Globalization

From Wikipedia, the free encyclopedia

The neutrality of this article is disputed. Please see the discussion on the talk page. Please
do not remove this message until the dispute is resolved. (November 2010)

Globalisation (or globalization) describes the process by which regional economies, societies, and cultures have

become integrated through a global network of political ideas through communication, transportation, and trade.

The term is most closely associated with the term economic globalization: the integration of national economies

into the international economy through trade, foreign direct investment, capital flows, migration, the spread

of technology, and military presence.[1] However, globalization is usually recognized as being driven by a

combination of economic, technological, sociocultural, political, and biological factors.[2] The term can also refer to

the transnational circulation of ideas, languages, or popular culture through acculturation. An aspect of the world

which has gone through the process can be said to be globalised.

Contents

[hide]

• 1 Definitions

• 2 Effects

o 2.1 Cultural effects

o 2.2 Negative effects

 2.2.1 Sweatshops

 2.2.2 Negative effects of economic liberalization

 2.2.3 Brain drain

 2.2.4 Environmental degradation

 2.2.5 Food security

 2.2.6 Disease

 2.2.7 Drug and illicit goods trade

• 3 Advocates

• 4 Critics

• 5 History

o 5.1 Post-World War II

• 6 Measurement

o 6.1 International social fora

• 7 See also

• 8 References
 • 9 Further reading

• 10 External links

o 10.1 Multimedia

[edit]Definitions

According to the Oxford English Dictionary, the word 'globalization' was first employed in a publication

entitled Towards New Education in 1952, to denote a holistic view of human experience in education.[3]An early

description of globalization was penned by the American entrepreneur-turned-minister Charles Taze Russell who

coined the term 'corporate giants' in 1897,[4] although it was not until the 1960s that the term began to be widely

used by economists and other social scientists. The term has since then achieved widespread use in the

mainstream press by the later half of the 1980s. Since its inception, the concept of globalization has inspired

numerous competing definitions and interpretations, with antecedents dating back to the great movements of trade

and empire across Asia and the Indian Ocean from the 15th century onwards.[5]

The United Nations ESCWA says globalization "is a widely-used term that can be defined in a number of different

ways. When used in an economic context, it refers to the reduction and removal of barriers between national

borders in order to facilitate the flow of goods, capital, services and labor... although considerable barriers remain

to the flow of labor... Globalization is not a new phenomenon. It began towards the end of the nineteenth century,

but it slowed down during the period from the start of the First World War until the third quarter of the twentieth

century. This slowdown can be attributed to the inward-looking policies pursued by a number of countries in order

to protect their respective industries... however, the pace of globalization picked up rapidly during the fourth quarter

of the twentieth century..."[6]

HSBC, the world's largest bank, operates across the globe.[7][8] Shown here is the HSBC Global Technology Centre in Pune, India

which develops software for the entire HSBC group.[9]

Tom J. Palmer of the Cato Institute defines globalization as "the diminution or elimination of state-enforced

restrictions on exchanges across borders and the increasingly integrated and complex global system of production

and exchange that has emerged as a result."[10]

Thomas L. Friedman has examined the impact of the "flattening" of the world, and argues that globalized

trade, outsourcing, supply-chaining, and political forces have changed the world permanently, for both better and

worse. He also argues that the pace of globalization is quickening and will continue to have a growing impact on

business organization and practice.[11]

Herman E. Daly argues that sometimes the terms internationalization and globalization are used interchangeably

but there is a significant formal difference. The term "internationalization" (or internationalisation) refers to the

importance of international trade, relations, treaties etc. owing to the (hypothetical) immobility of labor and capital

between or among nations.[citation needed]

Finally, Takis Fotopoulos argues that globalization is the result of systemic trends manifesting the market

economy's grow-or-die dynamic, following the rapid expansion of transnational corporations. Because these trends

have not been offset effectively by counter-tendencies that could have emanated from trade-union action and other

forms of political activity, the outcome has been globalization. This is a multi-faceted and irreversible phenomenon

within the system of the market economy and it is expressed as: economic globalization, namely, the opening and

deregulation of commodity, capital and labour markets which led to the present form of neoliberal globalization;

political globalization, i.e., the emergence of a transnational elite and the phasing out of the all powerful nation-

state of the statist period; cultural globalization, i.e., the worldwide homogenisation of culture; ideological

globalization; technological globalization; social globalization.[12]

[edit]Effects

Globalization has various aspects which affect the world in several different ways

 Industrial - emergence of worldwide production markets and broader access to a range of foreign

products for consumers and companies. Particularly movement of material and goods between and within

national boundaries. International trade in manufactured goods increased more than 100 times (from $95

billion to $12 trillion) in the 50 years since 1955.[13] China's trade with Africa rose sevenfold during 2000-07

alone.[14][15]

 Financial - emergence of worldwide financial markets and better access to external financing for

borrowers. By the early part of the 21st century more than $1.5 trillion in national currencies were traded daily

to support the expanded levels of trade and investment.[16] As these worldwide structures grew more quickly

than any transnational regulatory regime, the instability of the global financial infrastructure dramatically

increased, as evidenced by the Financial crisis of 2007–2010.[17]

As of 2005–2007, the Port of Shanghaiholds the title as the World's busiest port.[18][19][20]

 Economic - realization of a global common market, based on the freedom of exchange of goods and

capital.[21] The interconnectedness of these markets, however, meant that an economic collapse in one area

could impact other areas.[citation needed] With globalization, companies can produce goods and services in the

lowest cost location. This may cause jobs to be moved to locations that have the lowest wages, least worker

protection and lowest health benefits. For Industrial activities this may cause production to move to areas with

the least pollution regulations or worker safety regulations.

Almost all notable worldwide ITcompanies have a presence in India. Four Indians were among the world's top 10 richest in 2008,

worth a combined $160 billion.[22] In 2007, China had 415,000 millionaires and India 123,000.[23]

 Health Policy - On the global scale, health becomes a commodity. In developing nations under the

demands of Structural Adjustment Programs, health systems are fragmented and privatized. Global health

policy makers have shifted during the 1990s from United Nations players to financial institutions. The result of

this power transition is an increase in privatization in the health sector. This privatization fragments health

policy by crowding it with many players with many private interests. These fragmented policy players

emphasize partnerships and specific interventions to combat specific problems (as opposed to

comprehensive health strategies). Influenced by global trade and global economy, health policy is directed by

technological advances and innovative medical trade. Global priorities, in this situation, are sometimes at
 odds with national priorities where increased health infrastructure and basic primary care are of more value to

the public than privatized care for the wealthy.[24]

 Political - some use "globalization" to mean the creation of a world government which regulates the

relationships among governments and guarantees the rights arising from social and economic globalization.
[25]
Politically, the United States has enjoyed a position of power among the world powers, in part because of

its strong and wealthy economy. With the influence of globalization and with the help of The United States’

own economy, the People's Republic of China has experienced some tremendous growth within the past

decade. If China continues to grow at the rate projected by the trends, then it is very likely that in the next

twenty years, there will be a major reallocation of power among the world leaders. China will have enough

wealth, industry, and technology to rival the United States for the position of leading world power.[26]

Among the political effects some scholars also name the transformation of sovereignty. In their opinion,

'globalization contributes to the change and reduction of nomenclature and scope of state sovereign powers, and

besides it is a bilateral process: on the one hand, the factors are strengthening that fairly undermine the countries'

sovereignty, on the other – most states voluntarily and deliberately limit the scope of their sovereignty'.[27]

 Informational - increase in information flows between geographically remote locations. Arguably this is a

technological change with the advent of fibre optic communications, satellites, and increased availability of

telephone and Internet.

 Language - the most popular first language is Mandarin (845 million speakers) followed by Spanish (329

million speakers) and English (328 million speakers).[28] However the most popular second language is

undoubtedly English, the "lingua franca" of globalization:

 About 35% of the world's mail, telexes, and cables are in English.

 Approximately 40% of the world's radio programs are in English.

 English is the dominant language on the Internet.[29]

 Competition - Survival in the new global business market calls for improved productivity and increased

competition. Due to the market becoming worldwide, companies in various industries have to upgrade their

products and use technology skillfully in order to face increased competition.[30]

 Ecological - the advent of global environmental challenges that might be solved with international

cooperation, such as climate change, cross-boundary water and air pollution, over-fishing of the ocean, and

the spread of invasive species. Since many factories are built in developing countries with less environmental

regulation, globalism and free trade may increase pollution and impact on precious fresh water

resources(Hoekstra and Chapagain 2008).[31] On the other hand, economic development historically required

a "dirty" industrial stage, and it is argued that developing countries should not, via regulation, be prohibited

from increasing their standard of living.

London is a city of considerable diversity. As of 2008, estimates were published that stated that approximately 30% of London's

total population was from an ethnic minority group. The latest official figures show that in 2008, 590,000 people arrived to live in

the UK whilst 427,000 left, meaning that net inward migration was 163,000.[32]

 Cultural - growth of cross-cultural contacts; advent of new categories of consciousness and identities

which embodies cultural diffusion, the desire to increase one's standard of living and enjoy foreign products

and ideas, adopt new technology and practices, and participate in a "world culture".[33] Some bemoan the

resulting consumerism and loss of languages. Also see Transformation of culture.

 Spreading of multiculturalism, and better individual access to cultural diversity (e.g. through the

export of Hollywood). Some consider such "imported" culture a danger, since it may supplant the local

culture, causing reduction in diversity or even assimilation. Others consider multiculturalism to promote

peace and understanding between people. A third position that gained popularity is the notion that

multiculturalism to a new form of monoculture in which no distinctions exist and everyone just shift

between various lifestyles in terms of music, cloth and other aspects once more firmly attached to a

single culture. Thus not mere cultural assimilation as mentioned above but the obliteration of culture as

we know it today.[34][35] In reality, as it happens in countries like the United Kingdom, Canada, Australia or

New Zealand, people who always lived in their native countries maintain their cultures without feeling

forced by any reason to accept another and are proud of it even when they're acceptive of immigrants,

while people who are newly arrived simply keep their own culture or part of it despite some minimum

amount of assimilation, although aspects of their culture often become a curiosity and a daily aspect of

the lives of the people of the welcoming countries.

 Greater international travel and tourism. WHO estimates that up to 500,000 people are on

planes at any one time.[citation needed][36] In 2008, there were over 922 million international tourist arrivals, with

a growth of 1.9% as compared to 2007.[37]

  Greater immigration,[38] including illegal immigration.[39] The IOM estimates there are more than

200 million migrants around the world today.[40] Newly available data show that remittance flows to

developing countries reached $328 billion in 2008.[41]

 Spread of local consumer products (e.g., food) to other countries (often adapted to their

culture).

 Worldwide fads and pop culture such as Pokémon, Sudoku, Numa Numa, Origami, Idol

series, YouTube, Orkut, Facebook, and MySpace; accessible only to those who have Internet or

Television, leaving out a substantial portion of the Earth's population.

The construction of continental hotels is a major consequence of globalization process in affiliation

with tourism and travel industry,Dariush Grand Hotel, Kish, Iran

 Worldwide sporting events such as FIFA World Cup and the Olympic Games.

 Incorporation of multinational corporations into new media. As the sponsors of the All-

Blacks rugby team, Adidas had created a parallel website with a downloadable interactive rugby game for

its fans to play and compete.[42]

 Social - development of the system of non-governmental organisations as main agents of global public

policy, including humanitarian aid and developmental efforts.[43]

 Technical

 Development of a Global Information System, global telecommunications infrastructure and

greater transborder data flow, using such technologies as theInternet, communication

satellites, submarine fiber optic cable, and wireless telephones

 Increase in the number of standards applied globally; e.g., copyright laws, patents and world

trade agreements.

 Legal/Ethical

 The creation of the international criminal court and international justice movements.

 Crime importation and raising awareness of global crime-fighting efforts and cooperation.

 The emergence of Global administrative law.

  Religious

 The spread and increased interrelations of various religious groups, ideas, and practices and

their ideas of the meanings and values of particular spaces.[44]

[edit]Cultural effects

Globalization has influenced the use of language across the world. This street in Hong Kong, a former British colony, shows

various signs, a few of which incorporate both Chinese and British English.

Japanese McDonald's fast food as evidence of corporate globalization and the integration of the same into different cultures.

"Culture" is defined as patterns of human activity and the symbols that give these activities significance. Culture is

what people eat, how they dress, the beliefs they hold, and the activities they practice. Globalization has joined

different cultures and made it into something different.[45]

Culinary culture has become extensively globalized. For example, Japanese noodles, Italian meatballs,

Indian curry, French cheese, and American burgers and fries have become popular outside their countries of

origin. Two American companies, McDonald's and Starbucks, are often cited as examples of globalization, with

over 31,000 and 18,000 locations operating worldwide, respectively.

Another common practice brought about by globalization is the usage of Chinese characters in tattoos. These

tattoos are popular with today's youth despite the lack of social acceptance of tattoos in China.[46] Also, there is a

lack of comprehension in the meaning of Chinese characters that people get,[47] making this an example of cultural

appropriation.
The internet breaks down cultural boundaries across the world by enabling easy, near-instantaneous

communication between people anywhere in a variety of digital forms and media. The Internet is associated with

the process of cultural globalization because it allows interaction and communication between people with very

different lifestyles and from very different cultures. Photo sharing websites allow interaction even where language

would otherwise be a barrier.

[edit]Negative effects
See also: Alter-globalization, Participatory economics, and Global Justice Movement

Globalization has generated significant international opposition over concerns that it has increased inequality and

environmental degradation.[48] In the Midwestern United States, globalization has eaten away at its competitive

edge in industry and agriculture, lowering the quality of life.[49]

Some also view the effect of globalization on culture as a rising concern. Along with globalization of economies

and trade, culture is being imported and exported as well. The concern is that the stronger, bigger countries such

as the United States, may overrun the other, smaller countries' cultures, leading to those customs and values

fading away. This process is also sometimes referred to as Americanization or McDonaldization. [50]

[edit]Sweatshops

A maquila in Mexico

In many poorer nations, globalization is the result of foreign businesses utilizing workers in a country to take

advantage of the lower wage rates.

One example used by anti-globalization protestors is the use of sweatshops by manufacturers. According to Global

Exchange these "Sweat Shops" are widely used by sports shoe manufacturers and mentions one company in

particular – Nike.[51] There are factories set up in the poor countries where employees agree to work for low wages.

Then if labour laws alter in those countries and stricter rules govern the manufacturing process the factories are

closed down and relocated to other nations with more business favorable policies, such

as Cambodia or Bangladesh.[citation needed]

There are several agencies that have been set up worldwide specifically designed to focus on anti-sweatshop

campaigns and education of such. In the USA, theNational Labor Committee has proposed a number of bills as

part of The Decent Working Conditions and Fair Competition Act, which have thus far failed inCongress. The

legislation would legally require companies to respect human and worker rights by prohibiting the import, sale, or

export of sweatshop goods.[52]

Specifically, these core standards include no child labor, no forced labor, freedom of association, right to organize

and bargain collectively, as well as the right to decent working conditions.[53]

There are also concerns about the emergence of "electronic sweatshops." Shehzad Nadeem writes that

the outsourcing of service work, such as customer serviceand Information Technology work, to India has resulted

in “longer work hours, an intense work pace, and temporal displacement manifested in health problems and

alienation from family and friends.”[54]

[edit]Negative effects of economic liberalization

Further information: Neoliberalism

The world today is so interconnected that the collapse of the subprime mortgage market in the U.S. has led to

a global financial crisis and recession on a scale not seen since the Great Depression.[55]According to left-wing

ideologists, government deregulation and failed regulation of Wall Street's investment banks were important

contributors to the subprime mortgage crisis.[56][57]

A flood of consumer goods such as televisions, radios, bicycles, and textiles into the United States, Europe, and

Japan has helped fuel the economic expansion of Asian tiger economies in recent decades.[58] However,

Chinese textile and clothing exports have recently encountered criticism from Europe, the United States and some

African countries.[59][60] In South Africa, some 300,000 textile workers have lost their jobs due to the influx of

Chinese goods.[61] The increasing U.S. trade deficit with China has cost 2.4 million American jobs between 2001

and 2008, according to a study by theEconomic Policy Institute (EPI).[62] A total of 3.2 million – one in six U.S.

factory jobs – have disappeared between 2000 and 2007.[63]

[edit]Brain drain

Opportunities in rich countries drives talent away from poor countries, leading to brain drains. Brain drain has cost

the African continent over $4.1 billion in the employment of 150,000 expatriate professionals annually.
[64]
Indian students going abroad for their higher studies costs India a foreign exchange outflow of $10 billion

annually.[65]

[edit]Environmental degradation
Burning forest in Brazil. The removal of forest to make way for cattle ranching was the leading cause of deforestation in the

Brazilian Amazon from the mid 1960s. Recently, soybeans have become one of the most important contributors to deforestation in

the Brazilian Amazon.[66]

The Worldwatch Institute said the booming economies of China and India are planetary powers that are shaping

the global biosphere. In 2007, China overtook the United States as the world's biggest producer of CO2.[67] Only 1

percent of the country’s 560 million city inhabitants (2007) breathe air deemed safe by theEuropean Union. At

present rates, tropical rainforests in Indonesia would be logged out in 10 years, Papua New Guinea in 13 to 16

years.[68] A major source of deforestation is the logging industry, driven spectacularly by China and Japan.[69] China

and India are quickly becoming large oil consumers.[70][71] China has seen oil consumption grow by 8% yearly since

2002, doubling from 1996–2006.[72] State of the World 2006 report said the two countries' high economic growth hid

a reality of severe pollution. The report states:

The world's ecological capacity is simply insufficient to satisfy the ambitions of China, India, Japan,

Europe and the United States as well as the aspirations of the rest of the world in a sustainable way[73]

Without more recycling, zinc could be used up by 2037, both indium and hafnium could run out by 2017,

and terbium could be gone before 2012.[74] It is said that if China and India were to consume as much

resources per capita as United States or Japan in 2030 together they would require a full planet Earth to

meet their needs.[75] In the longterm these effects can lead to increased conflict over dwindling

resources[76] and in the worst case a Malthusian catastrophe.

[edit]Food security

The head of the International Food Policy Research Institute, stated in 2008 that the gradual change in diet

among newly prosperous populations is the most important factor underpinning the rise in global food prices.
[77]
From 1950 to 1984, as the Green Revolution transformed agriculture around the world, grain production

increased by over 250%.[78] The world population has grown by about 4 billion since the beginning of the

Green Revolution and most believe that, without the Revolution, there would be

greaterfamine and malnutrition than the UN presently documents (approximately 850 million people suffering

from chronic malnutrition in 2005).[79][80]

It is becoming increasingly difficult to maintain food security in a world beset by a confluence of "peak"

phenomena, namely peak oil, peak water, peak phosphorus, peak grain and peak fish. Growing populations,

falling energy sources and food shortages will create the "perfect storm" by 2030, according to the UK

government chief scientist. He said food reserves are at a 50-year low but the world requires 50% more

energy, food and water by 2030.[81][82] The world will have to produce 70% more food by 2050 to feed a

projected extra 2.3 billion people and as incomes rise, the United Nations' Food and Agriculture

Organisation (FAO) warned.[83] Social scientists have warned of the possibility that global civilization is due

for a period of contraction and economic re-localization, due to the decline in fossil fuels and resulting crisis

in transportation and food production.[84][85][86] One paper even suggested that the future might even bring

about a restoration of sustainable local economic activities based on hunting and gathering, shifting

horticulture, and pastoralism.[87]

The journal Science published a four-year study in November 2006, which predicted that, at prevailing

trends, the world would run out of wild-caught seafood in 2048.[88]

[edit]Disease

Further information: Globalization and disease

Globalization has also helped to spread some of the deadliest infectious diseases known to humans.
[89]
Starting in Asia, the Black Death killed at least one-third of Europe's population in the 14th century.
[90]
Even worse devastation was inflicted on the American supercontinent by European arrivals. 90% of the

populations of the civilizations of the "New World" such as the Aztec, Maya, and Inca were killed by small

pox brought by European colonization. Modern modes of transportation allow more people and products to

travel around the world at a faster pace, but they also open the airways to the transcontinental movement of

infectious disease vectors.[91] One example of this occurring is AIDS/HIV.[92] Due to immigration,

approximately 500,000 people in the United States are believed to be infected with Chagas disease.[93] In

2006, the tuberculosis (TB) rate among foreign-born persons in the United States was 9.5 times that of U.S.-

born persons.[94]

[edit]Drug and illicit goods trade

The United Nations Office on Drugs and Crime (UNODC) issued a report that the global drug

trade generates more than $320 billion a year in revenues.[95] Worldwide, the UN estimates there are more

than 50 million regular users of heroin, cocaine and synthetic drugs.[96] The international trade of endangered

species is second only to drug trafficking.[97] Traditional Chinese medicine often incorporates ingredients

from all parts of plants, the leaf, stem, flower, root, and also ingredients from animals and minerals. The use

of parts of endangered species (such as seahorses, rhinoceros horns, saiga antelopehorns, and tiger bones

and claws) has created controversy and resulted in a black market of poachers who hunt restricted animals.
[98][99]
In 2003, 29% of open sea fisheries were in a state of collapse.[100]
[edit]Advocates

Supporters of free trade claim that it increases economic prosperity as well as opportunity, especially among

developing nations, enhances civil liberties and leads to a more efficient allocation of resources. Economic

theories of comparative advantage suggest that free trade leads to a more efficient allocation of resources,

with all countries involved in the trade benefiting. In general, this leads to lower prices, more employment,

higher output and a higher standard of living for those in developing countries.[101][102]

Dr. Francesco Stipo, Director of the United States Association of the Club of Rome, writes in favor of political

globalization in the form of a world government, suggests that it "should reflect the political and economic

balances of world nations. A world confederation would not supersede the authority of the State

governments but rather complement it, as both the States and the world authority would have power within

their sphere of competence".[103]

Proponents of laissez-faire capitalism, and some libertarians, say that higher degrees of political

and economic freedom in the form of democracy and capitalism in the developed world are ends in

themselves and also produce higher levels of material wealth. They see globalization as the beneficial

spread of liberty and capitalism.[101]

Supporters of democratic globalization are sometimes called pro-globalists. They believe that the first phase

of globalization, which was market-oriented, should be followed by a phase of building global political

institutions representing the will of world citizens. The difference from other globalists is that they do not

define in advance any ideology to orient this will, but would leave it to the free choice of those citizens via a

democratic process.[citation needed]

Some, such as former Canadian Senator Douglas Roche, O.C., simply view globalization as inevitable and

advocate creating institutions such as a directly elected United Nations Parliamentary Assembly to exercise

oversight over unelected international bodies.

[edit]Critics

Main article: Anti-globalization movement

See also: Alter-globalization, Participatory economics, and Global Justice Movement

"Anti-globalization" can involve the process or actions taken by a state or its people in order to demonstrate

its sovereignty and practice democratic decision-making. Anti-globalization may occur in order to maintain

barriers to the international transfer of people, goods and beliefs, particularly free market deregulation,

encouraged by business organizations and organizations such as the International Monetary Fund or

the World Trade Organization. Moreover, as Naomi Klein argues in her book No Logo, anti-globalism can

denote either a single social movement or an umbrella term that encompasses a number of separate social
movements[104] such as nationalists and socialists. In either case, participants stand in opposition to the

unregulated political power of large, multi-national corporations, as the corporations exercise power through

leveraging trade agreements which in some instances create unemployment, and damage

the democratic rights of citizens[citation needed], the environment particularly air quality indexand rain forests[citation
needed]
, as well as national government's sovereignty to determine labor rights,[citation needed] including the right to

form a union, and health and safety legislation, or laws as they may otherwise infringe on cultural practices

and traditions of developing countries.[citation needed]

Some people who are labeled "anti-globalist" or "sceptics" (Hirst and Thompson)[105] consider the term to be

too vague and inaccurate.[106][107] Podobnik states that "the vast majority of groups that participate in these

protests draw on international networks of support, and they generally call for forms of globalization that

enhance democratic representation, human rights, and egalitarianism."

Joseph Stiglitz and Andrew Charlton write:[108]

The anti-globalization movement developed in opposition to the perceived negative aspects of

“ globalization. The term 'anti-globalization' is in many ways a misnomer, since the group represents a
wide range of interests and issues and many of the people involved in the anti-globalization movement
do support closer ties between the various peoples and cultures of the world through, for example, aid,
assistance for refugees, and global environmental issues. ”
Some members aligned with this viewpoint prefer instead to describe themselves as the "Global Justice

Movement", the "Anti-Corporate-Globalization Movement", the "Movement of Movements" (a popular term in

Italy), the "Alter-globalization" movement (popular in France), the "Counter-Globalization" movement, and a

number of other terms.

Critiques of the current wave of economic globalization typically look at both the damage to the planet, in

terms of the perceived unsustainable harm done to the biosphere, as well as the perceived human costs,

such as poverty, inequality, miscegenation, injustice and the erosion of traditional culture which, the critics

contend, all occur as a result of the economic transformations related to globalization. They challenge

directly the metrics, such as GDP, used to measure progress promulgated by institutions such as the World

Bank, and look to other measures, such as the Happy Planet Index,[109] created by the New Economics

Foundation.[110] They point to a "multitude of interconnected fatal consequences–social disintegration, a

breakdown of democracy, more rapid and extensive deterioration of the environment, the spread of new

diseases, increasing poverty and alienation"[111] which they claim are the unintended but very real

consequences of globalization.

The terms globalization and anti-globalization are used in various ways. Noam Chomsky believes that[112][113]

The term "globalization" has been appropriated by the powerful to refer to a specific form of
“ international economic integration, one based on investor rights, with the interests of people incidental.
That is why the business press, in its more honest moments, refers to the "free trade agreements" as "free
”
investment agreements" (Wall St. Journal). Accordingly, advocates of other forms of globalization are
 described as "anti-globalization"; and some, unfortunately, even accept this term, though it is a term
of propaganda that should be dismissed with ridicule. No sane person is opposed to globalization, that is,
international integration. Surely not the left and the workers movements, which were founded on the
principle of international solidarity — that is, globalization in a form that attends to the rights of people,
not private power systems.

The dominant propaganda systems have appropriated the term "globalization" to refer to the specific
“ version of international economic integration that they favor, which privileges the rights of investors and
lenders, those of people being incidental. In accord with this usage, those who favor a different form of
international integration, which privileges the rights of human beings, become "anti-globalist." This is
simply vulgar propaganda, like the term "anti-Soviet" used by the most disgusting commissars to refer to
dissidents. It is not only vulgar, but idiotic. Take theWorld Social Forum, called "anti-globalization" in
the propaganda system – which happens to include the media, the educated classes, etc., with rare
exceptions. The WSF is a paradigm example of globalization. It is a gathering of huge numbers of
people from all over the world, from just about every corner of life one can think of, apart from the
extremely narrow highly privileged elites who meet at the competing World Economic Forum, and are
called "pro-globalization" by the propaganda system. An observer watching this farce from Mars would
collapse in hysterical laughter at the antics of the educated classes. ”
Critics argue that globalization results in:

 Poorer countries suffering disadvantages: While it is true that globalization encourages free

trade among countries, there are also negative consequences because some countries try to save their

national markets. The main export of poorer countries is usually agricultural goods. Larger countries

often subsidise their farmers (like the EU Common Agricultural Policy), which lowers the market price

for the poor farmer's crops compared to what it would be under free trade.[114] (See Agricultural

subsidy for more information.)

 The exploitation of foreign impoverished workers: The deterioration of protections for

weaker nations by stronger industrialized powers has resulted in the exploitation of the people in those

nations to become cheap labor. Due to the lack of protections, companies from powerful industrialized

nations are able to offer workers enough salary to entice them to endure extremely long hours and

unsafe working conditions, though economists question if consenting workers in a competitive

employers' market can be decried as "exploited". It is true that the workers are free to leave their jobs,

but in many poorer countries, this would mean starvation for the worker, and possible even his/her

family if their previous jobs were unavailable.[115]

 The shift to outsourcing: Globalization has allowed corporations to move manufacturing and

service jobs from high cost locations to locations with the lowest wages and worker benefits. This

results in loss of jobs in the high cost locations.[citation needed] This has contributed to the deterioration of the

middle class[citation needed] which is a major factor in the increasing economic inequality in the United

States .[citation needed] Families that were once part of the middle class are forced into lower positions by

massive layoffs and outsourcing to another country. This also means that people in the lower class

have a much harder time climbing out of poverty because of the absence of the middle class as a

stepping stone.[116]
  Weak labor unions: The surplus in cheap labor coupled with an ever growing number of

companies in transition has caused a weakening of labor unions in the United States. Unions lose their

effectiveness when their membership begins to decline. As a result unions hold less power over

corporations that are able to easily replace workers, often for lower wages, and have the option to not

offer unionized jobs anymore.[114]

 An increase in exploitation of child labor: for example, a country that experiencing increases

in labor demand because of globalization and an increase the demand for goods produced by children,

will experience greater a demand for child labor. This can be "hazardous" or "exploitive", e.g.,

quarrying, salvage, cash cropping but also includes the trafficking of children, children in bondage or

forced labor, prostitution, pornography and other illicit activities.[117]

In December 2007, World Bank economist Branko Milanovic has called much previous empirical research

on global poverty and inequality into question because, according to him, improved estimates of purchasing

power parity indicate that developing countries are worse off than previously believed. Milanovic remarks

that "literally hundreds of scholarly papers on convergence or divergence of countries’ incomes have been

published in the last decade based on what we know now were faulty numbers." With the new data, possibly

economists will revise calculations, and he also believed that there are considerable implications estimates

of global inequality and poverty levels. Global inequality was estimated at around 65 Gini points, whereas

the new numbers indicate global inequality to be at 70 on the Gini scale.[118]

The critics of globalization typically emphasize that globalization is a process that is mediated according to

corporate interests, and typically raise the possibility of alternative global institutions and policies, which they

believe address the moral claims of poor and working classes throughout the globe, as well as

environmental concerns in a more equitable way.[119]

The movement is very broad[citation needed], including church groups, national liberation

factions, peasant unionists, intellectuals, artists, protectionists, anarchists, those in support of relocalization

and others. Some are reformist, (arguing for a more moderate form of capitalism) while others are

more revolutionary (arguing for what they believe is a more humane system than capitalism) and others

arereactionary, believing globalization destroys national industry and jobs.

One of the key points made by critics of recent economic globalization is that income inequality, both

between and within nations, is increasing as a result of these processes. One article from 2001 found that

significantly, in 7 out of 8 metrics, income inequality has increased in the twenty years ending 2001. Also,

"incomes in the lower deciles of world income distribution have probably fallen absolutely since the 1980s".

Furthermore, the World Bank's figures on absolute poverty were challenged. The article was skeptical of the

World Bank's claim that the number of people living on less than $1 a day has held steady at 1.2 billion from

1987 to 1998, because of biased methodology.[120]

A chart that gave the inequality a very visible and comprehensible form, the so-called 'champagne glass'

effect,[121] was contained in the 1992 United Nations Development Program Report, which showed the

distribution of global income to be very uneven, with the richest 20% of the world's population controlling

82.7% of the world's income.[122]

Distribution of world GDP, 1989

Quintile of Population Income

Richest 20% 82.7%

Second 20% 11.7%

Third 20% 2.3%

Fourth 20% 2.4%

Poorest 20% 0.2%

Source: United Nations Development Program. 1992 Human Development Report[123]

Economic arguments by fair trade theorists claim that unrestricted free trade benefits those with

more financial leverage (i.e. the rich) at the expense of the poor.[124]

Americanization related to a period of high political American clout and of significant growth of America's

shops, markets and object being brought into other countries. So globalization, a much more diversified

phenomenon, relates to a multilateral political world and to the increase of objects, markets and so on into

each others countries.

Critics of globalization talk of Westernization. A 2005 UNESCO report[125] showed that cultural exchange is

becoming more frequent from Eastern Asia but Western countries are still the main exporters of cultural

goods. In 2002, China was the third largest exporter of cultural goods, after the UK and US. Between 1994

and 2002, both North America's and the European Union's shares of cultural exports declined, while Asia's

cultural exports grew to surpass North America. Related factors are the fact that Asia's population and area

are several times that of North America.

Some opponents of globalization see the phenomenon as the promotion of corporatist interests.[126] They

also claim that the increasing autonomy and strength of corporate entities shapes the political policy of

countries.[127][128]

[edit]History

Extent of the Silk Road and Spice traderoutes blocked by the Ottoman Empire in 1453 spurring exploration

The historical origins of globalization are the subject of on-going debate. Though some scholars situate the

origins of globalization in the modern era, others regard it as a phenomenon with a long history.

Perhaps the most extreme proponent of a deep historical origin for globalization was Andre Gunder Frank,

an economist associated with dependency theory. Frank argued that a form of globalization has been in

existence since the rise of trade links between Sumer and the Indus Valley Civilization in the third

millenniumB.C.[129] Critics of this idea contend that it rests upon an over-broad definition of globalization.

An early form of globalized economics and culture existed during the Hellenistic Age, when commercialized

urban centers were focused around the axis of Greek culture over a wide range that stretched from India to

Spain, with such cities as Alexandria, Athens, and Antioch at its center. Trade was widespread during that

period, and it is the first time the idea of a cosmopolitan culture (from Greek "Cosmopolis", meaning "world

city") emerged. Others have perceived an early form of globalization in the trade links between the Roman

Empire, the Parthian Empire, and the Han Dynasty. The increasing articulation of commercial links between

these powers inspired the development of the Silk Road, which started in western China, reached the

boundaries of the Parthian empire, and continued onwards towards Rome.[130] With 300 Greek ships a year

sailing between the Greco-Roman world and India, the annual trade may have reached 300,000 tons.[131]

The Islamic Golden Age was also an important early stage of globalization, when Jewish and Muslim

traders and explorers established a sustained economy across the Old World resulting in a globalization of

crops, trade, knowledge and technology. Globally significant crops such as sugar and cotton became widely

cultivated across the Muslim world in this period, while the necessity of learning Arabic and completing

the Hajj created a cosmopolitan culture.[132]

Portuguese carrack in Nagasaki, 17th century Japanese Nanban art

Native New World crops exchanged globally: Maize, Tomato, Potato, Vanilla,Rubber, Cacao, Tobacco

The advent of the Mongol Empire, though destabilizing to the commercial centers of the Middle East and

China, greatly facilitated travel along the Silk Road. This permitted travelers and missionaries such as Marco

Polo to journey successfully (and profitably) from one end of Eurasia to the other. The so-called Pax

Mongolicaof the thirteenth century had several other notable globalizing effects. It witnessed the creation of

the first international postal service, as well as the rapid transmission of epidemic diseases such as bubonic

plague across the newly unified regions of Central Asia.[133] These pre-modern phases of global or

hemispheric exchange are sometimes known as archaic globalization. Up to the sixteenth century, however,

even the largest systems of international exchange were limited to the Old World.

The Age of Discovery brought a broad change in globalization, being the first period in which Eurasia and

Africa engaged in substantial cultural, material and biologic exchange with the New World.[134] It began in the

late 15th century, when the two Kingdoms of the Iberian Peninsula - Portugal and Castile - sent the first

exploratory voyages[135] around the Horn of Africa and to the Americas, "discovered" in 1492 by Christopher

Columbus. Shortly before the turn of the 16th century, Portuguese started establishing trading posts

(factories) from Africa to Asia and Brazil, to deal with the trade of local products like gold, spices and timber,

introducing an international business center under a royal monopoly, the House of India.[136]

Global integration continued with the European colonization of the Americas initiating the Columbian

Exchange,[137] the enormous widespread exchange of plants, animals, foods, human populations

(including slaves), communicable diseases, and culture between the Eastern and Western hemispheres. It
was one of the most significant global events concerning ecology, agriculture, and culture in history. New

crops that had come from the Americas via the European seafarers in the 16th century significantly

contributed to the world's population growth.[138]

This phase is sometimes known as proto-globalization. It was characterized by the rise of maritime

European empires, in the 16th and 17th centuries, first thePortuguese and Spanish Empires, and later

the Dutch and British Empires. In the 17th century, globalization became also a private business

phenomenon whenchartered companies like British East India Company (founded in 1600), often described

as the first multinational corporation, as well as the Dutch East India Company (founded in 1602) were

established. The issuance of shares of stock (starting with the Dutch East India Company, the first after the

Middle Ages) became an important mechanism to raise capital funds for and share the risk of international

trade by ship.[citation needed]

Animated map showing Colonial empiresevolution from 1492 to present

19th century Great Britain become the first global economic superpower, because of superior manufacturing technology

and improved global communications such assteamships and railroads.

The 19th century witnessed the advent of globalization approaching its modern

form. Industrialization allowed cheap production of household items using economies of scale, while rapid

population growth created sustained demand for commodities. Globalization in this period was decisively

shaped by nineteenth-century imperialism. After the Opium Wars and the completion of British conquest of

India, vast populations of these regions became ready consumers of European exports. It was in this period

that areas of sub-Saharan Africa and the Pacific islands were incorporated into the world system.

Meanwhile, the conquest of new parts of the globe, notably sub-Saharan Africa, by Europeans yielded

valuable natural resources such as rubber, diamonds and coal and helped fuel trade and investment
between the European imperial powers, their colonies, and the United States.[citation needed] Said John Maynard

Keynes,[139]

The inhabitant of London could order by telephone, sipping his morning tea, the various products of the
“ whole earth, and reasonably expect their early delivery upon his doorstep. Militarism and imperialism of
racial and cultural rivalries were little more than the amusements of his daily newspaper. What an
extraordinary episode in the economic progress of man was that age which came to an end in August
1914. ”
The first phase of "modern globalization" began to break down at the beginning of the 20th century,

with World War I. The novelist VM Yeates criticised the financial forces of globalization as a factor in

creating World War I.[140] The final death knell for this phase came during the gold standard crisis and Great

Depression in the late 1920s and early 1930s.[citation needed]

[edit]Post-World War II

Globalization, since World War II, is partly the result of planning by politicians to break down borders

hampering trade. Their work led to the Bretton Woods conference, an agreement by the world's leading

politicians to lay down the framework for international commerce and finance, and the founding of several

international institutions intended to oversee the processes of globalization. Globalization was also driven by

the global expansion of multinational corporationsbased in the United States and Europe, and worldwide

exchange of new developments in science, technology and products, with most significant inventions of this

time having their origins in the Western world according to Encyclopedia Britannica.[141] Worldwide export

of western culture went through the new mass media: film, radio and television and recorded music.

Development and growth of international transport and telecommunication played a decisive role in modern

globalization.

These institutions include the International Bank for Reconstruction and Development (the World Bank), and

the International Monetary Fund. Globalization has been facilitated by advances in technology which have

reduced the costs of trade, and trade negotiation rounds, originally under the auspices of the General

Agreement on Tariffs and Trade (GATT), which led to a series of agreements to remove restrictions on free

trade.

Since World War II, barriers to international trade have been considerably lowered through international

agreements — GATT. Particular initiatives carried out as a result of GATT and the World Trade

Organization (WTO), for which GATT is the foundation, have included:

 Promotion of free trade:

 elimination of tariffs; creation of free trade zones with small or no tariffs

 Reduced transportation costs, especially resulting from development of containerization for
ocean shipping.
  Reduction or elimination of capital controls
 Reduction, elimination, or harmonization of subsidies for local businesses
 Creation of subsidies for global corporations
 Harmonization of intellectual property laws across the majority of states, with more restrictions
 Supranational recognition of intellectual property restrictions (e.g. patents granted by China
would be recognized in the United States)

Cultural globalization, driven by communication technology and the worldwide marketing of Western cultural

industries, was understood at first as a process of homogenization, as the global domination of American

culture at the expense of traditional diversity. However, a contrasting trend soon became evident in the

emergence of movements protesting against globalization and giving new momentum to the defense of local

uniqueness, individuality, and identity.[142]

The Uruguay Round (1986 to 1994)[143] led to a treaty to create the WTO to mediate trade disputes and set

up a uniform platform of trading. Other bilateral and multilateral trade agreements, including sections of

Europe's Maastricht Treaty and the North American Free Trade Agreement (NAFTA) have also been signed

in pursuit of the goal of reducing tariffs and barriers to trade.

World exports rose from 8.5% in 1970, to 16.2% of total gross world product in 2001.[144]

In the 1990s, the growth of low cost communication networks allowed work done using a computer to be

moved to low wage locations for many job types. This included accounting, software development, and

engineering design.

In late 2000s, much of the industrialized world entered into a deep recession.[145] Some analysts say the

world is going through a period of deglobalization after years of increasing economic integration.[146]
[147]
China has recently become the world's largest exporter surpassing Germany.[148]

[edit]Measurement

Economic globalization can be measured in different ways. These center around the four main economic

flows that characterize globalization:

 Goods and services, e.g., exports plus imports as a proportion of national income or per capita

of population

 Labor/people, e.g., net migration rates; inward or outward migration flows, weighted by

population

 Capital, e.g., inward or outward direct investment as a proportion of national income or per

head of population
  Technology, e.g., international research & development flows; proportion of populations (and

rates of change thereof) using particular inventions (especially 'factor-neutral' technological advances

such as the telephone, motorcar, broadband)

As globalization is not only an economic phenomenon, a multivariate approach to measuring globalization is

the recent index calculated by the Swiss think tank KOF. The index measures the three main dimensions of

globalization: economic, social, and political. In addition to three indices measuring these dimensions, an

overall index of globalization and sub-indices referring to actual economic flows, economic restrictions, data

on personal contact, data on information flows, and data on cultural proximity is calculated. Data is available

on a yearly basis for 122 countries, as detailed in Dreher, Gaston and Martens (2008).[149] According to the

index, the world's most globalized country is Belgium, followed by Austria, Sweden, the United Kingdom and

the Netherlands. The least globalized countries according to the KOF-index are Haiti, Myanmar, the Central

African Republic and Burundi.[150]

A.T. Kearney and Foreign Policy Magazine jointly publish another Globalization Index. According to the

2006 index, Singapore, Ireland, Switzerland, the Netherlands, Canada and Denmark are the most

globalized, while Indonesia, India and Iran are the least globalized among countries listed.

[edit]International social fora

See also: European Social Forum, Asian Social Forum, and World Social Forum

The first World Social Forum in 2001 was an initiative of the administration of Porto Alegre, Brazil. The

slogan of the forum was "Another World Is Possible". It was here that the WSF's Charter of Principles was

adopted to provide a framework for the fora.

The WSF became a periodic meeting: in 2002 and 2003 it was held again in Porto Alegre and became a

rallying point for worldwide protest against the American invasion of Iraq. In 2004 it was moved

toMumbai, India, to make it more accessible to the populations of Asia and Africa. This last appointment saw

the participation of 75,000 delegates.

Regional fora took place following the example of the WSF, adopting its Charter of Principles. The

first European Social Forum was held in November 2002 in Florence. The slogan was "Against the war,

against racism and against neo-liberalism". It saw the participation of 60,000 delegates and ended with a

huge demonstration against the war of 1,000,000 people according to the organizers. The other two ESFs

took place in Paris and London, in 2003 and 2004 respectively.

Recently there has been some discussion behind the movement about the role of the social forums. Some

see them as a "popular university", an occasion to make many people aware of the problems of

globalization. Others would prefer that delegates concentrate their efforts on the coordination and

organization of the movement and on the planning of new campaigns. However it has often been argued
that in the dominated countries (most of the world) the WSF is little more than an 'NGO fair' driven by

Northern NGOs and donors most of which are hostile to popular movements of the poor.
Globalization (or globalisation), although often described as the cause of much
turbulence and change, is in fact the umbrella term for the collective effect, the
change itself. Globalization (i.e. the aggregate change we observe in our factories,
storefronts, indeed generally across our economies and lifestyles) is caused by four
fundamental forms of capital movement throughout the global economy. The four
important capital flows are:

• Human Capital (i.e. Immigration, Migration, Emigration, Deportation, etc.)

• Financial Capital (i.e. Aid, Equity, Debt, Credit & Lending, etc.)
• Resource Capital (i.e. Energy, Metals, Minerals, Lumber, etc.)
• Power Capital (i.e. Security Forces, Alliances, Armed Forces, etc.)

Most of the stresses and complexities confronted in the general macro affairs of
countries, communities, and the interactions between them, can be traced to these
four flows. Connectivity available via cheaper telecommunications and modes of
travel-- made more accessible to more people, facilitates these interactions at a rate
unprecedented in history. Cultural and political frictions at all levels can thus be
explained as arising from the difference in opinion between two or more parties
about the origination, treatment, timing, ownership or value of one or more of the
capital flows.

Meaning and debate:

The International Monetary Fund defines globalization as the growing
economic interdependence of countries worldwide through increasing volume
and variety of cross-border transactions in goods and services, free
international capital flows, and more rapid and widespread diffusion of
technology. Meanwhile, The International Forum on Globalization defines it
as the present worldwide drive toward a globalized economic system
dominated by supranational corporate trade and banking institutions that are
not accountable to democratic processes or national governments. While
notable critical theorists, such as Immanuel Wallerstein, emphasize that
globalization cannot be understood separately from the historical development
of the capitalist world-system the different definitions highlight the ensuing
debate of the roles and relationships of government, corporations, and the
individual in maximizing social welfare within the globalization paradigms.
Nonetheless, it is clear that globalization has economic, political, cultural, and
technological aspects that may be closely intertwined. Given that these aspects
are key to an individual's quality of life, the social benefits and costs brought
upon them by globalization generate strong debate.

The economic aspects stressed in globalization are trade, investment and migration.
The globalization of trade entails that human beings have greater access to an array
of goods and services never seen before in human history. From German cars, to
Colombian coffee, from Chinese clothing, to Egyptian cotton, from American music to
Indian software, human beings may be able to purchase a wide range of goods and
services. The globalization of investment takes place through Foreign Direct
Investment, where multinational companies directly invest assets in a foreign
country, or by indirect investment where individuals and institutions purchase and
sell financial assets of other countries. Free migration allows individuals to find
employment in jurisdictions where there are labor shortages.

Critics of free trade also contend that it may lead to the destruction of a country's
native industry, environment and/or a loss of jobs. Critics of international investment
contend that by accepting these financial schemes a country loses its economic
sovereignty and may be forced to set policies that are contrary to its citizen's
interests or desires. Moreover, multinational companies that invest in a country may
also acquire too much political and economic power in relation to its citizens. Finally,
migration may lead to the exploitation of workers from a migrant country and the
displacement of workers from a host country. Critics of globalization also contend
that different economic systems that either augment or supplant globalization may
maximize social welfare more efficiently and equitably.

The political aspects of globalization are evidenced when governments create

international rules and institutions to deal with issues such as trade, human rights,
and the environment. Among the new institutions and rules that have come to
fruition as a result of globalization are the World Trade Organization,
the Euro currency, the North American Free Trade Agreement, to name a few.
Whether a government is to consciously open itself to cross-border links, is the
central question of this aspect.

Social activist and non-profit organizations such as Amnesty

International and Greenpeace are also becoming more global in scope. Some of these
organizations take issue with the economic and political aspects of globalization as
they fear that economic interests either subvert the nation state in its ability to
protect its citizens from economic exploitation, or support governments that violate
the human rights of their citizens.

Cultural global ties also grow through globalization as news ideas and fashions
through trade, travel and media move around the globe at lightning speed. Global
brands such as Coca-Cola, Nike & Sony serve as common reference to consumers all
over the World. An individual in China enjoys the same soft drink as an individual
in Puerto Rico--at opposite ends of the globe. However, these ties may also cause
strains: for example Western Ideas of freedom of expression may clash
with Islamic views on Religious tolerance. And if not strains, critics contend this is
really an imposition of cultural imperialism in order to preserve economic interests.

The other aspect of globalization is the revolutionary change in technology,

particularly in transport and communication, which ostensibly creates a global
village. In 1850 it took nearly a year to sail around the World. Now you can fly around
the world in a day, send an email anywhere almost instantly, or be part of the 1.5
billion viewers watching the final match of the World Cup. Transportation costs have
come down as result of technological advances that make foreign markets more
accessible to trade. Tuna caught in the North Atlantic may be served the next day at
a Sushi restaurant in Japan. Finally, billions of dollars in assets and currencies are
exchanged daily around the globe by electronic means at virtually no cost.
Globalization spreads everything.

History:
Since the word has both technical and political meanings, different groups will
have differing histories of "globalization". In general use within the field of
economics and political economy, however, it is a history of increasing trade
between nations based on stable institutions that allow firms in different
nations to exchange goods and services with minimal friction.

The term "liberalization" came to mean the acceptance of the Neoclassical economic
model which is based on the unimpeded flow of goods and services between
economic jurisdictions. This led to specialization of nations in exports, and the
pressure to end protective tariffs and other barriers to trade. The period of the gold
standard and liberalization of the 19th century is often called "The First Era of
Globalization". Based on the Pax Britannica and the exchange of goods in currencies
pegged to specie, this era grew along with industrialization. The theoretical basis
was David Ricardo's work on Comparative advantage and Say's Law of General
equilibrium. In essence, it was argued that nations would trade effectively, and that
any temporary disruptions in supply or demand would correct themselves
automatically. The institution of the gold standard came in steps in major
industrialized nations between approximately 1850 and 1880, though exactly when
various nations were truly on the gold standard is contentiously debated.

Globalization in the era since World War II has been driven by trade negotiation
rounds, originally under the auspices of GATT, which led to a series of agreements to
remove restrictions on "free trade". The Uruguay round led to a treaty to create
the World Trade Organization or WTO, to mediate trade disputes. Other bi- and
trilateral trade agreements, including sections of Europe'sMaastricht Treaty and
the North American Free Trade Agreement have also been signed in pursuit of the
goal of reducing tariffs and barriers to trade.

Nature and existence of globalization:

There is much academic discussion about whether globalization is a real
phenomenon or only an analytical artifact (a myth). Although the term is
widespread, many authors argue that the characteristics attributed to
globalization have already been seen at other moments in history. Also, many
note that such features, including the increase in international trade and the
greater role ofmultinational corporations, are not as d Some authors prefer
the term internationalization rather than globalization. In
internationalization, the role of the state and the importance of nations are
greater, while globalization in its complete form eliminatesnation states. So,
they argue that the frontiers of countries, in a broad sense, are far from being
dissolved, and therefore this globalization process is not happening, and
probably will not happen, considering that in world history, internationalization
never turned into globalization (the European Union and NAFTA are yet to
prove their case).

Some maintain that globalization is an imagined geography; that is, a political tool of
ruling neo-liberalists, who are attempting to use certain images and discourses of
world politics to justify their political agendas. Writers of books such as No Logo claim
that by presenting a picture of a globalized world, the Bretton Woods institutions can
demand that countries open up their economies to liberalization under Structural
Adjustment Programmes that encourage governments to
fund privatization programmes, ahead ofwelfare and public services.

Characteristics:
Globalization / internationalisation has become identified with a number of
trends, most of which may have developed since World War II. These include
greater international movement of commodities, money, information, and
people; and the development of technology, organizations, legal systems, and
infrastructures to allow this movement. The actual existence of some of these
trends is debated.

• Economically
o Increase in international trade at a much faster rate than the growth in
the world economy
 o Increase in international flow of capital including foreign direct
investment
o Creation of international agreements leading to organizations like
the WTO and OPEC
o Development of global financial systems
o Increased role of international organizations such
as WTO, WIPO, IMF that deal with international transactions
o Increase of economic practices like outsourcing, by multinational
corporations
• Culturally
o Greater international cultural exchange,
o Spreading of multiculturalism, and better individual access to cultural
diversity, for example through the export
ofHollywood and Bollywood movies. However, the imported culture can
easily supplant the local culture, causing reduction in diversity
through hybridization or even assimilation. The most prominent form of
this is Westernization, butSinicization of cultures also takes place.
o Greater international travel and tourism
o Greater immigration, including illegal immigration
o Spread of local foods such as pizza, Chinese and Indian food/Pakistani
Food to other countries (often adapted to local taste)
o World-wide Fads and Pop Culture such as Pokemon, Sudoku, Numa
Numa, Origami, Idol series, YouTube,MySpace, and many others.
o Increasing usage of foriegn phrases. Example... "Amigo" and "Adios"
are Spanish terms many non-speaking spanish people in the US
understand, Most Americans understand some French, Spanish or
Japanese without actually knowing the language.
• Development of a global telecommunications infrastructure and greater
transborder data flow, using such technologies as
the Internet, communication satellites and telephones
• Increase in the number of standards applied globally; e.g. copyright
laws and patents
• Formation or development of a set of universal values
• The push by many advocates for an international criminal court and
international justice movements (see the International Criminal
Court and International Court of Justice respectively).
• It is often argued that even terrorism has undergone globalization, with
attacks in foreign countries that have no direct relation with the own country.

Barriers to international trade have been considerably lowered since World War II
through international agreements such as theGeneral Agreement on Tariffs and
Trade (GATT). Particular initiatives carried out as a result of GATT and the WTO, for
which GATT is the foundation, have included:

• Promotion of free trade

o Of goods:
 Reduction or elimination of tariffs; construction of free trade
zones with small or no tariffs
 Reduced transportation costs, especially from development
of containerization for ocean shipping.
o Of capital: reduction or elimination of capital controls
o Reduction, elimination, or harmonization of subsidies for local
businesses
 • Intellectual property restrictions
o Harmonization of intellectual property laws across nations (generally
speaking, with more restrictions)
o Supranational recognition of intellectual property restrictions
(e.g. patents granted by China would be recognized in the US)

Anti-globalization:
Critics of the economic aspects of globalization contend that it is not, as its proponents
tend to imply, an inexorable process that flows naturally from the economic needs of
everyone. The critics typically emphasize that globalization is a process that is
mediated according to elite imperatives, and typically raise the possibility of
alternative global institutions and policies, which they believe address the moral claims
of poor and working classes throughout the globe, as well as environmental concerns in
a more equitable way. In terms of the controversial global migration issue, disputes
revolve around both its causes, whether and to what extent it is voluntary or
involuntary, necessary or unnecessary Increase in international flow of capital
including foreign direct investment Critics of the economic aspects of globalization
contend that it is not, as its proponents tend to imply, an inexorable process that flows
naturally from the economic needs of everyone. The critics typically emphasize that
globalization is a process that is mediated according to elite imperatives, and typically
raise the possibility of alternative global institutions and policies, which they believe
address the moral claims of poor and working classes throughout the globe, as well as
environmental concerns in a more equitable way. In terms of the controversial global
migration issue, disputes revolve around both its causes, whether and to what extent it
is voluntary or involuntary, necessary or unnecessary; and its effects, whether
beneficial, or socially and environmentally costly. Proponents tend to see migration
simply as a process whereby white and blue collar workers may go from one country to
another to provide their services, while critics tend to emphasize negative causes such
as economic, political, and environmental insecurity, and cite as one notable effect, the
link between migration and the enormous growth of urban slums in developing
countries. According to"The Challenge of Slums," a 2003 UN-Habitat report, "the
cyclical nature of capitalism, increased demand for skilled versus unskilled labour, and
the negative effects of globalisation "in particular, global economic booms and busts
that ratchet up inequality and distribute new wealth unevenly" contribute to the
enormous growth of slums.

Various aspects of globalization are seen as harmful by public-interest activists as

well as strong state nationalists. This movement has no unified name. "Anti-
globalization" is the media's preferred term; it can lead to some confusion, as
activists typically oppose certain aspects or forms of globalization, not globalization
per se. Activists themselves, for example Noam Chomsky, have said that this name is
meaningless as the aim of the movement is to globalize justice. Indeed, the global
justice movement is a common name. Many activists also unite under the slogan
"another world is possible", which has given rise to names such asaltermondialisme
in French.

Economic arguments by fair trade theorists claim that unrestricted free

trade benefits those with more financial leverage (i.e. the rich) at the expense of the
poor. Many "anti-globalization" activists see globalization as the promotion of
a corporatist agenda, which is intent on constricting the freedoms of individuals in
the name of profit. Some "anti-globalization" groups argue that globalization is
necessarily imperialistic, is one of the driving reasons behind the Iraq war and is
forcing savings to flow into the United States rather than developing nations; it can
therefore be said that "globalization" is another term for a form of Americanization,
as it is believed by some observers that the United States could be one of the few
countries (if not the only one) to truly profit from globalization.

Some argue that globalization imposes credit-based economics, resulting in

unsustainable growth of debt and debt crises. The financial crises in Southeast Asia,
that began in the relatively small, debt-ridden economy of Thailand but quickly
spread toMalaysia, Indonesia, South Korea and eventually was felt all around the
world, demonstrated the new risks and volatility in rapidly changing globalized
markets. The IMF's subsequent 'bailout' money came with conditions of political
change (i.e. government spending limits) attached and came to be viewed by critics
as undermining national sovereignty in neo-colonialist fashion. Anti-Globalization
activists pointed to the meltdowns as proof of the high human cost of the
indiscriminate global economy.

The main opposition is to unfettered globalization (neoliberal; laissez-faire

capitalism), guided by governments and what are claimed to be quasi-governments
(such as the International Monetary Fund and the World Bank) that are supposedly
not held responsible to the populations that they govern and instead respond mostly
to the interests of corporations. Many conferences between trade and finance
ministers of the core globalizing nations have been met with large, and occasionally
violent, protests from opponents of "corporate globalism".

Some "anti-globalization" activists object to the fact that the current "globalization"
globalizes money and corporations, but not people and unions. This can be seen in
the strict immigration controls in nearly all countries, and the lack of labour rights in
many countries in the developing world.

Another more conservative camp opposed to globalization is state-

centric nationalists who fear globalization is displacing the role of nations in global
politics and point to NGOs as encroaching upon the power of individual nations. Some
advocates of this warrant for anti-globalization are Pat Buchanan and Jean-Marie Le
Pen.

The movement is very broad, including church groups, national liberation

factions, left-wing parties, environmentalists, peasantunionists, anti-racism groups, a
narchists, those in support of relocalization and others. Most are reformist, (arguing
for a more humane form of capitalism) while others are more revolutionary (arguing
for a more humane system than capitalism). Many have decried the lack of unity and
direction in the movement, but some such as Noam Chomsky have claimed that this
lack of centralization may in fact be a strength.

Protests by the global justice movement have forced high-level international

meetings away from the major cities where they used to be held, into remote
locations where protest is impractical.

Pro-globalization (globalism):
Supporters of democratic globalization can be labelled pro-globalists. They
consider that the first phase of globalization, which was market-oriented,
should be completed by a phase of building global political institutions
representing the will of world citizens. The difference with other globalists is
that they do not define in advance any ideology to orient this will, which should
be left to the free choice of those citizens via a democratic process.
Supporters of free trade point out that economic theories of comparative
advantage suggest that free trade leads to a more efficient allocation of resources,
with all countries involved in the trade benefiting. In general, this leads to lower
prices, more employment and higher output.

Libertarians and other proponents of laissez-faire capitalism say higher degrees of

political and economic freedom in the form ofdemocracy and capitalism in the
developed world are both ends in themselves and also produce higher levels of
material wealth. They see globalization as the beneficial spread of liberty and
capitalism.

Critics argue that the anti-globalization movement uses anecdotal evidence to

support their view and that worldwide statistics instead strongly support
globalization:

• the percentage of people in developing countries living below US$1 (adjusted

for inflation and purchasing power) per day has halved in only twenty years,
although some critics argue that more detailed variables measuring poverty
should instead be studied.

• Life expectancy has almost doubled in the developing world since WWII and is
starting to close the gap to the developed world where the improvement has
been smaller. Child mortality has decreased in every developing region of the
world.Income inequality for the world as a whole is diminishing.

• Democracy has increased dramatically from almost no nation with universal

suffrage in 1900 to 62.5% of all nations in 2000.

• The proportion of the world's population living in countries where per-capita

food supplies are less than 2,200 calories (9,200kilojoules) per day decreased
from 56% in the mid-1960s to below 10% by the 1990s.

• Between 1950 and 1999, global literacy increased from 52% to 81% of the
world. Women made up much of the gap: Female literacy as a percentage of
male literacy has increased from 59% in 1970 to 80% in 2000.

• The percentage of children in the labor force has fallen from 24% in 1960 to
10% in 2000.

• There are similar trends for electric power, cars, radios, and telephones per
capita, as well as the proportion of the population with access to clean water.

However, some of these improvements may not be due to globalization, or may be

possible without the current form of globalization or its negative consequences, to
which the global justice movement objects.

Some pro-capitalists are also critical of the World Bank and the IMF, arguing that they
are corrupt bureaucracies controlled and financed by states, not corporations. Many
loans have been given to dictators who never carried out promised reforms, instead
leaving the common people to pay the debts later. They thus see too little capitalism,
not too much. They also note that some of the resistance to globalization comes from
special interest groups with conflicting interests, like Western world unions. However,
there are also many anti-capitalist who are against the World Bank and the IMF
because they believe they are too capitalist and only in interests for profit.

Others, such as Senator Douglas Roche, O.C., simply view globalization as inevitable
and advocate creating institutions such as adirectly-elected United Nations
Parliamentary Assembly to exercise oversight over unelected international bodies.

Other uses:
"Globalization" can mean:

• Globalism, if the concept is reduced to its economic aspects, can be said to

contrast with economic nationalism andprotectionism. It is related to laissez-
faire capitalism and neoliberalism.
• It shares a number of characteristics with internationalization and is often
used interchangeably, although some prefer to use globalization to emphasize
the erosion of the nation-state or national boundaries.
• Making connections between places on a global scale. Today, more and more
places around the world are connected to each other in ways that were
previously unimaginable. In geography, this process is known as complex
connectivity, where more and more places are being connected in more and
more ways. Arjun Appadurai identified five types of global connectivity:
o Ethnoscapes: movements of people, including tourists, immigrants,
refugees, and business travellers.
o Financescapes: global flows of money, often driven by interconnected
currency markets, stock exchanges, and commodity markets.
o Ideoscapes: the global spread of ideas and political ideologies. For
example, Green Peace has become a worldwide environmental
movement.
o Mediascapes: the global distribution of media images that appear on
our computer screens, in newspapers, television, and radio.
o Technoscapes: the movement of technologies around the globe. For
example, the Green Revolution in rice cultivation introduced western
farming practices into many developing countries.

Although Appadurai's taxonomy is highly contestable, it does serve to show

that globalization is much more than economics on a global scale.

• In its cultural form, globalization has been a label used to identify attempts to
erode the national cultures of Europe, and subsume them into a global culture
whose members will be much easier to manipulate through mass media and
controlled governments. In this context, massive legal or
illegal immigration has been allowed, mainly in European countries.
• The formation of a global village closer contact between different parts of the
world, with increasing possibilities of personal exchange, mutual
understanding and friendship between "world citizens", and creation of
a global civilization.
• Economic globalization there are four aspects to economic globalization,
referring to four different flows across boundaries, namely flows of
goods/services, i.e. 'free trade' (or at least freer trade), flows of people
(migration), of capital, and of technology. A consequence of economic
globalization is increasing relations among members of an industry in different
parts of the world (globalization of an industry), with a corresponding erosion
of national sovereignty in the economic sphere. The IMF defines globalization
 as the growing economic interdependence of countries worldwide through
increasing volume and variety of cross-border transactions in goods and
services, freer international capital flows, and more rapid and widespread
diffusion of technology (IMF, World Economic Outlook, May, 1997). The World
Bank defines globalization as the "Freedom and ability of individuals and firms
to initiate voluntary economic transactions with residents of other countries".
• In the field of management, globalization is a marketing or strategy term that
refers to the emergence of international markets for consumer goods
characterized by similar customer needs and tastes enabling, for example,
selling the same cars or soaps or foods with similar ad campaigns to people in
different cultures. This usage is contrasted with internationalization which
describes the activities of multinational companies dealing across borders in
either financial instruments, commodities, or products that are extensively
tailored to local markets. Globalization also means cross-border management
activities or development processes to adapt to the emergence of a globalized
market or to seek and realize benefit from economies of scale or scope or
from cross-border learning among different country-based organizations.
• In the field of software, globalization is a technical term that combines the
development processes of internationalization andlocalization.
• Many, such as participants in the World Social Forum, use the term "corporate
globalization" or "global corporatization" to highlight the impact
of multinational corporations and the use of legal and financial means to
circumvent local laws and standards, in order to leverage the labor and
services of unequally-developed regions against each other.
• The spread of capitalism from developed to developing nations.
• "The concept of globalisation refers both to the compression of the world and
the intensification of consciousness of the world as a whole" - Benedikt
Kiesenhofer

Measurement of globalization:
To what extent a nation-state or culture is globalized in a particular year has
until most recently been measured employing simple proxies like flows of trade,
migration, or foreign direct investment. A more sophisticated approach to
measuring globalization is the recent index calculated by the Swiss think tank
KOF. The index measures the three main dimensions of globalization:
economic, social, and political. In addition to three indices measuring these
dimensions, an overall index of globalization and sub-indices referring to actual
economic flows, economic restrictions, data on personal contact, data on
information flows, and data on cultural proximity is calculated. Data are
available on a yearly basis for 122 countries. According to the index, the world's
most globalized country is the USA, followed by Sweden, Canada, the United
Kingdom, and Luxembourg. The least globalized countries according to the
KOF-index are Togo, Chad and the Central African Republic.

Global Falsehoods: How the World Bank and the UNDP Distort the Figures on Global
Poverty:

According to Professor Michel Chossudovsky ,until the 1998 financial meltdown

("black September" 1998), the World economy was said to be booming under the
impetus of the "free market" reforms. Without debate or discussion, so-called "sound
macro-economic policies" (meaning the gamut of budgetary austerity, deregulation,
downsizing and privatisation) continue to be heralded as the key to economic
success and poverty alleviation. In turn, both the World Bank and the United Nations
Development Programme (UNDP) have asserted authoritatively that economic
growth in the late 20th Century has contributed to a reduction in the levels of World
poverty. According to the UNDP, "the progress in reducing poverty over the 20th
century is remarkable and unprecedented... The key indicators of human
development have advanced strongly."

The Devastating Impacts of Macro-economic Reform are casually denied:

The increasing levels of global poverty resulting from macro-economic reform are
casually denied by G7 governments and international institutions (including the
World Bank and the IMF); social realities are concealed, official statistics are
manipulated, economic concepts are turned upside down.

The World Bank framework deliberately departs from all established concepts and
procedures (eg. by the US Bureau of Census or the United Nations) for measuring
poverty. It consists in arbitrarily setting a "poverty threshold" at one dollar a day per
capita. It then proceeds (without even measuring) to deciding that population groups
with a per capita income "above one dollar a day" are "non-poor".

The World Bank "methodology" conveniently reduces recorded poverty without the
need for collecting country-level data. This "subjective" and biased assessment is
carried out irrespective of actual conditions at the country level. The one dollar a day
procedure is absurd: the evidence amply confirms that population groups with per
capita incomes of 2, 3 or even 5 dollars a day remain poverty stricken (ie. unable to
meet basic expenditures of food, clothing, shelter, health and education).

Authoritative" World Bank Numbers:

These authoritative World Bank numbers are those which everybody quotes, --ie. 1.3
billion people below the poverty line. But nobody seems to have bothered to examine
how the World Bank arrives at these figures.

The data is then tabulated in glossy tables with "forecasts" of declining levels of
global poverty into the 21st Century. These World Bank "forecasts" of poverty are
based on an assumed rate of growth of per capita income, --ie. growth of the latter
implies pari passu a corresponding lowering of the levels of poverty. Its a numerical
game!

The UNDP Framework:

While the UNDP Human Development Group has in previous years provided the
international community with a critical assessment of key issues of global
development, the 1997 Human Development Report devoted to the eradication of
poverty broadly conveys a similar viewpoint to that heralded by the Bretton Woods
institutions. The UNDP's "human poverty index" (HPI) is based on "the most basic
dimensions of deprivation: a short life span, lack of basic education and lack of
access to public and private resources".

Based on the above criteria, the UNDP Human Development Group comes up with
estimates of human poverty which are totally inconsistent with country-level realties.
The HPI for Colombia, Mexico or Thailand, for instance, is of order of 10-11 percent
(see Table 1). The UNDP measurements point to "achievements" in poverty reduction
in Sub-Saharan Africa, the Middle East and India which are totally at odds with
country-level data.

The human poverty estimates put forth by the UNDP portray an even more distorted
and misleading pattern than those of the World Bank). For instance, only 10.9
percent of Mexico's population are categorised by the UNDP as "poor". Yet this
estimate contradicts the situation observed in Mexico since the mid-1980s: collapse
in social services, impoverishment of small farmers and the massive decline in real
earnings triggered by successive currency devaluations. A recent OECD study
confirms unequivocally the mounting tide of poverty in Mexico since the signing of
the North American Free Trade Agreement (NAFTA).

Double Standards in the "Scientific" Measurement of Poverty:

"Double standards" prevail in the measurement of poverty: the World Bank's one
dollar a day criterion applies only to the "developing countries". Both the Bank and
the UNDP fail to acknowledge the existence of poverty in Western Europe and North
America. Moreover, the one dollar a day criterion is in overt contradiction with
established methodologies used by Western governments and intergovernmental
organisations to define and measure poverty in the "developed countries".

In the West, the methods for measuring poverty have been based on minimum levels
of household spending required to meet essential expenditures on food, clothing,
shelter, health and education. In the United States, for instance, the Social Security
Administration (SSA) in the 1960s had set a "poverty threshold " which consisted of
"the cost of a minimum adequate diet multiplied by three to allow for other
expenses". This measurement was based on a broad consensus within the US
Administration.

Conversely, if the US Bureau of Census methodology (based on the cost of meeting a

minimum diet) were applied to the developing countries, the overwhelming majority
of the population would be categorised as "poor". While this exercise of using
"Western standards" and definitions has not been applied in a systematic fashion, it
should be noted that with the deregulation of commodity markets, retail prices of
essential consumer goods are not appreciably lower than in the US or Western
Europe. The cost of living in many Third World cities is higher than in the United
States.

Moreover, household budget surveys for several Latin American countries suggest
that at least sixty percent of the population the region does not meet minimum
calorie and protein requirements. In Peru, for instance, following the 1990 IMF
sponsored "Fujishock", 83 percent of the Peruvian population according to household
census data were unable to meet minimum daily calorie and protein requirements.
The prevailing situation in Sub-Saharan Africa and South Asia is more serious where a
majority of the population suffer from chronic undernourishment.

The investigation on poverty by both organizations take official statistics at face

value. It is largely an "office based exercise" conducted in Washington and New York
with few insights or awareness of "what is happening in the field". The 1997 UNDP
Report points to a decline of one third to a half in child mortality in selected countries
of Sub-Saharan despite the slide in State expenditures and income levels. What it
fails to mention, however, is that the closing down of health clinics and the massive
lay-offs of health professionals (often replaced by semi-illiterate health volunteers)
responsible for compiling mortality data has resulted in a de facto decline in recorded
mortality. The IMF-World Bank sponsored macro-economic reforms have also led to a
collapse in the process of data collection.

Table 1
THE UNDP'S HUMAN POVERTY INDEX

Selected Developing Countries Country Poverty Level

 (percent of the population below the poverty line)
Trinidad and Tobago 4.1
Mexico 10.9
Thailand 11.7
Colombia 10.7
Philippines 17.7
Jordan 10.9
Nicaragua 27.2
Jamaica 12.1
Iraq 30.7
Rwanda 37.9
Papua New Guinea 32.0
Nigeria 41.6
Zimbabwe 17.3

Source: Human Development Report 1997, table 1.1, p. 21

Table 2
POVERTY IN SELECTED G7 COUNTRIES, BY NATIONAL STANDARDS

Countries Country Poverty Level

(percent of the population below the poverty line)
United States (1996)* 13.7
Canada (1995)** 17.8
United Kingdom (1993)*** 20.0
Italy (1993)*** 17.0
Germany (1993)*** 13.0
France (1993)*** 17.0

Source:
*US Bureau of Census,

** Centre for International Statistics, Canadian Council on Social Development

***European Information Service.

Beyond globalism and antiglobalism:

This essay has aimed to refute many of the arguments put forward by the anti-
globalization movement and has tried to show that globalism is not a reactionary plot
by powerful sharks but the revolutionary activity of many small fish, navigating the
oceans and freely communicating with each other.

The arguments of the anti-globalization movement lead us back into the crushing
embrace of Big Brother the nation state, which has never been the defender of the
local community and the protector of the individual person.

The "think globally act locally" message has been turned upside down by the anti-
globalizers who act globally (from Seattle to Prague, from Gothenburg to Genova)
while thinking along very narrow and short-term lines. The main focus should not be
on the MacDonaldÕs outlets of this world but on the MacArthur (the generals) and the
McCarthy (the politicians); otherwise they will always prevail with their nefarious
interventions even after hamburgers and fast food have gone out of fashion.
Globalism is, for many people, the only way to escape political oppression, economic
poverty, cultural alienation. However, even this grand vision of emancipation and
progress connected to globalism does not represent the core of the matter, being still
full of limitations and distortions linked to a discourse based on globalism versus
antiglobalism.

The real issue is not globalization vs. anti-globalization but liberation vs. subjection,
especially with reference to the nation state with its protected cohort of monopolistic
producers and parasitic consumers (the bureaucracy, the army, etc.).What is at stake
is not globalism or localism but freedom and nothing else than freedom.

We do not need to pile up data or write long treatises to show that freedom is a
human value and servitude is not, that the earth belongs to humankind for the care
of present and future generations and is not the closed territorial racket of national
rulers and their corrupt or credulous appendages.

For this reason, whenever and wherever a debate on globalization takes place, after
listening carefully to the various positions and arguments put forward and having
worked out in our mind all the possible implications, we should sincerely ask
ourselves: where is freedom? who is really advocating freedom? how can we better
develop freedom?
According to the answers we should know where we stand.

Terrorism and Globalisation:

According to the E-journal. ISSN 1505-1161. October 2002 by Asta Maskaliunaite,
already from the 1970s terrorism has been considered one of the global problems,
and, actually, almost all the states of the world have experienced terrorist attacks in
the last three decades. Although the tactics resembling terrorism is traced as early as
the Jewish struggle against the Roman empire, it is the end of the 1960s that marks
the beginning of the contemporary terrorist activities, an era of what has been
called age of terrorism. Several events of that time influenced both the increasing
usage of terrorist tactics in attempt to influence the political agenda and the
appearance of the word terrorism in the everyday language, especially in the media.
These events: death of Che Guevara in 1967, which showed the shortcomings of
guerrilla warfare, the student uprisings of the 1968 having a similar influence on the
view of impact of such type of revolts and the Six Day War of June 1967 that gave an
impetus for an increasing use of the termterrorism by the Western media.

The debate about the impacts of the terrorist network on the development of
globalization is much more controversial. In this sphere two main conflicting ideas
can be distinguished: there are authors who claim that terrorism would slow down
globalization processes and there are ones who argue exactly the opposite that it
would speed up the processes of integration worldwide. The arguments for the
strengthening of globalization received even more credibility because of the events
that followed the September 11 attacks and the rhetoric that president Bush’s
administration adopted after them. Enhancing the free trade was one of the main
arguments of this rhetoric. In fact the processes of globalization seemed to advance
after these events as United States received a possibility to both assert its leadership
and transfer the blame over the world recession on the works of terrorists.

Such optimistic views, however, can hardly be sustained in the view of the current
events. While it is rather clear that the processes of economic globalization will not
halt, the form it takes is far from the one that has been dreamed of by the various
activists of global civil society organizations. Hence, it is very doubtful that the
terrorist attacks and the need to respond to the terrorist threat would greatly
enhance the creation and development of the global civil society

Conclusions:
Various debates about the mutual impact of terrorism and globalization show the
multifaceted relationship between the two phenomena. Summarizing briefly the
arguments exposed so far it could be said that globalization provides means for the
global terrorism by its technological advances; it also gives causes for such a
terrorism primarily by creating great discrepancies in the economic conditions in
various countries of the world. While analyzing the relationship between globalization
and causes of terrorism, it is also perceived as a resistance to the domination of the
United States in the world. The world itself, in words of Baudrillard, resists
domination. These arguments lead are connected with the idea that terrorism
became truly a global actor, which is confirmed by the fact that such organizations as
al Qaeda achieve truly global dimensions. It uses global networks and advances
causes that are deeply connected with the way the politics of the world function.

On the other hand, the analysts who promote the idea that because of the threat of
terrorism the process of globalization will be just advanced also have important
arguments. The process of globalization does not seem to have stopped and the form
of it is not much different from the one experienced before the September
11th attacks either. To the contrary, the assertion of hegemony by United States has
recently reached rather impressive dimensions. The world is gathered around the
United States in its fight against terrorism, which also means the affirmation of its
dominant position in the world.

However, contrary to the more optimistic views of the global civil society activists
and some social scientists, there is not much multilateralism and mutual cooperation
between the states and societies to be seen. In this sense, the process of
globalization was not advanced by the terrorist attacks and no sense of a need of
multilateral cooperation between the countries for countering the threat of terrorism
was created.

As a final point, it could be argued that terrorism has an effect on globalization, but
exactly a reverse one than intended, that instead of weakening the position of
hegemonic power, it actually reinforces it. Hence, again, it could be argued that we
are spinning in some kind of vicious circle where the shape of globalization, which we
witness, engenders terrorism and terrorism itself enforces exactly this kind of
globalization based on a hegemony of the United States.
 Globalization
The human society around the world, over a period of time, has established greater contact, but the pace has increased
rapidly since the mid 1980’s.The term globalization means international integration. It includes an array of social, political
and economic changes. Unimaginable progress in modes of communications, transportation and computer technology
have given the process a new lease of life.

The world is more interdependent now than ever before .Multinational companies manufacture products across many
countries and sell to consumers across the globe. Money, technology and raw materials have broken the International
barriers. Not only products and finances, but also ideas and cultures have breached the national boundaries.

Laws, economies and social movements have become international in nature and not only the Globalization of the
Economy but also the Globalization of Politics, Culture and Law is the order of the day. The formation of General
Agreement on Tariffs and Trade (GATT), International Monetary Fund and the concept of free trade has boosted
globalization.

Globalization in India
In early 1990s the Indian economy had witnessed dramatic policy changes. The idea behind the new economic model
known as Liberalization, Privatization and Globalization in India (LPG), was to make the Indian economy one of the fastest
growing economies in the world. An array of reforms was initiated with regard to industrial, trade and social sector to make
the economy more competitive. The economic
changes initiated have had a dramatic effect on
the overall growth of the economy. It also
heralded the integration of the Indian economy
into the global economy. The Indian economy was in major crisis in 1991 when foreign currency reserves went down to $1
billion and inflation was as high as 17%. Fiscal deficit was also high and NRI's were not interested in investing in India.
Then the following measures were taken to liberalize and globalize the economy.

Steps Taken to Globalize Indian Economy

Some of the steps taken to liberalize and globalize our economy were:

1. Devaluation: To solve the balance of payment problem Indian currency were devaluated by 18 to 19%.

2. Disinvestment: To make the LPG model smooth many of the public sectors were sold to the private sector.

3. Allowing Foreign Direct Investment (FDI): FDI was allowed in a wide range of sectors such as Insurance (26%),
defense industries (26%) etc.

4. NRI Scheme: The facilities which were available to foreign investors were also given to NRI's.

Merits and Demerits of Globalization

The Merits of Globalization are as follows:

• There is an International market for companies and for consumers there is a wider range of products to choose
from.
• Increase in flow of investments from developed countries to developing countries, which can be used for
economic reconstruction.
• Greater and faster flow of information between countries and greater cultural interaction has helped to
overcome cultural barriers.
• Technological development has resulted in reverse brain drain in developing countries.

The Demerits of Globalization are as follows:

• The outsourcing of jobs to developing countries has resulted in loss of jobs in developed countries.
• There is a greater threat of spread of communicable diseases.
• There is an underlying threat of multinational corporations with immense power ruling the globe.
• For smaller developing nations at the receiving end, it could indirectly lead to a subtle form of colonization.

Summary
India gained highly from the LPG model as its GDP increased to 9.7% in 2007-2008. In respect of market capitalization,
India ranks fourth in the world. But even after globalization, condition of agriculture has not improved. The share of
agriculture in the GDP is only 17%. The number of landless families has increased and farmers are still committing
suicide. But seeing the positive effects of globalization, it can be said that very soon India will overcome these hurdles too
and march strongly on its path of development.
Impact of Globalisation on Developing Countries and India
Impact of Globalisation on Developing Countries and India
by Chandrasekaran Balakrishnan

Chandrasekaran Balakrishnan for The 2004 Moffatt Prize in Economics

Introduction:
Globalisation is the new buzzword that has come to dominate the world since the nineties of the last
century with the end of the cold war and the break-up of the former Soviet Union and the global
trend towards the rolling ball. The frontiers of the state with increased reliance on the market
economy and renewed faith in the private capital and resources, a process of structural adjustment
spurred by the studies and influences of the World Bank and other International organisations have
started in many of the developing countries. Also Globalisation has brought in new opportunities to
developing countries. Greater access to developed country markets and technology transfer hold
out promise improved productivity and higher living standard. But globalisation has also thrown up
new challenges like growing inequality across and within nations, volatility in financial market and
environmental deteriorations. Another negative aspect of globalisation is that a great majority of
developing countries remain removed from the process. Till the nineties the process of globalisation
of the Indian economy was constrained by the barriers to trade and investment liberalisation of
trade, investment and financial flows initiated in the nineties has progressively lowered the barriers
to competition and hastened the pace of globalisation
Sponsored Links
Calculating GHG EmissionsLearn how to save 30% off your energy costs from the experts!schneider-
electric.com
FedEx IBL ChallengeDo you think you are a Business Champion? Then Enter FedEx IBL!
InternationalBusinessLeague.com
What is Sensex?You don’t need tuitions to learn. The First Step Kit teaches
enough.Sharekhan.Sharekhan-Firststep.com
Definition:
Globalised World - What does it mean?
Does it mean the fast movement of people which results in greater interaction?
Does it mean that because of IT revolution people can be in touch with each other in any part of the
world?
Does it mean trade and economy of each country is open in Non-Intrusive way so that all varieties
are available to consumer of his choice?
Does it mean that mankind has achieved emancipation to a level of where we can say it means a
social, economic and political globalisation?
Though the precise definition of globalisation is still unavailable a few definitions worth
viewing, Stephen Gill: defines globalisation as the reduction of transaction cost of transborder
movements of capital and goods thus of factors of production and goods.Guy Brainbant: says that
the process of globalisation not only includes opening up of world trade, development of advanced
means of communication, internationalisation of financial markets, growing importance of MNC's,
population migrations and more generally increased mobility of persons, goods, capital, data and
ideas but also infections, diseases and pollution
Impact on India:
India opened up the economy in the early nineties following a major crisis that led by a foreign exchange
crunch that dragged the economy close to defaulting on loans. The response was a slew of Domestic and
external sector policy measures partly prompted by the immediate needs and partly by the demand of the
multilateral organisations. The new policy regime radically pushed forward in favour of amore open and
market oriented economy.
Major measures initiated as a part of the liberalisation and globalisation strategy in the early nineties
included scrapping of the industrial licensing regime, reduction in the number of areas reserved for the
public sector, amendment of the monopolies and the restrictive trade practices act, start of the
privatisation programme, reduction in tariff rates and change over to market determined exchange rates.
Over the years there has been a steady liberalisation of the current account transactions, more and more
sectors opened up for foreign direct investments and portfolio investments facilitating entry of foreign
investors in telecom, roads, ports, airports, insurance and other major sectors.
The Indian tariff rates reduced sharply over the decade from a weighted average of 72.5% in
1991-92 to 24.6 in 1996-97.Though tariff rates went up slowly in the late nineties it touched 35.1% in
2001-02. India is committed to reduced tariff rates. Peak tariff rates are to be reduced to be reduced to the
minimum with a peak rate of 20%, in another 2 years most non-tariff barriers have been dismantled by
march 2002, including almost all quantitative restrictions.
India is Global:
The liberalisation of the domestic economy and the increasing integration of India with the global economy
have helped step up GDP growth rates, which picked up from 5.6% in 1990-91 to a peak level of 77.8% in
1996-97. Growth rates have slowed down since the country has still bee able to achieve 5-6% growth rate
in three of the last six years. Though growth rates has slumped to the lowest level 4.3% in 2002-03 mainly
because of the worst droughts in two decades the growth rates are expected to go up close to 70% in
2003-04. A Global comparison shows that India is now the fastest growing just after China.
This is major improvement given that India is growth rate in the 1970's was very low at 3% and GDP
growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India. Though
India's average annual growth rate almost doubled in the eighties to 5.9% it was still lower than the
growth rate in China, Korea and Indonesia. The pick up in GDP growth has helped improve India's global
position. Consequently India's position in the global economy has improved from the 8th position in 1991 to
4th place in 2001. When GDP is calculated on a purchasing power parity basis.
Globalisation and Poverty:
Globalisation in the form of increased integration though trade and investment is an important reason why
much progress has been made in reducing poverty and global inequality over recent decades. But it is not
the only reason for this often unrecognised progress, good national polices , sound institutions and
domestic political stability also matter.
Despite this progress, poverty remains one of the most serious international challenges we face up to 1.2
billion of the developing world 4.8 billion people still live in extreme poverty.
But the proportion of the world population living in poverty has been steadily declining and since 1980 the
absolute number of poor people has stopped rising and appears to have fallen in recent years despite
strong population growth in poor countries. If the proportion living in poverty had not fallen since 1987
alone a further 215million people would be living in extreme poverty today.
India has to concentrate on five important areas or things to follow to achieve this goal. The areas like
technological entrepreneurship, new business openings for small and medium enterprises, importance of
quality management, new prospects in rural areas and privatisation of financial institutions. The
manufacturing of technology and management of technology are two different significant areas in the
country.
There will be new prospects in rural India. The growth of Indian economy very much depends upon rural
participation in the global race. After implementing the new economic policy the role of villages got its own
significance because of its unique outlook and branding methods. For example food processing and
packaging are the one of the area where new entrepreneurs can enter into a big way. It may be organised
in a collective way with the help of co-operatives to meet the global demand.
Understanding the current status of globalisation is necessary for setting course for future. For all nations
to reap the full benefits of globalisation it is essential to create a level playing field. President Bush's
recent proposal to eliminate all tariffs on all manufactured goods by 2015 will do it. In fact it may
exacerbate the prevalent inequalities. According to this proposal, tariffs of 5% or less on all manufactured
goods will be eliminated by 2005 and higher than 5% will be lowered to 8%. Starting 2010 the 8% tariffs
will be lowered each year until they are eliminated by 2015.
GDP Growth rate:
The Indian economy is passing through a difficult phase caused by several unfavourable domestic and
external developments; Domestic output and Demand conditions were adversely affected by poor
performance in agriculture in the past two years. The global economy experienced an overall deceleration
and recorded an output growth of 2.4% during the past year growth in real GDP in 2001-02 was 5.4% as
per the Economic Survey in 2000-01. The performance in the first quarter of the financial year is5.8% and
second quarter is 6.1%.
Export and Import:
India's Export and Import in the year 2001-02 was to the extent of 32,572 and 38,362 million
respectively. Many Indian companies have started becoming respectable players in the International
scene. Agriculture exports account for about 13 to 18% of total annual of annual export of the country. In
2000-01 Agricultural products valued at more than US $ 6million were exported from the country 23% of
which was contributed by the marine products alone. Marine products in recent years have emerged as the
single largest contributor to the total agricultural export from the country accounting for over one fifth of
the total agricultural exports. Cereals (mostly basmati rice and non-basmati rice), oil seeds, tea and coffee
are the other prominent products each of which accounts fro nearly 5 to 10% of the countries total
agricultural exports.
Where does Indian stand in terms of Global Integration?
India clearly lags in globalisation. Number of countries have a clear lead among them China, large part of
east and far east Asia and eastern Europe. Lets look at a few indicators how much we lag.
•Over the past decade FDI flows into India have averaged around 0.5% of GDP against 5% for
China 5.5% for Brazil. Whereas FDI inflows into China now exceeds US $ 50 billion
annually. It is only US $ 4billion in the case of India
•Consider global trade - India's share of world merchandise exports increased from .05% to .
07% over the pat 20 years. Over the same period China's share has tripled to almost 4%.
•India's share of global trade is similar to that of the Philippines an economy 6 times smaller
according to IMF estimates. India under trades by 70-80% given its size, proximity to
markets and labour cost advantages.
•It is interesting to note the remark made last year by Mr. Bimal Jalan, Governor of RBI.
Despite all the talk, we are now where ever close being globalised in terms of any
commonly used indicator of globalisation. In fact we are one of the least globalised
 among the major countries - however we look at it.
•As Amartya Sen and many other have pointed out that India, as a geographical, politico-
cultural entity has been interacting with the outside world throughout history and still
continues to do so. It has to adapt, assimilate and contribute. This goes without saying
even as we move into what is called a globalised world which is distinguished from
previous eras from by faster travel and communication, greater trade linkages, denting
of political and economic sovereignty and greater acceptance of democracy as a way of
life.
Consequences:
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.
~
References:
1. Globalisation and Poverty: Centre for International Economics, Australia.
2. WIDER ANNUAL LECTURE 6: Winners and Losers over two centuries of Globalisation:Jeffery G.
Williamson.
3. Globalisation Trend and Issues - T.K.Velayudham, Page 3, 66.
4. Globalisation and India -Lecture : Prof .Sagar Jain, University of N.Carolina.
5. Repositioning India in the Globalised World - Lecture : V.N.Rai.
6. Globalisation and India's Business prospectives - Lecture - Ravi Kastia.
7. "Globalisation and Liberalisation" Prospects of New World Order - Dr.A.K.Ojha, Third Concept - An
International Journal of Ideas, Aug 2002.
8. The Indian and Global Business - Jan 2004, Page 30.
9. Globalisation: Imperatives, Challenges and the Strategies, Page 39.
Impact of Globalization on Developing Countries
(With Special Reference To India)
Krishn A Goyal
Department of Management
Birla Institute of Technology, International Center
Waljat Colleges of Applied Sciences, Muscat
P. Box-197, PC-124, Rusayl, Muscat, Oman
E-mail: kagoyala@gmail.com
Phone 00968 92373238
Abstract
The growing integration of economies and societies around the world – has been
one of the most hotly-debated topics in international economics over the past few years.
Rapid growth and poverty reduction in China, India, and other countries that were poor
20
years ago, has been a positive aspect of Liberalization Privatization and Globalization
(LPG). But Globalization has also generated significant international opposition over
concerns that it has increased inequality and environmental degradation. There is a need
to
study the impact of globalization on developing countries from the viewpoint of inward
foreign direct investment. Attention should also be focused on the role which some
developing countries, particularly from parts of Asia and Latin America, are playing as
initiators of globalization through their own MNCs.
India opened up the economy in the early nineties following a major crisis that led
by a foreign exchange crunch that dragged the economy close to defaulting on loans. The
response was a slew of Domestic and external sector policy measures partly prompted by
the immediate needs and partly by the demand of the multilateral organisations. The new
policy regime radically pushed forward in favour of a more open and market oriented
economy. This paper explores the contours of the on-going process of globalization
Liberalization and privatization. Throughout this paper, there is an underlying focus on
the
impact of LPG on Indian economy. It also comments on impact of LPG on Developing
countries.
Key Words: Multi National Companies, Liberalisation, Privatization.
Introduction
Globalization has many meanings depending on the context and on the person who is
talking about.
Though the precise definition of globalisation is still unavailable a few definitions are
worth viewing,
Guy Brainbant: says that the process of globalisation not only includes opening up of
world trade,
development of advanced means of communication, internationalisation of financial
markets, growing
importance of MNC’s, population migrations and more generally increased mobility of
persons, goods,
capital, data and ideas but also infections, diseases and pollution. The term globalization
refers to the
integration of economies of the world through uninhibited trade and financial flows, as
also through
mutual exchange of technology and knowledge. Ideally, it also contains free inter-country
movement
of labour. In context to India, this implies opening up the economy to foreign direct
investment by International Research Journal of Finance and Economics - Issue 5 (2006)
167
providing facilities to foreign companies to invest in different fields of economic activity
in India,
removing constraints and obstacles to the entry of MNCs in India, allowing Indian
companies to enter
into foreign collaborations and also encouraging them to set up joint ventures abroad;
carrying out
massive import liberalisation programs by switching over from quantitative restrictions to
tariffs and
import duties, therefore globalization has been identified with the policy reforms of 1991
in India.
The Important Reform Measures (Step Towards Globalization)
Indian economy was in deep crisis in July 1991, when foreign currency reserves had
plummeted to
almost $1 billion; Inflation had roared to an annual rate of 17 percent; fiscal deficit was
very high and
had become unsustainable; foreign investors and NRIs had lost confidence in Indian
Economy. Capital
was flying out of the country and we were close to defaulting on loans. Along with these
bottlenecks at
home, many unforeseeable changes swept the economies of nations in Western and
Eastern Europe,
South East Asia, Latin America and elsewhere, around the same time. These were the
economic
compulsions at home and abroad that called for a complete overhauling of our economic
policies and
programs. Major measures initiated as a part of the liberalisation and globalisation
strategy in the early
nineties included the following:
• Devaluation: The first step towards globalization was taken with the announcement of
the
devaluation of Indian currency by 18-19 percent against major currencies in the
international
foreign exchange market. In fact, this measure was taken in order to resolve the BOP
crisis
• Disinvestment-In order to make the process of globalization smooth, privatization and
liberalisation policies are moving along as well. Under the privatization scheme, most of
the
public sector undertakings have been/ are being sold to private sector
• Dismantling of The Industrial Licensing Regime At present, only six industries are
under
compulsory licensing mainly on accounting of environmental safety and strategic
considerations. A significantly amended locational policy in tune with the liberalized
licensing
policy is in place. No industrial approval is required from the government for locations
not
falling within 25 kms of the periphery of cities having a population of more than one
million.
• Allowing Foreign Direct Investment (FDI) across a wide spectrum of industries and
encouraging non-debt flows. The Department has put in place a liberal and transparent
foreign
investment regime where most activities are opened to foreign investment on automatic
route
without any limit on the extent of foreign ownership. Some of the recent initiatives taken
to
further liberalise the FDI regime, inter alias, include opening up of sectors such as
Insurance
(upto 26%); development of integrated townships (upto 100%); defence industry (upto
26%);
tea plantation (upto 100% subject to divestment of 26% within five years to FDI);
enhancement
of FDI limits in private sector banking, allowing FDI up to 100% under the automatic
route for
most manufacturing activities in SEZs; opening up B2B e-commerce; Internet Service
Providers (ISPs) without Gateways; electronic mail and voice mail to 100% foreign
investment
subject to 26% divestment condition; etc. The Department has also strengthened
investment
facilitation measures through Foreign Investment Implementation Authority (FIIA).
• Non Resident Indian Scheme the general policy and facilities for foreign direct
investment as
available to foreign investors/ Companies are fully applicable to NRIs as well. In
addition,
Government has extended some concessions specially for NRIs and overseas corporate
bodies
having more than 60% stake by NRIs
• Throwing Open Industries Reserved For The Public Sector to Private Participation.
Now
there are only three industries reserved for the public sector
• Abolition of the (MRTP) Act, which necessitated prior approval for capacity expansion
• The removal of quantitative restrictions on imports.
• The reduction of the peak customs tariff from over 300 per cent prior to the 30 per cent
rate
that applies now. 168 International Research Journal of Finance and Economics - Issue 5
(2006)
• Severe restrictions on short-term debt and allowing external commercial borrowings
based on
external debt sustainability.
• Wide-ranging financial sector reforms in the banking, capital markets, and insurance
sectors,
including the deregulation of interest rates, strong regulation and supervisory systems,
and the
introduction of foreign/private sector competition.
Impact of Globalization
The implications of globalization for a national economy are many. Globalization has
intensified
interdependence and competition between economies in the world market. These
economic reforms
have yielded the following significant benefits:
Globalization in India had a favorable impact on the overall growth rate of the
economy.This is
major improvement given that India’s growth rate in the 1970’s was very low at 3% and
GDP growth
in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India.
Though
India’s average annual growth rate almost doubled in the eighties to 5.9%, it was still
lower than the
growth rate in China, Korea and Indonesia. The pick up in GDP growth has helped
improve India’s
global position. Consequently India’s position in the global economy has improved from
the 8th
position in 1991 to 4th place in 2001; when GDP is calculated on a purchasing power
parity basis.
During 1991-92 the first year of Rao’s reforms program, The Indian economy grew by
0.9%only.
However the Gross Domestic Product (GDP) growth accelerated to 5.3 % in 1992-93,
and 6.2% 1993-
94. A growth rate of above 8% was an achievement by the Indian economy during the
year 2003-04.
India’s GDP growth rate can be seen from the following graph since independence
India - a growing economy
Structure of the Economy
Due to globalization not only the GDP has increased but also the direction of growth in
the sectors has
also been changed. Earlier the maximum part of the GDP in the economy was generated
from the
primary sector but now the service industry is devoting the maximum part of the GDP.
The services
sector remains the growth driver of the economy with a contribution of more than 57 per
cent of GDP.
India is ranked 18
th
among the world’s leading exporters of services with a share of 1.3 per cent in
world exports. The services sector is expected to benefit from the ongoing liberalization
of the foreign
investment regime into the sector. Software and the ITES-BPO sectors have recorded an
exponential
growth in recent years. Growth rate in the GDP from major sectors of the economy can
be seen from
the following Table. International Research Journal of Finance and Economics - Issue 5
(2006) 169
Table-1: Structure of the Economy (Percentage)
(% Of GDP) 1984-85 2002-3 2003-4 2004-5
Agriculture 35.2 26.5 21.7 20.5
Industry 26.1 22.1 21.6 21.9
Services 38.7 51.4 56.7 57.6
Source: Economic Survey 2000 &2005
Foreign Direct investment inflows
FDI increased from around US$100 million in 1990/91 to USD 5536 million in 2004-5.
The details of
the foreign investment inflow can be seen from the following table.
Table 2: Foreign Direct investment inflows (USD $ Million)
INVESTMENT 1990-91 2002-03 2003-04 2004-05 (P)
A.DIRECT INVESTMENT 97 5,035 4,673 5,536
I. Equity 2,764 2,387 3,363
a) Government (SIA/FIPB) 919 928 1,062
b) RBI 739 534 1,259
c) NRI - - -
d) Acquisition of shares * 916 735 930
e) Equity cap. of unincorporated bodies 190 190 112
II. Reinvested earnings 1,833 1,798 1,816
III. Other capital # 438 488 357
B. PORTFOLIO INVESTMENT 6 979 11,377 8,909
a) GDRs/ADRs 600 459 613
b) FIIs @ 377 10,918 8,280
c) Off-shore funds & others 6 2 - 16
C. TOTAL (A+B) 103 6,014 16,050 14,445
P: Provisional
*: Relates to acquisition of shares of Indian companies by non-residents under Section 6
of FEMA 1999.
#: Data pertain to inter-company debt transactions of FDI entities
2. Data on foreign investment presented in this table represent inflows into the country
and may not tally with data presented in
other tables. They may also differ from data relating to net investment in stock exchanges
by FIIs.
ta represent net inflow of funds by FIIs.
Source: Reserve Bank of India Annual Report for 2004-05
• The current account deficit has hovered at less than 1 per cent of GDP in recent years.
• The strength of the external sector was reflected in a sizeable accumulation of India's
foreign
exchange reserves comprising foreign currency assets, gold, SDRs and the reserve
position with the
IMF which touched US $ 141.5 billion as on March 31, 2005. These were about then
US$1 billion
during the 1990–91 balance of payments crises.
• The composition of debt is also favorable. Short-term debt amounts to 3.5 per cent of
external debt
and concessional debt amounts to 36.5 per cent of total debt.
• The external debt burden looks sustainable according to a range of measures of
indebtedness. Both
debt service payments as a proportion of current receipts, and the external debt-to-GDP
ratio have
been falling steadily during the 1990s, and currently stand at around 17 per cent and 22
per cent,
respectively.
Foreign Trade (Export- Import)
India’s imports in 2004-05 stood at US$ 107 billion recording an increase of 35.62
percent compared
with US$ 79 billion in the previous fiscal. Export also increased by 24 percent as
compared to previous
year. It stood at US $ 79 billion in 2004-05 compared with US $ 63 billion in the
previous year. Oil
imports zoomed by 19 percent with the import bill being US $ 29.08 billion against USD
20.59 billion 170 International Research Journal of Finance and Economics - Issue 5
(2006)
in the corresponding period last year. Non-oil imports during 2004-05 are estimated at
USD 77.036
billion, which is 33.62 percent higher than previous year's imports of US $ 57.651 billion
in 2003-04.
Table-3:Foreign Trade (US $ Million)
Trade 1990-91 2002-3 2003-4 2004-5
Total Exports 18477 52719 63843 79247
Total imports 27915 61412 79149 107066
Trade Balance -9438 -8693 -14307 -27819
Source – Reserve Bank of India Annual Report 2004-05
Thus we find that the economic reforms in the Indian economy initiated since July 1991
have
led to fiscal consolidation, control of inflation to some extent, increase in foreign
exchange reserve
and greater foreign investment and technology towards India. This has helped the Indian
economy to
grow at a faster rate. Presently more than 100 of the 500 fortune companies have a
presence in India as
compared to 33 in China.
A Comparison with Other Developing Countries
• Consider global trade – India’s share of world merchandise exports increased from .
05% to .07%
over the past 20 years. Over the same period China’s share has tripled to almost 4%.
• India’s share of global trade is similar to that of the Philippines an economy 6 times
smaller
according to IMF estimates.
• Over the past decade FDI flows into India have averaged around 0.5% of GDP against
5% for
China and 5.5% for Brazil. FDI inflows to China now exceed US $ 50 billion annually. It
is only
US $ 4billion in the case of India.
Indian Economy: Future Challenges
• Sustaining the growth momentum and achieving an annual average growth of 9-10 % in
the next
five years.
• Simplifying procedures and relaxing entry barriers for business activities and Providing
investor
friendly laws and tax system.
• Checking the growth of population; India is the second highest populated country in the
world after
China. However in terms of density India exceeds China as India's land area is almost
half of
China's total land. Due to a high population growth, GNI per capita remains very poor. It
was only
$ 2880 in 2003 (World Bank figures).
• Boosting agricultural growth through diversification and development of agro
processing.
• Expanding industry fast, by at least 10% per year to integrate not only the surplus
labour in
agriculture but also the unprecedented number of women and teenagers joining the labour
force
every year.
• Developing world-class infrastructure for sustaining growth in all the sectors of the
economy
• Allowing foreign investment in more areas.
• Effecting fiscal consolidation and eliminating the revenue deficit through revenue
enhancement and
expenditure management.
• Some regard globalization as the spread of western culture and influence at the expense
of local
culture. Protecting domestic culture is also a challenge.
• Global corporations are responsible for global warming, the depletion of natural
resources, and the
production of harmful chemicals and the destruction of organic agriculture.
• The government should reduce its budget deficit through proper pricing mechanisms
and better
direction of subsidies. It should develop infrastructure with what Finance Minister P
Chidambaram International Research Journal of Finance and Economics - Issue 5 (2006)
171
of India called “ruthless efficiency” and reduce bureaucracy by streamlining government
procedures to make them more transparent and effective.
• Empowering the population through universal education and health care, India must
maximize the
benefits of its youthful demographics and turn itself into the knowledge hub of the world
through
the application of information and communications technology (ICT) in all aspects of
Indian life
although, the government is committed to furthering economic reforms and developing
basic
infrastructure to improve lives of the rural poor and boost economic performance.
Government had
reduced its controls on foreign trade and investment in some areas and has indicated more
liberalization in civil aviation, telecom and insurance sector in the future.
Conclusion
The lesson of recent experience is that a country must carefully choose a combination of
policies that
best enables it to take the opportunity - while avoiding the pitfalls. For over a century the
United
States has been the largest economy in the world but major developments have taken
place in the world
economy since then, leading to the shift of focus from the US and the rich countries of
Europe to the
two Asian giants- India and China. Economics experts and various studies conducted
across the globe
envisage India and China to rule the world in the 21st century. India, which is now the
fourth largest
economy in terms of purchasing power parity, may overtake Japan and become third
major economic
power within 10 years.
References
[1] Goyal K A. & P.K.Khicha, “Globalization of Business: Future Challenges”, Third
concept, An
International Journal of Ideas.
[2] Ojha. A.K. , Globalization & Liberalization – prospects of new world order, Third
concept- An
International Journal of Ideas, August-2002.
[3] Government of India, Planning Commission, 1992. Eighth Five Year Plan, 1992-97
New Delhi.
And Tenth Five Year plan 2002-07
[4] Jalan, Bimal 1996. India’s Economic Policy: Preparing for the Twenty-First Century.
Penguin
Books, New Delhi
[5] Michael Porter. 2001. Competitive advantage of Nation
[6] Diana Farrell, December 2004, Beyond Off shoring: Assess Your Company’s global
potential,
Harvard Business Review, December-2004
[7] Bartlett, Christopher A and Samantha Ghoshal, “Going Global-Lessons from late
Movers”,
Harward business Review, March- April 2000
[8] Child, john and David K. Tse, China’s Transition and its Implications for
International
Business”, Journal of International Business studies, Volume 32 Number 2001
[9] United Nations- UNCTAD, World Investment report
[10] World Bank, World Bank Indicators
[11] Indian Government, Economic survey, 2002-03-04-05
[12] Reserve Bank of India Annual Report-2004-05
[13] The India Economic Summit Report – 2005