Globalization: Developmental Boon Or Bane?

Years ago, globalization was the curious “buzzword” which was viewed with much optimism by much of the world, including the poor and underdeveloped nations . The merging of the world’s economies promised great opportunities for growth and development especially for Third World economies. Today, there are two prevailing sentiments on globalization: either that globalization has resulted to prosperity for the poor nations or that it has resulted to the prosperity of the rich at expense of the world’s poor (Irogbe, 2005). This paper posits that while globalization have provided a range of benefits for underdeveloped nations, the wheels of globalization has led to the widening poverty gap, the deterioration of national economies, marginalization of the South, cultural homogenization, and environmental degradation.

Main Features of Globalization

Globalization is a complex process which has many facets: economic, political and cultural. To understand this more concretely, discussed are the main features of globalization from the perspective of the developing world and how it is concretely manifested. Looking at globalization from a Third World lens is crucial to our understanding of it (Yotopoulous & Romano, 2007). This is because, when viewed from the perspective of the First World, it is easy to appreciate the obvious benefits of globalization. For instance, globalization has enabled Americans to get hold of a wide range of products and services from all over the world. The margining of the world’s economies have allowed us to enjoy goods previously inaccessible to us because of high cost: for instance, fruits such as pineapples, bananas, and mangoes that is not homegrown in the United States. We can listen to world music, Africa, Jamaican, Latin American, and Arabic rhythms through our iPod all day long. What is not clearly visible to us is how the wheels of globalization impact the farmer in Southeast Asia, the coffee growers in Latin America, and the agricultural workers in Africa.

Economic integration

While faster interconnected through advanced technology and transportation is the most popular idea about globalization, globalization is a fundamentally economic phenomenon. The economic promise of free trade and free competition was supposedly designed to help Third World economies to gain market access previously impossible to penetrate (Lechner & Boli, 2004). This has been true. Underdeveloped countries have been able to export their local products to developed markets unlike in the past (Sen, 2000). However, the bigger picture suggests because of the inherent asymmetries of the world’s economies, globalization also leads to asymmetrical development – benefitting the rich countries more than the poor (Yotopoulous & Romano, 2007).

Economic integration through the merging of the global economies takes on three primary forms: liberalization, privatization, and deregulation (Benyon & Dunkerley, 2000). Liberalization is “the downgrading of the social goals of national development, combined with the upgrading of participation in the world market” (McMichael, 2004, p. 158). This is achieved by reducing and eventually removing the barriers to flow of goods, capital, and services among countries, e.g. the removal of tariffs on agricultural products such as corn, rice, or beef. Deregulation means the reduction of the reduction of the role of governments in regulating trade and production and in providing services (Yotopoulos & Romano, 2007). It adheres to the belief that the market is the most efficient and effective determinant of what should be produced and what would be consumed. Privatization in its purest sense means divestiture of state-owned enterprises or SOEs (McMichael, 2004). What used to be an ideological battle between “big government/welfare states” and “more marketless state” has moved into the mainstream economic development debate under the guise of sound economic management and “good governance” (Benyon & Dunkerley, 2000, p. 45). A deregulated market freed from the visible hand of government is the most efficient, less burdensome system that will result in economic progress through foreign investments, so goes the argument. Economic pragmatism and expediency are the main motives for privatizing today, driven mainly by balance-of-payment imperatives and the need to shift the “burden of development” from the public to the private sector (Leeds, 1990).

To drive these three key strategies of economic globalization, two main institutions are responsible: the world’s transnational corporations (TNCs) and the triumvirate of public international financial institutions (Buckman, 2004). The global TNCs hold tremendous influence in global trade because it has control over investment, employment, and trading decisions which surpass the decision-making power of most developing countries. The triumvirate of the the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO) act as a global overseer of the processes of economic globalization (Benyon & Dunkerley, 2000). In theory, the triumvirate could be held accountable by the world’s governments but in practice, it has become “a major global bureaucracy wielding enormous, largely unaccountable influence” (Buckman, 2004, p. 87). The global privatization network includes multilateral and bilateral lenders, large MNCs, merchant banks, stockbrokers, accounts and management consultants, legal firms, marketing, specialist consultants, and think tanks (Leeds, 1990). The TNCs control the lion’s share of the world trade. The strongest among them, “act more cohesively, in close cooperation with their respective governments, to assault or defend markets” (Bello, 1997, p. 5). Hence, globalization also means the most intense competition even among industrialized economies. For instance, the United Sates and the business interests it represents stands to gain the most from globalization, which is why it has tried to dominate both the GATT-WTO and the APEC (Benyon & Dunkerley, 2000). While imposing unilateral measures to protect its own market, the US is trying to prevent other countries from acting in the same way by invoking the principles of free trade. On another plane, many Northern governments, despite the neoliberal ideology of reducing the role of the state in economic matters, still heavily subsidize their agricultural products. These then become very cheap and when dumped into the markets of developing countries, local products cannot compete. This explains why farmers in Chile, Latin America, South Asia, and Southeast Asia have experienced destruction of their local economies such as in textile, transport, and even agriculture (Bello, 1997; McMichael, 2004).

Political marginalization

Globalization has also resulted to the political asymmetries leading to the marginalization of the South. Globalization has proceeded under the premise that modernization is the key towards the genuine development of the Third World. However, the dependency theory of development suggests that modernization will only lead to increasing domination of the major world economic players to the detriment of the poor nations. The basic decisions in global trade are still influenced by the dominant countries, leaving dependent nations with few choices because the parameters have already been set by the former (Willis, 2005).

It is in the South where globalization as a political process really reduces the role of the nation state in terms of deciding the direction of development through macro-economic policies. Parallel to this is the “qualitative strengthening of the institutions of global economic governance” (Bello, 1997, p. 8). The main mechanism for this has been the debt trap, whereby highly indebted countries are compelled to undergo structural adjustment programs (SAPs) in exchange for more loans. The infamous SAPs of the IMF, and so-called “development” loans from the World Bank routinely come with harsh conditionalities that require developing nations to abandon important domestic programs that serve the population. These include education, health services and environmental programs, which don’t produce revenues to repay IMF and World Bank loans or interest. This system leaves countries utterly dependent upon market and pricing systems over which they have no control. Meanwhile, they have given up the ability to determine their own destinies. The greatest mystery of course is how any of the promoters of such rules and conditions (among others) could possibly argue that these rules could help nations rise from poverty. Clearly, this is a blueprint for dependency and poverty creation.

Cultural homogenization

Globalization is a phenomenon that crosses and erases geographical and political borders and makes all countries start to look the same. As a result of globalization, local products, services, and cultures disappear into a global culture, a culture defined not by the global citizenry but rather the world’s economic and political superpowers – mostly North America-owned corporations. Because of globalization, people on every continent are exposed to and consumed by a North American ‘culture’ defined by Nike running shoes, MTV, Coca Cola, and McDonald’s. Some people have re-named the process of globalization and called it McDonaldization or CocaColonization.

Not only does globalization create one bland culture the world over, it forces people to arrange their lives to promote this culture. Poor Filipino farmers end up being forced off their land and into factories producing running shoes and video cameras for North Americans, Brazilian rainforests are destroyed in order to make room for giant beef farms producing hamburgers that will be consumed by the world’s richest people. Because of its focus on corporations’ access to the free market, globalization has led to an increase in the gap between rich and poor. The world’s poorest people have experienced deepening poverty while the incomes of a very few rich people, have soared. The arrival of the Web has raised a number of democratic possibilities. However, its decentralised structure has prevented business and the media from gaining control over it. Numerous attacks against people and organisations take place every day on the Web; taking action against them is not an easy task. Although there is a great deal of insecurity on the Web, that does not prevent people around the world to use it for their transactions and their communications, since it is a more democratic and less controlled media (Cohen & Kennedy, 2007).

Conclusion

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.