Globalization and DevelopmentCaribbean StudiesIssues in Caribbean DevelopmentDate: February 7, 2012.

Definition of Globalization•Globalization is a revolutionary macro concept

about radical liberation of the world’s cultural, economic, financial and all other forms of trade and interaction across national borders with minimal restrictions (Reid, 2002).

•It is also referred to as the increasingly global relationship of culture, people and economic activity. Most often, it refers to economics the global distribution of goods and services through

Definition reduction of barriers to international trade

such as tariffs, export fees and import quotas.

•Others defined globalization as the growing economic integration of the world through the removal of barriers to trade, investment, capital, information as well as goods and services.

Globalization •Globalization is an evolutionary process.

It is a result of development over many years. There is a level playing field when the world is truly globalized. It is also where everyone has an equal chance to benefit from trade and technology.

True Globalization•An example is given of something that is

truly globalized that is the cell phone. Today, there is not one place in the world that has not the opportunity to use cell phones. It is so affordable that everyone can have access to one. ▫Characteristics

Affordable Accessible to all income family

Stages of Globalization•First stage- began with the

internationalization of economic institutions of Europe and North America in the 19th and early 20th centuries. Internationalization is simply removing national borders through the of information and communication technologies. This is basically implying that people are given the option to travel to obtain an education or they can stay at home and get it by using the internet

Stages of Development•Second stage- started at the end of the

second World War in 1945. At this time internationalization was back on track after been placed on pause as a result of the two world conflicts World War 1 and 2. At the time of the wars the world became divided into two, Eastern and Western ideologies, with USSR and USA on either side with opposing ideologies.

Comparison of ideologiesEastern Western

• USSR (super power)

• Communist

• Central and Planned

• USA (super power)

• Democratic or Capitalist

• Free market and mixed economy where government role is limited and foreign investors are encouraged.

Stages of Development•The second stage also gave rise to some

organizations such as United Nations, World Bank, IMF and the GAAT. Their combine efforts helped to stabilize many economies especially those of the developing countries and the newly independent ones as well as to increase trade in industrialized countries. The effort made was to keep a tight monitoring on the international flow of money. Stage ended in 1970s

Stages of Development•Third stage- began in the hiking of oil

prices by the OPEC countries which result in the declining of dollar. Since this period the idea of free trade has spread and international capital now move cross the globe as Transnational Corporations seek to establish themselves all over. Much of this must be owed to the revolution of communications technology.

MAIN POINTS

OF GLOBALIZATION

Liberal Economic Model•Submission to a liberal economic

model emphasizes that people should make their own choices with their money so long as it does not infringe on the liberty of others. It’s basically a free market democratic economy. Note if any Caribbean country refused such model then they would be denied the right to trade with others. For instance, Cuba and USSR.

Constriction of Capital Flow•Globalization would generally result in

capital moving in and out of a country to anywhere in the world evident in Foreign direct investment. To control this countries might place restrictions on what and who they receive in their country. For example, developed countries would prefer labour capital of highly skilled and professionals. Selective immigration is being encouraged rather than freedom of movement.

Access to more Market•Both developing and developed countries

have become integrated. Everyone has access to other country’s market. This gives the opportunity to choose the cheaper and the best and also aid in promoting development of countries economy.

Removal of Preferential Trade•The ACP countries usually enjoys

preferential trade from the mother countries in Europe for their products of banana ad sugar. This agreement was called the Lome agreement. With globalization the introduction of liberalized trade became the culture. As a result, America fought for the removal of this preferential trade allowing every country to have a chance in showcasing their product and having an equal opportunity to have it selected.

Erasure and Hybridization of culture•As countries interact without restrictions

via internet and cable etc many cultural practices were traded across borders resulting in a mixed or eroded culture. This is evident in fashion, dress, entertainment, technology and even language.

Deepening of social inequality•Globalization encourages the culture of

free market. Free market if look closely is the survival of the fittest. It is about equalization of opportunity or creating a level play field. The level play field should only be seen from a certain angle and that is the fact that everyone has the opportunity to put forward their products and services for the world to choose based on the price and benefit then it is selected.

Deepening of social inequality•Also the role of government becomes less.

Government was used to regulate the economy with the lessening of their power the more power individual, local or foreign investors gain. This will result in the removal of the poorer class protection. Hence, the rich gets richer and the poor gets poorer typical to that of the continuous widening of the gap between developed and developing countries.

Summary •The controversy is to come to conclusion if

the Caribbean is truly experiencing globalization or internationalization. Well based on it meaning which involved a removal of the distinction between nations, free and fair trade there becomes a problem with globalization. Based on the definition, internationalization is the term that best describe what the Caribbean is in fact experiencing where there is a constant relationship with nations across the world.

Facilitators of Globalization•GAAT•WTO (World Trade Organization)•IMF (International Monetary Fund)•World Bank•Transnational organizations•Technology•Trade•Ideologies

•Impact and Responses

Introduction •In the 20th century, shortly after WWII there

followed reoccurrence of the Great Depression similar to that of the 1930s. The rising was partly the result of planning by politicians to lower or blur the borders that hampered trade. There work led to the Bretton Woods Conference of 1945 in New Hampshire USA. At the conference an agreement was made by major Governments to lay down the framework of institutionalization.

Introduction •During this time international monetary

policy, commerce, finance and founding of several international institutions were established to facilitate economic growth and development. These institutions were the World Bank, International Monetary Fund, General Agreement on Tariff and Trade later replaced by the World Trade Organization.

Introduction •All these institutions were dedicated to

achieve certain goals and put in place expected procedures and guidelines for all nations who are involved and want to benefit must adhere to in order to be granted the benefits.

The World Bank /(IBRD)•Also called the International Bank of

Reconstruction and Development •It was the first of the multilateral

agencies to be established after the Bretton Conference of 1945. it began its operation in 1946

•Located in the Washington D.C. with the president of the bank a US national.

•Consisted of 184 member countries.

Functions of World Bank•Provides long term loans to assist in the

economic development of a country, mainly to developing countries. This is said to promote equity and productivity in education, health and industry.

•The loan was also used to finance reconstruction in Europe countries that were badly damaged by WWII.

Functions of World Bank•Channel flows of capital from the rich

countries of Western Europe, North America, Japan and the rich oil countries to the poor mainly agricultural societies of Africa, Asia and South America.

•It finances infrastructural development such as roads communications, power stations, water supplies, irrigation and rural development, as well as health care in member countries.

Functions of World Bank•Offers financial and technical services to

developing countries. Its engineers, surveyors, accountants, economists and other experts help countries plan and implement their development projects.

•The World Banks main function was to facilitate economic growth which is extremely important as it is the first stage of development but now with the revolutionary definition or concept of

Functions of World Bank•Sustainable development which includes

human development the WB had to change its focus to poverty reduction.

Criticism •Tools of western Imperialism as the bank

seeks to impose western culture on countries who wish to borrow and benefit.

•Policies benefit the rich countries through the presence of trade liberalization. Trade liberalization is removing all the preferential treatment and tariffs from all good and services provided by the developing countries. It involves giving each country equal opportunity on the market .

Criticism •US bias. The Bank supports the transnational

corporations in oil gas and mining concerns even if the result is environmental destruction. It is important to note that oil and gas production require the educated and skilled workers usually such descriptions eliminate to poor class which represents the majority of the developing countries population.

•In conclusion it only sparks economic growth but little or no human development.

International Monetary Fund•Based in Washington D.C. Like World Bank.•Operations began in 1947 and was also a

plan of the Bretton Woods Conference.•The IMF is funded by the countries of Japan,

UK, USA, Germany, France and Saudi Arabia.•Unlike the World Bank its president is a

European.•It has the same 184 countries as its member

states.

Functions •Provides short term credit or loans to its

member states.•Encourages international corporation in the

field and the removal of foreign exchange restrictions.

•Stabilizes exchange rate (financial stability)•It helps countries to control their debt and

gives advice on the policies most likely to encourage stable exchange rates and economic growth.

Conditions of getting the loan•Keep interest rate high to stabilize currency•Devalue the currency in order to boost

exports other country will find the lower rate more attractive this help to decrease imports.

•Reduce government spending especially in non productive sectors such as health, education, social welfare and increase taxes.

•Sell public and state owned companies especially utility companies to private owners as they tend to drain the country.

Results of IMF •UNEMPLOYMENT

•INCREASE POVERTY

•POLITICAL UNREST

•ECONOMIC HARDSHIP

•HIGH INFLATION

World Trade Organization•Successor of the GATT•Headquarters are in Switzerland •Has 148 member states.•Started 1995

Functions •Regulating trade in goods•Administering world trade agreements•Handling trade disputes•Providing a forum for trade negotiations•Cooperation with other international

organizations•Impose sanctions through its dispute

settlement mechanism•Monitoring national trade policies

Functions •Providing technical assistance and

training for developing countries.

Benefits •Helps to promote peace in trading•Handles disputes constructively •Rules make life easier for all•Freer trade reduces cost of living•Trade raises incomes•Provides more choices of products and

qualities•Trade stimulates economic growth•The basic principles make life more efficient•System encourages good governance.

MNC•Head offices located in parent country•Establish outlet or branches in other

countries particularly the less developed countries

•They seek out the best profit opportunities and are largely unconcerned with social issues as poverty, inequality and reduction of unemployment.

•Large scale financing, production and research in the foreign operations.

MNC•Normally manufacturing industry•Frequent technological change since they

are from the industrialized nation.

PURPOSE•Obtain control over the supply of

resources•Take advantage of cheap labour and

materials in lower income societies•Avoid paying tariffs on imported goods•Avoid high production costs and taxes

associated in their countries.

Advantage •Provides jobs•Transfer of technology•Diverse business practices•Attract foreign investors•Offers variety of goods and services•Provides revenue for government through

taxes.•Provides social benefits and scholarships.

Disadvantages •Poses a threat to local industries•Repatriation of profits to home base•Creates competition among countries in

the region that are vying for MNCs•Pollution•Imports raw material (in some cases)