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CARIBBEAN STUDIES NOTES

GLOBALISATION AND DEVELOPMENT


Globalisation is the process whereby flows of trade, finance and information between countries
are broadened and deepened so that they function as one global market. Globalisation is a
process that erodes distinctions between one place and another. The world would operate as if
there are no borders as if the nation-state does not exist. All countries would be on a level
playing field (conceived as equal) and all would be impacted by worldwide phenomenon.
However, there are implicit contradictions in the way globalisation is being played out such as
the fact that there will be who can afford greater access to the elite products and services and
have more power. All countries would not have the same impact on others; instead, there may
be a few powerful countries whose dominant ideas and products influence the rest of the world.
Internationalization began with the reduction in transport costs in the nineteenth and early
twentieth centuries. After the two world wars, the institutions of the UN, IMF, GATT (now
WTO) and the World Bank were set up. They stabilized currencies, increased trade and
production and kept a tight hold on regulation of international monetary flows. Economies were
thrown into disarray in the 1970s when OPEC countries hiked up the price of oil. Since then, free
trade has spread and TNCs and foreign investment has been more widespread.
ICTs have enables businesses to communicate with suppliers and customers all over the world
and have automated many stages of production, greatly increasing efficiency.
Globalisation is primarily of three types, namely, economic, cultural and political:
1. Economic Globalisation:
No national economy is an island now. To varying degrees, national economies influence one
another. One country which is capital-rich invests in another country which is poor. One who has
better technologies sells these to others who lack such technologies.
The products of an advanced country enter the markets of those countries that have demands for
these products. Similarly, the natural resources of developing countries are sold to developed
countries that need them. Thus, globalisation is predominantly an economic process involving
the transfer of economic resources form one country to another.
2. Cultural Globalisation:
Culture has increasingly become a commodity. Popular books and films have international
markets. Harry Potter has readers almost all over the world. English movies are seen almost in all
countries. Western pop music has become popular in developing countries. The reverse flow of

culture is insignificant. The flow of culture is mainly from the North to the South. In the last few
years the media owners of the West have shown interest in entering developing countries.
For example, Murdoch has opened TV channels (STAR News, STAR Movies and STAR Plus) in
India. Cultural globalisation has been facilitated by the information revolution, the spread of
satellite communication, telecommunication networks, information technology and the Internet
etc. This global flow of ideas, knowledge and values is likely to flatten out cultural differences
between nations, regions and individuals.
As this flow of culture is mainly from the centre to the periphery, from the North to the South,
and from the towns and cities to villages, it is the cultures of villages of poor countries which
will be the first to suffer erosion.
3. Political Globalisation:
Since long, efforts have been on to bring the whole world under one government. The League of
Nations and the UN have been the efforts in that direction. It is believed that the world under one
government will be safer and freer from conflicts: The UN has belied expectations, but a number
of regional organisations like European Union, ASEAN, APEC and SAARC, and multicultural
economic organisations such as WTO have come up.
The member-states remain sovereign, but through their obligations and commitments, they have,
to some extent, integrated themselves to the concerned international organisations and groupings.
GLOBALISATION
Linkages between countries are deepened
Recognizes no boundaries; sees the world as a
whole
All countries are on equal footing
A kind of socialist idea where all countries
receive equal benefits

INTERNATIONALISATION
Countries trade more
Recognizes the nation-state
Sees countries as developed and developing
and treats them differently
Countries benefit differently depending on how
well they can withstand the competition

Adam Smith suggested the non-interference of governments in markets so that each country
could produce the commodities in which they had a comparative advantage.
IMPACT AND RESPONSE TO GLOBALISATION

Industry and commerce There has been the expansion of free trade or trade
liberalization whereby tariffs and other barriers to trade have been removed. However,
developed countries may still subsidise their industries and institute tariffs but flood the
markets of developing countries with their goods.
Capital can be moved quickly to anywhere in the world facilitating FDI in many
countries.

Distributive sector (supermarkets, department stores) These exhibit a wide range of


goods from all parts of the world, increasing choice for the consumer. He benefits by
choosing cheaper products that may not be locally produced. However, these goods have
to be paid for with foreign exchange.
Labour Globalisation both creates and destroys jobs. Jobs found in industries which are
not globally competitive are lost while those which contribute greatly towards the
countrys exports are maintained and formed continuously. Ideally, globalisation should
also facilitate the free movement of labour between countries. Therefore, persons
qualified in a specific area may move to those countries specialising in those activities.
Technology Countries which have removed trade barriers but were less efficient in
production than competitors have sought to automate many processes in production and
industry e.g. agriculture. This would increase output and reduce costs, thereby making
these countries more competitive.
Ideology Capitalism is the dominant theme behind the current processes of
globalisation. Countries also have to accept the advice and conditions of multilateral
organisations, especially once aid is given. Structural adjustment policies (including
cutting back on social reforms and reducing salaries and the workforce) are common
across many developing countries which have received aid.
Popular movements
o Caribbean Association for Feminist Research and Action (CAFRA) CAFRA is a
regional network of feminists, individual researchers, activists and women's
organisations who define feminist politics as a matter of both consciousness and
action. Its mission is to celebrate and channel the collective power of women for
individual and societal transformation, thus creating a climate in which social
justice is realised. CAFRA's current research projects focus on the impact of trade
liberalisation on women, the development of gender indicators for projects and
programmes to benefit women, and tourism and the sex trade.
o Womens Action for New Directions (WAND) This progressive national nonprofit organization that seeks to empower women to act politically to reduce
violence and militarism and redirect excessive military resources toward unmet
human and environmental needs. It aims to promote alternatives to violence as
solutions to conflict, clean up environmental effects of nuclear weapons
production and prevent violence against women.
o Environmental and social justice non-governmental organisations These aim to
eliminate discrimination towards certain groups of people. Sustainable
development and environmental protection are also focuses of some
organisations.

FACILITATORS OF GLOBALISATION AND DEVELOPMENT

A multilateral agency is one where many members participate on equal footing to achieve certain
goals by following devised procedures.

World Trade Organisation (formerly the General Agreement on Tariffs and Trade)
o Regulates trade in goods by overseeing the rules of international trade and
arbitrating disputes arising from those rules
o Its task is to remove all barriers or encumbrances of any kind to trade anywhere
in the world.
o Provides services such as telecommunications and banking
o The WTO has been accused of favouring TNCs and developed countries,
subverting its own goals of globalisation for internationalisation
International Monetary Fund
o Fosters global monetary cooperation
o Ensures financial stability worldwide
o Provides loans and technical assistance to expand trade and to promote exchange
stability and manage BOP problems
o Helps to control debt
o Gives advice on policies most likely to encourage stable exchange rates and
economic growth
o Oversees entire international monetary and financial system
o Solutions suggested by the IMF (structural adjustment policies) include the
following. These have resulted in unemployment, poverty, inflation and lack of
availability of good utilities and services.
Keeping interest rates high
Devaluing the currency
Reducing government spending in non-productive sectors
Increasing taxes
Privatizing many public corporations
World Bank (formerly International Bank for Reconstruction and Development)
o Provides finance for projects to promote development in the form of long-term
loans to developing countries
o Loans promote equity and productivity and are usually conditional on
improvement in some aspect of social life
o Changing definitions of development has changed the focus from economic
growth to include poverty reduction
o Endorses internationalisation of markets and trade liberalisation policies as the
path to economic development
o It has helped to boost economic growth but its contribution to human
development has been significantly less
Economic Partnership Agreement The Economic Partnership Agreements (EPAs)
between the EU and African, Caribbean and Pacific (ACP) regions are aimed at
safeguarding preferential access to European markets and promoting trade between the

two groupings and through trade development, sustainable growth and poverty
reduction.
The EPAs set out to help ACP countries integrate into the world economy and share in
the opportunities offered by globalisation.
For well over 30 years, exports from the ACP countries were given generous access to
the European market.
Yet preferential access failed to boost local economies and stimulate growth in ACP
countries. And the proportion of EU imports from ACP countries dropped from 7% to
3% of EU imports.
The EPAs allow for:

are "tailor-made" to suit specific regional circumstances

go beyond conventional free-trade agreements, focusing on ACP development, taking


account of their socio-economic circumstances and include co-operation and assistance
to help ACP countries implement the Agreements

opened up EU markets fully and immediately (unilaterally by the EU since 1st January
2008), but allowed ACP countries 15 (and up to 25) years to open up to EU imports
while providing protection for the sensitive 20% of imports

provide scope for wide-ranging trade co-operation on areas such as services and
standards

are also designed to be drivers of change that will kick-start reform and help strengthen
rule of law in the economic field, thereby attracting foreign direct investment, so
helping to create a "virtuous circle" of growth

Transnational Organisations MNCs greatly infiltrate the markets of developing


countries, especially those with a stable government or currency situation, sound
infrastructure and/or cheap labour force. However, MNCs have been found guilty of
serious human rights violations, tax evasion, money laundering and hiding funds in
offshore banks. Many do not even employ enough persons and leave whenever they are
ready usually when their tax-free period of operation is completed.
Technology
o Allows communication between suppliers and purchasers in separate countries
o E-commerce has opened up markets for products and provides more choice for
consumers

o Investment such as the purchasing of stocks can be done over the internet, thus
eliminating the middle man
o Goods can be produced more cheaply and in larger quantities, making them more
competitive on the world market
Ideologies
o Social preference for foreign products
o Gender
o Economic an unfettered economy is the engine of growth as economies will
specialise in those goods with which they have a comparative advantage
o Political capitalist economies try to compete on the world market

The IMF and World Bank are about lending money and giving technical advice. Poverty,
although still widespread, has reported significant reduction but countries cannot compete under
conditions of trade liberalization.