GLOBALISATION

Globalization, by definition, is the integration and democratization of the world's

culture, economy, and infrastructure through transnational investment, rapid
proliferation of communication and information technologies, and the impacts of
free-market on local, regional and national economies.
The phenomenon of globalization has created a dichotomy of perception dividing the
world into plethora of apprehensions and appreciations due to the intense velocity
which the information about people, products, nature, environment, politics and
economy disperses across borders, across countries and nations creating virtually
one world into a global village.Here the golden words of late Dr. Mahbub ul Haq
provides the true vision:
"Globalization is no longer an option, it is a fact. Developing countries have either to
learn to manage it far more skilfully, or simply drown in the global cross currents."

Globalization is multidimensional and impacts all aspects of life– economic social,

cultural and political. Globalization in production and labor markets is leading to
increasing outsourcing of parts, components, and services. The drive towards market
liberalization has rapidly accelerated the pace of globalization during the past
decade.
Theoretically
• Globalization opens up markets and ensures competition
• Removes inefficiencies and leading to greater growth.
• Ensures specialization takes place in areas of comparative advantage.
• For labor abundant economies this means increased employment as well as
growth.

'Globalization and Pakistan,' is a presentation by Professor Chandrasekhar. According to the

Professor, Pakistan also shows some special features in terms of the globalisation experience.
The globalisation process in Pakistan was a two-phased process of growth. If an
economic relationship with other countries is the visible indicator of globalisation, Pakistan began
experiencing it right up to the 1980s - defined as its first phase of globalisation. This was
particularly after the Gulf countries benefited by the oil boom of the 1970s. There was a sizeable
movement of workers, skilled and semi-skilled, from Pakistan to these countries, resulting in a
large inflow of remittances. But this was not enough to close the gap in the external account. So,
Pakistan, in order to cope with the opening of the economy and trying to get a larger share of the
markets, also tried to reduce its extremely high trade tariffs from 42 percent to 22 percent.
However, in the second phase of globalisation, the 1990s, was quite challenging for Pakistan in
terms of increased imports, high rate of poverty, along with a sharp decline in growth. Therefore,
debt rescheduling became extremely crucial in the late 1990s. Thus, Pakistan turned to borrowing
from the International financial agencies and foreign private banks.

The two-phased process of globalisation in Pakistan was also true for India to quite an
extent, especially in terms of the 'borrowing of loans,' from the financial agencies, for the
rehabilitation of its liberalised economy. However, Pakistan, unlike India, does not have a
flourishing stock exchange, or any portfolio investment of foreign capital. This has made it difficult
for Pakistan to be more open and liberalised than India, in terms of investment. Moreover,
Pakistan's exports are dominated by textiles and the lucrative cotton cultivation has led to the
concentration of landholdings and to the introduction of new technologies in agriculture, both
resulting in perceptible inequalities.
Globalization refers to the absence of the trade walls that
every country has. PAKISTAN is considered to be the fourth
largest economy in South Asia hit by the impact of
globalization. Not only does it have its economical affects but
it also alter and influence the mindset, psychology of the
people gradually.
Trade liberalization might lead to more employment and
improve the standard of living in Pakistan but this will
happen only when the power blocks have mutual trust and
respect for Pakistan’s interest (no colonialist designs)

Pakistan is the signatory of the Uruguay Round and also

the WTO. As a member it has to abide by the WTO's
objective of abolishing the import duties which have been
reduced from maximum over 80 per cent nine years ago to
30 per cent at present.

THE BENEFITS ANS AND LIMITATIONS OF

GLOBALISATION
PROS

1. More access to products Duty free and unconditioned

import of raw material could be obtained and new
strategies could emerge for Pakistan.

2. Steady cash flows

3. Stimulation to produce and various options Automobile
industry is based on foreign joint ventures and this
might lead to flourishing of Pakistani industry as foreign
investments occur to improve local productivity. E.g.
INDUS MOTOR COMPANY under the joint venture of
TOYOTA JAPAN producing Toyota cars and Daihatsu
cuore cars. These cars are produced under Japanese
industrial standards JIS and International standards
organization ISO.

4. Cultural intermingling like watching the international

programs

5. Few brain drains as people while working in Pakistan

bring foreign exchange e.g. Out sourcing, Tele-
operations etc.

6. Reduction in poverty, U.S employees can lose their

competitive advantage as production shifts abroad this
favors Pakistan as Pakistanis earn in dollars, and
productivity grows and better living standards are
encouraged.

7. Opening of markets under the WTO regime.

8. Surgical industry entering into joint ventures

reflects the competitive advantage Pakistan shares as
our delivery time is shortest and big sized orders are
executed in a short time.
 9. Foreign experts facilitate technical assistance such
as UNIDO AND JICA

10. Gwadar port a multinational project generated

demand for cement (boost for local cement industry).

11. Lowered tariff measures make it easy for Pakistan to

get latest plant and machinery available off the shelf in
the international market.

CONS

1. Social degeneration, loss of our own culture

2.Threat of “corporate ruling” by developed

countries.
Money is invested by countries like U.S.A and CHINA.
SAINDAK Copper Gold project completed at a cost of Rs.14
billion remained nonoperational for want of required working
capital. This project is now leased out to CHINESE
COMPANY for ten years. Ruining expectations of Pakistan
to become the third largest exporter of copper independently
(source: PAKISTAN 2001-02 AN OFFICIAL HAND BOOK)
3. Westernization, genocide of Pakistani culture.
Pakistani national psyche which prefers anything
foreign , the local industries would have a hard time
to compete with imported counterparts imported at
zero duty and offered at a competitive price.

4. Pakistan is being exploited by the richer countries

as low wages are implemented.

5. U.S promotes free trade only in sectors which

benefit it as it enjoys an immense influence in the
WTO. As far as other sectors, like textiles, are
concerned it chooses to resort to protectionism.
Pakistan has faced many anti-dumping and quota
related problems with the US for exporting its
cotton and textile .Opening up more sectors for free
trade will give the developed countries more access
to the resources of the developing countries.

6. Uneven competition Countries like PAKISTAN

are increasingly pressurized to abolish subsidies on
commodities, they can never become self sufficient.
The US has seen it fit to translate the agreement as
it likes to institutionalize subsidies to its agro-
exporters. On the other hand, it feels no qualms to
prohibit governments in the developing countries to
introduce new forms of support for their own
disadvantaged farmers.

7. Pakistan is still heavily dependent on importing

basic and raw materials. Increased gas and
petroleum prices have pushed the production costs
to an uncompetitive level. This has resulted in less
demand locally due primarily to a declining
purchasing power, increasing unemployment level
 and a pervading sense of uncertainty. It has also
taken its toll on exports by rendering products in
competitive against such traditional rivals as India,
China, Bangladesh, etc

8. Pakistani local industries whose domestic base is

eroding due to continuous decline in purchasing
power. This poses many problems for the local
industries such as the industries can’t compete with
goods both in quality and price imported under the
zero duty.

9. Set back for Pakistan was the shifting of buyers

after the September11 events. Buyers switched to
INDIA and CHINA.

10. Lack of proper training and inadequacy of skills

result as a hampering for Pakistan. E.g.
LEATHER industry the second top foreign
exchange earner after textile faces stiff competition
from CHINA and INDIA. Pakistan has to offer extra
benefits.