PROJECT REPORT ON GLOBALIZATION AND DEVELOPMENT AMARDEEP SINGH SHERGILL MEMORIAL COLLEGE, MUKANDPUR.

DISTRICT NAWANSHEHER (PUNJAB)

( A CONSTITUENT OF GURU NANAK DEV UNIVERSITY ) A PROJECT REPORT SUBMITTED FOR THE PARTIAL FULFILLMENT OF TERM PAPER OF MBA (FYIC) 6TH SEMESTER
SUBMITTED BY :
NAME : AMARJEET KAUR CLASS : MBA(FYIC) 6TH SEM ROLL NO : 880047
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SUBMITTED TO :
MRS. GEETU MIGLANI

PREFACE

G RAMAKRISHNA holds an M.A.,M.Phil and a PGDM from Madras University . He is currently working as a Faculty Member and Consulting Editor with ICFAI University . He has 15 years of industry and academic experience. His article have been published in various magazines and management journals. He presented several papers in various conference and seminars.
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CONTENTS
(A). FIRST SECTION - Globalization Controversy (B). SECOND SECTION- Globalization And Development Experience (A) SECTION FIRST

1. Whose globalization is it anyway ? 2. What have been the latest development in globalization controversy ? 3. Globalization : Threat or Opportunity ? 4. Winners and Losers Over Two Centuries of Globalization . 5. Globalization and Its Discontents 6. Globalization , Trade Facilitations and Trade in services. 7. The World is flat : A Breif history of the globalized World in the 21st century. (B) SECOND SECTION
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8. How does globalization effect the synchronization of Business Cycle ? 9. Financial Globalization , Growth and Volatility in Developing Countries. 10.Globalization and American Prosperity. 11. Globalization and Balance of Payments Experience of India 12. The impact of Trade Liberalization on export performance of Developing Countries : The Case of Ethoipia. 14. Deteriminants of Direct Foreign Investment in ASEAN-4 Countries : Estimation of Panel Data.

OVERVIEW
The globalization of production process, market for goods and services as well as financial markets has heightened the debate on the linkage between trade policy and economic growth , and the consequent effect on poverty and inequalities. Different people view globalization differently. To most businesses, globalization essentially means expanded and freer trade and investment opportunities. For policy makers in most countries, globalization stands for more openness in the economy and lifting of barriers to trade and investment. Economists, by and large, tend to view free trade and open investment policies as positive forces and expect those countries pursuing these policies to benefit significantly. Massive capital flows and trade liberalization have also brought to the forefront, the debate on the linkage between trade policy and investment. Improved trade and investment performance is considered essential for economic growth and integration in global market.
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Many believe that, other things being given, countries that globalize their economies and reduce the impediments to their international trade can experience a relatively higher economic growth, The argument is that , in the absence of protective measure and other free market constraints, the performance of an economy will be guided by the principle of comparative advantage . Globalization , influencing economic growth positively, has a wider consensus at least among the economists, Several countries including Africa has improved their growth rates after globalization . However, its influence on reducing poverty and inequality has been viewed with some skepticism. Any policy , which aims at increasing economic growth , should also result in declining poverty and income inequalities . Otherwise, the growth attained may not be sustainable . Increase in poverty and inequality may result in social unrest and even cause political instability . These together can hamper growth .

The World Bank and the International Monetary Fund (IMF ) have been propagating globalization at least since the eighties , and have encouraged countries to implement
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trade and investment liberalization policies . Membership in the World Trade Organization is typically conditional on acceptance of free trade and investment policies by the countries seeking membership.

Many developing countries have moved toward more open trade and investment policies since the late eighties . Few people ( often called anti globalists ) feel that globalization is another example of exploitation of poor countries by the rich and powerful countries and big multinational corporations . Anti-globalists fail to see any significant benefit from globalization and have actively protested against these policies .

This volume concentrates on experiences of various countries in the light of their globalization experiment . The book reviews individual country experiences and it consists of two Sections . Section 1st deals with the Globalization
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Controversy , where Section 2nd emphasizes Globalization and Development Experience.

The first article in the first section is Whose Globalization is it Anyway ? written by Ganti Subrahamanyam . He opines that globalization is a process that has attracted capital flows for higher returns for developing countries and promoted economic integration , at the same time , discouraging segmentation . The author concludes by stating that IMF and World Bank have to efficiently help the nations to improve the state of the poor . The next article What have been the Latest Development in the Globalization Controversy? is sourced from www.newsbatch.com . This article states that the economies of Asian countries are booming. At the same time , it is creating anxiety among displaced and potentially to-be-displaced workers in the developed economies. Reasons for concern about globalization developed because of trade unions , environmental organizations , social activities and poor nations. International organizations involved in the globalization controversy are
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World Trade Organization , World Bank , International Monetary Fund, NAFTA ( The North American Free Trade Agreement) , OECD (Organization For Economic Cooperation and Development) , and the Group of Eight (G-8). The author concludes that free trade has created two major environmental concerns: Is free trade changing economies in the third world countries , without regard to environmental protection? Does the WTO issue rulings, which undermine national laws, which provide environmental protection? Are WTO sponsored free trade policies and World Bank / IMF structural adjustment loans undermining the development of poor countries? Ultimately , the poor countries have been forced to assume an unreasonable debt burden . The next article Globalization: Threat or Opportunity? is sourced from International Monetary Fund . This article offers an overview of some aspects of globalization and aims to identify ways in which countries can tap the gains of this process , while remaining realistic about its potential and its risks. The chief aspects of globalization are trade, capital movements, movement of people, spread of knowledge ( and technology). The factors that help countries in increasing output are macroeconomic stability to create the right conditions for investment and
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saving ; outward oriented policies to promote efficiency through increased trade and investment ; structural reforms to encourage domestic competition ; strong institutions and an effective government h to foster governance ; education, training and research and development to promote productivity ; and external debt management to ensure adequate resources for sustainable development . This article concludes stating that globalization has progressed, living conditions have improved significantly and the strong gainers are advanced countries and very few developing countries. The next one is a summary of an NBER working paper , Winners and Losers Over Two Centuries of Globalization written by Jeffrey G Williamson and summarized by Payal Baid . This article discusses the role played by globalization in : How are prices of consumption goods on the expenditure side affected ? and How is the economic position of the poor influenced? It further discusses how the non-beneficiaries of globalization took the form of anti- global policy manifested by immigration restriction in the high-wage countries and trade restriction and how the race was towards the top whereby legislation strengthened loserssafety nets and increased their sense of political participation . Finally , it
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explains the four areas where the impact of globalization is felt. They are commodity price structure , the causes of protection , the impact of world migration on poverty eradication , and the role of political participation in the whole process. The next one is a summary of the book Globalization and Its Discontents authored by joseph E Stiglitz and summarized by A V Vedpuriswar. This book focuses mostly on the IMF and the World Bank, which have been at the centre of major economic issues of the last two decades, including currency crises and the transition of the former Communist countries to market economies. The author believes that these two institutions should be reformed, not dismantled and advocates a gradual, sequential, and selective approach for its reformation. The next article is Globalization, Trade Facilitations and Trade in Services written by Ganti Subrahmanyam. The author opines that the trade facilitation came hastening to the forefront of WTO issues, as the international business community increasingly expressed concern for greater transparency, efficiency and procedural uniformity of cross-border transportation of goods. He
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further expresses that trade in service is a relatively new phenomenon and the main barriers for the sluggish growth are severe entry barriers. WTO negotiations on trade in services gathered pace with the adoption of the negotiating guidelines and procedures. Finally, he explains the reasons why trade facilitation is equally important with trade liberalization, and also discusses trade in services and mode of services trade. The next article is a review of the book The World is Flat: A Brief History of the Globalized World in the 21st Century authored by Thomas L Friedman and reviewed by Rajesh Prabhakar . This book elucidates the new age of globalization that has been triggered by the technology explosion, which has flattened the world. It further discuss the flattening process in detail and its impact on countries, companies and people around the world. The author has traveled around the world and assessed the change in globalization trends and expressed the same elaborately. He has also provided some inputs for the changing face of globalization , changing rules of the game and the leveling of the field between of the field between the developed and the developing nations.
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The first article in the second section is How does Globalization Affect the Synchronization of Business Cycles? authored by M Ayhan Kose, Eswar S Prasad and Marco E Terrones. This article examines the impact of rising trade and financial integration on international business cycle co-movement , among a large group of industrial and developing countries. The effect of globalization on the degree of synchronization of business cycle is limited . trade and financial integration enhances global spillovers of macroeconomic fluctuations , stronger for industrial countries . Cross- country consumption correlations have not increased in the 1990s, precisely when financial integration would have been expected to result in better risk-sharing opportunities, especially for developing countries.

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The next article is a summary of NBER Working Paper, Financial Globalization , Growth and Volatility in Developing Countries authored by Eswar S Prasad , Kenneth Rogoff, Shang- Jin Wei amd M Ayhan Kose and summarized by Usha N Raghunandan . This article discusses the impact of financial globalization on growth and volatility in developing countries . Developing countries were successful in using financial integration to stabilize fluctuation in consumption growth by providing good institutions and quality of governance , macroeconomic stability, flexible exchange rate regimes, and maintenance of fiscal discipline. The next article Globalization and American Prosperity is a speech by George F Russell, Jr. The process of globalization and growing free trade are at the center of US prosperity today. Trade accounts for 25% of national income and one in nine American jobs. A recent study by the Institute of International Economics shows that US post-war integration into the global trading system adds $1 trillion per year to US national income . According to the World Banks World Development Indicators of 2004,growing trade allowed the developing countries to grow at 4.3% a year during the decade of the 1990s, twice the rate of the rich countries. One-quarter
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of all Americans today work in jobs that were not even listed in the Census Bureaus occupation codes in 1967. The January 2005 Labor Department report showed that the US economy generated 2.2 million net jobs in 2004, while the unemployment rate dropped to just 5.4%. Finally, the author opines America mudt reduce its huge trade deficit that is causing people to focus mistakenly on outsourcing rather than on the more important issues of productivity and increasing US competitiveness. The next article is Globalization and Balance of Payments Experience of India authored by G Ramakrishna. This article studies the balance of payments experience of India during the period , 1950-51 to 2000-01 with particular reference to its globalization period i.e., after 1991-92. It explains the determinants of Indias current account deficits using an econometric model with globalization as one of the variables. It further highlights that the performance of BOP of India is satisfactory during its globalization period along with other variables such as real effective exchange rate, fiscal consolidation. It concludes that globalization influenced current account balances of India positively .

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The next article The Impact of Trade Liberalization on Export Performance of Developing Countries: The Case of Ethiopia is authored by Abdulhamid Sukar, G Ramakrishna and Seid Hassan. This article examines the impact of trade liberalization on export performance of Ethiopian economy. The analysis reveals that exchange rate and foreign income are positively associated with exports. The economic reforms introduced by the regime were to attain relatively fast, broad-based and more equitable economic growth with macroeconomic stability, making a rapid increase in agricultural output sparked by productivity gains and rural development program as a cornerstone of economic growth and poverty alleviation. It also helps to integrate the Ethiopian economy with global economic by further liberalizing foreign trade in goods and services. The measures taken to achieve the above objectives are a continuous devaluation of the Birr to reflect its market price; enhancing competition in the coffee export sector; rescheduling the forign exchange auction from bi-weekly to the weekly basis; unification of the official exchange rate with the auction rate; introduction of the duty drawback system; eliminating the foreign exchange surrender requirements ; reducing the maximum tariff to 40% and the number of tariff banks to seven ; removing all
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reatrictions on external current account relating to business travel education and health , and increasing the limit on holiday travel to $1200 per person per trip; and strengthening the external debt management. The final article is Determinants of Foreign Direct Investment in ASEAN-4 Countries: Estimation of Panel Data, written by Syed Ahmed , Abdulhamid Sukar and Saleheen Khan. This article describes the growth of inward FDI in Philippines, Thailand, Malaysia and Indonesia. It also explains the factors influencing FDI flow in these countries.They are market size, openness of the economy , interest rates, exchange rates, human capital formation and infrastructure. It further discusses the effect of Asian currency crisis on the level of FDI in these economies.

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Conclusion
Critise of globalization or more correctly , openness in trade and investment , have gained some respectability recently with some economists and other academics joining the ranks. This book focues mostly on the IMF and the World Bank , which have been at the center of major economic issues of the last two decades , including currency crises and the transition of the former Communist countries to market economies . The author believes that these two institutions should be reformed, not dismantled and advocates a gradual,sequential,and selective for its reformation. This book elucidates the new age of globalization that has been triggered by the technology explosion , which has flattened the world .It further discusses the flattening process in detail and its impact on countries, companies and people around the world. The author has traveled around the world and essessed the change in globalization trends and expressed the same elaborately. He has provided some inputs for the changing face of globalization, changing rules of the game and the leveling of the field between the developed and the developing nations.
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On the whole, there are several channels by which globalization can influence the economic development. Globalization increases exports, economic growth, and enhances productivity by allowing trading countries to specialize in the production of goods and services, in which they have comparative advantage. Exports would improve balance of payments. But , the increased incomes may also increase imports. The increase in the market size provides an outlet for the surplus products that are not consumed domestically and thus ensures an increase in exports and improvements in balance of payments. International trade provides a source of foreign exchange earnings, makes imports of capital goods easier, which , in turn,improves domestic production and impacts balance of payments.

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