Political-Economy of Democratic Republic of Congo and Impact of Globalization - Essay Example

Political-economy of Democratic Republic of Congo (DRC) and impact of Globalization Introduction The political-economic critiques of contemporary globalized markets offers insights on how developing countries have encountered due to globalization. The world-system started in 1970s and has facilitated globalization (Wallerstein 38). Globalization refers to the global integration of world markets due to increase in free trade, immigration, growth in technology, and international flow of information. Wallerstein conceptualizes capitalism economy as a world system that emerged in Europe and facilitated the market economy that has driven endless accumulation of capital and wealth by certain nations (Wallerstein 40). The industrial development in peripheral economies is governed by foreign capital and thus globalization creates postimperial sovereignty. The current political-economy in Republic of Congo is characterized by institutional corruption, political instability, slow economic growth, low wages, and wastage of natural resources. The loosers of globalization in Congo include the poor farmers, workers and local businessmen while the beneficiaries of globalization in Congo are the foreign multinational firms and politicians. Joseph Stiglitz and Immanuel Wallerstein argues that developed countries should provide better trade agreements with developing countries. Stiglitz calls for more accountability in the resource contract and posits that financial aid should be provided to developing countries in order to improve the infrastructure. Thesis statement: The ideas of Immanuel Wallerstein and Joseph Stiglitz can make globalization work better for the Democratic Republic of Congo since the country will receive financial aid for improvement of infrastructure and will enjoy balanced trade agreements that aim at boosting the country exports. Negative effects of globalization in Democratic republic of Congo (DRC) Globalization has led to exclusion and marginalization of Democratic Republic of Congo Globalization of world markets is facilitated by the free markets that allow for competition. In this case, competition results to problems of inequality in distribution of globalization benefits since developing countries are not capable of competing effectively with developed countries in accessing international markets (Wallerstein 63). The globalization of markets has facilitated the high growth of economic growth and development inequalities between the industrialized and developing countries like DRC. The industrialized countries have benefit from globalized markets more than developing countries since they are capable of getting cheap raw materials and labor for their production (Wallerstein 69). It is surprisingly that most of the minerals that are used in the production of mobile phones are mined in DRC and shipped to industrialized countries yet DRC lacks a single production facility or mobile phone assembly plant. The globalized markets have affected labor in developing countries since the state is not capable of improving the welfare of the workers through direct intervention. Institutional provisions like minimum wages do not cover the informal sector and reach out to a small percentage of the total workers in the country (Wallerstein 58). The mass illegal migration of people from neighboring countries such as Rwanda and Uganda has led to decline in the real wages in DRC thus leading to decline in the disposable incomes of the citizens (Stiglitz 99). The global markets are dominated by transnational corporations that maximize their economic profits at the expense of development needs of the local populations in developing countries. The multinational corporations in DRC have engaged in unethical practices such as smuggling of minerals, dumping of products and transfer pricing practices that aim at evading payment of taxes. Accordingly, the powerful multinationals operating in DRC have ignored the local population needs such as education, water and sanitation in their economic pursuit thus making DRC remain one of the poorest countries and least developed country in the world (Stiglitz 71). Democratic Republic of Congo has endured years of civil conflicts that are fueled by the control of rich minerals. Several countries and multinational corporations are interested in the outcomes of the conflict. The neighboring countries such as Rwanda have been accused of training and arming militia in order to cause instability in order to facilitate illegal exports of precious minerals. The ongoing political instability in DRC is rooted in the interdependencies of economies since increased interest in diamonds by multinational companies has led to internal conflicts where various political factions and militia aim at controlling the illegal mining and export of the diamonds (Wallerstein 72). Another critique advanced against globalization that is evident in DRC is the unequal distribution of power in the world. The developing countries such as DRC have little influence in international economic matters due to lack of voting rights. For instance, DRC is not capable of influencing the policies and programs of World Bank or International Monetary Fund and will depend on developed countries to vote in its favor when faced with economic and financial issues (Stiglitz 41). Globalization has led to a geoculture at the expense of the national cultures of DRC. Advances in information communication technology have facilitated dissemination of Western cultural values and beliefs to other parts of the world including DRC. The increased information flows, migration and travel have led to homogenization of culture in favor of the American culture that advances individualism. In this case, DRC citizens have lost their core traditional values such as the importance of maintaining stronger family ties and traditional ceremonies that are essential in ensuring harmony among the communities (Stiglitz 93). The Republic of Congo is dependent on foreign aid for development purposes despite its rich endowment with valuable natural resources such as minerals. The protectionist measures of developed countries have denied the country products access to global markets. For instance, DRC climate can support capital intensive agricultural production, but European Union restrictions on agricultural product origin and standards have limited exportation of agricultural produce to those markets (Stiglitz 48). The positive effects of globalization in DRC However, there are certain positive effects of globalization in DRC that include the greater variety of products in the markets and reduction in prices due to competition. DRC has benefited from expanded market since businesses can export their excessive production to overseas markets. Accordingly, the local firms are capable of attracting expansion capital from the international financial markets (Stiglitz 53). Globalization has led to more access to technology and information in DRC. The citizens can receive news at the comfort of their homes to access to the internet, television and other multimedia communication devices. In this case, the citizens are capable of highlighting the poverty conditions in the country to the international community (Stiglitz 57). Significant problems introduced by globalization The significant problems that have been introduced by globalization in DRC include inequality, dumping, depletion of natural resources, and decline in wage rates. Globalization has also led to influx of immigrants and diminishment of DRC cultural values. The country has faced political instability and ongoing internal conflicts due to vested interests of multinational corporations (Stiglitz 89). Solutions to development challenges in developing countries The solutions offered by Wallerstein, Stiglitz and Collier, can be used to solve development challenges in developing countries. Some of the measures that should be implemented include structural adjustment programs of international organizations such as IMF and World Bank that will help in reducing the economic growth disparities between the developed and developing nations. The fiscal policies and monetary policies of the country together with the grants from World Bank should aim at expanding infrastructure in order to attract direct foreign investments and spur economic growth (Wallerstein 67). DRC must strengthen governance and transparency in the extractive industries in order to ensure than the resources benefit the country. The country should require the multinational corporations to establish manufacturing facilities in the country in order to create more job opportunities, attract technology transfer and enable growth of related industries (Stiglitz 102). The developing countries such as DRC should gain competitiveness through establishing labor intensive industries due to availability of cheap labor and abundant natural resources in the country. The country should invest in industries where it can attain comparative advantage in the international markets (Wallerstein 75). Conclusion The globalized markets lead to uneven development across the different countries that participate in the international markets. The political-economy of DRC is characterized by low economic growth and development, high poverty levels, low wages and political instability. Globalization has contributed to the unequal development, smuggling of minerals, political instability and dumping. In this case, DRC should seek structural adjustment packages from IMF and invest in expanding the infrastructure in order to spur domestic growth and attract foreign direct investments that will facilitate employment creation. Works Cited: Stiglitz, Joseph. Making Globalization Work. New York: Norton. 2006. Wallerstein, Immanuel. World-Systems Analysis: An Introduction. Durham, N.C: Duke University. 2004. Read More