New policies a must for globalization<\/p>\n
By Djauhari Oratmangun<\/p>\n
This is the first of two articles on globalization and the
\nrole of the nation states.<\/p>\n
JAKARTA (JP): The word \"globalization\" in recent years has
\nbecome commonly used as a buzzword all over the world. It has
\nbeen used to encapsulate several strands and trends of thought in
\nboth national and international fora.<\/p>\n
The use of this terminology to describe anything and
\neverything as a \"global\" phenomenon has, however, created more
\nconfusion.<\/p>\n
Basically, this word tries to create the opinion that
\neverything now has a global dimension and global effects and that
\nthis is a natural phenomenon with which humankind is being
\nconfronted with all its consequences. Being an unstoppable
\nphenomenon, we need to be ready and prepare to entertain this
\nglobalization process.<\/p>\n
The process of globalization in these recent years has
\nprompted many scholars and international organizations to
\nreexamine the meaning and, in particular, the dimensions of its
\nimpact on the process of development, especially from the
\neconomic perspective. And also to see what can be done by nation
\nstates, particularly those in the developing world, to meet the
\nchallenges it poses in facing the as yet unpacified and
\ntumultuous future.<\/p>\n
The terminology of globalization is more meaningful when it is
\nused in an economic context, and in conjunction with the concept
\nof the \"integration\" of countries and economies into a single
\nworld economy whose benchmarks are \"interdependence\" and
\n\"openness\".<\/p>\n
Globalization, in the economic sense, is used to describe a
\n\"process\" rather than a \"state of being\" -- a process of
\nincreasing economic activity across national boundaries, so
\ncreating an unavoidable economic integration and interdependence
\nbetween and among countries.<\/p>\n
It is often identified or measured in terms of the movement of
\ngoods, resources, capital, technology, information and people
\nacross nation states.<\/p>\n
Indeed, the process of globalization carries with it the
\nopening up of new opportunities as well as positive impacts that
\nhopefully will benefit the development process of many countries,
\nin particular those in the developing world.<\/p>\n
This includes increased trading opportunities arising from the
\nconclusion of the Uruguay Round; the readjustment of domestic
\ntrade, investment and financial policies to be consistent with
\nthe international requirements that many believe will bring
\nprosperity to civil society; the improvement of efficiency in
\nmanaging domestic trade, investment and financial policies; and
\nan increase in international capital and financial flows.<\/p>\n
Some developing countries have already greatly benefited from
\nglobalization. Large flows of foreign direct investment (FDI) to
\nthese countries and its growing contribution to fixed capital
\ninvestment as well as to the fast growth in trade and GDP can be
\ntaken as examples.<\/p>\n
At the same time, the globalization process also brings
\nchallenges as well as adverse impacts on the development efforts
\nand objectives of many countries, in particular developing
\ncountries, failing to seize the opportunities created by the
\nglobalization process.<\/p>\n
The United Nations Conference on Trade and Development
\n(UNCTAD) has identified three affected aspects; the loss of
\npolicy autonomy in some areas at the national level which
\nrestricts or alters the scope of development policies, the risk
\nof instability and disruption resulting from financial openness
\nand, the risk of marginalization of those at the grassroots
\nlevel.<\/p>\n
Here, in more detail, are some of the adverse impacts of
\nglobalization. First, the process of globalization has also
\nbrought highly uneven disparities and imbalances to the world
\neconomy. Most developing countries have been doing their utmost
\nto adjust their domestic economies to meet the requirements of
\nglobalization and open their markets to the world economy.<\/p>\n
However, the dividends of globalization have gone to the
\nholders of capital and not to developing countries. Therefore,
\nexcessive optimism about the development effects of globalization
\nhas been replaced by a more pessimistic view in light of the fact
\nthat only a small number of developing countries have reached the
\nrate of economic growth necessary to reduce unemployment and
\nallow equitable income distribution.<\/p>\n
Second are the dangers of marginalization among and within
\ncountries as the result of the process of globalization, and
\nincreased competition in a more liberalized world economy.
\nGreater concern over social inequality is therefore called for.<\/p>\n
In recent years the least developed countries and other
\nstructurally weaker economies have been unable to benefit from,
\nand meaningfully participate in, the globalization process due to
\nsupply impediments, commodity dependence, difficulties in
\nattracting FDI, the decline in Official Development Assistance
\n(ODA) from the developed world, and also because of ongoing
\ndifficulties with external debt (1996 report of UNCTAD).<\/p>\n
Even the recent 1997 UNCTAD Report, while elaborating on the
\nbenefits of globalization, stated that the globalization process
\nhas unfortunately been particularly characterized by an increase
\nin the widening of the income gap between North and South, and in
\nincome inequality within countries.<\/p>\n
The logic behind this is that globalization means market-
\ndriven economies in which profit takes precedence over social
\nconsequences. The result of a market-driven economy is that there
\nwill be winners while others will be losers, most of whom will be
\npeople in the developing world.<\/p>\n
Third, the process of globalization fails to address the
\nundemocratic decision-making process in the international
\nmonetary and trade authorities. Therefore only a small portion of
\nactivity deployed by the developing countries to safeguard their
\nown interests in multilateral negotiations in such areas as
\nmoney, finance and trade actually reaches its target.<\/p>\n
As a consequence, despite benefiting from the globalization
\nprocess, developing countries still have very little say in the
\npolicy formulation of the world macro economy.<\/p>\n
The best example of the adverse impact of globalization is the
\ncurrent financial turbulence besetting Asia, particularly
\nSoutheast Asia, which has a political as well as social
\ndimension. There is however, a positive aspect arising from this,
\nnamely the need to adjust economic and political structures.<\/p>\n
It is, however, to be noted that at the same time the negative
\naspect costs the wealth of these countries dearly, especially at
\nthe grassroots level. The latter will be the hardest hit by the
\nmarket-driven process of globalization.<\/p>\n
One might worry that \"the tolerance threshold\" of that
\nvictimized segment of society will become lower and lower,
\nreaching the point where social upheaval can be easily triggered.<\/p>\n
Likewise, if the process of globalization continues to breed
\ninequality, there will be a real danger of a political backlash
\nagainst it. If this issue cannot be handled properly, the danger
\nof social fragmentation will become unavoidable.<\/p>\n
Judging from the adverse impacts which globalization can bring
\nabout, the question is: can development objectives be achieved in
\nan era of globalization, or can the latter guarantee that the
\nultimate development objectives of developing countries are
\nachieved?<\/p>\n
Is there any role left for a government to play if it is to
\ncontinue the development process to benefit its people or civil
\nsociety in the era of globalization, or should it simply leave it
\nto the \"invisible hand of globalization\" to correct the
\nsituation?<\/p>\n
The writer is an international trade analyst.<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/new-policies-a-must-for-globalization-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }