DVS 2201 CITIZENRY, PROFESSIONALISM,

GLOBALIZATION AND ENTREPRENEURSHIP

Introduction
Having looked at Citizenry and professionalism, we
will focus on globalization and entrepreneurship and
how these processes are linked to development
especially of developing countries and Africa in
particular. Globalization of markets and production
has produced many opportunities and new threats for
businesses in Africa and the other parts of the
developing world. It should be noted that
industrialized countries are the ones dominating the
world business.
Introduction contd…

• Part of these lectures will point to the major challenges

facing entrepreneurs and their small-scale enterprises in
Africa and we shall discuss suggestions on how best
African entrepreneurs can survive amidst competition in
the world trade due to globalization-incase they need to
use globalization as an opportunity. This will be covered
under economic aspects of globalization
Introduction contd…
• So what is "globalization"? What are its implications for
the conduct of economic policy, particularly in Africa?
What are its potential benefits and risks? What will
developing countries have to do to benefit from it, to avoid
its downside risks? Is there any good reason to fear
globalization?
Introduction contd…
• To answer these and other questions, it would be useful
first to explain what globalization is, and what it is not,
what has caused it, and what effects it has had. Situating
the discussion in this context will make it easier to identify
the benefits and the true risks of the trend to global
integration and, in turn, to determine the correct policy
response.
• In most basic terms,
globalization is the integration of economies throughout the
world through trade, financial flows, the exchange of
technology and information, and the movement of people.
 Definition of Globalization:
• Globalization has become a major topic of discussion and concern in
economic circles since the mid-1990s
• It is a complex phenomenon, which encompasses a great variety of
tendencies and trends in the economic, social and cultural spheres.
It has a multidimensional character and thus does not lend itself to
a unique definition
• Globalization is a continuous process leading to free movements
and transfers of goods and services and factors of production as
well as information and technology across national borders aided
and supported by national and international market oriented
economic, political, and legal institutions in an economically,
politically, and socially interconnected and interdependent world
(Wolf, 2004)
Definition of Globalization contd…
It can also be viewed as a process of advancement and increase
in interaction among the countries and people of the world
facilitated by progressive technological change in transport,
communication, political and military power, knowledge and
skills as well as interfacing of cultural values, systems and
practices
Nsibambi (2001) viewed globalization as an international socio-
political, economic and cultural permeation process facilitated
by policies of government, private corporations, international
agents and civil society organization
George et al (2002) view globalization as the increasing
interconnectedness of the world (see the diagram in the slide
after the next two), through the compression of time and space
brought about by advances in knowledge and technology as
well as by political events and decisions
Definition of Globalization contd…
• Swedish journalist Thomas Larsson, in his book “The Race to
the Top: The Real Story of Globalization” (2001), stated that
globalization is the process of world shrinkage of distances
getting shorter, things moving closer.
• It pertains to the increasing ease with which somebody on one
side of the world can interact, to mutual benefit, with somebody
on the other side of the world
• It should however be noted that an individual’s political
ideology, geographic location, social status, cultural
background, and ethnic and religious affiliation provide the
background that determines how globalization is and how is
interpreted for instance the former director of Third World
Network president of Malaysia looked at globalization as
colonization.
Globalization: Periodization
• Increased global integration in a number of economic areas
began to intensify in the late1980s and early 1990s when many
governments supported economic liberalization with states
efforts to uphold free trade
• Looking at the aspects of globalization below, one can consider
globalisation to be the concept of the late 20 th Century.
• Globalization in the light of this, needs to be distinguished from
internationalization because internationalization is only one of
the aspects that satisfies globalisation. Over the past century for
instance Africa had been integrated in the world system
through colonization, this can be looked at as
internationalization per se, the process which described
transactions among states reflected in the flows of trade and
capital. What makes a difference is that globalisation goes
beyond internationalization to include technological revolution
and liberalization of economies (Baylis et al 2001)
 Interconnectedness of the world today
Trade flows among Western countries
The Characteristics of contemporary Globalization Process

From the previous diagram, it can be seen that people

around the globe are more connected to each other than
ever before. Information and money flow more quickly
than ever. Goods and services produced in one part of the
world are increasingly available in all parts of the world.
International travel is more frequent. And therefore
globalization is characterized by:
• New and growing social networks overcoming traditional
economic, political, cultural, and geographic boundaries
• Expansion of social relations, activities, and interdependence
• Intensification and acceleration of social exchanges
The Characteristics of contemporary
Globalization Process contd…
• Elimination of politically-imposed barriers with the
liberalization and deregulation of markets
• The rapid increase in capital and private investment flows
has raised the resources available to countries able to
attract them, and accelerated the pace of their
development beyond what they could otherwise have
achieved.
• Moreover, greater openness and participation in
competitive international trade have increased
employment, primarily of skilled labor, in tradable goods
sectors.
• Globalization of human consciousness; people becoming
conscious of global interdependence
The Characteristics of contemporary
Globalization Process contd…
• There is a relatively small yet diverse group of global
players who have been the planners and instigators
behind globalization. This is exemplified by enhanced
roles of international economic institutions: multinational
companies, World bank, IMF, World Trade Organization
• privatization of assets, retreat of state functions
• The presence of Multinational Corporations and TNCs
• The integration of markets on a worldwide scale that could
eventually mean worldwide standards or practices for
product quality, pricing, service, and design.”
Globalization dimensions (Aspects)
Globalization is a multi-dimensional phenomenon with numerous
aspects of life. There is intensification of economic, political,
social and cultural relations across borders.
a)Technological revolution dimension
• A number of authors take technological factors as the main
causes of modern globalization, since the latest technological
achievements have also enabled fast and undisturbed migration
of people and flow of capital and information, having
simultaneously induced the need for it. The technological
changes include the latest accomplishments of technological
revolution such as telecommunication systems, the scientific
revolution, new forms of transport, the Internet and similar,
because all of these technical-technological factors have
facilitated unhindered communication of knowledge, people,
information and capital among the countries worldwide.
Globalization dimensions contd…
Sometimes technological progress can be considered as one of
the main driving forces of globalization since it shortens
distances in a broad sense by reducing transport and
communication costs
• b) Economic dimension: globalization” is often used to refer to
economic globalization because of rapid increase in capital and
private investment flows which enable the integration of national
economies in to the international economy through trade, direct
foreign investment and capital flows. In other words, there is
establishment of a global common market, based on the freedom
of exchange of goods and capital, with financial liberalization.
There is also development of worldwide financial markets and
access to external financing for borrowers such as countries
borrowing from IMF (international Monetary Fund). There is
industrial globalization with the development of worldwide
production markets and broader access to a range of foreign
products. This aspect also includes foreign aid ideology.
Globalization dimensions contd…
• c) Socio-cultural dimension:
• this involves sharing of ideas, attitudes and values across
national borders. This sharing generally leads to an
interconnectedness and interaction between peoples of
diverse cultures and ways of life.

• Mass media and communication technologies are the

primary instruments for cultural globalization. Many people
believe that globalization is driven by the worldwide export
of western culture through the new mass media: film,
radio, television and recorded music.
Globalization dimensions contd…
Socio-cultural dimension contd…
• Therefore heterogeneous cultures become
incorporated and integrated into a dominant
culture which eventually covers the whole world.
• Furthermore there has been propagation of
western culture and democracy as well as
globalization of languages alongside cultural
conversions. It can go as far as preparing
software for use in any language and cultural
environment either by designing it to be usable in
this way or by adding facilities to existing software
to facilitate subsequent localization
Globalization dimensions contd…
(d) Political dimension of globalization: There is creation
of international organizations to regulate the relationships
among governments and to guarantee the rights arising
from social and economic globalization. These could be
organizations such as UN, security council, World Bank
among others.
• Influence of International policies and commitments on
nation states governance
• International disputes and wars, cross boarder conflicts
• State Sovereignty and regional integration-the role of
international organizations and treaties
• Globalization and national sovereignty: national
governments losing their control over their relationships
with other states (and in some cases their domestic
affairs) and yielding to multinational and international
organizations and multinational economic powers
Views for and against Globalization
• Globalization is not a single set of processes and does not
lead in a single direction. It produces solidarities in some
places and destroys them in others. It has quite different
consequences on one side of the world from the other. In
other words, it is a wholly contradictory process (Giddens,
1996).
• Therefore there are those that look at globalization as an
engine of progress while others look at globalization as an
engine of exploitation disadvantaging the developing
world.
Views for: Globalization as an engine of
progress
Globalization optimists consider globalization a powerful
force that shall transform the world and that is responsible
for the massive economic and social evolution, but that
requires gradual adaptation from states and societies.
Here below are considered as positive components
• Import-export of goods-free movement of goods and
services
• Investment of capital in another country to produce goods
there
• Creation of international production networks – the world
as a factory
Globalization as an engine of progress contd…
• Removal of obstacles to trade and financial flows and therefore
trade liberalization leads to a more efficient reallocation of
resources which in turn creates net benefits for both parties
involved in the exchange of goods
• Migration of workers to seek employment anywhere
• Capital is free to go anywhere to seek a higher rate of profit
• Global division of labour reaches unprecedented scale:
everybody depends on everybody else
• The opening up of economic opportunities allows the
movement of foreign capital, technology and management,
largely from transnational corporations (TNCs), to host country
entrepreneurs and corporations
Globalization as progress contd…
• The globalization of technology has contributed not only to the
explosive growth of information exchange via the Internet, but
also to the expansion of education opportunities and the
creation of trans-national social networks. Information, which
had been the monopoly of the few, is becoming accessible to
wider and more diverse audiences
• Greater economic openness, foreign direct investment, and
transfer of technologies offer potential opportunities for
economic growth.
• Economic globalization has also provided opportunities for
developing countries in that it expands the size of their markets
for export and attracts foreign capital, which aids development.
• Globalization optimists contend that the existence of market
failures, deficiencies and weaknesses can be regulated by the
state, but ‘wise’ governments learn to work with markets and
not against them.
The Discontents with Globalization
• While benefiting many in different parts of the world the
globalization process has led to the disfranchisement of the
poorest of the poor in many developing countries as well as some
developed countries resulting in a widening gap between the poor
and the rich.

• According to Ulrich Beck (2000) “globalization implies the

weakening of state sovereignty and state structures.” This is due
to greater economic and social interdependence that seem to
affect national decision-making processes since it calls for a
transfer of decisions to the international level. Control of national
economies seem to be shifting from sovereign governments to
other entities including the most powerful nation states,
multinational or global firms and International organizations.
Hence national sovereignty is being undermined
The Discontents with Globalization contd…

• According to Neeraj (2001) globalization is nothing but

‘re-colonisation’ in a new attire

• In their efforts to adhere to the prescribed economic and

financial liberalization (promoted and managed by the
West) many governments in the developing world have
curtailed or abandoned numerous social programs
essential to their economic development. (Education,
healthcare, etc.)

• The negative role of technological inventions in state

security systems such as invention of weapons of mass
destruction, sophisticated intelligence systems etc.
Discontents (contd…)
• The interaction between political and economic forces in
managing the globalization process seems to have been
directed more by politics than by economics.
• The unfair (excessive) influence of the powerful interest
groups, particularly the ones in the West, in setting the
rules of the game and shaping the global economy; these
rules have in some cases made the poorest countries
worse off.
• The conflicts (and competition) between small local
businesses and large multinationals often have led to the
disappearance of the former.
• This is because globalization is largely shaped by the
rules advanced by one part of the world – namely the
most influential – and these rules do not necessarily
favour developing countries
Discontents (continued)
• The international organizations (WB, IMF, WTO, etc.)
managing the globalization process are run by appointed
(non-elected) officials mostly from rich countries whose
sensitivity to the problems and needs of developing
countries is at best limited. Policies and decisions
undertaken by these organizations tend to favor the
political and economic interests of the rich countries their
corporate citizens.
• Insufficient concern for regional and global environment
has put many populations as well as the world as a whole
at risk while at the same time national governments find
themselves weakened, by a combination of economic and
political pressures from within and without, in dealing with
environmental consequences of globalization.
•
Discontents (continued)
• The economic system (American style capitalism) forced
upon developing countries is not appropriate for many of
them and has in fact harmed large segments of their
population.
• The globalization process is being run in very
undemocratic ways. The rules and policies are made by
appointed officials mostly from western countries who are
not accountable to even those countries’ electorates.
• Developing countries that are most affected by the actions
and decisions of the managing international organizations
have little or no say in the policy making process.
Discontents contd…
• In addition, the reform efforts of the African countries will
need to continue to be supported by adequate financing
on concessional terms.
• In this regard, the Fund has put the ESAF, an IMF
concessional lending facility, on a permanent footing, so
that it can continue to support reform efforts of the poorer
countries, especially in Africa.
• Moreover, the Fund and the World Bank have recently
begun implementing the framework for action to resolve
the external debt problems of heavily indebted low-income
countries (HIPC), including their large multilateral debt.
• Three African countries--Burkina Faso, Côte d’Ivoire and
Uganda--are among the first countries to be considered
under the Initiative.
Discontents contd
• The challenge facing the developing world, and African
countries in particular, is to design public policies so as to
maximize the potential benefits from globalization, and to
minimize the downside risks of destabilization and/or
marginalization.

• None of these policies is new, and most African countries

have been implementing them for some time.
Who benefits and who loses? Contd…
• It is important to recognize that globalization is not a zero-
sum game--it is not necessary for some countries to lose
in order that others may gain. But to take advantage of
this trend, countries will have to position themselves
properly through the right policies.
• Clearly, those economies that open themselves to trade
and capital flows on a free and fair basis and are able to
attract international capital will benefit the most from
globalization. Open and integrated markets place a
premium on good macroeconomic policies, and on the
ability to respond quickly and appropriately to changes in
the international environment.
Who benefits and who loses?
• Success in open markets, and in attracting new
investment and advanced technology, also means that the
structure of economies is changing more rapidly than ever
before. As with any structural change, there will be some
segments of society that are at a disadvantage in the
short term, even while other segments, and the economy
as a whole, are benefiting.
Who benefits and who loses? Contd…

• This does not mean, however, that countries should seek

to isolate themselves from globalization. Rather,
governments must fully embrace globalization in
awareness of its potential risks, and seek to provide
adequate protection for the vulnerable segments of
society during the process of change.
Policy Response cntd
• In particular, sub-Saharan Africa has made substantial
progress toward macroeconomic stability:
• There has been continued improvement in overall growth
performance. Average real growth has increased from
less than 1 percent in 1992 to over 5 1/2 percent in 1996,
and this positive trend is expected to continue;
• There has been some success in bringing down inflation--
many countries have already achieved single digit inflation
rates, and for the region as a whole, average inflation is
expected to fall from the peak of 60 percent in 1994 to 17
percent in 1997;
• More importantly, no one set of policies is a sufficient
condition for success--indeed, experience shows that poor
policies in one area can obstruct progress, even if policies
in other areas are good. The three objectives of policies
complement and reinforce each other:
Policy Response cntd
• Openness, in the resolute pursuit of policies to rationalize
and liberalize the exchange and trade regimes, is vital in
international competition. This forces the economy to fully
exploit its comparative advantage through trade;
• And finally, the primary role of the government should be
the creation of an enabling environment that encourages
foreign and domestic investment, and of a solid
infrastructure to support an expanding economy.
• African governments have also made considerable strides
in opening their economies to world trade. A good
indicator of this is the fact that 31 Sub-Saharan African
countries have accepted the obligations of Article VIII of
the Fund's Articles of Agreement, almost all of them since
1993.
Policy Response cntd
• The government must also implement policies that
eliminate the structural weaknesses that would be
exposed by the heightened international competition. Not
surprisingly, these elements are generally central to the
policy dialogue between the International Monetary Fund
and its members (Alassane D. Ouattara, 1997).
Policy Response cntd
• Most countries have moved ahead with trade and
exchange liberalization, eliminating multiple exchange
rates and nontariff barriers, and also lowering the degree
of tariff protection. A recent qualitative study by the African
Department of the Fund indicates that the number of
countries in Sub-Saharan Africa with a "restrictive"
exchange regime declined from 26 in 1990 to only 2 in
1995, while the number of countries with a "substantially
liberal" trade regime rose from 26 to 38 over the same
period.
Policy Response contd…
• Finally, the restructuring of many African economies is
gaining momentum. Throughout the continent,
government intervention in economic activity is on the
wane. Administrative price controls are being reduced and
agricultural marketing has been widely liberalized.
• The process of restructuring and privatizing state
enterprises has been underway for some time in most
countries, though with varying speed and degrees of
success. And finally, fiscal reform is gaining ground--
African countries are taking firm steps to rationalize their
tax systems, to reduce exemptions, and to enhance
administrative efficiency.
• At the same time, they are also reorienting expenditures
away from wasteful outlays towards improved public
investment and spending on key social services,
particularly health and basic education.
Main areas where African countries need to achieve
greater progress in order to speed up their participation
in globalization
• It is becoming increasingly evident that so far globalization
has benefited only a relatively small number of countries.
The task for the nations is to make globalization
beneficial, minimizing the costs and raising the benefits.
But, as pointed out earlier, it is essential to achieve the
right combination of policies. While Africa is clearly on the
right track, there is still some way to go. Five main areas
where African countries need to achieve greater progress
in order to speed up their participation in globalization
include:
Main areas where African countries need to
achieve greater progress in order to speed up their
participation in globalization contd…
1)Reinforcing democratic institutions and achieving
good governance
National authorities should spare no efforts to tackle
corruption and inefficiency, and to enhance accountability
in government. This means reducing the scope of
distortionary rent-seeking activities; eliminating wasteful or
unproductive uses of public funds; and providing the
necessary domestic security.
• Many African countries will also have to undertake a
comprehensive reform of the civil service, aimed at
reducing its size while enhancing its efficiency.
• In short, governments must create confidence in their role
as a valued and trusted partner of private economic
agents.
Main areas where African countries need to
achieve greater progress in order to speed up their
participation in globalization contd…
• 2) Reforming financial sectors
• An open and liberal system of capital movements is
beneficial to the world economy.
• However, rising capital flows place additional burdens on
banking regulation and supervision, and require more
flexible financial structures.
• This aspect of globalization thus confronts developing
countries with a new challenge--to accelerate the
development and liberalization of their financial markets,
and to enhance the ability of their financial institutions to
respond to the changing international environment
Main areas where African countries need to
achieve greater progress in order to speed up their
participation in globalization contd…
3) Maintaining macroeconomic stability and accelerating
structural reform
As the continent enters the "second phase of adjustment", the
emphasis must be to maintain economic stability and to
reinforce the implementation of structural policies that will make
the economies more flexible, encourage diversification, and
reduce their vulnerability to exogenous shocks.
These include further reforms in the areas of public enterprise
activity, the labor markets, and the trade regime. Governments
must also ensure that public services--including transportation
networks, electricity, water, and telecommunications, but also
health services and education--are provided in a reliable and
cost-efficient fashion.
Main areas where African countries need to achieve
greater progress in order to speed up their
participation in globalization contd…
4) Ensuring economic security.
Establishing the right framework for economic activity
addresses the second requirement of policy--removing the
sense of uncertainty that still plagues economic decision-
making in most of Africa. The direction and orientation of future
policy must be beyond question. This requires the creation of a
strong national capacity for policy formulation, implementation
and monitoring.
• Moreover, transparency, predictability and impartiality of
regulatory and legal systems must be guaranteed. This goes
well beyond respect of private property rights and enforcement
of commercial contracts. It also involves the elimination of
arbitrariness, special privileges, and ad-hoc exemptions, even
where these are intended to encourage investment.
Main areas where African countries need to
achieve greater progress in order to speed up their
participation in globalization contd…
5) A partnership with Civil Society
• African governments will need to actively encourage the
participation of civil society in the debate on economic
policy, and to seek the broad support of the population for
the adjustment efforts. To this end, governments will need
to pursue a more active information policy, explaining the
objectives of policies and soliciting the input of those
whom the policies are intended to benefit.
6) promote an efficient public administration
7Promote an effective strategy of resource mobilization and
improve tax administration systems among others
African Entrepreneurs and Globalization
Globalization can also pose a challenge on how Small and
Medium Enterprises in Africa should brace themselves to
respond to and take advantages of the changes, and
carve an appropriate position in the global competitive
economy.
A focus on the implications of globalization for
entrepreneurship development in developing countries is
imperative, in view of the role of entrepreneurship as the
engine of economic growth,and also, considering the
apparent controversy about the role of globalization in
national economic growth and development which is
polarized between a positive perspective and a negative
perspective
African Entrepreneurs and Globalization contd…
• The evidence from the literature points to several
stumbling blocks that prevent African manufacturing
SMEs from participating successfully in the global
economy. These include problems with exports,
technology, competitiveness and inter-firm linkages as
well as barriers in the institutional and policy
environments.
Way forward for Africa Entrepreneurship
• developing countries must operate a selective or guided
open system with regards to business entry into their
economies from outside, to guard against market adverse
effect due to globalization
Way forward for Africa Entrepreneurship

• African entrepreneurs need to prepare for continuous

searching business innovation and opportunities at all times
and in any place in this epoch of global business turbulence
and marked uncertainties.
• They need to equip themselves with the desired appropriate
knowledge technology and skills for active engagement in the
global business environment
• They should also take into consideration the importance of
hiring well trained, globally exposed, knowledgeable managers
and professionals at large.
• Entrepreneurs collectively and academic institutions can
collaborate in training qualified professional that can play a
catalyst role in enhancing involvement in international business
activities.
Way forward for Africa Entrepreneurship

• entrepreneurs need to articulate a pragmatic vision,

exercise effective leadership, and develop a competent
business strategy
• the ability to adopt a global mindset in the exercise of
entrepreneurial initiative