Introduction:

Globalization (or globalization) describes an ongoing process by which regional economies,

societies, and cultures have become integrated through a globe-spanning network of
communication and execution. The term is sometimes used to refer specifically to economic
globalization: the integration of national economies into the international economy through
trade, foreign direct investment, capital flows, migration, and the spread of technology.
However, globalization is usually recognized as being driven by a combination of economic,
technological, socio-cultural, political, and biological factors. The term can also refer to the
transnational circulation of ideas, languages, or popular culture through acculturation.
Covering a wide range of distinct political, economic, and cultural trends, the term
globalization has quickly become one of the most fashionable buzzwords of contemporary
political and academic debate.

General Concept of Globalization:

Broadly speaking, the term globalization means integration of economies and societies
through cross country flows of information, ideas, technologies, goods, services, capital,
finance and people. Cross border, integration can have several dimensions cultural, social,
political and economic. In fact, some people fear cultural and social integration even more
than economic integration. The fear of cultural hegemony haunts many. Limiting
ourselves to economic integration, one can see this happen through the three channels of

(a) trade in goods and services,

(b) movement of capital and

(c) flow of finance.

Besides, there is also the channel through movement of people.

In popular discourse, globalization often functions as little more than a synonym for one or
more of the following phenomena: the pursuit of classical liberal (or free market) policies
in the world economy (economic liberalization), the growing dominance of western (or
even American) forms of political, economic, and cultural life (westernization or
Americanization), the proliferation of new information technologies (the Internet
Revolution), as well as the notion that humanity stands at the threshold of realizing one
single unified community in which major sources of social conflict have vanished (global
integration). Fortunately, recent social theory has formulated a more precise concept of
globalization than those typically offered by pundits. Although sharp differences continue to
separate participants in the ongoing debate, most contemporary social theorists endorse the
view that globalization refers to fundamental changes in the spatial and temporal contours of
social existence, according to which the significance of space or territory undergoes shifts in

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the face of a no less dramatic acceleration in the temporal structure of crucial forms of human
activity. Geographical distance is typically measured in time.

Definitions:

An early description of globalization was penned by the American entrepreneur-turned-

minister Charles Taze Russell who coined the term 'corporate giants' in 1897. However, it was
not until the 1960s that the term began to be widely used by economists and other social
scientists. It had achieved widespread use in the mainstream press by the later half of the
1980s. Since its inception, the concept of globalization has inspired numerous competing
definitions and interpretations.

The United Nations ESCWA has written that globalization,

"is a widely-used term that can be defined in a number of different ways. When used in an
economic context, it refers to the reduction and removal of barriers between national borders
in order to facilitate the flow of goods, capital, services and labour... although considerable
barriers remain to the flow of labour... Globalization is not a new phenomenon. It began in
the late nineteenth century, but its spread slowed during the period from the start of the First
World War until the third quarter of the twentieth century. This slowdown can be attributed to
the inwardlooking policies pursued by a number of countries in order to protect their
respective industries... however, the pace of globalization picked up rapidly during the fourth
quarter of the twentieth century..."

Saskia Sassen writes that,

"a good part of globalization consists of an enormous variety of micro-processes that begin
to denationalize what had been constructed as national whether policies, capital, political
subjectivities, urban spaces, temporal frames, or any other of a variety of dynamics and
domains."

Tom G. Palmer of the Cato Institute defines globalization as

"The diminution or elimination of state-enforced restrictions on exchanges across borders

and the increasingly integrated and complex global system of production and exchange that
has emerged as a result."

Thomas L. Friedman has examined,

the impact of the "flattening" of the world, and argues that globalized trade, outsourcing,
supply-chaining, and political forces have changed the world permanently, for both better
and worse. He also argues that the pace of globalization is quickening and will continue to
have a growing impact on business organization and practice.

Noam Chomsky argues that,

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 The word globalization is also used, in a doctrinal sense, to describe the neoliberal form of
economic globalization.

Herman E. Daly argues that,

Sometimes the terms internationalization and globalization are used interchangeably but
there is a significant formal difference. The term "internationalization" (or
internationalisation) refers to the importance of international trade, relations, treaties etc.
owing to the (hypothetical) immobility of labor and capital between or among nations.

Methodology:

Globalization is currently a popular and controversial issue, though often remaining loose
and poorly defined concept. Sometimes too comprehensively, the term is used to encompass
increases in trade and liberalization policies as well as reductions in transportation costs and
technology transfer. As far as its impact is concerned, discussion of globalization tends to
consider simultaneously its effects on economic growth, employment and income distribution
often without distinguishing between countries and within-country inequalities and other
social impacts such as opportunities for poverty alleviation, human and labor rights,
environmental consequences and so on. Moreover, the debate is often confused from a
methodological point of view by the interactions between history, economics, political
science and other social sciences. Partially as a consequence of the lack of clear definitions
and methodological choices, the current debate is characterized by an harsh divide between
the supporters and the opponents of globalization, where both groups appear to be
ideologically committed and tend to exploit anecdotes (successfully or unsuccessfully
respectively), rather than sound, comprehensive empirical evidence to support their cause
.Since the debate appears quite confused and the issues overlapping, one of the aims of this
contribution is to select some precisely-defined topics and to give an account of theories and
applied approaches which have really contributed to the understanding of the social impact of
globalization in developing countries (DCs).

History of Globalization:

The historical origins of globalization are the subject of on-going debate. Though some
scholars situate the origins of globalization in the modern era, others regard it as a
phenomenon with a long history. Perhaps the most extreme proponent of a deep historical
origin for globalization was Andre Gunder Frank, an economist associated with dependency
theory. Frank argued that a form of globalization has been in existence since the rise of trade
links between Sumer and the Indus Valley Civilization in the third millennium B.C. Critics of
this idea point out that it rests upon an overly-broad definition of globalization.

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 Figure: Extent of the Silk Road

An early form of globalized economics and culture existed during the Hellenistic Age, when
commercialized urban centers were focused around the axis of Greek culture over a wide
range that stretched from India to Spain, with such cities as Alexandria, Athens, and Antioch
at its center. Trade was widespread during that period, and it is the first time the idea of a
cosmopolitan culture (from Greek "Cosmopolis", meaning "world city") emerged.

Others have perceived an early form of globalization in the trade links between the Roman
Empire, the Parthian Empire, and the Han Dynasty. The increasing articulation of
commercial links between these powers inspired the development of the Silk Road, which
started in western China, reached the boundaries of the Parthian empire, and continued
onwards towards Rome. The Islamic Golden Age was also an important early stage of
globalization, when Jewish and Muslim traders and explorers established a sustained
economy across the Old World resulting in a globalization of crops, trade, knowledge and
technology. Globally significant crops such as sugar and cotton became widely cultivated
across the Muslim world in this period, while the necessity of learning Arabic and completing
the Hajj created a cosmopolitan culture. The advent of the Mongol Empire, though
destabilizing to the commercial centers of the Middle East and China, greatly facilitated
travel along the Silk Road. This permitted travelers and missionaries such as Marco Polo to
journey successfully (and profitably) from one end of Eurasia to the other. The so-called Pax
Mongolica of the thirteenth century had several other notable globalizing effects. It witnessed
the creation of the first international postal service, as well as the rapid transmission of
epidemic diseases such as bubonic plague across the newly unified regions of Central Asia.[16]
These pre-modern phases of global or hemispheric exchange are sometimes known as archaic
globalization. Up to the sixteenth century, however, even the largest systems of international
exchange were limited to the Old World.

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

maritime European empires, in the 16th and 17th centuries, first the Portuguese and Spanish
Empires, and later the Dutch and British Empires. In the 17th century, globalization became
also a private business phenomenon when chartered companies like British East India
Company (founded in 1600), often described as the first multinational corporation, as well as
the Dutch East India Company (founded in 1602) were established. Because of the large

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investment and financing needs and high risks involved in international trade, the British East
India Company became the first company in the world to share risk and enable joint
ownership of companies through the issuance of shares of stock: an important driver for
globalization.

Great Britain grew rich in the 19th century as the first global economic superpower, because
of its superior manufacturing technology and improved global communications such as
steamships and railroads. The 19th century witnessed the advent of globalization approaching
its modern form. Industrialization allowed cheap production of household items using
economies of scale, while rapid population growth created sustained demand for
commodities. Globalization in this period was decisively shaped by nineteenth-century
imperialism. After the Opium Wars and the completion of British conquest of India, vast
populations of these regions became ready consumers of European exports. It was in this
period that areas of sub-Saharan Africa and the Pacific islands were incorporated into the
world system. Meanwhile, the conquest of new parts of the globe, notably sub-Saharan
Africa, by Europeans yielded valuable natural resources such as rubber, diamonds and coal
and helped fuel trade and investment between the European imperial powers, their colonies,
and the United States Said John Maynard Keynes,

The inhabitant of London could order by telephone, sipping his morning tea, the
various products of the whole earth, and reasonably expect their early delivery
upon his doorstep. Militarism and imperialism of racial and cultural rivalries were
little more than the amusements of his daily newspaper. What an extraordinary
episode in the economic progress of man was that age which came to an end in
August 1914.

The first phase of "modern globalization" began to break down at the beginning of the 20th
century, with the first world war. The novelist VM Yeates criticized the financial forces of
globalization as a factor in creating World War I. The final death knell for this phase came
during the gold standard crisis and Great Depression in the late 1920s and early 1930s. In the
middle decades of the twentieth century globalization was largely driven by the global
expansion of multinational corporations based in the United States and Europe, and
worldwide exchange of new developments in science, technology and products, with most
significant inventions of this time having their origins in the Western world according to
Encyclopedia Britannica. Worldwide export of western culture went through the new mass
media: film, radio and television and recorded music. Development and growth of
international transport and telecommunication played a decisive role in modern globalization.

In late 2000s, much of the industrialized world entered into a deep recession. Some analysts
say the world is going through a period of de globalization after years of increasing economic
integration. Up to 45% of global wealth had been destroyed by the global financial crisis in

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little less than a year and a half. China has recently become the worlds largest exporter
surpassing Germany.

Modern globalization:

Globalization, since World War II, is largely the result of planning by politicians to break
down borders hampering trade to increase prosperity and interdependence thereby decreasing
the chance of future war. Their work led to the Bretton Woods conference, an agreement by
the world's leading politicians to lay down the framework for international commerce and
finance, and the founding of several international institutions intended to oversee the
processes of globalization. These institutions include the International Bank for
Reconstruction and Development (the World Bank), and the International Monetary Fund.
Globalization has been facilitated by advances in technology which have reduced the costs of
trade, and trade negotiation rounds, originally under the auspices of the General Agreement
on Tariffs and Trade (GATT), which led to a series of agreements to remove restrictions on
free trade.

Since World War II, barriers to international trade have been considerably lowered through
international agreements GATT. Particular initiatives carried out as a result of GATT and
the World Trade Organization (WTO), for which GATT is the foundation, have included:

Promotion of free trade:

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

Reduced transportation costs, especially resulting from development of containerization

for ocean shipping.

Harmonization of intellectual property laws across the majority of states, with more
restrictions

Supranational recognition of intellectual property restrictions (e.g. patents granted by

China would be recognized in the United States)

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

Western cultural industries, was understood at first as a process of homogenization, as the
global domination of American culture at the expense of traditional diversity. However, a
contrasting trend soon became evident in the emergence of movements protesting against
globalization and giving new momentum to the defense of local uniqueness, individuality,
and identity, but largely without success. The Uruguay Round (1986 to 1994) led to a treaty
to create the WTO to mediate trade disputes and set up a uniform platform of trading. Other
bilateral and multilateral trade agreements, including sections of Europe's Maastricht Treaty
and the North American Free Trade Agreement (NAFTA) have also been signed in pursuit of

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the goal of reducing tariffs and barriers to trade. World exports rose from 8.5% in 1970, to
16.2% of total gross world product in 2001.

Measuring globalization:

Looking specifically at economic globalization, demonstrates that it can be measured in

different ways. These center around the four main economic flows that characterize
globalization:

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

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

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

or per head of population

Technology, e.g., international research & development flows; proportion of

populations (and rates of change thereof) using particular inventions (especially
'factor-neutral' technological advances such as the telephone, motorcar, broadband)

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

globalization is the recent index calculated by the Swiss think tank KOF. The index measures
the three main dimensions of globalization: economic, social, and political. In addition to
three indices measuring these dimensions, an overall index of globalization and sub-indices
referring to actual economic flows, economic restrictions, and data on personal contact, data
on information flows, and data on cultural proximity is calculated. Data is available on a
yearly basis for 122 countries, as detailed in Dreher, Gaston and Martens (2008). According
to the index, the world's most globalized country is Belgium, followed by Austria, Sweden,
the United Kingdom and the Netherlands. The least globalized countries according to the
KOF-index are Haiti, Myanmar, the Central African Republic and Burundi. A.T. Kearney and
Foreign Policy Magazine jointly publish another Globalization Index. According to the 2006
index, Singapore, Ireland, Switzerland, the Netherlands, Canada and Denmark are the most
globalized, while Indonesia, India and Iran are the least globalized among countries listed.

Effects of globalization:

Globalization has various aspects, which affect the world in several different ways such as:

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

foreign products for consumers and companies. Particularly movement of material and goods
between and within national boundaries. International trade in manufactured goods increased

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more than 100 times (from $95 billion to $12 trillion) in the 50 years since 1955. Chinas
trade with Africa rose sevenfold during 2000-07 alone.

Financial - emergence of worldwide financial markets and better access to external financing
for borrowers. By the early part of the 21st century, more than $1.5 trillion in national
currencies were traded daily to support the expanded levels of trade and investment. As these
worldwide structures grew more quickly than any transnational regulatory regime, the
instability of the global financial infrastructure dramatically increased, as evidenced by the
financial crisis of 20072009. As of 2005-2007, the Port of Shanghai holds the title as the
World's busiest port.

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

goods and capital. The interconnectedness of these markets however meant that an economic
collapse in any one given country could not be contained. India is right now home of almost
every well known I.T company around the globe. Four Indians were among the world's top
10 richest in 2008, worth a combined $160 billion. In 2007, China had 415,000 millionaires
and India 123,000.

Health Policy - On the global scale, health becomes a commodity. In developing nations
under the demands of Structural Adjustment Programs, health systems are fragmented and
privatized. Global health policy makers have shifted during the 1990s from United Nations
players to financial institutions. The result of this power transition is an increase in
privatization in the health sector. This privatization fragments health policy by crowding it
with many players with many private interests. These fragmented policy players emphasize
partnerships, specific interventions to combat specific problems (as opposed to
comprehensive health strategies). Influenced by global trade and global economy, health
policy is directed by technological advances and innovative medical trade. Global priorities,
in this situation, are sometimes at odds with national priorities where increased health
infrastructure and basic primary care are of more value to the public than privatized care for
the wealthy. Britain is a country of rich diversity. As of 2008, 40% of London's total
population was from an ethnic minority group. The latest official figures show that in 2008,
590,000 people arrived to live in the UK whilst 427,000 left, meaning that net inward
migration was 163,000.

Political - some use "globalization" to mean the creation of a world government which
regulates the relationships among governments and guarantees the rights arising from social
and economic globalization. Politically, the United States has enjoyed a position of power
among the world powers, in part because of its strong and wealthy economy. With the
influence of globalization and with the help of The United States own economy, the People's
Republic of China has experienced some tremendous growth within the past decade. If China
continues to grow at the rate projected by the trends, then it is very likely that in the next
twenty years, there will be a major reallocation of power among the world leaders. China will
have enough wealth, industry, and technology to rival the United States for the position of
leading world power. Informational - increase in information flows between geographically

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remote locations. Arguably this is a technological change with the advent of fiber optic
communications, satellites, and increased availability of telephone and Internet.

Language - the most popular language is Mandarin (845 million speakers) followed
by Spanish (329 million speakers) and English (328 million speakers)

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

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

Competition - Survival in the new global business market calls for improved productivity
and increased competition. Due to the market becoming worldwide, companies in various
industries have to upgrade their products and use technology skillfully in order to face
increased competition.

Ecological - the advent of global environmental challenges that might be solved with
international cooperation, such as climate change, cross-boundary water and air pollution,
over-fishing of the ocean, and the spread of invasive species. Since many factories are built in
developing countries with less environmental regulation, globalism and free trade may
increase pollution. On the other hand, economic development historically required a "dirty"
industrial stage, and it is argued that developing countries should not, via regulation, be
prohibited from increasing their standard of living. The construction of continental hotels is a
major consequence of globalization process in affiliation with tourism and travel industry,
Dariush Grand Hotel, Kish, Iran

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

identities which embodies cultural diffusion, the desire to increase one's standard of living
and enjoy foreign products and ideas, adopt new technology and practices, and participate in
a "world culture". Some bemoan the resulting consumerism and loss of languages. Also see
Transformation of culture.

Greater immigration, including illegal immigration. The IOM estimates there are
more than 200 million migrants around the world today. Newly available data show
that remittance flows to developing countries reached $328 billion in 2008.

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

Worldwide fads and pop culture such as Pokmon, Sudoku, Numa Numa, Origami,
Idol series, YouTube, Orkut, Facebook, and MySpace. Accessible to those who have
Internet or Television, leaving out a substantial segment of the Earth's population.

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

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Social - development of the system of non-governmental organisations as main agents of
global public policy, including humanitarian aid and developmental efforts. Technical

Development of a Global Information System, global telecommunications

infrastructure and greater transborder data flow, using such technologies as the
Internet, communication satellites, submarine fiber optic cable, and wireless
telephones

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

Legal/Ethical

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

Crime importation and raising awareness of global crime-fighting efforts and

cooperation.

The emergence of Global administrative law.

Religious

The spread and increased interrelations of various religious groups, ideas, and
practices and their ideas of the meanings and values of particular spaces.

Incorporation of multinational corporations in to new media. As the sponsors of the All-

Blacks rugby team, Adidas had created a parallel website with a downloadable interactive
rugby game for its fans to play and compete. About 50% of all Internet traffic uses English.

Cultural effect:
Globalization has had an impact on different cultures around the world. Culture is defined as
patterns of human activity and the symbols that give these activities significance. Culture is
what people eat, how they dress, beliefs they hold, and activities they practice. Globalization
has joined different cultures and made it into something different. As Erla Zwingle, from the
National Geographic article titled Globalization states, When cultures receive outside
influences, they ignore some and adopt others, and then almost immediately start to transform
them. One classic culture aspect is food. Someone in America can be eating Japanese
noodles for lunch while someone in Sydney, Australia is eating classic Italian meatballs. India
is known for its curry and exotic spices. France is known for its cheeses. America is known
for its burgers and fries. McDonalds is an American company which is now a global
enterprise with 31,000 locations worldwide. This company is just one example of food
causing cultural influence on the global scale.

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Negative effects:

Globalization has been one of the most hotly debated topics in international economics over
the past few years. Globalization has also generated significant international opposition over
concerns that it has increased inequality and environmental degradation. In the Midwestern
United States, globalization has eaten away at its competitive edge in industry and
agriculture, lowering the quality of life in locations that have not adapted to the change.
Globalization, the flow of information, goods, capital and people across political and
geographic boundaries, has also helped to spread some of the deadliest infectious diseases
known to humans. Modern modes of transportation allow more people and products to travel
around the world at a faster pace, they also open the airways to the transcontinental
movement of infectious disease vectors. One example of this occurring is AIDS/HIV.
Opportunities in richer countries drives talent away, leading to brain drains. Brain drain has
cost the African continent over $4 billion in the employment of 150,000 expatriate
professionals annually. Indian students going abroad for their higher studies costs India a
foreign exchange outflow of $10 billion annually. A study by the World Institute for
Development Economics Research at United Nations University reports that the richest 1% of
adults alone owned 40% of global assets in the year 2000. The three richest people possess
more financial assets than the poorest 10% of the world's population, combined [5]. The
combined wealth of the 10 million millionaires grew to nearly $41 trillion in 2008. In 2001,
46.4% of people in sub-Saharan Africa were living in extreme poverty. Nearly half of all
Indian children are undernourished.

Picture: Burning forest in Brazil.

The removal of forest to make way for cattle ranching was the leading cause of
deforestationin the Brazilian Amazon from the mid 1960s. Recently, soybeans have become
one of the most important contributors to deforestation in the Brazilian Amazon. The World
watch Institute said the booming economies of China and India are planetary powers that are
shaping the global biosphere. In 2007, China has overtaken the United States as the world's
biggest producer of CO2. At present rates, tropical rainforests in Indonesia would be logged
out in 10 years, Papua New Guinea in 13 to 16 years. A major source of deforestation is the
logging industry, driven spectacularly by China and Japan. Thriving economies such as China
and India are quickly becoming large oil consumers. China has seen oil consumption grow by

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8% yearly since 2002, doubling from 1996-2006. Crude oil prices in the last several years
have steadily risen from about $25 a barrel in August 2003 to over $140 a barrel in July 2008.

The State of the World 2006 report said the two countries' high economic growth hid a reality
of severe pollution. The report states:

The world's ecological capacity is simply insufficient to satisfy the ambitions of China,
India, Japan, Europe and the United States as well as the aspirations of the rest of the
world in a sustainable way

Without more recycling, zinc could be used up by 2037, both indium and hafnium could run
out by 2017, and terbium could be gone before 2012. It said that if China and India were to
consume as much resources per capita as United States or Japan in 2030 together they would
require a full planet Earth to meet their needs. In the long term these effects can lead to
increased conflict over dwindling resources and in the worst case a Malthusian catastrophe.

Dimensions of Globalization :

According to UN-DAW (1999), Globalization has become the catch-all term used to refer to
those various phenomena and processes that are brought about by changes towards world
economic integration. It therefore lacks a neat definition. Its economic dimensions,
however, cover the closely related but distinct concepts of openness or liberalization,
integration and interdependence of nations. From this statement, many faces of globalization
are widely recognized with varied expectations. These include capital expansion, trade
expansion or trade liberalization, cultural integration, financial liberalization, increased
information and technology flows, increased labor mobility, changing consumption patterns
and so on. Central to all these is increased exchanges or trade. Thus trade liberalization is one
of the most touted features of globalization.

In the agricultural sector or in other primary production or craft economies, trade

liberalization was jumpstarted by structural adjustment policies (SAPs). To these economies,
SAPs continue to be the major face of globalization and has been analyzed more than other
facets. In this regard, it is always difficult to disentangle trade effects from other globalization
effects. In these discussions of the micro level analysis of globalization, we shall also focus
on the liberalization policies that have shaped agricultural growth process in Africa.

Central to this is the theory of inequality as it affects unequal partners. Globalization effects
are expected to be positive for all trade participants, and although there will be net gains and
net losses; it is propounded that the net gain will outweigh the net loss (World Bank, 2001).
But in recognizing the inherent equity considerations in the response to the same set of
opportunities by different (unequal) actors, it remains doubtful that the net gain will augur
well for long term human development especially in poorer countries or between different
groups within the same country. According to Elson (1989), adjustment means change and
change means costs as well as benefits, losers as well as winners. Change must therefore be

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managed so as not to leave inequities in is distribution of costs and benefits. And according to
ADB (1992), all must be carried along into the income-growth process that liberalization
offers, if Africa is to achieve the self-sustaining growth that has always eluded it. As stated by
Elson and quoted in Gladwin (1991) And if greater reliance is to be placed on private
enterprise, we need to ask, whose enterprise? The enterprise of the woman farmer (on whom
household subsistence is hinged) or the enterprise of (male-managed, household, market-
bound) agribusiness and merchant with monopoly power? The enterprise of women
cooperatives or that of a multinational corporation?

These diametric concerns symbolize the lack of synergies between the macro and micro
impacts of liberalization and central to this is the creation rather than the eradication of
(feminized) poverty and food insecurity in Africa.

The Impacts of Globalization on Agrarian Structure:

1.Agrarian Structure and Globalization:

The term agrarian structure usually denotes the pattern of how agricultural lands are
distributed both among various owners and among various cultivators, including private
producers as well as communities and the state. The land distribution pattern is historically
determined, while being influenced by such factors as ecology, population density and
technology, among which the market structure also plays a critical role. Indeed, a dual
agrarian structure consisted of small family farms commonly called peasants and large
agribusiness plantations, which are observable in many places in Southeast Asia, was
originated in response to the integration of this region with global markets in the late 19th to
the early 20th century under Western colonialism. During this period, rising demands for
tropical agricultural products from the industrializing West were channeled to this region
through major innovations in transportation including the introduction of steam ships and the
opening of Suez Canal (Myint 1965; Ingram 1971). Correspondingly, Western traders became
eager to assemble topical commodities for bulk shipment. In those days unused lands suitable
for the production of tropical export crops were abundantly available. The problem was how
to mobilize a large number of peasant producers in remote hinterlands for production and
assemble a large amount of their products in meeting quality standards acceptable to Western
markets. The traditional marketing system in this region as well as other developing regions
was adequate to handle small marketable surpluses from peasants above their own home
consumption within a small local market, but was not sufficient for channeling global
demands to rural producers in the hinterland. Facing this problem, Western traders found it
necessary to develop large plantations under their management for securing needed products
in a sufficiently large bulk at a standardized quality for shipment to their home markets. In
fact, this line of policy has already been promoted by so-called economic concessions, by
which the large tracts of unused state lands have been transferred to private management

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under long-term lease contracts. Recently, this policy has been criticized as promoting
inequality and poverty as well as environmental degradation under the increasing incidence
of landlessness in the rural sector. Correspondingly, the program of social concessions has
started, by which unused state lands including those of cancelled economic concessions are
allocated to landless families in small parcels

2.Merits and Drawbacks of Family Farms versus Plantations:

The advantage of plantations can best be understood in comparison with the merits and
drawbacks of family farms. The greatest merit of family farms lies in their predominant
reliance on the labor of family members. Family workers have the strong incentive to elicit
conscientious work efforts for the sake of own familys well-being, whereas hired wage
workers are inclined to shirk in the absence of supervision by their employers. This advantage
applies to not only farm but also non-farm family enterprises, but it is much more pronounced
in agricultural production. In urban industries, work is standardized and relatively easy to
monitor. In contrast, the biological process of agricultural production is subject to infinite
ecological variations. Different ways of handling crops or animals are often required for even
slight differences in temperature and soil moisture. Unlike industrial production being carried
out inside factories, the dispersal of agricultural operations over open wide areas adds to the
difficulty of supervising workers. For this reason, family farms continue to be the dominant
form of agricultural production even in high-income economies where industrial production
is predominantly carried out in large factories manned by hired wage workers. A conventional
explanation for this question has been to assume the existence of scale economies inherent in
the production of tropical export crops in contrast to the absence of scale economies in
temperate crops such as wheat (Baldwin 1956). Yet, accumulated empirical evidence has
denied the existence of scale economies in farm-level production. Instead, the following three
conditions have been identified as underlying the emergence of the plantation system
((Hayami 2001; 2004)

2.1.Coordination between farm production and processing/marketing:

Significant increasing returns exist at the levels of processing and marketing, though not
existing at the farm production level. The vertical integration of a large estate farm with a
large-scale central processing/marketing facility under the same management is called for
because of the need to supply farm-produced raw materials in a timely schedule. This need is
known to be strong for the processing of such products as palm oil, sisal and tea. Comparison
of processing tea leaves between fermented black tea and unfermented green tea is
especially illuminating on this problem. Manufacturing black tea at a standardized quality for
export requires a modern fermentation plant into which fresh leaves must be fed within a few
hours after plucking. The need for close coordination between farm production and large-
scale processing underlies the pervasive use of the plantation system for black tea production.
Un fermented green tea, in contrast, remains predominantly the product of family farms in
China and Japan. Another typical example is bananas for export. In this case, harvested fruits
must be packed, sent to the wharf, and loaded on a refrigerated boat within a day. One full

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boat of bananas that can meet the quality standard of foreign buyers must be collected within
a few days. Therefore, the whole production process from planting to harvesting must be
precisely controlled to be consistent with the shipment schedule. Thus, the plantation system
has a decisive advantage for bananas for export, but not for bananas for domestic
consumption so that they are usually produced in family farms.

2.2 Ability of building infrastructure:

Large plantations have a decisive advantage in opening new lands for cultivation where
infrastructure such as roads, bridges and docking facilities is absent. Without such
infrastructure, natural resources in under-developed hinterlands can hardly be exploited for
global demands irrespective to how large their potential is. An individual family farm not
only has little means to build such large infrastructure but also has little incentive to do so,
because of the difficulty of internalizing gains from the infrastructure investment, For
example, if a small farmer builds a road, not only he himself but also his neighbors will use
it. The benefit that he will obtain from the road is likely to be too small to pay for his
investment, even though the total benefit to all the users including the neighbors is expected
to be much larger than the investment cost. In this case it is unlikely for any smallholder to
have the incentive of making such infrastructure investment. In contrast, a large plantation
has the incentive, because as the sole user of a large land area the plantation can capture most
benefits from the infrastructure built in its territory. This was one of major factors underlying
the emergence of the plantation system in tropical Asia from the late 19th century when rising
global demands for topical export crops dictated opening new lands for cultivation in the
regions characterized by thin population density and absence of infrastructure in support of
market activities.

2.3 Preemption of frontier lands:

While recognizing the economic advantage of the plantation system in the land-opening
stage, plantations could have not been established unless large land concessions were granted
to specific planters for their exclusive use, similar to economic concessions in Cambodia
today. Colonial governments gave such concessions to Western planters, typically under the
British rule in such places as the highlands of Kenya and Sri Lanka. In Indonesia, the Dutch
colonial government had traditionally tried to prevent alienation of farmland for rice
production from indigenous peasants by regulating against land purchase by foreigners
including ethnic Chinese. However, in the late nineteenth century when demands for tropical
cash crops rose sharply, by the Agricultural Land Law of 1870 the government granted Dutch
planters long-term contracts to lease in wild lands in upland areas, which were de jure owned
by the government but were de facto used by native tribes. While this new institutional
arrangement should have accelerated the development of empty land for cash crop
production, it served as an instrument to preempt land for the elite, closing small holders
land access (Hayami and Kikuchi 1982).

3. Declining Role of Plantations:

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To recapitulate, the plantation system tends to be adopted despite its high cost of labor
management where: (1) close coordination between farm-level production and large-scale
processing/marketing facilities is required for certain crops, (2) basic infrastructure is absent
in the land-opening stage, so that the large-scale production unit is needed for internalizing
gains from investment in infrastructure, and (3) concessions on the use of large tracts of
virgin land for exclusive use are granted to certain power elite, such as Western planters
during the colonial period. Among the three conditions, the first condition applies chronically
to specific crops, whereas the second and the third are mainly limited to the land-opening
stage though applicable to all the crops. Therefore, it is common to observe that the role of
plantations tends to decline, as frontiers are closed for opening new lands, population density
rises and infrastructure is decently developed (Myint 1965; Booth 1988). This tendency can
be clearly observable in the recent rise of Thailand in the world export market of tropical
crops as compared with Indonesia and the Philippines. These three economies in Southeast
Asia were traditionally endowed with relatively abundant land resources, which were
exploited for export crop production in the late 19th to the early 20th century. In this process
the plantation system became dominant in the production of export crops in colonized
Indonesia and Philippines, whereas family farms continued to be dominant in independent
Thailand specializing in the production of rice. However, after the Second World War,
Thailand emerged as a major exporter of several tropical export crops associated with the
declines of Indonesia and the Philippines. Sugar represents a typical example. Thailand was a
net importer of sugar before the Second World War and was barely self-sufficient in the early
1960s.Nevertheless, Thailand rose to the third largest sugar exporter in the world next to
Brazil and Australia in the1990s. In contrast, Indonesia and the Philippines, two traditional
exporters of sugar in Asia, almost completely lost their significance in the world market.

4. Prospect for Contract Farming:

The large plantation based on hired wage laborers under centralized management was a
necessary and efficient organization for opening new lands for export crop production,
because of its ability to build necessary infrastructure. However, after the land-opening stage
was over and infrastructure was built, plantations became increasingly more inefficient
relative to family farms, because of high costs to supervise hired wage laborers. Because of
high costs to monitor hired labor in spatially dispersed and ecologically diverse farm
operations, plantations usually practice monoculture. Complicated inter-cropping and crop-
livestock combination are more difficult to manage by the command system, implying that
both labor input and income per hectare are lower in plantations. Moreover, continuous
cultivation of a single crop over a wide space increases the incidence of pest, and
counteracting application of chemicals tendsto pollute environments Yet, coordination
between farm-level production and marketing/processing continues to be vitally important for
several export crops. Many agricultural products of the rising world demand today are
perishable commodities, such as flowers, fruits and vegetables. Assembling these
commodities in standard quality for regular shipment to the markets of high-income
economies requires the high skill of achieving tight coordination across harvesting,

16
processing and shipping activities. In this way the advantage of agribusiness in large-scale
marketing/processing activities and the advantage of small family farms in farm-level
production activities can be combined. Contract farming has recorded several significant
successes, notably in pineapples for processing by multinational agribusiness in Thailand,
with which Thailand rose to the world-top exporter of pineapple products, surpassing the
Philippines based on the plantation system.

5. Implications for Combodia:

A conceptual framework built on the foregoing review of experiences in Southeast Asia

suggests that the following considerations may be necessary in designing agrarian policies for
Cambodia: Examine where plantations can contribute Above all, it is important to understand
that neither family farms nor plantations are unanimously efficient. Plantations can be a more
efficient organization than family farms for channeling global demands to rural hinterlands
under the condition that the large tracts of unused lands are available for opening to the
cultivation of export crops and, yet, appropriate marketing infrastructure is absent. Since
amongSoutheast Asian economies Cambodia is exceptionally rich in natural resource
endowments with its population density being the second lowest only next to Laos, there may
be some areas still being left where plantations ability of building infrastructure can be
profitably used for increasing social welfare. Whether this is the case or not should be
resolved by careful research based on empirical data.

Support family farms with infrastructure:

Even if uncultivated lands may be found to profitably use the plantation system at present,
they are likely to be exhausted soon under the pressure of rapid population growth amounting
to nearly 2.5 percent per annum, with the result of raising advantage of the family farm
system. The major limitation of family farms is that no individual farm is sufficiently large to
profitably build infrastructure necessary for its own economic activities. For promoting
efficiency of family farms, it is critically important for the government to supply
infrastructure such as roads, electricity and agricultural extension services. While the major
infrastructure, such as highways, large-scale irrigation and agricultural research systems must
be shouldered by the government, small public goods, such as country roads, grazing lands
and fishing stock in small rivers and lakes, can be better conserved by the collective efforts of
local people at the community level. Therefore, the supports on smallholders may include
rendering to them education and extensions on the management of commons, providing
financial and material supports such as food-for-work programs and micro-credit programs,
and backing up communities rules by the governments administrative guidance and/or
formal laws (Aoki and Hayami 2001).

Promote contract farming in various designs:

17
Even with improved infrastructure, however, small family farms alone are unlikely to be
sufficient in coping with rising global demands for high-quality products, many of which are
perishables such as flowers and fruits. For the sake of regular shipment of such commodities
in bulk loads, tight coordination between farm-level production and marketing/processing is
required, for which plantations have advantage. Yet, for maintaining high quality standards
for such delicate commodities as flowers and fruits, conscientious care and judgment by
family workers are advantageous. For combining these merits of family farms and plantations
together, contract farming seems to have a high prospect to becoming the major career of
natural resource exploitation in Cambodia. In this regard, it is important to recognize that
contact farming has various forms in a spectrum ranging between the plantation and the
family farm systems. Indeed, there are cases in which agribusiness plantations have adopted
some elements of contract farming are adopted by plantations in order to increase their
efficiency. In any case it is advisable for policy makers in Cambodia to observe various
options of contract farming through visits to several successful sites, such as for pineapple in
Thailand and tea in Kenya.

Ensure competitive markets:

Rural markets in low-income economies are highly imperfect, subject to many market
failures, owing to imperfect information and high risk as well as underdevelopment of laws
and courts. However, observations in Southeast Asia show that private entrepreneurs in
hinterlands have been effectively overcoming this problem by utilizing the community
relationships. They often fail in market transactions due to their weak information capacity.
Yet, it is hazardous to attempt replacing their functions by government or non-market
organizations. Such attempts are likely to result in the government failures that are often more
dangerous than market failures. Critically important for supporting rural entrepreneurs is for
the government to refrain from distorting incentives of market agents. If markets are
competitive, profit-seeking private entrepreneurs in rural areas will try to make the best use
of community relationships for reducing transaction costs in order to win the competition.
Resulting efficiency improvements in marketing will benefit both consumers and producers.
Therefore, in organizing contract farming, for example, it is not appropriate to grant an
exclusive franchise over a territory to either an agribusiness enterprise or a co-operative to
force farmers operating in the territory to deliver their products to the center of processing or
marketing held by a particular principal. Farmers should be given an exit option to move to
other principals after completing the contact for the present period. Otherwise, contract
farming will be an oppressor in support of monopoly to exploit smallholders, irrespective of
its being organized by profit-seeking private business or non-profit organizations like co-
operative.

Charge prices to land users:

Critically important for the government to promote rural entrepreneurs activities for
effectively exploiting natural resources in response to global demand is charge appropriate
prices to their use of lands. It must be recognized that the obligation of land rent payment

18
works as a strong pressure on the lessees of lands to utilize lands more efficiently, so as to
raise sufficient profits for paying the rents. If the lessees are waived of rent payments, they
are subject to the temptation of holding lands for the expectation of capital gains from land
price appreciation or for the sake of social prestige without using the lands for productive
purposes. So far, many elites who received economic concessions have not yet opened their
estates and paid no rent to the government. Forcing them to pay appropriate rents will
motivate them either to make greater efforts of using the lands more productively or to
transfer the lands to someone else who has the capacity to use the lands more productively.
The present arrangements of economic concession do not seem considering this productivity-
enhancing role of land rents. In the province of Kompong Cham, I happened to meet an
operator of a cashew plantation based on an economic concession of 2000 hectares for the
duration of 70 years. According to him, by contract he is obliged to pay to the government
9% of net profit after the gratis period of 9 years. This gratis period appears to be too
generous, considering the fact that cashew trees begin bearing fruits in less than 2 years after
planting.

6.Globalization and Technology Transfers :

Take the argument that globalization brings in new technology. On a selective basis,
globalization indeed brings in new technology and opposition to globalization is not
tantamount to becoming technologically isolated from the rest of the world. But today, almost
no advocate of globalization is calling for selectivity. For instance, Coca-Cola and Pepsi were
welcomed into the country even though they offered little in terms of new technology.
Cosmetic manufacturers and manufacturers of designer label clothes have also brought in
little new technology of any consequence. The same can be said of advertising companies and
manufacturers of consumer non-durable goods like soap, detergent, toothpaste, cereals etc.

Some offer a counter-argument for unrestricted globalization arguing that only if India
liberalizes unconditionally will India be able to attract high technology and capital investment
in the areas it really wants. In other words, if we let the Cokes and Pepsis of the world to
come in, the INTELs, the AMDs, and the CISCOs will follow. But the experience of the last
decade belies such claims. While it is true that INTEL, AMD and CISCO have all invested in
India, the sum total of their investments has been minuscule in relation to their other
investments abroad. And rather than bring in new technology to India, they are actually
sucking out technology from India. All their investment has been on divisions that either
develop software on demand, or provide research assistance to their US counterparts. None of
them has set up any manufacturing plants in India or signed any technology transfer
agreements with any Indian company. All the technology that is developed is owned and
marketed by the parent company, and other than the slightly higher than average salaries that
accrue to a small minority of Indians working in the sector, few benefits accrue to India as a
nation. What is worse is that these companies are provided all manner of perks and privileges

19
to exploit India's intellectual capital. They are given tax breaks and tax write-offs. They are
given preferential treatment in the allocation of scarce resources like land, and round-the-
clock electricity supply.

Conclusion:
However, the globalization is spreading day by day, but its always created problem in the
third world country. Only the developed countries are found the benefits of the activities of
this globalization. The role IMF, World Bank and Multinational Company are spreading in
the agricultural and another sector all over the world. They promoted to set up new industry,
loan activities running, new hybrid seeds, new agricultural tools, machineries and many
others side. But with the rise of population growth the land is fragmented, agricultural land is
divested due to set up new industry or another companies. However, they play the negative
role, but created the employment opportunity of these countries.

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