Is Development Best Achieved by Being For, Or Against, Globalization - Essay Example

IS DEVELOPMENT BEST ACHIEVED BY BEING FOR, OR AGAINST, GLOBALIZATION? + State Date Introduction The contemporary world has evolved in many ways. As such, the means of interactions and relations between countries and organizations have changed. One characteristic feature of the modern-day evolution is globalization. Globalization can best be exemplified by the presence of different product from different regions in the world. For instance, in the supermarket, you may find rice imported from Pakistan, electronic goods made in China, fish and seafood imported from Japan and unprocessed beverages such as coffee and tea harvested in Africa. Globalization has also been manifested through organizations of global governance such as the UN and the EU. Globalization is the international process of exchanging ideas, products, opinions, and in some cases culture (Callinicos, 2009). Bhagwati (2004) defines globalization as the worldwide movement that is aimed at achieving financial, economic, and communications integration. Consequently, globalization is the opening up of the national frontiers to a wider viewpoint of an independent an interconnected world characterized by the free flow of goods, capital and services throughout the world. This paper will seek to establish if globalization has indeed brought about development or resulted in the failure of economies. The paper begins by giving a background of globalization and a deeper understanding of what development is. The body will contain the arguments by different pundits on globalization. It will begin by analyzing and evaluating the theories of how globalization has brought about development. The second part of the body will critically illustrate how globalization has resulted in reduced development progress in some of the world economies. The background and body will, for this reason, help in forming a formidable conclusion on the pertinent question, is development best achieved by being for, or against, globalization? Globalization is a word that has been coined recently to refer to an age-old process (Amin, 2011). Indeed, globalization began in the centuries preceding the New World and the European Age of Discovery. Some of the earliest forms of globalization were through trade and cultural interactions. For instance, the Ottoman Empire explored parts of Africa, Europe and Asia while trading silk and spices in the 15th century. However, the magnitude of globalization in these times can best be described by the term minute. Increasing in modern globalization began in the mid-1980s and has risen sharply in the subsequent decades. This sharp rise is attributed to the modern forms of communication such as the internet and the emergence of mobile phones (Stiglitz, 2002). Wolf (2004) notes that globalization is characterized by four main aspects that which are: capital and investments movement, trade and transaction, the migration and movement of people, and the spreading of ideas. The rate of trade and transactions have over the past two decades increased exponentially. Since the liberalization of commerce through the General Agreement on Tariffs and Trade (GATT) in the 1970s, the Gross Domestic Product (GDP) of the industrialized world has grown faster than the global GDP (Arighi, 2010). This is attributed to the fact that GATT involved the developed world more that the developing countries. However, in the 1980s, the trade levels increased between the developed and the developing countries hence globalization. The expansion of trade was not uniform in the countries that participated in global trade. Majority of the trade and transactions occurred between industrialized countries and 12 developing countries (Arrighi, 2010). Globalization, has seen the liberalization of financial markets that is a sharp contrast to the Bretton Woods system (Wolf, 2004). The latter focused on fixed exchange rate and closed capital accounts hence hindering efficient trade.Nayyar(2003) notes that the world monetary system underwent severe reforms that created the movement of capital and investments. These reforms are deregulation, innovation and internalization. As such, their liberalization of financial markets led to the conception of lending through international bonds. Globalization has facilitated the ease of movement of people through policies and laws that allow dual-citizenship. In addition, the convenience of the modern forms of transport and communication has made commuting easier and faster. Communication, more so through the internet, has fueled the dissemination of knowledge, ideas and culture (Kiely, 2008). Consequently, people from different cultural settings and countries can conveniently exchange their thoughts. Development is a term that has been used to evaluate the progress of a nation be it socially, financially or economically. The evaluation of development over the past decades has changed (Hopper, 2012). In the 1950s, economists measured development with GDP per capita or GDP of a nation. Emphasis was laid on the need for rapid industrialization rather than the efficiency of industrialization (Sen, 1999). In the 1970s, the term development took a social approach. Development, during this period, referred to the reduction in poverty levels, low unemployment rates and equality (Sen, 1989). In this rationale of thinking, economists asserted that development ought to improve the living standards of the population. As such emphasis was laid on education, shelter, agriculture and healthcare services. In the 1990s, development was evaluated in terms of ability to freedom in the social, economic and political rights. Development was assessed on the basis of gender equality, and equal opportunities for the various groups in life (Hopper, 2012). In this school of thought, the primary emphasis was empowering people so as to fuel development. These definitions are equally important in determining whether globalization aids or is detrimental to development. The impact of globalization on development has split economist right in the middle with some supporting globalization and many opposing it. Indeed, globalization is double faceted. The world has made exponential progress in the second half of the 20th century. Over the past five decades, the world’s GDP has multiplied more than twelve-folds while the per capita income over time has increased considerably over three times (Maddison, 1995). The effects of this economic growth have been witnessed in both developed and developing countries. The 1st half of the twentieth century that was mainly characterized by imperialism and world wars, was damaging to most of economies around the world. In fact, trade was largely confined to the colonies and their allies. This, compounded by the Bretton Woods system of fixed exchange rates and closed capital markets resulted in the stagnation of development in countries (Maddison, 1995). Consequently, the advent of the globalization heralded economic development for most parts of the world. Globalization, through the open economies and market system, has resulted in numerous economic opportunities for countries. Open societies have led to the conducive environments for trade, innovation and expansion of companies. Through the open market system, companies and organization can expand their base of operations to different parts of the globe (Lall, 1990). In addition, companies have the advantage of outsourcing for cheaper products cost in countries where the cost of doing business is relatively low. Nayyar (2003) underscores that the growth of China is partly attributed to the fact that goods can be produced at cheaper costs hence resulting in a competitive advantage over competitors. In a study conducted in 12 countries whose markets were liberalized the return of quoted shares in this market averaged at 4.6% monthly and resulted in a cumulated rate of 38.6% (Fine, Lapavitsas & Pincus, 2001). They further assert that these return rates are extremely high and profitable for the companies that venture in the liberalized global model. Ultimately, the growth of companies through globalization encourages competition for the markets. In addition, employment opportunities arise for the population in question. Governments also stand to benefit by taxing such business that operate in their countries. The summation of increased taxes and high rates of employment translates to development for the country and the population as well. The Global North has been at the forefront of campaigning for democracy in the Global South. Their ideology is that democracy fosters a conducive environment for the development of countries through the right of equal participation and freedom (Bush, 2007). The primary aim of the advocacy for democracy is to enable citizens in the Global South to take part in the governance, particularly their countries. African countries suffer many problems that lead to stagnation of development due to bad governance practices. Practices such as corruption and marginalization of communities are rampant in countries where there are no democratic institutions (Bates, 2001). Such practices are harmful in terms of continental development. Indeed, democracy is beneficial to the population of a nation. Unlike dictatorial regimes, citizens under a democratic government can express their ideas, opinions and grievances through the existing channels. Democracy is also characterized by equality in opportunities regardless of gender, and the community one hails from. Even though it is hard to link democracy to economic progress, it has led to the empowerment of the people. Streeten (1981) highlights that development involves freedom of the population to achieve their goals. This can only be achieved in a hospitable environment where democracy is advocated for. Even though globalization has benefits, there are pertinent issues that have been brought up questioning the validity of the phenomenon more so to the development of countries. Chang (1996) asserts that, the primary aim of globalization was to benefit all countries and raise the living standards of the world citizens. As such, there would have been a reduction in the rates of poverty and better socio-economic security within continents, regions and countries. However, this has not been the case. Globalization has benefited the few countries (Chang, 1993). In truth, many countries have plunged into economic pit holes as a result of globalization. In addition, globalization led to unequal growth in countries. Few countries realized the benefits of globalization while most witnessed little or negative growth of their economies. For instance, between 1985 and 2000, only 16 developing countries experienced a growth of their per capita income by over 3% per annum (World Bank, 2003). This is a sharp contrast to 55 developing countries that grew at a rate of less than 2% per annum while 23 countries in this category suffered negative growth (World Bank, 2003). These statistics have been summed up in the table below. Table 1 shows the economic performance of developing countries compared to industrial and transition countries (World Bank Development Indicators, 2003) In addition, Easterly (2011) records that there was a significant increase in the gap between the rich and the poor countries during the period globalization were at its peak. This increase is illustrated in the bar graph below: The bar graph above shows the GDP per capita in the poorest and richest countries, from the year 1960-62 all through 2000-02 with the constant 1995 US $, plain averages (World Bank Development indicators, 2003) The sharp disparity in development and lack of development can be attributed to various factors. Callinicos (2009) claims that the Global North including China and India were able to benefit from globalization as a result of abundance of capital, highly reliable and skilled labor force technological leadership and their strong economic base. The development in developing countries stalled due to political instability, high rates of poverty, an unskilled labor force and the over-reliance on one good. During the advent of globalization, developing countries had a high percentage of exports to the global market. However, competition from the industrial world coupled with politics and monopoly of the regional block saw the decline of the market share of the various export products (Chang, 2003). Consequently, the imbalance of trade between the imports and the exports of the developing countries was detrimental to the growth of the economy. A line graph showing the share of least developed countries in commodity exports from 1966 to 2000 (United Nations Conference on Trade and Development, 2004). Fine et al. (2001) underscore that even though globalization led to the growth of brands such as Coca-Cola and Lenovo, small industries and companies in the developing world struggled to survive. The liberalization of the markets enabled the multinational companies to set up base and expand their market. On the other hand, companies started in the developing world coupled with limited resources succumbed to the cut-throat competition that the multinational companies brought. Consequently, this resulted in unemployment and increase in the poverty levels of the countries. Globalization has eroded the sovereignty and autonomy of states (Amin, 2011). Hooper (2012) observes one of the aspects of globalization is the free movement of people and goods. Subsequently it has led to the borderless world economy. In addition, globalization has resulted in the formation of international organizations such as the United Nations. Amin (2011) asserts that these organization have vested interests which affect the policy making of nation. For, instance the United Nations Security Council is charged with the responsibility of solving disputes between nations and in extreme cases deploying troops in war torn regions. Furthermore, globalization has led to the formation of international treaties such as the Kyoto Protocol and the Rome Statute which aim at synchronizing the laws and policies in the world. The Rome Statute, for instance, has led to the formation of an independent court, the International Criminal Court. Hooper (2012) claims that world leaders who influence war in their regions will be subject to justice through the ICC. He quotes the cases of the President of Kenya and his deputy who faced charges while still in office. These cases have affected the sovereignty of the nation of Kenya. On the same note, globalization has led to negative political outcomes more so in the developing world (Hooper, 2012). He notes that the leaders of the developed world influence the way developing countries are governed. In most cases, the West has imposed conditions on developing countries so as to receive donor funding. In extreme cases, the governments of the Western World have financed the campaigns of politicians in the global South. This is in a bid to influence the future policies that such leaders make if elected and as such advance their interests (Amin, 2011). Consequently, the sovereignty and freedom of countries are undermined through globalization. The summation of the political effect of globalization affects the existence of nations. In most cases, developed countries form cahoots to advance their interest in the developing world. As such, this negatively affects the political development of most nations. The contemporary globalization features the ability of countries to borrow or seek grants to from other countries and well established institutions like the World Bank. This offer is lucrative for the government of developing countries who seek the approval of their citizens. Bates (2001) records that the loans provided to developing countries are in most cases misused or misappropriated. There exists slight evidence to demonstrate that the funds lent have been used for development projects. The problem comes in when the developing countries service their loans. Accumulation of high debts with additional interests plunges most countries in high debts which lead to declines in economies resulting in low unemployment rate and consequently increased poverty. Hopper (2012) asserts that the developed countries have to grapple with the debt crisis and exemplifies the situation in Greece. The economies of Greece and nations signatory to the European Union have over the past few years witnessed little or no growth that is attributed to the debt crisis in Greece. The debt crisis compounded by globalization is so severe that its effects have rippled economic activities around the world thereby causing a global recession. Conclusively, development is best achieved by being against globalization. As illustrated above, the effects of globalization benefit few countries while causing disadvantages to many. The modern-day phenomenon has failed to eradicate poverty and improve on the lives of those in developing countries. Instead, it has resulted in high unemployment rates and degradation of the standards of living. For example, globalization has forced the shutdown of many startup companies based in developing countries due to their inability to match the expertise and capital of the developed world. Secondly, globalization has resulted in inequality between the developed and developing countries. This compounded with the debt crisis hinders development for the underdeveloped countries. Consequently, globalization goes against the fundamental mantra of development by making the industrial countries richer and degrading the standards of living in the underdeveloped countries. As such, there is a need for formulation a new model of development that will enhance the development of regions in need of economic and social advancements. References and Bibliography Amin, S., (2011), Global History: a view from the south. Bangalore, Cape Town, Dakar: Pambazuka and CODESRIA. Arrighi, G., (2010), The long twentieth century: money, power and the origins of our times, London: Verso. Bates, R., (2001), Prosperity and Violence: The Political Economy of Development, New York: Norton & Co. Bhagwati, J., (2004), In Defence of Globalization, Oxford: Oxford University Press. Bush, R. (2007), Poverty and Neoliberalism: Persistence and Reproduction in the Global South, London: Pluto. Callinicos, A., (2009),Imperialism and Global Political Economy, Polity. Chang, H., (1996), The Political Economy of Industrial Policy, London: Macmillan. Chang, H., (2003), Kicking away the ladder: development strategy in historical perspective, London: Anthem. Easterly, W., (2001), Elusive Quest for Growth, Cambridge: MIT Press. Fine, B.,Lapavitsas, C., &Pincus J., (2001), Development Policy in the Twenty-First Century: Beyond the post-Washington Consensus. London: Routledge. Hopper, P., (2012), Understanding Development, London: Polity. Kiely, R., (2008), The New Political Economy of Development: Globalization, Imperialism and Hegemony, London: Palgrave. Lall, S., (1990), Building Industrial Competitiveness in Developing Countries, OECD Development Centre: Paris. Maddison, A., (1995), Monitoring the World Economy: 1820-1992, OECD Development Centre: Paris. Nayyar, D., (2003), ‘Globalization and Development Strategies’, in J. Toye (ed.) Trade and Development, Cheltenham: Edward Elgar. Sen, A., (1989), ‘Development as Capability Expansion’, Journal of Development Planning 19: 41-58. Sen, A., (1999),Development as Freedom, New York: NY, Alfred E. Knopf. Stiglitz, J., (2002), Globalization and its Discontents, London: Allen Lane. 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