SL, Revista
de Sociolingüística (Barcelona),
http://www6.gencat.net/llengcat/noves/hm02estiu/metodologia/a_bastardas1_9.htm.
• von Braun, Joachim; Eugenio Diaz-Bonilla (2007). Globalization of Food and Agriculture
and the Poor. Oxford: Oxford University Press. ISBN 9780195695281.
http://www.ifpri.org/PUBS/otherpubs/globalpoor.asp.
• Peter Berger, Four Faces of Global Culture (The National Interest, Fall 1997).
• Friedman, Thomas L. (2005). The World Is Flat. New York: Farrar, Straus and Giroux. ISBN
0-374-29288-4.
• Grinin, Leonid. Globalization and Sovereignty: Why do States Abandon their Sovereign
Prerogatives?. http://old.uchitel-izd.ru/index.php?
option=content&task=view&id=155&Itemid=97.
• Haggblade, Steven; et al. (2007). Transforming the Rural Nonfarm Economy: Opportunities
and Threats in the Developing World. Johns Hopkins University Press. pp. 512. ISBN 978-0-
8018-8663-8. http://www.ifpri.org/pubs/jhu/transformrural.asp.
• Kitching, Gavin (2001). Seeking Social Justice through Globalization. Escaping a
Nationalist Perspective. Penn State Press. ISBN 0271021624.
http://www.gavinkitching.com/africa_3.htm.
• Gernot Kohler and Emilio José Chaves (Editors) “Globalization: Critical Perspectives”
Haupauge, New York: Nova Science Publishers (http://www.novapublishers.com/) ISBN 1-
59033-346-2. With contributions by Samir Amin, Christopher Chase Dunn, Andre Gunder
Frank, Immanuel Wallerstein
• Mander, Jerry; Edward Goldsmith (1996). The case against the global economy : and for a
turn toward the local. San Francisco: Sierra Club Books. ISBN 0-87156-865-9.
• Moore, Karl; David Lewis (2009). Origins of Globalization. New York: Routledge.
• Murray, Warwick E. (2006). Geographies of Globalization. New York: Routledge/Taylor and
Francis. ISBN 0415317991.
• Osterhammel, Jurgen; Niels P. Petersson (2005). Globalization: A Short History. Princeton,
NJ: Princeton University Press. ISBN 0-691-12165-6.
http://www.amazon.com/Globalization-Short-History-Jurgen-
Osterhammel/dp/0691121656/ref=sr_1_1?ie=UTF8&s=books&qid=1238939576&sr=1-1.
• Raffaele Feola, La Globalizzazione dell'Arte. L'UTOPIA DEL GLOBALE, Napoli 2009.
• Reinsdorf, Marshall and Matthew J. Slaughter (2009). International Trade in Services and
Intangibles in the Era of Globalization. Chicago: The University of Chicago Press. ISBN
9780226709598.
• Sen, Amartya (1999). Development as Freedom. Oxford, New York: Oxford University
Press. ISBN 019289330.
• Sirkin, Harold L; James W. Hemerling and Arindam K. Bhattacharya (2008). Globality:
Competing with Everyone from Everywhere for Everything. New York: Business Plus.
pp. 292. ISBN 0446178292. http://www.bcg.com/globality.
• Smith, Charles (2007). International Trade and Globalisation, 3rd edition. Stocksfield:
Anforme. ISBN 1905504101.
• Steger, Manfred (2002). Globalism: the new market ideology. Lanham, MD: Rowman &
Littlefield Publishers. ISBN 0742500721.
• Steger, Manfred (2003). Globalization: A Very Short Introduction. Oxford, New York:
Oxford University Press. ISBN 0-19-280359-X.
• Stiglitz, Joseph E. (2002). Globalization and Its Discontents. New York: W.W. Norton. ISBN
0-393-32439-7.
• Stiglitz, Joseph E. (2006). Making Globalization Work. New York: W.W. Norton. ISBN 0-
393-06122-1.
• Tausch, Arno (2008). Multicultural Europe: Effects of the Global Lisbon Process.
Hauppauge, NY: Nova Science Publishers. ISBN 978-1-60456-806-6.
https://www.novapublishers.com/catalog/product_info.php?products_id=7489.
• Tausch, Arno (2009). Titanic 2010? The European Union and its failed “Lisbon strategy.
Hauppauge, NY: Nova Science Publishers. ISBN 978-1-60741-826-9.
https://www.novapublishers.com/catalog/product_info.php?products_id=8314.
• Wolf, Martin (2004). Why Globalization Works. New Haven: Yale University Press. ISBN
978-0300102529.

[edit] External links


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improve this article by removing excessive and inappropriate external links or by
converting links into references. (June 2009)

Wikiquote has a collection of quotations related to: Globalization

Look up globalisation or globalization in Wiktionary, the free dictionary.

Wikimedia Commons has media related to: Globalization

• YaleGlobal Online Online Magazine focusing on Globalization


• Latin Business Chronicle, Dec.10, 2008 Latin America More Globalized
• Argentine Center of International Studies
• Arno Tausch (2006), ‘From the “Washington” towards a “Vienna Consensus”? A
quantitative analysis on globalization, development and global governance’. Paper,
prepared for the discussion process leading up to the EU-Latin America and Caribbean
Summit 2006, May 11, 2006 to May 12, 2006, Vienna, Austria. Centro Argentino de
Estudios Internacionales, Buenos Aires
• Arno Tausch (2007), ‘“Destructive Creation”? Some long-term Schumpeterian
reflections on the Lisbon process’ Entelequia e-Books, University of Cadiz/Malaga
(Spain), Munich Personal Repec Archive, Global Development Network, University of
Sussex and University of Connecticut, Ideas/Repec
• Effects of globalization on online freelancers
• Embracing the Challenge of Free Trade: Competing and Prospering in a Global Economy
a speech by Federal Reserve chairman Ben Bernanke
• Globalisation shakes the world BBC News
• Inequality Project from University of Texas
• Institute for Research on World-Systems at UC Riverside
• Resilience, Panarchy, and World-Systems Analysis from the Ecology and Society Journal
• Rethinking Globalisation blog
• OECD Globalization statistics
• Globalization theories
• The Sociology of Globalization
• Mapping Globalization — globalization project with a collection of maps
• Globalization and Me Views and viewpoints on Globalization
• Globalism/Antiglobalism : a survey and a view
• The Effects of Globalization on the U.S.A.
[edit] Multimedia
• CBC Archives CBC Television reports on the opening of Moscow McDonalds (1990) -
sample of Western business expanding into former communist countries.
• Squeezed: The Cost of Free Trade in the Asia-Pacific 2007 film about the impacts of
globalisation in Thailand and the Philippines

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Global Education Global Issues Globalisation

Globalisation
Facts
Background
Australia's response
The global agenda
Facts
Global income is more than $31 trillion a year, but 1.2 billion people of the world's population
earn less than $1 a day.
80% of the global population earns only 20% of global income, and within many countries there
is a large gap between rich and poor.
The 3 billion people living in the 24 developing countries that increased their integration into the
world economy enjoyed an average 5% growth rate in income per capita, longer life expectancy
and better schooling.
Two billion people, living in countries in sub-Saharan Africa, the Middle East, and the former
Soviet Union, have been unable to increase their integration into the world economy, and their
economies have contracted, poverty has risen, and education levels have risen less rapidly than in
the more globalised countries.
Sea level rise, warming temperatures, uncertain effects on forest and agricultural systems, and
increased variability and volatility in weather patterns are expected to have a significant and
disproportionate impact in the developing world, where the world's poor remain most susceptible
to the potential damages and uncertainties inherent in a changing climate.
The digital and information revolution has changed the way the world learns, communicates,
does business and treats illnesses. In 2002, there were 364 people per 1000 using the internet in
high income countries, while there were only 10 per 1000 in low income countries.
Source: The World Bank, 2004, http://www.worldbank.org/
United Nations Development Programme, 2004 http://www.undp.org/

Background
What is globalisation?
There are many different definitions of globalisation, but most acknowledge the greater
movement of people, goods, capital and ideas due to increased economic integration which in
turn is propelled by increased trade and investment. It is like moving towards living in a
borderless world.

There has always been a sharing of goods, services, knowledge and cultures between people and
countries, but in recent years improved technologies and a reduction of barriers means the speed
of exchange is much faster. Globalisation provides opportunities and challenges. Bigger markets
can mean bigger profits which leads to greater wealth for investing in development and reducing
poverty in many countries. Weak domestic policies, institutions and infrastructure and trade
barriers can restrict a country's ability to take advantages of the changes. Each country makes
decisions and policies that position them to maximise the benefits and minimise the challenges
presented by globalisation.

The issues and perceived effects of globalisation excite strong feelings, tempting people to
regard it in terms of black and white, when in fact globalisation is an extremely complex web of
many things. The following table presents ten opposing points of view often expressed about
globalisation.

Benefits of globalisation Problems of globalisation


1.
Economies of countries that engage well with the international economy have consistently
grown much faster than those countries that try to protect themselves. Well managed open
economies have grown at rates that are on average 2 ½ percentage points higher than the rate of
growth in economies closed to the forces of globalisation.
There are social and economic costs to globalisation. Trade liberalisation rewards competitive
industries and penalises uncompetitive ones, and it requires participating countries to undertake
economic restructuring and reform. While this will bring benefits in the long term, there are
dislocation costs to grapple with in the immediate term, and the social costs for those affected are
high.

2.

Countries which have had faster economic growth have then been able to improve living
standards and reduce poverty. India has cut its poverty rate in half in the past two decades. China
has reduced the number of rural poor from 250 million in 1978 to 34 million in 1999. Cheaper
imports also make a wider range of products accessible to more people and, through competition,
can help promote efficiency and productivity.
Some countries have been unable to take advantage of globalisation and their standards of living
are dropping further behind the richest countries. The gap in incomes between the 20% of the
richest and the poorest countries has grown from 30 to 1 in 1960 to 82 to 1 in 1995.

3.

Improved wealth through the economic gains of globlisation has led to improved access to
health care and clean water which has increased life expectancy. More than 85 percent of the
world's population can expect to live for at least sixty years (that's twice as long as the average
life expectancy 100 years ago!)
Increased trade and travel have facilitated the spread of human, animal and plant diseases, like
HIV/AIDS, SARS and bird flu, across borders. The AIDS crisis has reduced life expectancy in
some parts of Africa to less than 33 years and delays in addressing the problems, caused by
economic pressures, have exacerbated the situation.
Globalisation has also enabled the introduction of cigarettes and tobacco to developing countries,
with major adverse health and financial costs associated with that.

4.

Increased global income and reduced investment barriers have led to an increase in foreign
direct investment which has accelerated growth in many countries. In 1975, total foreign direct
investment amounted to US$23 billion while in 2003 it totalled US$575 billion.
The increasing interdependence of countries in a globalised world makes them more vulnerable
to economic problems like the Asian financial crisis of the late 1990's.

5.

Improved environmental awareness and accountability has contributed to positive environmental


outcomes by encouraging the use of more efficient, less-polluting technologies and facilitating
economies' imports of renewable substitutes for use in place of scarce domestic natural
resources.
The environment has been harmed as agricultural, forest, mining and fishing industries exploit
inadequate environmental codes and corrupt behaviour in developing countries. Agricultural
seed companies are destroying the biodiversity of the planet, and depriving subsistence farmers
of their livelihood.

6.
Increasing interdependence and global institutions like WTO and World Bank, that manage the
settlement of government-to-government disputes, have enabled international political and
economic tensions to be resolved on a "rules based" approach, rather than which country has the
greatest economic or political power. Importantly it has bolstered peace as countries are unlikely
to enter conflict with trading partners and poverty reduction helps reduce the breeding ground for
terrorism.
The major economic powers have a major influence in the institutions of globalisation, like the
WTO, and this can work against the interests of the developing world. The level of agricultural
protection by rich countries has also been estimated to be around five times what they provide in
aid to poor countries

7.

Improved technology has dramatically reduced costs and prices changing the way the world
communicates, learns, does business and treats illnesses. Between 1990 and 1999, adult illiteracy
rates in developing countries fell from 35 per cent to 29 per cent.
Trade liberalisation and technological improvements change the economy of a country,
destroying traditional agricultural communities and allowing cheap imports of manufactured
goods. This can lead to unemployment if not carefully managed, as work in the traditional
sectors of the economy becomes scarce and people may not have the appropriate skills for the
jobs which may be created.

8.

Modern communications and the global spread of information have contributed to the toppling
of undemocratic regimes and a growth in liberal democracies around the world.

Modern communications have spread an awareness of the differences between countries, and
increased the demand for migration to richer countries. Richer countries have tightened the
barriers against migrant workers, xenophobic fears have increased and people smugglers have
exploited vulnerable people.

9.
The voluntary adoption by global companies of workplace standards for their internationalised
production facilities in developing countries has made an important contribution to respect for
international labour standards. Wages paid by multinationals in middle- and low-income
countries are on average 1.8 to 2.0 times the average wages in those countries.
Globalised competition can force a 'race to the bottom' in wage rates and labour standards. It can
also foster a 'brain drain' of skilled workers, where highly educated and qualified professionals,
such as doctors, engineers and IT specialists, migrate to developed countries to benefit from the
higher wages and greater career and lifestyle prospects. This creates severe skilled labour
shortages in developing countries.

10.

International migration has led to greater recognition of diversity and respect for cultural
identities which is improving democracy and access to human rights.
Indigenous and national culture and languages can be eroded by the modern globalised culture.

Source: AusAID, 2004, http://www.ausaid.gov.au/


Source: The World Bank, 2004, http://www.worldbank.org/
United Nations Development Programme, 2004 http://www.undp.org/

Balancing the globalisation scales


Globalisation has costs and benefits. There have been examples of poorly managed globalisation
(eg when countries opened their economic borders before they had the capacity to respond well)
but there are also examples of well managed engagement with the international community.
Like it or not, globalisation is a reality. Many countries have committed themselves to reducing
poverty through the Millennium Development Goals (MDGs) and are cooperating together to
work out smart ways to manage globalisation.

Australia's response
Australia is an example of a country that has benefited from globalisation, both in terms of
exports (wool, wheat and minerals) and as a borrower of international capital. The standard of
living Australians enjoy now can be attributed to its 'open' and, therefore competitive, economy.

Australia lives in a region surrounded by populous developing countries and a significant


proportion of our exports either go to, or pass through, developing countries. Through its aid
program, Australia provides technical assistance, capacity building initiatives and investment,
and information communication technologies to promote active participation in the global
community. Australia is working to maximise the benefits and minimise the challenges presented
to developing countries by globalisation.

Virtual Colombo Plan (VCP)

The Virtual Colombo Plan, a $200 million joint initiative of the Australian Government and
World Bank, assists developing countries to access knowledge networks and improved
education.
It has provided:

a high-speed broadband connection for the University of the South Pacific


video-conferencing and internet centres in China, East Timor, PNG and Vietnam
an internet portal to maximise the interchange of information about sustainable development and
poverty reduction
http://www.developmentgateway.com.au/

Trade and Development

Australia is providing technical advice to developing countries to engage in trade negotiations


and improve trade facilitation through more efficient port, customs and quarantine systems.
Australia is also helping developing country economies maximise benefits from free trade
opportunities, for example, by reform of domestic policy on trade related aspects of intellectual
property rights.
Australia also provides tariff and quota free access for all goods produced in the 49 Least
Developed Countries.
http://www.ausaid.gov.au/publications/pubout.cfm?ID=8919_7048_6624_3702_4235
http://www.dfat.gov.au/

Global agenda

International Monetary Fund (IMF)


URL: http://www.imf.org/external/index.htm

The official site for the International Monetary Fund (IMF). The IMF is a sister institution to the
World Bank in the United Nations system. It shares the same international membership and the
same goal of raising living standards in its member countries. It works to foster global monetary
cooperation, secure financial stability, facilitate international trade, promote high employment
and sustainable economic growth and reduce poverty. Contents of the site include a clear
explanation of the role of the IMF, a FAQ, the Annual Report 1998, member nations, current
issues on world finance and a range of interesting articles. Site relevant for Upper Secondary
students studying Economics, Accounting, Politics and History. Suitable for Secondary, Teacher
Reference.

World Bank
URL: http://www.worldbank.org/
The World Bank Group's mission is to fight poverty and improve the living standards of people
in the developing world. It is a development bank which provides low-interest loans, interest-free
credit, grants, policy advice, technical assistance and knowledge sharing services to low and
middle-income countries to reduce poverty. The Bank promotes growth to create jobs, and to
empower poor people to take advantage of economic opportunities. The Bank is strongly
committed to the Millennium Development Goals which target poverty, school enrolments, child
mortality, maternal health, disease, and access to water. It is currently involved in more than
1,800 projects, in virtually every sector and developing country.

World Social Forum (WSF)


URL: http://www.forumsocialmundial.org.br/index.php?cd_language=2&id_menu=

The World Social Forum (WSF) is an amalgamation of many political/social movements from
around the world. It was created to openly discuss alternatives to the model for globalisation
formulated by the World Economic Forum, large multinational corporations, national
governments, IMF, the World Bank and the WTO. It is working to demonstrate that the path to
sustainable development, social and economic justice lies in alternative models for people-
centred and self-reliant progress, rather than in neo-liberal globalisation.

World Trade Organisation


URL: http://www.wto.org/

The World Trade Organization (WTO) is a global international organisation dealing with the
rules of trade between nations. At its heart are the WTO agreements, negotiated and signed by
the bulk of the world's trading nations and ratified in their parliaments. The goal is to help
producers of goods and services, exporters, and importers conduct their business.
Computer technology has made long distance learning an everyday reality for these students in
Ningxia Province, China

My Thuan Bridge, Mekong River, near Vinh Long, southern Vietnam

Customs Officers in their new AusAID-funded computer room in the Customs Department
offices in Apia, Samoa

Global income is more than $31 trillion a year but 1.2 billion of the world's population earn less
than $1 a day
Case study

Hello… The World's Calling

Teaching activities

Defining globalisation (U/Sec)


For and against globalisation (U/Sec)
Globalisation learning quests (U/Sec)
Hello...The world's calling (U/Sec)
Understanding free trade and protection (LS)

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About:globalizationeconomics of indiaeconomics of developing countries

Impact of Globalisation on Developing Countries and India

Impact of Globalisation on Developing Countries and India

by Chandrasekaran Balakrishnan
Chandrasekaran Balakrishnan for The 2004 Moffatt Prize in Economics

Introduction:

Globalisation is the new buzzword that has come to dominate the world since the
nineties of the last century with the end of the cold war and the break-up of the
former Soviet Union and the global trend towards the rolling ball. The frontiers of
the state with increased reliance on the market economy and renewed faith in the
private capital and resources, a process of structural adjustment spurred by the
studies and influences of the World Bank and other International organisations have
started in many of the developing countries. Also Globalisation has brought in new
opportunities to developing countries. Greater access to developed country markets
and technology transfer hold out promise improved productivity and higher living
standard. But globalisation has also thrown up new challenges like growing
inequality across and within nations, volatility in financial market and environmental
deteriorations. Another negative aspect of globalisation is that a great majority of
developing countries remain removed from the process. Till the nineties the process
of globalisation of the Indian economy was constrained by the barriers to trade and
investment liberalisation of trade, investment and financial flows initiated in the
nineties has progressively lowered the barriers to competition and hastened the
pace of globalisation

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Definition:

Globalised World - What does it mean?

Does it mean the fast movement of people which results in greater interaction?

Does it mean that because of IT revolution people can be in touch with each other in
any part of the world?

Does it mean trade and economy of each country is open in Non-Intrusive way so
that all varieties are available to consumer of his choice?

Does it mean that mankind has achieved emancipation to a level of where we can
say it means a social, economic and political globalisation?

Though the precise definition of globalisation is still unavailable a few definitions


worth viewing, Stephen Gill: defines globalisation as the reduction of transaction
cost of transborder movements of capital and goods thus of factors of production
and goods. Guy Brainbant: says that the process of globalisation not only includes
opening up of world trade, development of advanced means of communication,
internationalisation of financial markets, growing importance of MNC's, population
migrations and more generally increased mobility of persons, goods, capital, data
and ideas but also infections, diseases and pollution

Impact on India:
India opened up the economy in the early nineties following a major crisis that led
by a foreign exchange crunch that dragged the economy close to defaulting on
loans. The response was a slew of Domestic and external sector policy measures
partly prompted by the immediate needs and partly by the demand of the
multilateral organisations. The new policy regime radically pushed forward in favour
of amore open and market oriented economy.

Major measures initiated as a part of the liberalisation and globalisation strategy in


the early nineties included scrapping of the industrial licensing regime, reduction in
the number of areas reserved for the public sector, amendment of the monopolies
and the restrictive trade practices act, start of the privatisation programme,
reduction in tariff rates and change over to market determined exchange rates.

Over the years there has been a steady liberalisation of the current account
transactions, more and more sectors opened up for foreign direct investments and
portfolio investments facilitating entry of foreign investors in telecom, roads, ports,
airports, insurance and other major sectors.

The Indian tariff rates reduced sharply over the decade from a weighted average of
72.5% in 1991-92 to 24.6 in 1996-97.Though tariff rates went up slowly in the late
nineties it touched 35.1% in 2001-02. India is committed to reduced tariff rates.
Peak tariff rates are to be reduced to be reduced to the minimum with a peak rate
of 20%, in another 2 years most non-tariff barriers have been dismantled by march
2002, including almost all quantitative restrictions.

India is Global:

The liberalisation of the domestic economy and the increasing integration of India
with the global economy have helped step up GDP growth rates, which picked up
from 5.6% in 1990-91 to a peak level of 77.8% in 1996-97. Growth rates have
slowed down since the country has still bee able to achieve 5-6% growth rate in
three of the last six years. Though growth rates has slumped to the lowest level
4.3% in 2002-03 mainly because of the worst droughts in two decades the growth
rates are expected to go up close to 70% in 2003-04. A Global comparison shows
that India is now the fastest growing just after China.
This is major improvement given that India is growth rate in the 1970's was very
low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was
more than twice that of India. Though India's average annual growth rate almost
doubled in the eighties to 5.9% it was still lower than the growth rate in China,
Korea and Indonesia. The pick up in GDP growth has helped improve India's global
position. Consequently India's position in the global economy has improved from
the 8th position in 1991 to 4th place in 2001. When GDP is calculated on a
purchasing power parity basis.

Globalisation and Poverty:

Globalisation in the form of increased integration though trade and investment is an


important reason why much progress has been made in reducing poverty and
global inequality over recent decades. But it is not the only reason for this often
unrecognised progress, good national polices , sound institutions and domestic
political stability also matter.

Despite this progress, poverty remains one of the most serious international
challenges we face up to 1.2 billion of the developing world 4.8 billion people still
live in extreme poverty.

But the proportion of the world population living in poverty has been steadily
declining and since 1980 the absolute number of poor people has stopped rising
and appears to have fallen in recent years despite strong population growth in poor
countries. If the proportion living in poverty had not fallen since 1987 alone a
further 215million people would be living in extreme poverty today.

India has to concentrate on five important areas or things to follow to achieve this
goal. The areas like technological entrepreneurship, new business openings for
small and medium enterprises, importance of quality management, new prospects
in rural areas and privatisation of financial institutions. The manufacturing of
technology and management of technology are two different significant areas in the
country.
There will be new prospects in rural India. The growth of Indian economy very much
depends upon rural participation in the global race. After implementing the new
economic policy the role of villages got its own significance because of its unique
outlook and branding methods. For example food processing and packaging are the
one of the area where new entrepreneurs can enter into a big way. It may be
organised in a collective way with the help of co-operatives to meet the global
demand.

Understanding the current status of globalisation is necessary for setting course for
future. For all nations to reap the full benefits of globalisation it is essential to
create a level playing field. President Bush's recent proposal to eliminate all tariffs
on all manufactured goods by 2015 will do it. In fact it may exacerbate the
prevalent inequalities. According to this proposal, tariffs of 5% or less on all
manufactured goods will be eliminated by 2005 and higher than 5% will be lowered
to 8%. Starting 2010 the 8% tariffs will be lowered each year until they are
eliminated by 2015.

GDP Growth rate:

The Indian economy is passing through a difficult phase caused by several


unfavourable domestic and external developments; Domestic output and Demand
conditions were adversely affected by poor performance in agriculture in the past
two years. The global economy experienced an overall deceleration and recorded
an output growth of 2.4% during the past year growth in real GDP in 2001-02 was
5.4% as per the Economic Survey in 2000-01. The performance in the first quarter
of the financial year is5.8% and second quarter is 6.1%.

Export and Import:

India's Export and Import in the year 2001-02 was to the extent of 32,572 and
38,362 million respectively. Many Indian companies have started becoming
respectable players in the International scene. Agriculture exports account for about
13 to 18% of total annual of annual export of the country. In 2000-01 Agricultural
products valued at more than US $ 6million were exported from the country 23% of
which was contributed by the marine products alone. Marine products in recent
years have emerged as the single largest contributor to the total agricultural export
from the country accounting for over one fifth of the total agricultural exports.
Cereals (mostly basmati rice and non-basmati rice), oil seeds, tea and coffee are the
other prominent products each of which accounts fro nearly 5 to 10% of the
countries total agricultural exports.

Where does Indian stand in terms of Global Integration?

India clearly lags in globalisation. Number of countries have a clear lead among
them China, large part of east and far east Asia and eastern Europe. Lets look at a
few indicators how much we lag.

·Over the past decade FDI flows into India have averaged around 0.5% of GDP
against 5% for China 5.5% for Brazil. Whereas FDI inflows into China now exceeds
US $ 50 billion annually. It is only US $ 4billion in the case of India

·Consider global trade - India's share of world merchandise exports increased from .
05% to .07% over the pat 20 years. Over the same period China's share has tripled
to almost 4%.

·India's share of global trade is similar to that of the Philippines an economy 6 times
smaller according to IMF estimates. India under trades by 70-80% given its size,
proximity to markets and labour cost advantages.

·It is interesting to note the remark made last year by Mr. Bimal Jalan, Governor of
RBI. Despite all the talk, we are now where ever close being globalised in terms of
any commonly used indicator of globalisation. In fact we are one of the least
globalised among the major countries - however we look at it.

·As Amartya Sen and many other have pointed out that India, as a geographical,
politico-cultural entity has been interacting with the outside world throughout
history and still continues to do so. It has to adapt, assimilate and contribute. This
goes without saying even as we move into what is called a globalised world which is
distinguished from previous eras from by faster travel and communication, greater
trade linkages, denting of political and economic sovereignty and greater
acceptance of democracy as a way of life.

Consequences:

The implications of globalisation for a national economy are many. Globalisation has
intensified interdependence and competition between economies in the world
market. This is reflected in Interdependence in regard to trading in goods and
services and in movement of capital. As a result domestic economic developments
are not determined entirely by domestic policies and market conditions. Rather,
they are influenced by both domestic and international policies and economic
conditions. It is thus clear that a globalising economy, while formulating and
evaluating its domestic policy cannot afford to ignore the possible actions and
reactions of policies and developments in the rest of the world. This constrained the
policy option available to the government which implies loss of policy autonomy to
some extent, in decision-making at the national level.

~
References:

1.Globalisation and Poverty: Centre for International Economics, Australia.

2.WIDER ANNUAL LECTURE 6: Winners and Losers over two centuries of


Globalisation: Jeffery G. Williamson.

3.Globalisation Trend and Issues - T.K.Velayudham, Page 3, 66.

4.Globalisation and India -Lecture : Prof .Sagar Jain, University of N.Carolina.

5.Repositioning India in the Globalised World - Lecture : V.N.Rai.

6.Globalisation and India's Business prospectives - Lecture - Ravi Kastia.

7."Globalisation and Liberalisation" Prospects of New World Order - Dr.A.K.Ojha,


Third Concept - An International Journal of Ideas, Aug 2002.

8.The Indian and Global Business - Jan 2004, Page 30.

9.Globalisation: Imperatives, Challenges and the Strategies, Page 39.

This was an entry for The 2004 Moffatt Prize in Economics. See the contest rules for
more information.

If you'd like to leave comments about this entry, use the contest feedback form.
Make sure to indicate that you are commenting on Chandrasekaran Balakrishnan's
"Impact of Globalisation on Developing Countries and India

SELECT SPEECHES
India and Globalisation
This is a truly momentous occasion in the life of this Institute, its students, its teachers, and
its friends. Let me begin by conveying my heartiest congratulations to the students who are
receiving their degrees today. For all of them, it is a culmination of years of hard work, and
a recognition of their high academic merit.
All the teachers of this great Institute, who have put in so much time and effort to make
this day possible, also deserve our gratitude.
I would like to specially welcome the parents of the students, who are present at this
Convocation. Without some sacrifice and a good deal of support, successful completion of
higher studies by young men and women, who are here today, would not have been
possible.
I am personally grateful to the President of the Indian Statistical Institute, Prof.
M.G.K.Menon and Director, Prof. K.B.Sinha, for inviting me to be a part of this occasion. A
scientist, a scholar and a public figure, Prof. Menon has led this Institute with great
distinction. He has been a source of inspiration for all those connected with ISI and its
teachers and students. It is a particular privilege and honour to deliver this address in his
esteemed presence.
On this important occasion, I would also like to pay homage to the memory of Professor
P.C.Mahalanobis, founder of the ISI and the builder of the modern statistical system in
India. His technical contribution to the development of statistics as a science are
fundamental and well known all over the world. What was even more remarkable, in a
developing country context, was his desire to use statistical methods including sample
surveys to understand and solve the problems of an underdeveloped economy, including
low productivity agriculture.
The high quality, the depth, and the breadth of research and teaching in statistics and other
inter-related subjects at this Institute are tributes to the vision of Prof. Mahalanobis and his
confidence in our country’s future.
While I am thankful for being here on this occasion, I am also a little daunted by the task of
having to say something useful which may be of interest to this varied audience from so
many different walks of life. After some reflection, I have chosen to speak to you on "India
and Globalisation", or how we in India should look at the process of so-called "globalisation"
that the world has been passing through in recent years. I had an occasion to speak on this
subject at Mumbai University Convocation a couple of weeks ago. This is a matter of
considerable contemporary debate, and I thought some reflection on this may also be of
interest here in Kolkata.
There is a debate not only in India but all over the globe about the pros and cons of
"globalisation". There is hardly any important global meeting which does not witness
vigorous protest marches or picketing by the opponents of the globalisation process.
Equally, on the opposite side, there are those who regard it as panacea for all the world’s
problems and key to unmixed prosperity and well being for all the countries and all the
people. If you take a poll in any assembly, including I am sure this one, you will find some
are strongly for and some are strongly against globalisation.
To my mind, neither view – for or against – is correct. The only rational view is to accept it
as an emerging and powerful global reality which has a momentum of its own. Our job as an
independent nation / state is to ensure that we maximise the advantage for our country and
minimise the risks. It has both pluses and minuses like any other major global economic
change – say, the industrial revolution of the 18th century. Some countries gained, some
lost – partly because of the then prevailing political circumstances. India, for example, lost
because of colonialism and fragmented nature of our polity. U.K., Europe, U.S. – and later
Japan prospered. Same is the case with globalisation. One big difference, however, is that
unlike the olden days, today our destiny is in our own hands.
Before we look at our opportunities and challenges from globalisation, it is good to be
certain of facts – where exactly India is in terms of globalisation. If we look at some of our
own debate, it would seem as if we were already well on the way to globalisation, which was
shaking up our economy. A most common measure of globalisation is openness to trade and
a country’s participation in trade. By this measure, the extent of India’s globalisation is
insignificant – it is one of the lowest in the world. India’s share in world trade is a meagre
0.7 per cent or so. If a map of the world were drawn on the scale of a country’s
participation in trade, India with a population of more than 1,000 million will occupy a
smaller area than Singapore with a population of only 3 million. You would need a
magnifying glass to locate India on that map!
A second commonly used measure of globalisation is a country’s participation in
international capital flows, particularly Foreign Direct Investment (FDI). As you know,
annual flow of FDI across the globe is more than $ 1 trillion, i.e., $ 1,000 billion. Annual FDI
inflows into India is $ 3 – 4 billion only or 0.3 – 0.4 per cent of the total – that is all. Same
is true of Foreign Institutional Investment (FII).
Therefore, the first point that I would like to emphasise is that despite all the talk, we are
nowhere even close to being globalised in terms of any commonly used indicator of
globalisation. In fact, we are still one of the least globalised among major countries –
however we look at it.
An equally important point is that whether the so-called globalisation is considered to be
good or bad for a country depends crucially on the sense in which the word is used. The
word may be used in a purely descriptive sense to describe a "shrinkage" of distance among
nation states due to technological changes in transport and communication and closer
integration of product and financial markets across the world.
Another sense in which the word may be used is the effect of such changes on different
countries or groups of countries, such as, developed and developing. In yet another sense,
the word may also represent a "globalisation of ideas or ideology" and may be used as a
synonym for triumph of capitalism or dominance of unfettered markets.
In discussing the issue of globalisation in the Indian context, I propose to confine myself
largely to the factual and descriptive sense in which the word is used, i.e. the technological
changes, and associated policy changes, that have brought the world economies closer and
made them more integrated with each other.
In this particular sense, I believe that the changes that have occurred in the patterns of
trade and capital flows in recent years are to India’s advantage – although, unfortunately,
so far we have not made much use of it. Today, in terms of the potential benefits of
globalisation, India is in a very different position than would have been the case 50 or even
20 years ago.
This is because the sources of what economists call "comparative advantage" have changed
dramatically in India’s favour in the 1990s because of the technological revolution. In the
old days, comparative advantage was largely determined by "factor endowments", i.e. land,
labour and capital. Geographical location and early starts in industry also conferred greater
advantages.
Thus, at one time, a country’s trade pattern, was determined by its natural resources and
the productivity of its land. Leaving aside political and institutional factors, a country’s level
of income was also largely determined by the global demand for its natural resources and
its relative efficiency in exploiting them. The importance of land as a source of comparative
advantage, however, changed dramatically after the industrial revolution. Today, it is almost
insignificant. Thus, except for the United States, countries accounting for a predominant
share of the world GDP have a relatively small share of global land area.
After the industrial revolution, the availability of "capital" or investible resources became the
most dominant source of comparative advantage. At this Institute, established by the great
Prof. P.C.Mahalonobis, I hardly need to elaborate on the importance that was attached to
domestic capital accumulation in early development economics. In fact, scarcity of capital
and low domestic savings were considered to be, and rightly so, as principal causes of a
country’s underdevelopment.
Today, availability of capital and productivity are still crucial in determining a country’s
growth rate. However, there has been a dramatic change in the global mobility of capital,
and national boundaries are no longer important determinants of sources and uses of
capital. A dramatic illustration of this is the fact that the most developed country in the
world, which enjoyed unprecedented growth during the 1990s, is actually a capital-
importing country, i.e. the United States. Similarly, the fastest growing developing country,
i.e. China, is one of the largest recipients of capital from outside.
Similary, labour is no longer an important element in cost of production and in determining
a country’s comparative advantage. In most manufacturing industries in the world, it is no
higher than 1/8th of total costs. In India, it may be somewhat higher because of our
domestic laws, but the important fact to note is that India no longer needs to specialise only
in the production of labour-intensive plantation crops or primary commodities.
A related development which is linked to the above changes, is the "Services Revolution".
The focus of attention in conventional economics, was on production of goods –
manufactured products and agricultural commodities. It was, of course, recognised that the
services sector (which includes transport, communication, trade, banking, construction and
public administration, etc.) was an important source of income and employment in most
economies. However, overall, the growth of services was perceived at best as a by-product
of developments in the primary and secondary sectors, and at worst as a drag on the
prospects for long-term economic growth.
In the last few years, there has been a phenomenal change in the conventional view of
services and their role in the economy. This change has been facilitated by unprecedented
and unforeseen advances in computer and communication technology. As a result, the
development of certain services is now regarded as one of the preconditions of economic
growth, and not as one of its consequences.
The boundary between goods and services is also disappearing. Many industrial products
are not only manufactured, but they are also researched, designed, marketed, advertised,
distributed, leased and serviced.
An important aspect of the "services revolution" is that geography and levels of
industrialisation are no longer the primary determinants of the location of facilities for
production of services. As a result, the traditional role of developing countries is also
changing – from mere recipients to important providers of long-distance and high value
services.
From India’s point of view, these developments provide opportunities for substantial growth.
For example:
• The fastest growing segment of services is the rapid expansion of knowledge-based
services, such as, professional and technical services. India has a tremendous
advantage in the supply of such services because of a developed structure of
technological and educational institutions, such as this one, and lower labour costs.
• Unlike most other prices, world prices of transport and communication services have
fallen dramatically. By 1960, sea transport costs were less than a third of their 1920
level, and they have continued to fall. The cost of a telephone call fell more than ten-
fold between 1970 and 2000. Moreover, the cost of communication is also becoming
independent of distance. The most dramatic example in this area is, of course,
provided by the "Internet". India’s geographical distance from several important
industrial markets (for instance, North America) is no longer an important element in
the cost structure of skill-based services.
• It is now feasible to "unbundle" production of different types of goods and services.
India does not necessarily have to be a low-cost producer of certain types of goods
(e.g., computers or discs) before it can become an efficient supplier of services
embodied in them (e.g., software or music).
At the same time, it must be recognised that the "death of distance" and the growing
integration of global product, services and financial markets in recent years have also
presented new challenges for management of the national economy – not only in India but
all over the world. The trend towards integration of markets, particularly financial markets,
is by no means an unmixed blessing. Unlike the old days, a heavy price may have to be paid
by national economies for somnolence, sloth and non-conformity to generally accepted
international norms and standards of macro-economic management, disclosure,
transparency and financial accountability.
Another consequence of recent global trends is the greater vulnerability of national
economies to developments outside their own borders. A crisis in any one or a group of
countries, can be transmitted to other countries – including countries which may not have
any strong economic linkages with crisis-affected countries. Thus, the ’nineties have been
marked by a large number of currency crises (for example, in Mexico, Russia, East Asia and
Brazil – and currently Argentina and Turkey); substantial swings in exchange rates
(including the exchange rate of three leading currencies – the dollar, the Euro and the Yen);
and run ups in asset prices followed by sharp collapse (for example in Japan and East Asia
earlier and the United States last year). While the crises initially occur in one or two specific
countries, their adverse effects are felt across the world.
While we must be careful, on the whole, in my view, – the death of distance, the services
revolution, and the mobility of capital – which characterise globalisation – present
unprecedented opportunities for India. The primary source of comparative advantages today
are : skills and ability to adapt and change. And, India has the advantage – of skills, of
entrepreneurship and of managerial competence in taking advantage of these changes.
If what I have said is correct, then, why are we not jumping with joy and optimism? Why
are we so "unglobalised" in terms of our share in trade, investment or communication?
Transition from a closed to a vibrant, open and a more globally dominant economy will
certainly take time and will not be painless.
As of now, we also have much greater tolerance for waste, non-work and survival of the
inefficient, and the self-seeking than other fast growing countries. Somehow to make this
transition – from a less productive and less challenging economy to a more work-oriented
and competitive economy – is the real challenge of globalisation.
If we continue in our old ways, I see real social problems and inequalities emerging in our
society. We will have islands of prosperity and excellence – IT, beauty parades and media
entertainment amidst growing disparity, rising unemployment and immiserisation. And as
has happened in several countries in the 1990s, including Turkey and Argentina - just now,
those who are with us today will be the first to leave.
The principal lesson of recent economic and technological developments, and growing
tensions and inequalities within and across countries, is that our fate is in our hands. Our
public policies have to respond to our own requirements rather than to any fixed global
ideology or a pre-determined and internationally prescribed model of economic progress. In
my view, this is the real lesson of the 1990s.
My fervent hope is that as you – the best and the brightest of our country – go out and face
a "globalising" world, you will keep India’s interest, its integrity, its indivisibility and its
future potential close to your hearts and your minds. I have no doubt that, with your help,
India of 2025 will be a very different place, and a much more dominant force in the world
economy, than was the case twenty five years ago or at the beginning of the new
millennium.
Thank you.Back to SpeechesPrevioust

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. . Vikas Pota – Globalisation & India . .
Bridging different cultures for business results
. Please visit www.vikaspota.com for my new blogsite•November 5, 2009 • Comments Off
You may also wish to visit www.indiaincthebook.com for more info on my book

Posted in Uncategorized

The traits of entrepreneurship•September 3, 2009 • 2 Comments


Having completed writing a book about some of India’s biggest and most successful
entrepreneurs, I was asked about what differentiates them from the rest, which isn’t as straight
forward to answer as it seems.

However, having attended an event yesterday evening hosted by my friend Deepak Haria at
Deloitte for the promotion of TATA Jagriti, which is an Indian NGO that literally takes a
trainload of enterprising Indian youth across India (on a yatra / journey) to expose them to
subjects of importance to India’s development and introduces them to entrepreneurial thinking,
I’m pleased to say that this question was posed, albeit in a different way, to Mr Gopalakrishnan
who is a Board Director of TATA (http://www.tata.com/aboutus/articles/inside.aspx?
artid=vyj45RCRud4=).

He was asked whether the Jagriti Sansthan – the NGO (http://www.jagritiyatra.com) – equips the
participants in political skills that help them overcome political problems, which the TATA man
rebutted by explaining that a programme like the yatra doesn’t aspire in providing such training,
as in his mind, entrepreneurs – by definition – find ways, by themselves, to overcome obstacles
and achieve success.

Interesting, I thought.
Let me know what you think characterises a successful entrepreneur. Please leave your
comments on this post.

Posted in entrepreneurship
Tags: entrepreneurship, india inc, R. Gopalakrishnan, saffron chase, Tata, The Indus
Entrepreneurs, TiE, vikas pota

Impact of Monsoon rains on the Indian economy•September 2, 2009 • Comments Off


Was interviewed by Al Jazeera today on the impact of the monsoon on the Indian economy. I
said there were a few things to note:

The impact of a poor monsoon is huge. India has approx 240 MILLION farmers, and an average
of 60% of the labour market is dependent on the agriculture sector – directly & indirectly. Water
is important to their livelihoods.

The problem is that the monsoon pattern is changing. Instead of long rains on a regular basis,
India now experiences short, heavy showers with long dry periods inbetween, the risk of
flooding and paradoxically, drought is increased.

The Indian government needs to look at strategic ways to help farmers. Instead of dishing out
seeds and providing subsidies, they need to look at the ways in which rainwater can be captured,
stored, and distributed more effectively. Only 30% of all agricultural land is irrigated, imagine if
they could improve this figure!

The second way is to educate the farming community about new technologies available to
improve their harvests, such as installing sprinkler irrigation systems or extending what the ITC
group has done with enabling farmers to get latest market data on their mobiles that allows them
to set the right prices for their crops.

Lastly, improve access to microfinance, in which small ticket loans could be provided for
investments in technology & know how.

What’s also evident is that around the time of Indian independence, India used to be wholly
dependent on the agri sector. However, as time moves on India’s dependency has declined to
around a level where agriculture accounts for almost 20% of her GDP. My point is that India
knows it needs to reduce its dependency on the monsoon to deliver a bumper harvest, and has
been doing so gradually.

I read a really interesting note, which will help me conclude this post. A bad monsoon isn’t just
bad for India, but for the whole world. We need to look at the agri-food sector like a Rubiks
cube, in which if you change one face of the cube, you inevitably create changes on the other
sides of the same cube. In a similar vein, a decline in, for example, rice production has an impact
on the cost of wheat in North America – after all we live in an increasingly interdependent world.

Posted in India Business, Indian Companies, globalisation


Tags: Indian economy, ITC, Monsoon, saffron chase, vikas pota

Batteries charged…•September 2, 2009 • Comments Off


Returned from my summer vacation yesterday with batteries fully charged, apologies for my
silence over the past few weeks.

The next six months are going to be exciting, please keep on following this blog for updates as
they occur.

Posted in Uncategorized
Tags: saffron chase, vikas pota

India Inc: How India’s Top 10 Entrepreneurs Are Winning Globally•August 12, 2009 • 3
Comments

Posted in India Business, Indian Companies, doing business in India, globalisation


Tags: Indian Business Leaders, saffron chase, vikas pota

TATA secures private funding for JLR•August 12, 2009 • Comments Off
Given all the flack that’s been flying about for eternity about the terms being imposed by the
British Government on Tata for a loan to save JLR, I was pleased to read that Tata has secured
non-government finance for JLR, which I’m sure would’ve been their first choice of funding, in
any case.

In Tata’s benefit, I’d like to add that their track record demonstrates their commitment to fairness
and responsible behaviour. They, themselves, wouldn’t have wanted taxpayer money, unless
they were in such dire straits, as has been the case with JLR.

However, Mandelson was right to ensure that the benefit of any funds has to favour the taxpayer.
He’s played a great game in ensuring that Tata work harder to secure funding from other sources.

For me what has been remarkable is the way and extent that Tata have used the media to get their
points across. Generally speaking, Indian CEO’s shoot from the hip and everything Tata has said
on-air has been well scripted and spoken. Take for example Ratan Tata’s appearance on Sky
News in which he asked the government not to “play chicken with him”. Such articulation is rare
in Indian business circles.

Full marks to his advisers.

Posted in Uncategorized
Tags: funding, JLR, Peter Mandelson, saffron chase, Tata, vikas pota

India season cometh (again)•July 31, 2009 • Comments Off


Its been a few years, but I can, for the first time in ages, say that I may actually enjoy August!

Traditionally, August and December were two points at which we could do all the things that
needed doing at work, but in the last few years this distinction blurred as there was so much
going on. It seems to be much quieter this time around, perhaps they’re too busy organising
themselves for the autumnal months ahead of us – which looks busy.

I thought I’d write a post as to what’s going on in London viz. India in September & October, as
this’ll probably save some time in conversation. Please feel free to add to this list:

Lord Davies, International Trade Minister, leads a business delegation to India this September.
He’ll visit Delhi, Mumbai, and Nagpur from 14th – 18th September.

Officials from The Indian Ministry of Finance & SEBI visit London on a study tour of regulatory
and monetary policy.

The Corporation of London hosts its India Advisory Council meeting on 1st October, which
Naina Kidwai and other leading CEOs from Mumbai visit. There’s an event with CNBC also.

The Lord Mayor of London leads a City delegation to India from 19th – 24th October. The Lord
Mayor represents the interests of the financial services sector of the UK.

The Indian President visits the UK on her first state visit here. You can be assured of several
events around this. I believe that her visit will also be used to mark the countdown to the
Commonwealth Games in Delhi.

The UK India Business Council will organise their annual conference and dinner on 29th
October. Was a blockbuster last year, you’d better buy tickets early if you want to secure a seat.
The All Party Parliamentary Group for UK – India Trade & Investment Relations will host a
dinner symposium on how British companies can participate in building India’s roads, ports and
other infrastructure. I’m lead to believe that an Indian Minister will deliver the keynote address.
Event takes place in conjunction with the Commonwealth Business Council on 2nd November.

Just as well I’ve been down to the gym building up my stamina. At least, I’ll be able to enjoy the
merriment around Diwali this time. Can’t wait to attend all those charity fund-raisers in town

Posted in Events, India Business


Tags: Corporation of London, Indian Ministry of Finance, Lord Mayor, Lord Mervyn Davies,
President of India, saffron chase, SEBI, UK India Business Council, UKIBC, vikas pota

The woes of Air India•July 24, 2009 • 1 Comment


Reading that Praful Patel, Indian Minister for Civil Aviation, is visiting Manmohan Singh with a
range of ideas that could turnaround India’s state airline, I am reminded of my few unique
experiences on Air India which, no matter what Mr Patel proposes, will undoubtedly remain
etched in my memory.

Having experienced great luxury travel with the likes of Jet and Virgin, especially of the
sumptuous Virgin lounge in Heathrow, it remains a constant surprise that Air India’s lounge is
just so, so shabby. To the point that the furniture has ciggy holes in it and everything looks
greasy – including the samosas! Let’s not even mention the unbearable stained carpets, the over-
weight and heavy handed flight attendants, or the sub-standard on-flight entertainment.

I agree with Praful Patel on the count that the issues with Air India are deeply systemic and go to
the core. If they can’t get customer service right, then why expect a higher demand on their
flights?

Not so long ago, a friend of mine – during a conversation of the excellent service I had received
with Jet, quipped amusingly that she always flew business class in Air India to Mumbai, for the
simple reason that “who else would let you put your kids down to sleep on the floor in front of
your seat”.!!!!

What a great USP.

Posted in Indian Companies


Tags: Air India, customer service, Jet, Mumbai, Praful Patel, Virgin Atlantic

India Inc: …•July 9, 2009 • 2 Comments


I’ve got a small dilemma that I need your help in resolving. You may be aware that for the last
two years or so, I’ve been writing a book on the emergence of Indian companies in international
markets, and have profiled ten Indian CEOs / entrepreneurs / promoters such as Narayana
Murthy, Baba Kalyani, Subhash Chandra, Malvinder Singh, Kishore Lulla etc. who have lead the
charge to globalise their firms.

Well, I’ve now finished writing the book and can now focus on the presentational aspects of the
project, of which, the most important being (at least for today) the title of the book. My original
choice was: ‘India Inc: How India’s Top Ten Business Leaders are Winning Globally’. However,
as a result of the economic downturn, is this title appropriate, given that the world has been
turned on it’s head as a result of the banking crisis and subsequent global recession?

It would seem a little to extravagant to use the original title in the environment we’re currently
in.

For this reason, I’m searching for something appropriate as a subtitle to ‘India Inc: xyz…’. Or is
‘India Inc.’ substantial enough?

Your ideas are welcome.

Posted in India Business, Indian Companies, globalisation


Tags: Baba Kalyani, book on indian business, india inc, Kishore Lulla, Malvinder Singh,
Narayana Murthy, Subhash Chandra

In conversation with Jim O’ Neill – emerging markets guru at Goldman Sachs•June 18, 2009 • 1
Comment
Attended a Q&A with Manchester United mad fan – Jim O’ Neill – author of the BRICs report
and Chief Economist of the mighty Goldman Sachs, in which he spoke about the I in BRIC. I
thought the following was interesting:

He referred to the current economic crisis we’re facing as the “crisis of the developed world”;
and highlighted the fact that countries like India were experiencing growth of over 6% at a time
in which ours is contracting. Jim referred to this as being “pretty remarkable” as it wasn’t too
long ago that economists believed that India wasn’t capable of breaching the so called 3% Hindu
rate of growth that she was known of hovering around for a very long time.

In marked contrast to China, India’s growth is a result of her personal consumption. People are
still spending money and it’s domestic demand is what’s keeping it going. Interestingly, the
current challenges that China is facing, Jim said, was going to be good for the world as it’ll force
China to rebalance their dependence on exports.
Often criticised about the inclusion of Russia in his analysis, which shows that despite what’s
happened in the last year, Russia has long outperformed Goldman’s first tranche of projections to
2050 – hence keeping those arguing for the removal of the R from his BRICs analysis at bay.

On India, the recently concluded general election was welcomed by the markets, with a surge in
the Sensex of approx 20% on the day after the results were announced. Interestingly, Jim’s co-
authored a paper titled ‘Ten Things for India to Achieve its 2050 Potential
(http://www2.goldmansachs.com/ideas/brics/ten-things-doc.pdf) in which he highlights the need
for improved governance as one of these factors.

He was asked as to what indicators would demonstrate that India was taking this seriously, which
was a brilliant question that needs further consideration. In many senses the answer may be as
straightforward as some of India’s biggest crooks – bureaucrats and politicians – having to face
penalties for their behavioural failings. O’Neill said he would start thinking of this and perhaps
write something on this matter. Please leave any comments on this post if you have any ideas.

Also asked of the real impact of being surrounded by some very populous countries, he reiterated
that the potential for the entire sub-continent being lifted onto a different plane if cross-border
trade could be encouraged, was noted and well received.

The briefing was taking place a day after the first BRICs summit, in which the Heads of Brazil,
Russia, China, and India were meeting to discuss substantive matters such as the establishment
of an alternative currency to the Dollar. In response to a question on the potential of this bloc, his
analysis explained that Brazil and Russia were commodity rich, whereas India and China
weren’t, which suggested that if they were to work together to realise synergies like this, then the
grouping would have a dramatic effect on global economics.

In addition, he highlighted that any discussion on tackling climate change without these four
economies would be futie. He joked that it was time that international institutions like the G7 &
G8, the UN, IMF could do more than just “invite them for coffee on the sidelines”, which drew a
few sniggers from the audience.

There’s not many people on this planet that could take the credit for coining the name of an
international summit that brings together future superpowers together to discuss major issues that
should concern all of us.

For this and more, Jim – we salute you.