Chapter-1: Trends in Commercial Policy With Reference To Globalization

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION
CHAPTER- 1
1.1 Introduction
A new social and economic order is fast emerging and seems to be engulfing the entire planet. It is characterized by strong global demographic, environmental, economic, political, cultural, scientific and technological (S&T) trends and interdependencies. Together, these trends constitute what has come to be popularly known as the phenomenon (or process) of globalization--as opposed to the counter-trend of localization which emphasizes heterogeneous development and cultural exclusiveness. The most pervasive aspects of globalization include the global economy, a global science and technology system, and a global culture. These will be briefly discussed in this essay using the theoretical frameworks provided by the modernization theory and the world system theory. Implications of these aspects of globalization for developing countries, particularly Cuba, will be highlighted. There are several reasons for highlighting the case of Cuba in this study. Much of the western discourse on Cuba is ideological, focusing basically on the politics of communism in Cuba, Cuban-American, and Cuban-Soviet relations. American media coverage on Cuba has been greatly influenced by the Cuban exiles in Miami and the anti-Communist, anti-Castro policies of the American government currently led by political figures like Senators Jesse Helms and Dan Burton, powerful figures in the Senate Foreign Relations Committee. The following comments by a Cuban exile reflect the image of Cuba commonly held by an average American: The events of Cuban history have continued through a path of poor policy-making and a divided people. Cubans have never united and agreed on anything. In the United States, we all value our right to freedom. That is what makes the United States strong and powerful. Cuba has succumbed to bad leadership because of its inability to set a vision for the country. What is generally ignored is the fact that Cuba is a dynamic not a static or closed society. It is highly organized but not a totalitarian police state. Whether one likes Cuba or not, it has had one of the most visionary and longest lasting leadership anywhere in the world. Cuba has been transforming its economy and society with a unique blend of freedoms and controls in the context of what may be described as perpetual revolution to overcome many odds, raise the standard of living of its people, and become fully integrated into the new global social and economic order. This study is an attempt to understand, and possibly forecast, some major implications of globalization for the developing countries in the twenty-first century using Cubas dramatic social and economic transformation from a relatively closed to an open society in recent years, as a case in point. As discussed in greater detail later in this study, Cubas entry into the global society and economy has followed a different and tortuous path than most other developing countries because of its history during the past one hundred years.
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1.2 The Global Economy

The global economy is characterized by interconnected systems of resourcing, innovating, manufacturing, and marketing on a worldwide basis. Multinational corporations (MNCs), backed by their respective governments, and international financial organizations such as the World Bank, the International Monetary Fund (IMF), the World Trade Organization (WTO), the International Finance Corporation (IFC), and the Asian Development Bank are the key agents of global economy. An increasing number of small- and medium-sized enterprises are also getting indirectly involved in global business operations, and consequently, in the global economy, as partners of giant corporations. Currently, the global economy is strongly influenced by the industrialized countries where the MNCs and the international financial organizations are headquartered. This has sometimes produced negative consequences for less influential nations. But as the global economy expands, all nations big and small are beginning to play an increasingly significant role in it and are being affected by it, sometimes positively, sometimes negatively. This is particularly true for the newly industrialized or industrializing countries (NICs) in Asia, Africa, and Latin America, barring some like North Korea, Myanmar, and Afghanistan which have so far participated only marginally in the global economy for internal and external political reasons. If the present trends continue, as they most likely will, all national economies, including those currently external or marginal to it, will be ultimately integrated into the global economy in different ways and to varying degrees. Former U. S. Labor Secretary, Robert Reich put it eloquently: We are living through a transformation that will rearrange the politics and economics of the coming century. There will be no national products or technologies, no national corporations, no national industries. There will no longer be national economies, at least as we have come to understand that concept. All that will remain rooted within national borders are the people who comprise a nation.
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1.3 The Global Culture

Economy, technology, and culture are closely connected. It would be impossible to understand any of these in isolation from the others starting from the beginning of human societies to the present day sophistication of modern social systems. The great ancient civilizations of the world--Iraq, India, China, Egypt, the Greco-Romans, and the Aztec-Incas of South America are supposed to have developed largely independently of each other. It is hard to imagine such isolation in the modern world of jets and computers. The local integration of economy, technology, and culture is now accompanied by global integration of these in some very important ways. Such integration is visible in the organization and management of business enterprises, deregulation of economic activity, bureaucratization and standardization, a culture of consumerism, better understanding of universal human rights, environmental consciousness, democratization of the political process, cuisines, music, fashions and fads, and above all, an increasing awareness, and one may even venture to add, greater tolerance of the vast world out there beyond ones own conventional boundaries. The development and expansion of global culture is occurring largely due to the pervasive influence of global economy and the global S&T system as discussed above. todays world traveler is often struck by the stale similarity of international airports, five-star hotels, super markets, modern architecture, consumer electronics, information technology systems, even modern hospitals wherever such may be available, whether that be in Melbourne, Montreal, Havana, Beijing, Karachi or New Delhi. Globalization of human experience in terms of the three aspects discussed above is neither shared equally by all global communities nor is it a prerogative of a few ex-colonial empires or over-developed western countries only. Globalization also does not mean end of national cultures, a panacea for all, or an unmitigated disaster for the world, as proposed by opposing camps in the world development dialogue. This dialogue is generally influenced by two powerful paradigms, modernization theory and the world system or dependency theory. These paradigms are briefly discussed below in order to suggest a broader context for this contentious dialogue as it has taken shape in recent years. Interestingly, Cuba has not figured much in this debate, although the implications of globalization are as serious for it today as for any other developing country. This debate is initiated and carried on by opposing ideological camps in the West. Their vision of the third world does not seem to include Cuba, a small island merely 90 miles off the southeastern coast of the United States.
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1.4 Modernization and World System Formulations

Globalization, according to some, involves modernization to the extent that the two processes are one and the same thing. Four facets of modernization are generally recognized: social (e.g. contractual relationships), economic (e.g. diverse, consumer oriented, free-market economies), political (e.g. development of democratic institutions) and cultural (e.g. movement from tradition to trends, i.e. trendiness) modernizations. According to this view, all contemporary societies are essentially modernizing societies progressing through similar, if not exactly the same, stages of development. Societies at a lesser stage of development could sooner or later reach the ideal stage, that is, industrialization, technological advancement, material prosperity, and happiness for all. This position is strongly held by development economists in the advanced industrial societies and by many among the modernizing elites in the developing countries as well. A key assumption of modernization theory, that of individual choice in a free society, is a correlate of the assumptions underlying the theories of capitalism and internal attribution where the actors, either individual or collective, are to be largely credited or debited for their own successes and failures. Actors external to the system under consideration may contribute to its success but cannot be blamed for its failure. Much of the development strategy and aid that flowed from the developed to the developing countries in the postcolonial period were influenced by these assumptions. Foreign aid as a source of modernization has been replaced in the global society by foreign domestic investment, international trade, and technology transfer. An opposite viewpoint, presented by the world system theory (WST), sees both globalization and modernization as hidden formulas for westernization of the non-Western world (the periphery) by giant multinational corporations and international financial organizations headquartered in, and controlled by Europe and North America (the core countries). According to this viewpoint, globalization and westernization produce opposite effects in these two categories of societies: increasing the power and prosperity of the rich core nations at the expense of the poorer, peripheral ones. It is contended that globalization, if left unchecked, would ultimately destroy local economies, cultural diversity, and traditional eco-system maintenance mechanisms around the world. They would transform all modernizing societies into mere appendages of the core countries at the receiving end of a bad deal. The suggested antidote to globalization, modernization, westernization, or McDonaldization is localization by de-linking from the world techno-economic system. Islamic countries like Iran and Afghanistan and communist states of North Korea and Myanmar may be cited as followers of this approach, either by design or default.
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From the vantage point of developing countries like Cuba at this juncture, the main questions to be considered include: Are these positions exclusive of each other? Are globalization, modernization, and localization defined similarly or differently in different parts of the world? To what extent, if at all, do globalization and modernization pose serious threats to the political sovereignty, cultural sanctity, and environmental integrity of the developing societies? Is it at all desirable, or even possible, for a developing country to remain isolated from the global society and economy? The discussion that follows will throw some light on these and other related issues, first generally then specifically for Cuba.
1.5 Interdependent Modernization or Dependent Development?

Both the modernization and world system theories view the global economy as a mechanism of integration of diverse societies into a large, and largely unified social, economic, and technological system. Such integration and unification is considered a positive outcome for the world by the adherents of the ideology of modernism. As the end of the twentieth century approaches, the growing recognition, reinforced by satellite images from space, that planet earth is a single place has reawakened intellectual interest in Enlightenment notions of a universal community of humankind. The modernists believe in the logic of evolutionary societal development, analogous to the assumptions of evolutionary biology or developmental psychology, whereas societies, like the natural and human systems, transform through similar developmental stages from infancy to maturity. These stages have already been passed by the advanced industrial societies in Europe and America. It is now the time for the rest to become like the West by following the so-called western model of social and economic development, the end point of the modernization game, including democracy and free markets. For all modernizing societies, democracy, capitalist economy, and integration in the global society are suggested as the necessary conditions for their survival and continuous growth. The post-World War II reconstruction and recovery of Japan and South Korea as major industrial powers are cited as a proof of legitimacy of this logic. So are the collapse of the Soviet Union, ushering in of perestroika and glasnost in Russia, Chinese partnership in world economy, and the economic woes of North Korea, Vietnam and Cuba.
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There is indeed a hollow ring to this logic as it looks at development as a single path, purely from the western, materialistic point of view that ignores not only its dysfunctional aspects, such as environmental degradation, loss of community, social inequality and violence in the modern industrial societies, but also the possibility of multiple and eclectic approaches to societal development. The opposite is true for the world system theorists. They believe that the desired integration is neither through nor for the sake of interdependent development. It is desired for the sake of keeping the developing world in a state of perpetual dependency in a hegemonistic world order where the development of the core is contingent upon the underdevelopment of the periphery through the exploitation of the latters markets and resources of the industrialized West. Multinational corporations and the international financial organizations are seen as agents of global economy. Their main purpose is to serve the interests of the industrialized West although they claim to be the promoters of international trade and development. In a rare show of unity against this edifice of imperialism, nervous trade unionists, NGO developmentalists, and environmentalists joined hands with representatives of American Right and Left to launch an impressive protest rally against the IMF on the occasion of its annual meeting in Washington D.C. on April 16/17, 2000, following a similar protest against the WTO a year earlier in Seattle, Washington. Loud cries of Break the Bank, Defund the Fund, Dump the Debt were heard during these demonstrations. Patrick Bond eloquently summarized the sentiments of April 16/17 (2000) protest: For socialists, defunding the Fund and breaking the Bank can dramatically improve global and local power balances, open up radical development finance alternatives, and contribute to an international solidarity unfettered by controversy over reform of imperialist institutions. April 16 gave thousands of activists an initial opportunity to run on the Bank and Fund. The follow up challenge is to keep the institutions running, until they drop of exhaustion. Similar sentiments were expressed in the 1998 Siena Declaration on the Crisis of Economic Globalization prepared by the Board of Directors of the International Forum on Globalization (IFG), an alliance of leading scholars, activists, economists, researchers, and writers, representing over 40 organizations in 20 countries. This strong-worded Declaration dramatizes the crisis engulfing the developing economies due to the actions of World Bank, WTO, IMF, GATT, NAFTA and other global bureaucracies that currently discipline governments in the area of trade and financial investment. It calls economic globalization an inverted experimental system that has caused havoc around the world: Great expectations have led to despair. After 50 years of this experiment, it is breaking down. Rather than leading to economic benefits for all people, it has brought the planet to the brink of environmental catastrophe, social unrest that is unprecedented, economies of most countries in shambles, and increase in poverty, hunger, landlessness, migration and social dislocation. The experiment may now be called a failure.
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While the burden of blame is heavy, the Declaration fails to explain how exactly economic globalization is responsible for such massive ills. It is interesting that the Declaration pointedly talks about the corrective actions recently taken by China, India, Hong Kong, Malaysia, Russia, and Chile, which by various means have tried to counter the destabilizing forces of unregulated private investment that has proved to benefit no one but the crony capitalists who advocate it. First, none of the corrective actions have been identified. Second, it is notable that each and every one of the countries mentioned--as well as most others not mentioned, such as Cuba--has been trying, sometimes quite desperately, to follow the formulas prescribed by the likes of World Bank, WTO, and IMF, that is, liberalization and deregulation of their economies, borrowing through the Bank and the Fund, encouraging foreign domestic/direct investment (FDI), privatization of publicly owned enterprises, encouragement of entrepreneurship, technology transfer from abroad, and export promotion--each within its own national context, of course. I do not know what other corrective actions the signers of the Declaration had in mind, except perhaps to imply that it is the strength of their economic and political institutions that has allowed these countries to take advantage of economic globalization without being totally swamped by global bureaucracies or gobbled up by giant corporations. But it would be hard, for example, to consider China and India--with huge trade surpluses with the United States, large export markets elsewhere, planned strategies to increase foreign investment from every conceivable source, and a dogged determination to continue and strengthen their ties with the WTO--as appendages of the world economy dominated by the Great Satan and his ilk. When India and China criticize the international financial institutions, the agenda generally is to milk them further, or at best to reform them and make them more flexible and inclusive in their funding priorities. Another interesting anomaly noticed in the Declaration is the composition of its signatories and the membership of the International Forum on Globalization that issued it. Five of the eleven IFG Board of Directors who signed the Declaration are Americans, two are Canadians, two are British, and the remaining two belong to the developing countries, one each from India and Malaysia--a poor representation of the community they are trying to patronize and protect, just like the April 16/17 (2000) young marchers in Washington. The same pattern is visible in the list of other signatories. Seventy-eight percent of the 145 are from the advanced industrial societies, 22 percent from the developing world, displaying once again the pattern of domination by the West the global economy is charged of promoting. But in any case, anti-globalization demonstrations have been organized since 1999 at every important meeting of the Bank and the Fund anywhere in the world, in Australia, Japan, Germany, and Canada. Their intensity has declined considerably, though, as was most evident during the latest of these demonstrations in Washington, DC.
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It seems that the protests and the protesters, not the Bank and the Fund, are dropping due to exhaustion. But they certainly have raised the level of awareness about the seamy sides of globalization, including among the executive branches of the financial institutions that are supposed to be its avid promoters. It would indeed be useful to have some workable radical development finance alternatives around. But none have been forthcoming, certainly none of the size and magnitudes of WB, IMF, or IFC. The marchers in Seattle and Quebec City have not offered any either. Interestingly, most of the anti-globalization marchers are young people driven by a combination of idealism, good intentions, affluence, and a dose of misinformation and self-righteousness-reminiscent of the young Americans of the 1960s. While their idealism and concern for the downtrodden of the world are well-taken, it is noteworthy that most of these young persons perhaps have never stepped out of their affluent surroundings, have not experienced poverty, have never seen a sweat shop or talked to the parents of the little kids who work in them. Being affluent, they are the product of a culture of consumerism that thrives on the labor of the poor they want to protect. Perhaps they have never renounced any material comfort for the welfare of the poor, the environment or anything like that. Their parents most likely work for and/or hold financial interests in one of the multinational corporations they demonize, and are, therefore, directly or indirectly responsible for the welfare of Wall Street and the global economy. Mahatma Gandhi renounced all material possessions, including his clothes, to make a point. When asked about the logic behind the gesture, he replied: If I have to serve them, I must live like them, referring to the millions of poor people in India and, by implications, the poor of the world. This may be an extreme example of renunciation, just to make another point. The cause of world poverty, inequality and environmental degradation would be served well if, for example, the American critics of global economy renounce the culture of consumerism that feeds it. It boggles the mind to think that one can live in the fanciest of neighborhoods, drive the most powerful gas guzzlers, wear the shoes and clothes manufactured in the sweat shops of the world, use more of the worlds resources than perhaps the whole world combined, create more trash per capita than anyone on planet earth, and then go on to criticize the multinational corporations and international financial organizations for promoting a similar economic and cultural climate overseas.
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1.6 Globalization for What?

Proponents of globalization and modernization assume the two processes to be good for world economy and society. But as discussed above, these claims and proposals have not been accepted universally or without serious reservations. Regardless, there is a universal desire to modernize business, industry, and agriculture using advanced technologies and systems; however one may think is the right way to do it. In addition to technology, other essential inputs in this process are capital and trained manpower. Globalization and localization may suggest different strategies for acquiring these inputs. The examples of India, China and Cuba may be instructive here. Throughout the decades of the 1950s, 1960s, and part of 1970s, India and China emphasized building techno-economic self-reliance largely through indigenous efforts in a fully or partially regulated environment. But even during these regulated periods, China received capital, technology, and training in heavy doses for nearly 12-15 years from the Soviet Union, as did Cuba from 1960 to 1988. India received similar inputs from multiple sources, including the United States, Canada, UK, France, Germany, and the Soviet Union, although not in such heavy doses as China and Cuba from a single source. The Chinese suffered a major setback after the Soviet assistance stopped in the early sixties, as did the Cubans in 1989. The situation in China began to ease a bit as Sino-American relations improved in 1972 during the Nixon administration. Western technology, capital, and education became gradually available to the Chinese. When China opened its doors further to the rest of the world after Chairman Maos death in 1976, full-scale globalization took hold there but without having to fully deregulate its economy. The rest is history. Today, China is an economic powerhouse and a major player in the world economy. Its recently acquired permanent membership in the WTO suggests that China will continue to be an even bigger player in it regardless of its relations with Washington or London. Indias case is also highly instructive. In the mid 1980s, Prime Minister Rajiv Gandhi took an about turn from the restrictive policies of his mother and opened up India irrevocably to western technology and capital. Information technology, foreign capital, consumer goods, and the culture that goes with them are sweeping through the Indian sub-continent today, as they are through the Peoples Republic of China and the rest of Asia. Markets are still not entirely free either in India or China.
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But even a partially restricted entry of the MNCs is seen by many critics of economic globalization in both countries as having negative consequences for native cultures, nascent industries, national pride, and self-reliance. For its proponents, which include most business and government institutions today, the present strategy is the right one for building self-reliance. The alternative would be stagnation and an increasing gap between them and the advanced industrial societies. For both China and India, the major push now is to acquire more foreign capital and technology on reasonable and acceptable conditions. They have been quite successful in doing exactly that, China more so than India. On the social front, intellectual capital has been strengthened, incomes have risen, general standard of living has improved, and poverty has declined, more so in China than in India, generally speaking. On the negative side, environmental regulations are not strictly imposed causing serious problems in sewage disposal and air and water quality management. Economic inequality has also increased in both countries, relatively more so in China than in India because China up until recently was a highly egalitarian socialist society, unlike India where inequality has been a fact of life for centuries. Privatization of business and profits, particularly in the free trade zones, and repatriation by overseas Chinese are largely responsible for the problem of inequality in Communist China. The regime seems to accept it as an inevitable consequence of economic progress in the global society and is determined to further deregulate the economy by unfreezing the unprofitable public enterprises. As for India, reducing inequality or removing poverty has never been an avowed goal of developmental planning to be taken seriously.
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1.7 The Global Science and Technology (S&Amp;T) System: Research Methodology:
Scientific knowledge, in its long and varied history, is truly universal both in terms of its origins and applications. All cultures of the world have contributed to it, shared it, and been affected by it differently and in varying degrees over different time periods. Historically, international transfer of ideas, cultural elements, technical inventions, human capital, goods and services has been the most prominent aspect in the creation of what has now come to be called global society, or in Marshall McLuhans eloquent phraseology, the global village. Such transfer has been going on for centuries in certain quarters, except that now it is much more frequent, rapid, and widespread. In contemporary society, three main characteristics of science and technology have made them evermore global. First is the large-scale innovation, production and dissemination of technologies in the fields of communication, transportation, energy, environment, genetics, medicine, manufacturing, agriculture, and systems design and engineering. These technologies are now being transferred across the world, from North to South and vice versa, and from West to East and vice versa regardless of their points of origin, unlike the unidirectional flows during the colonial and the early post-colonial periods . Even the ancient and hitherto culture-bound practices, such as acupuncture, yoga, and homeopathy are now globally available and practiced. The second aspect is the shared nature of scientific discovery in two important ways. (A) Research and development (R&D) in the areas of global significance, such as those mentioned above, are becoming increasingly global involving institutions and personnel from different parts of the world. (B) The nature of scientific communities and communication is changing rapidly from being local to cosmopolitan or global. This transformation is most visible in international education, migration, and employment of scientists and engineers. It is equally visible in the composition of editorial boards of scientific journals, the number of joint publications, the multi-national funding and processing of large R&D projects (e.g. the Genome project, space exploration, AIDS research), and membership of and attendance at scientific associations and conferences. The third aspect, unfortunately, deals with the global misuse of science and technology. This involves research, development and trade (both legal and illegal) of military technology, including light weapons and weapons of mass destruction. It is now well-known that despite the efforts of major nuclear nations to remain exclusive, the socalled Nuclear Club is no longer all that exclusive any more as an increasing number of nations like India, North Korea, Israel, and Pakistan have achieved the distinction of possessing nuclear capability, including nuclear weapons. Ironically, it is the spread of nuclear technology that has also created an almost universal desire for nuclear non-proliferation and disarmament.
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The development and trade of light weapons is far more pervasive and insidious than the weapons of mass destruction. Approximately 40 nations manufacture and export some kind of light weaponry. Those who cannot manufacture them, get them through military aid programs of large nations or the international arms market that includes both large and small nations. The global arms business is estimated to run into billions of dollars annually. There is an unholy alliance among the developed and the developing countries in the arms trade, the United States being the worlds largest supplier of arms and the developing countries being their largest buyers. Cubas situation in the global S&T system is unique in that while it may not have had a major advanced technology supplier since the collapse of the Soviet Union, it has also not wasted its meager resources on developing military technologies, nor has it engaged in and benefited from arms trade in any significant way. But Cubas civilian R&D capability is substantial despite its relative isolation from the global technology system. The American S&T establishment has largely ignored Cuban science and scientists. For example, the 2000 edition of Science and Engineering Indicators has only one skimpy reference to Cuba, that it spends 0.7 percent of its GDP on R&D. A recent literature review, conducted by the author, of selected science and technology policy related journals covering a ten-year period produced only ten items about science and technology in Cuba. Most of these dealt with the development of biotechnology, a field in which Cuba seems to have made good progress. Three discussed some issues connected with the development of communication networks. The most interesting item was the one dealing with the visit of 21 U.S. neuroscientists to Havana in 1999 to discuss with their Cuban counterparts areas of mutual interest, the first bilateral meeting in the life sciences since the imposition of the U.S. trade embargo 37 years ago.
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CHAPTER-2
2.1 Globalization of the Cuban Economy and Society:
Before 1959 and up until then Cuba was a fully integrated but highly dependent periphery of the core American, and consequently western, economy. American dollars flowed freely into the Carnal Disneyland. Cuba, particularly Havana, became international symbols of decadent pleasure. With the arrival of Fidel Castro and socialism, that relationship came to an end. Cuba tilted toward the Soviet Union. The United States had initially supported Castros revolution due to its own disenchantment with the puppet Batista regime. But soon after, Castro abolished ownership of private property and nationalized Cuban industry and agriculture. Cuban-American relations deteriorated further. Following the Bay of Pigs invasion (1961) and the Cuban Missile Crisis (1962), President Kennedy invoked the U.S. Governments Trading with the Enemy Act against Cuba (1963). Economic and social blockade followed. That pushed Cuba further into the Soviet camp. One form of dependency was replaced by another. By the middle of 1960s, Cuba became an integral part of the Soviet dominated Council for Mutual Economic Assistance (CMEA), and traded exclusively with the other member countries on highly favorable terms as a form of indirect economic assistance. Coming out of the American hegemony to join a larger group of trading and ideological partners under CMEA may in some way be construed as the beginning of globalization of the Cuban economy and society, although in a very restricted sense. Those early decisions to de-link itself from the larger western, capitalist world were made by the Cuban leadership partly as a result of the American blockade and partly as a condition of the expansion and exclusiveness of communism. While Cuba benefited from its most favored status in the CMEA, it became an appendage of the then communist world economy because of it. It was also deprived of much of the advanced western technology, particularly information technology, when it swept through large part of the so-called free world during the decade of the 1980s. With the collapse of the Communist Block, and the CMEA along with it, Mikhail Gorbachev decided that Russia could no longer continue to provide Cuba the economic and technical assistance it had been receiving from the Soviet Union. That decision had a dramatic impact on Cuban economy. The Cuban economy suffered a 35% decline in gross domestic product between 1989 and 1993 because of the loss of Soviet subsidies...Economic growth resumed in the mid -1990s after the Cuban government launched a concerted program to attract foreign tourism and investment....Living conditions in 1998 are well below the 1990 level.
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After the Soviets departed, Cuba entered into what has come to be known as the Special Period (1989-93) denoting the hardships the country faced. During this period, Cuban imports were down by 70 percent; exports by 35 percent. Seventy five percent of the productive capacity lay idle. GDP declined considerably. Unemployment and rationing became a way of life. The Cuban people were asked to further tighten their belts that were already too tight. The American embargo began to really hurt Cuba for the first time. With the collapse of CMEA went the structure of foreign trade Cuba had built over the years for the export of its commodities like sugar, tobacco, and nickel, and import of oil, machinery, and consumer goods, both on subsidized terms. Gradually, Cuba began to restructure its economic policies and management. The year 1994 stands out as the watershed year for reform and recovery. That was the year when Cubas modernization as an independent nation in partnership with the global economy began to take shape. Foreign trade was decentralized at the governmental level and diversified at the international level. In 1989, 79 percent of foreign trade was with the eastern block countries and only 6 percent with the rest of Europe. In 1994, it declined to 12 percent with Eastern Europe and rose to 34 percent with other European countries. During 1994-1998, foreign direct investment through joint ventures rose to 40 percent of the national investment, totaling approximately $2.5 billion since 1990. When Cuba decided to go global, in 1994, it found many international partners and investors despite the American Helms-Burton Act of 1996 that not only tightened the embargo on Cuba but also threatens others who want to do business there. Trade relations with Latin countries, particularly Mexico, improved considerably. For example, the Mexican holding company Demos purchased a 49 percent interest in the publicly held Cuban telephone industry for a reported $1.5 billion. Canada, Italy, the United Kingdom, Mexico, Italy, Spain, France and other European countries have made investments in approximately 350 joint ventures and other types of partnerships, some of them with 100 percent equity, in fields as diverse as tourism, oil drilling, nickel mining, and telecommunications. Canada, Spain and Italy are currently the most frequent joint venture partners. The Economists 1996 Cuba Survey reported that more than 650 foreign companies have some sort of presence in Cuba. More recent data are not available, but that number is believed to have doubled in the following years.
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Regional foreign trade distribution in 1997 stood at 41.1 percent with Europe, 40.8 percent with American states (excluding the United States), 13.8 percent with Asia, and 3.7 percent with Africa. Cuba is currently trading goods with over 100 countries in these regions. Some very modest illegal trading activity also takes place with the United States via Mexico. For example, American cigarettes and cocoa cola can be bought in Cuba and Cuban cigars in America, at some shops. Cuba continues to deregulate and liberalize its techno-economic system, although the politically correct term to define such reforms is adjustment. Foreign investment, international trade, cultural exchange, and technology transfer from abroad seem to have become the passion of Cuban development planners in recent years. For example, the 1978 Cuba-India Protocol for Cooperation in Science and Technology was revised in 1999 to include a much broader range of joint research and development activities in fields as diverse as biotechnology, plant breeding, and immunology. Credit arrangements with Japan and China have been established. Through a recently signed agreement, China will provide a $200 million loan for the purchase of advanced technology for modernizing the Cuban telecommunication network. Cuban and French business consortia have signed contracts worth millions of dollars for technology upgrade in transportation, oil exploration and refining, water and sewage system management, power generation, mining, and telecommunications. The Informatics 2000 Convention held in Havana during May 22-27, 2000 brought more than 500 delegates from 18 countries to discuss issues connected with collaborative information technology development, protection, and management. Once rather recluse Fidel Castro has now become the most gracious host to foreign delegations and a roving ambassador for building new cultural and economic relations with the outside world where he is warmly received as a revolutionary-turned politician and diplomat. During this authors visit to Havana in early June, 2000 the first thing that stood out on landing was the newly constructed, ultra-modern international airport built through Canadian collaboration. The other sights that immediately caught the eye were those artistically designed posters welcoming delegates to the Japan Week. Such business delegations have also come from the United States, meeting mostly in a third country with whom both trade freely--Mexico. Their purpose has been to lay the groundwork for partnership as soon as the embargo is relaxed or removed.
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In anticipation of that day, a private, non-profit organization called the U.S.-Cuba Trade and Economic Council, Inc. was established as early as 1994 to help the American business community access vital economic, commercial, and political information on Cuba. According to the current Cuban policy, foreign investment is allowed and encouraged in most sectors except in agriculture, education, and health. A separate Ministry of Foreign Investment and Cooperation (Minvec) was created as early as 1995 to initiate and coordinate the search for capital, technology, and markets on a worldwide basis. Minvec and Banco Central together are the two key organs of international business management in Cuba today. The pages of Cuban Review, a government sponsored business weekly, now read like the handouts for a dating agency. State-owned plants display their charms hoping for a foreign partner. A towel manufacturer offers its western equipment; a shoe factory vaunts its collection of Czech and Italian moulds. All claim a well-trained workforce, many years experience, and a fervent wish to produce for experts. All know precisely how much foreign capital they will need to set the enterprise humming again. These developments notwithstanding, it must be said that Cuba is still neither a free market economy nor a democracy according to western definitions. Almost all large industrial and public service sectors are still owned and controlled by the Cuban government, just like in China with whom the United States trades freely, or in North Korea and Vietnam with whom it might do so in the near future. Transfer of ownership of assets is extremely limited. And Cuba remains a one-party or no-party representative democracy that allows a measure of political participation in the selection and election of candidates for public offices, except the presidency. Although foreign firms can own up to 100 percent equity, such arrangements are made with due deliberation, caution, and restrictions. Setting up joint enterprises is not a breeze. The tourism industry, where the largest amount of foreign investment has been made in recent years, offers a good example. Hotels might be built entirely with foreign capital and technology with full repatriation allowed, but the Cuban government reserves the right to manage the facilities, recruit the entire workforce, and set their salaries and bonuses. These policies are being gradually liberalized, though. The Cuban government realizes their demotivating impact on prospective foreign investors.
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Case study: Impact of Globalization on Developing Countries

(With Special Reference To India)
Birla Institute of Technology, International Center 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 organizations. The new policy regime radically pushed forward in favors 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, Liberalization, Privatization.
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Introduction:
Globalization has many meanings depending on the context and on the person who is talking about. Though the precise definition of globalization is still unavailable a few definitions are worth viewing, Guy Brainbant: says that the process of globalization not only includes opening up of world trade, development of advanced means of communication, internationalization of financial markets, growing importance of MNCs, 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 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 liberalization 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 reserve s 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.
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Major measures initiated as a part of the liberalization and globalization 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 liberalization 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. 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.
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2.2 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 Indias growth rate in the 1970s was very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India. Though Indias 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 Indias global position. Consequently Indias 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 Raos 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. Indias GDP growth rate can be seen from the following graph since independence India - a growing economy.
2.3 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 among the worlds 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)
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CHAPTER-3
3.1 FINDINGS AND ANALYSIS
Table-1: Structure of the Economy (Percentage) Agriculture: 35.2 26.5 21.7 20.5 (% Of GDP) Industry Services 1984-85 26.1 38.7 2002-3 22.1 51.4 2003-4 21.6 56.7 2004-5 21.9 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
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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 : 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. 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$1 billion during the 199091 balance of payments crises. The composition of debt is also favorable. Short-term debt amounts to 3.5 per cent of external debt and concessional debt amounts to 36.5 per cent of total debt. The external debt burden looks sustainable according to a range of measures of indebtedness. Both debt service payments as a proportion of current receipts, and the external debt-to-GDP ratio have been falling steadily during the 1990s, and currently stand at around 17 per cent and 22 per cent, respectively.
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Foreign Trade (Export- Import) Indias imports in 2004-05 stood at US$ 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 Total Exports Total imports Trade Balance 1990-91 18477 27915 -9438 2002-03 52719 61412 -8693 2003-04 63843 79149 -14307 2004-05 79247 107066 -27819
Source Reserve Bank of India Annual Report 2004-05
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3.2 ANALYSIS: 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 Indias share of world merchandise exports increased from .05% to .07% over the past 20 years. Over the same period Chinas share has tripled to almost 4%. Indias 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.
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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) 171of 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.
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3.3 SUMMARY:
A. TRADE-DRIVEN GLOBALIZATION AND QUALITATIVE INTEGRATION Globalization is increasing the integration of national markets and the interdependence of countries worldwide for a wide range of goods, services, and commodities. In the past 30 years, international trade flows have expanded dramatically and, generally, at a rate faster than global output, with a doubling of the value of trade in a 10-year period since the mid-1990s. In 2006, the dollar value of world merchandise exports reached US$11.98 trillion (as compared to about US$5.17 trillion in 1995), and that of commercial services exports rose to US$2.71 trillion, thus raising total world trade to over US$14 trillion. Several factors have played an important role in the recent expansion of trade, the growing integration of economies, and the increasing contribution of trade to development. These include the liberalization of tariffs and other barriers to trade; foreign direct investment through trade and investment negotiations and agreements; autonomous unilateral structural reforms; technological innovations in transport and communications; international solidarity through supportive measures (like trade preferences); and the strategic use of policies, experimentation and innovation. Trade driven globalization is also manifested in the changing geography of the world economy today. Its key features include the emergence of a dynamic South as an additional (to the North) motor for world trade and new investment, and an expansion in South-South trade in goods, services and commodities. Assuring development gains from international trade in the context of trade-driven globalization necessitates improving the quantitative benchmarks of integration in international trade through increased trade performance, increasing shares in world trade and in GDP. More importantly, a major improvement in the qualitative benchmarks of integration such as increased competitiveness and enhanced productive capacity, adequate and modern infrastructure (physical and social), trade facilitation, human resource development, diversification, higher value addition of production and exports, employment generation, a sound financial and investment climate, competition culture, technological advances, and more environmentally sustainable and climate-friendly production, consumption and trade patterns will also be required. Accelerated economic growth and increased returns from trade should be channelized into achieving human and social development including food security, energy security, rural development, universal access to essential services, gender equity, and poverty reduction. All of
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these noble objectives are embodied in internationally agreed development goals, including in the Millennium Development Goals (MDGs) and the Monterey Consensus on Financing for Development. Reducing inequalities and democratizing the trade and development gains within and across countries should become the essential attributes of the globalizing world.
B. NEW OPPORTUNITIES, REALITIES AND PERSISTENT CHALLENGES Trade-driven globalization has reached unprecedented pace, scope, and scale. It has spawned new opportunities and realities as well as persistent challenges to the acceleration of economic growth, development, and poverty reduction. Some developing countries are beginning to realize the prospects of a more beneficial integration both quantitative and qualitative into the global economy and the international trading system. For many others, an increased quantitative integration has not had positive results. Often, their Globalization for Development liberalization has not translated into qualitative gains with widespread and structural developmental impact. Still others have seen only partial gains. In the LDCs especially, the promised and expected gains of trade-driven globalization are still missing or insufficient. There is concern that the costs of trade driven globalization maybe economically, socially, politically, and environmentally unsustainable, resulting in increasing inequalities and the loss of social cohesion within and across countries. For such countries, it has meant not just incurring costs including from adjustment to trade liberalization, intensified competition, and reduced policy space but also increased vulnerability to external shocks. In addition, disappointment with the lack of sufficient development dividends and increasing hardships on account of adjustment in many developing countries are calling into question the raison d'tre of trade liberalization and globalization. Even developed countries thus far the drivers and main beneficiaries of trade driven globalization now have anxieties about job displacement, wage stagnation, rising inequalities, and adjustment costs arising from freer trade. This is particularly so as more and more developing countries are becoming competitive in different sectors, and posing a challenge to the domestic manufacturing and services industries as well as the labour force of developed countries. This has begun to arouse protectionist sentiments, and even threaten a backlash against their trade with and investment relations with developing countries.
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Thus a prime concern today for most policymakers everywhere is how to maximize the development benefits of globalization and trade, to minimize their economic, social, human and environmental costs, and to make these the over-arching objectives of trade-driven globalization. It is imperative that both the reality and the perceptions about the costs and benefits of trade driven globalization be managed in such a way as to maximize development benefits with equity and inclusiveness, and minimize costs. The failure to do so has the potential of posing a setback to the attainment of internationally agreed development goals, including the MDGs. In this regard, countries are called upon to judiciously calibrate the following: the tension between national policy space and international obligations and commitments; the balance between national and global governance; the coherence among different policy areas and levels; and the differing yet complementary roles of the state, the market, and the corporate sector in the process of development. There is increasing acknowledgement that, despite an apparent irreversibility and spontaneity, it is possible to manage the globalization process towards better development outcomes. Efforts to create and sustain an enabling environment to benefit from globalization will have to be pursued in the context of an increasingly differentiated trade and development landscape. There is need to capture the 'common development denominators' across developing countries. These include the structural characteristics and policy issues of common concern and applicability to developing countries, irrespective of their size or weight in the world economy and international trade. These are reflected in the qualitative benchmarks of beneficial participation and integration of developing countries in international trade and economy. It will also be necessary to focus on the specific trade and development concerns of countries in special need, such as LDCs, landlocked countries, and small and vulnerable economies. For these countries, the challenges of marginalization, structural inadequacy, and productive capacity constraints are manifold. Moreover, despite their recent rapid growth and a successful increase in their global exports, many developing countries are still hugely challenged in having to deal with the backlog of underdevelopment, poverty and infrastructure deficit in a sustained manner. The predicament of middle income developing countries exposed to global markets and financial flows even as they strive to climb the trade and development ladder and further reduce poverty and inequality will also need attention. Already countries with economies in transition are providing examples of trade and development Endeavour that require different approaches and policy responses National, regional, and international trade and development strategies need to take these specificities as well as the
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baseline scenarios of such countries into account whilst adopting an integrated and holistic approach based on common development denominators.
C.UNCTADS CONTRIBUTION UNCTADs work contributes to making trade and globalization work for successful development. There is need to continuously monitor, assess, review and benchmark the problems, trends, and prospects in international trade and/for the formulation of trade policy. There is a need to address systemic issues that affect the enabling environment at the national, regional and international levels. There is need to elaborate and promote policy and institutional toolkits to positively harness globalization. There is a need to improve global governance and institutional coherence. There is need to foster solidarity initiatives for development-positive, pro-poor, and high quality integration of developing countries in the international trading system. With over 44 years of experience in trade and development, UNCTADs contribution as part of the United Nations system work on development becomes increasingly relevant in the advent and progression of globalization.
3.4 Implementing the Aid for Trade initiative

UNCTAD's analyses, policy-oriented work, and technical assistance have advanced the notion that aid for trade, in addition to aid for development, is a necessary prerequisite to improving the supply capacities and competitiveness of developing countries, as well as enabling them to meet implementation and adjustment costs arising from trade liberalization. This work underpins UNCTADs efforts to bring the aid for trade initiative into operation and thus contribute the effort by WTO to implement the initiative. UNCTADs contribution to the aid for trade initiative has been endorsed by the Mid-Term Review of the So Paulo Consensus. UNCTAD contributes to the Aid for Trade initiative inter alia through examining to the best strategies needed to deal with capacity constraints and trade adjustments in developing countries. It has convened brainstorming events on the AfT initiative, held a global conference in March 2006 as a follow-up to the decision taken at the 6theWTO Ministerial Conference on the subject, and has actively supported developing countries in responding to the initiative. It has contributed to and participated in first Global Aid for Trade Review conducted by the WTO. It is a member of the WTO Advisory Group on Aid for Trade. UNCTAD (in cooperation with other international organizations) continue to play a role in addressing a number of outstanding issues.
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These include country eligibility, scope, ownership, delivery mechanism, monitoring and evaluation, national needs assessment and prioritization, trade mainstreaming both by beneficiaries and donors, the brokering and funding of programmes, additional funding, as well as implementation mechanisms. Such assistance will help to build global public good for the service of all countries. UNCTAD has also gained significant expertise in trade- and development-related technical assistance. Its technical cooperation programmes can help developing countries to achieve development gains from the international trading system and trade negotiations. 90 Globalization for Development. Promoting energy trade and security Regarding energy, trade and development, UNCTAD analyses and suggest ways of providing for the growing demand for energy, particularly in the context of how to sustain the development process in developing countries, especially LDCs. It takes into account technologically and economically feasible alternative energy sources (biofuels, solar and wind); regional initiatives on energy; possible energy efficiency measures; as well as identification of regulatory and trade issues including capacity-building needs to expand capacity and diversify supply. UNCTAD adopts a holistic approach, helping exporting countries to devise strategies for fostering the development of the energy sector as an engine for growth and development. For some countries, this sector generates over 90 per cent of their total revenues and accounts for over 50 per cent of their GDP. Key development objectives include channelling oil revenues into capital investments in national and regional infrastructure development and basic services, while avoiding real exchange rate appreciation, and taking due account of each economy's absorption capacity. Oilimporting countries could reap great benefits from cooperation, particularly in the procurement field. Savings can be made from efficient procurement procedures for oil and oil products. Reorganizing the procurement of small volume imports of petroleum products into bulk procurement, and distributing these imports to sub regions, will generate economies of scale. Sharing storage infrastructures can also generate savings. However, this requires active cooperation from the governments involved. In Africa, UNCTAD convenes the Africa Oil, Gas, Trade and Finance Conference on an annual basis. The 11theConference held in Kenya in May 2007 brought together Ministers and senior-86 Globalization for Development level executives from the oil, gas and finance sectors. It provided a meeting place for investors concerned with opportunities and developments in the African energy sector. In this context also, a pre-event to UNCTAD XII, an India-Africa Hydrocarbon Conference & Exhibition, was convened for the first time in New Delhi from 6-7 November 2007. It was jointly organized by the Ministry of Petroleum & Natural Gas of India, the
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Federation of Indian Chambers of Commerce and Industry, and UNCTAD. Deliberations at the event resulted in the identification of a framework for cooperation and partnership at different levels in the hydrocarbon sector between India and Africa. Among the products emerging from the search of a new economic model based on low-carbon emissions are biofuels a sector that has experienced considerable development over the past decade. To ensure that engaging in the production/use of biofuels yields positive environmental and development results, Governments have to take crucial decisions and develop appropriate strategies. These will include deciding whether the production of biofuels is intended for transportation, or for broader energy replacement; what the land requirements are; and which conversion technology is desirable. The economic and environmental impacts, the compatibility of biofuels with existing fuel delivery/use infrastructures, and competing uses for biomass also have to be assessed. UNCTAD assists countries in implementing country-based assessments of the feasibility of engaging in the production of biofuels, and in setting up the required domestic frameworks. UNCTADs Biofuels Initiative is working in this area. It has conducted such assessments for several countries. It focuses on sound economic, legal, and trade policy analysis, capacity-building activities, and consensus-building tools. It provides lessons learnt from successful cases, and illustrates the problems encountered by developed and developing countries alike while dealing with the technical, policy, and economic aspects of biofuels development. It is working closely with other intergovernmental organizations, civil society, academia, and the private sector. Also, UNCTAD and the ECOWAS Bank for Investment and Development (EBID) have pooled their efforts to promote the financing of the production of biofuels and the development of Jatropha plantations in Africa, drawing upon the Clean Development Mechanism of the Kyoto Protocol. This initiative the first of its kind involves creating a fund to finance the agricultural and industrial production of biofuels in Africa. The main objective is to promote investments in the biofuels supply chain, including a window for financing R&D and capacitybuilding.
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3.5 Trade Preferences

Trade preferences constitute a key SDT pillar of the international trading system. Several initiatives by developed countries and to a lesser extent by developing countries have been developed to provide the latter improved market access for their exports and have brought important benefits (see Table 1). Such preferences for LDCs are a commitment of the international community, reiterated in MDG 8. As a result many developing countries, especially LDCs are dependent on preferential access including duty free, quota free access into major developed country markets. Such access enables them to secure more FDI for productive capacity-building and makes their exports more competitive than otherwise. Preference have served as a stimulus to trade and development in many beneficiary countries and for sectors affected. They continue to provide important competitive advantages to many small and vulnerable economies and represent for a number of them a most significant trade policy instrument for development. However with continuous unilateral, regional and multilateral liberalization and lowering of tariffs, preference margins are being continuously eroded rendering trade preferences an international trade and development solidarity measure with diminishing returns. The challenge for preference dependent developing countries and the international community is to cushion the adjustment shocks 4 Globalization for Development of preference erosion and to fashion SDT and solidarity measures going beyond tariff preferences. Thus it would be useful to look at easing market entry of these countries through help in the standards and conformity related infrastructure for example, including through aid for trade. Also, existing preference need to be improved especially as regards their product coverage and predictability as well as realistic rules of origin requirements and simplified administration procedures. Total imports Dutiable imports Covered by pref. Scheme Receiving pref. Treatment Coverage rate The EU's Everything but Arms initiative for LDCs, and the United States African Growth and Opportunities Act (AGOA) provides increased trading opportunities for some of the poorest developing countries. Other developing countries (such as the ACP States) benefit from nonreciprocal trade preferences (like those provided under the Cotonou Partnership Agreement). However, such trading regimes are time-bound and will expire. The Cotonou Partnership Agreements trade component expired in December 2007. New WTO-compatible trading arrangements have been negotiated in the form of interim economic partnership agreements that are being implemented for some ACP States from 1 January 2008. Other developed countries such as Japan, Australia, Canada, Norway and the United States have instituted a generalized system of preferences (GSP) for developing countries and LDCs which have been enhanced. The two major importers the EU and the United States recently revised their GSP programmes.
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The EUs GSP scheme was revised in January 2006, and is valid until December 2008. While the revised scheme is simpler and has wider product coverage than the previous one, it also includes some stringent rules for the 'GSP Plus' benefits which some vulnerable countries are entitled to. At present, 15 countries are beneficiaries of the 'GSP Plus' benefits. Also, the graduation criteria are tighter in the current scheme as compared to the previous one. Except in the case of textiles and clothing, which are reviewed annually, graduation will be assessed at the end of 2008. Under the revised scheme, 80 per cent of Chinese exports will be graduated. In December 2006, the United States GSP programme was extended for a further two years, until 31 December 2008. The criteria set for GSP graduation was tightened in the current GSP programme by adding a new statute. Previously, GSP products became subject to graduation if their exports exceed the competitive need limit (CNL), but such products could have a CNL waiver under certain conditions. In the current GSP scheme, the President can revoke any existing CNL waiver that has been in effect for at least five years if it meets certain conditions. Under the new criteria, some products from Brazil, Cote d'Ivoire, India, Philippines, Thailand and Venezuela have been graduated.
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CHAPTER-4
CONCLUSION AND OBSERVATION
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. Globalization is increasing the integration of national markets and the interdependence of countries worldwide for a wide range of goods, services, and commodities. Several factors have engendered such a transition including the liberalization of tariffs and other barriers to trade; foreign direct investment through trade and investment agreements; autonomous unilateral structural reforms; technological innovations in transport and communications; international development cooperation; and the strategic use of policies, experimentation and innovation. Some developing countries are beginning to realize the prospects of a more beneficial integration both quantitative and qualitative into the global economy and the international trading system as a result of globalization. For many others, an increased quantitative integration has not had positive results in terms of poverty reduction, employment or increased welfare. Still others have seen only partial gains. In LDCs especially, the expected gains of trade-driven globalization are still missing or insufficient. There is concern that the costs of trade driven globalization maybe economically, socially, politically, and environmentally unsustainable. A prime concern today for most policymakers everywhere is how to maximize the development benefits of globalization and trade, and to minimize their costs. Assuring development gains from international trade in the context of globalization necessitates improving the quantitative and qualitative integration of developing countries into the international trading system and economy.
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Accelerated economic growth and increased returns from trade should be channelized into achieving human and social development goals as embodied in internationally agreed development goals, including in the Millennium Development Goals. Reducing inequalities and democratizing the trade and development gains within and across countries should become the essential attributes of the globalizing world. Efforts to create and sustain an enabling environment to benefit from trade driven globalization will have to be pursued in the context of an increasingly differentiated trade and development landscape. The emergence of a dynamic South as an additional (to the North) motor for world trade and new investment, and an expansion in South-South trade in goods, services and commodities have emerged as key features of the global economy today. It will also be necessary to focus on the specific trade and development concerns of countries in special need, such as LDCs, landlocked countries, and small and vulnerable economies. National, regional, and international trade and development strategies need to take these specificities as well as the baseline scenarios of such countries into account whilst adopting an integrated and holistic approach based on common development denominators. The aid for trade offers a possible mechanism to respond to such concerns. The conclusion of the Doha Round of trade negotiations with strong development dimension is a key expectation of countries. Key trade and development issues to be tackled will include the changing commodity agenda, services trade, fair competition, environmental issues connected with trade, and the trade and development implications of energy, labor mobility and integration, and climate change. The international community including the United Nations can contribute to harnessing globalization for development. In the area of trade, UNCTADs work through research and analysis, technical assistance, and intergovernmental deliberations and consensus building contributes to making trade and globalization work for successful development.
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CHAPTER-5
BIBLIOGRAPHY
References [1] Goyal K A. & P.K.Khicha, Globalization of Business: Future Challenges, Third concept, An International Journal of Ideas. [2] Government of India, Planning Commission, 1992. Eighth Five Year Plan, 1992-97 New Delhi. And Tenth Five Year plan 2002-07 [3] Jalan, Bimal 1996. Indias Economic Policy: Preparing for the Twenty-First Century. Penguin Books. [4] Michael Porter. 2001. Competitive advantage of Nation [5] Diana Farrell, December 2004, Beyond Off shoring: Assess Your Companys global potential, Harvard Business Review, December-2004 [6] United Nations- UNCTAD, World Investment report [7] World Bank, World Bank Indicators [8] Indian Government, Economic survey, 2002-03-04-05 [9] Reserve Bank of India Annual Report-2004-05 [10] The India Economic Summit Report 2005. Web References
http://www.unido.org/fileadmin/import/userfiles/puffk/mrak.pdf http://globalization.icaap.org/content/v1.1/aqueilahmad.html (Globalization of the Cuban Economy and Society) http://www.eurojournals.com/IRJFE%206%20goyal.pdf ( special reference to india) http://www.wto.org/english/res_e/booksp_e/anrep_e/wtr08-0d_e.pdf
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Chapter-1: Trends in Commercial Policy With Reference To Globalization

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TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

1.2 The Global Economy

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

1.3 The Global Culture

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

1.4 Modernization and World System Formulations

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

1.5 Interdependent Modernization or Dependent Development?

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

1.6 Globalization for What?

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

Case study: Impact of Globalization on Developing Countries

Key Words: Multi National Companies, Liberalization, Privatization.

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

2.2 Impact of Globalization

2.3 Structure of the Economy

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

Source Reserve Bank of India Annual Report 2004-05

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

3.4 Implementing the Aid for Trade initiative

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

3.5 Trade Preferences

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

TRENDS IN COMMERCIAL POLICY WITH REFERENCE TO GLOBALIZATION

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