Workmens Compensation Act 1952

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!he globalising trend was halted by the two great wars of the twentieth century, and an$autarchic% anti&imperial $nationalist% interlude, which actually saw a decline ininternational trade and capital flows as a percentage of global G1". Even as trade andflags disengaged, the per capita incomebetween developed countries and the erstwhilecolonies continued to diverge.

1uring the third phase, merchandise trade resumed its triumphant march as the engine ofhyper growth in East #sia from the 234s. 0nternational trade5G1" ratios recovered totheir late 2th century level by the last decade of the 64th century. 7ut whereas theglobalisation thrust in the second phase in the nineteenth century involved, in the main,the export of mass&produced merchandise to the colonies, this time round the exportdynamism came from the erstwhile colonies. !his globalisation thrust was led by transnational corporations 8!(9s: that endeavoured to disseminate international trade andmodern technology to every flag on earth.

Globalisation arguably entered a frenetic fourth phase from the end of the twentieth

century, in which developed and developing countries are becoming more eual partnersin the flow of cross border trade and investment, as per capita income between thedeveloped world and the developing world rapidly converge, galvanised by theawakening of the ancient sleeping giants, 9hina and 0ndia.

Merchandise trade is being swamped by $invisible% trade in services led by rapidtechnological advances in information technology, and volatile capital flows, that havebecome new engines of growth redefining human interface and old nation&state basedeconomic, social, cultural and political paradigms. 9ontradictions between !(9s andsovereigns are growing in several areas such as trade, investment, labour, agriculture andinfrastructure policies. (ation states, in the form they emerged in the early modernperiod, are losing their raison d%;tre as they are increasingly constrained in the conduct offoreign policy in a unipolar world where conventional war is yielding to stateless conflictand terror< resolving the intertwined energy&food&security crisis< freeing resources for theintertwined ageing&health&welfare crisis< further extending the welfare benefits of trade0J0nternal auditorsof corporates in #sia&"acific region need to adopt a newapproach towards risk management in their organisations to keep with the new trendssuch as globalisation and technological advances, among others, a latest "w9 report says.

0nternal audit refers to the ongoing appraisal of the financial health of a companyKsoperations by its own employees before the final audit of the companyKs balance sheet.

!wo new reports released by "ricewaterhouse9oopers 8"w9: & 0nternal #udit 646 and0nternal #udit 646 #sia&"acific Supplement & have identified ma)or trends that are likelyto shape the world of internal audit over the next five years.

!he trends include globalisation, changes in risk management, advances in technology,talent and organisational issues and changing internal audit roles and expectations.

LGlobalisation and exponential growth are changing the competitive landscape for

companies. *e see a concern expressed by senior management and audit committeeswith respect to the state of governance and risk management capabilities,L"ricewaterhouse9oopers 0ndia 0nternal #udit Services leader Satyavati 7erera said.

!he boards of directors expect their internal audit functions to play a greater role inproviding assurance in corporate governance, risk management, ethicscomplianceandfraud prevention and not )ust in internal controls, 7erera added.

!he studies were based on interview and survey data from 9hief #udit Executives of ?4selected large companies in #sia "acific and from S +ortune 6?4 companies.
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Globalisation has been a double&edged sword. !o those able and willing to seiNe theopportunities and manage globalisation on their own terms, it has provided the basis ofunprecedented growth. 9hina and 0ndia, two countries with 6. billion people together,have for more than a uarter century been growing at historically unprecedented rates.!hey have taken advantage of globalisation of knowledge and of markets.

7ut elsewhere, matters have not worked out so well. !here is growing disparity betweenthe richest countries and the poorest countries, and growing ineualities within mostcountries around the world. !he number of people in poverty in #frica has doubled in thepast two decades.

#nd globalisation, as it has been managed, has contributed to both of these problems. +orinstance, the last tradeagreement, the ruguay 'ound, signed in Marrakech in the springof 22, was so unfair that the poorest countries of the world were actually made poorer.0n the (orth, global competition has helped drive down wages of unskilled workers,exacerbating similar trends coming from changes in technologies and the weakening of

labour unions.

Economic theory never said that everyone would gain as a result of globalisation. 0t saidthat the winners could compensate the losers, not that they would. #nd they haven%t.Some say that globalisation is inevitable, but that is simply wrongJ the extent ofglobalisation, as conventionally measured, for instance, by the ratio of trade or capitalflows to G1", was actually stronger before the +irst *orld *ar than in the interwarperiod. #nd unless we ensure that globalisation has more winners and few losers there can be a backlash against globalisation. 0ndeed, in many uarters, one can alreadysee such a backlash taking shape.

!his would be unfortunate both for those in the developed and the developingcountries. Standard economic theory emphasises that opening up markets providesopportunities for each country to take advantage of its comparative advantage, andprovides enhanced scope for efficiency gains from economies of scale. 7ut there is aneven more compelling argument for globalisationJ the encounters between differentcultures, the new opportunities which globalisation brings, as well as the enhancedcompetition that accompanies, all these mean that globalisation can, in fact, be atremendous spur for innovation and creativity.

#n alternative world is possibleJ globalisation can be managed differently. 0n MakingGlobaliNation *ork, 0 explain how this can be done. !he problems that have beenencountered are not inevitable. !hey are a conseuence of the particular way thatglobalisation has been managed or mismanaged especially in the post 9old&*arworld. 0 lay out a set of reforms some small, some large, some that will take years tobe brought about, some that are already in the process of being made that will at leastmake globalisation work better.+rom a global perspective, making globalisation work will reuire a fairer trade regime, atrue developmentround, not what the advanced industrial countries have tried to sell asthe development round. 0t reuires redressing the imbalance between capital and labour
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market liberalisation. 0t reuires an intellectual property regime markedly different fromthat embodied in !'0"s, the intellectual property provisions of the ruguay 'ound,which was both bad for global science and for developing countries. *hat is needed is anintellectual property regime that helps narrow the knowledge gap that separate developedfrom less developed countries not one which reduces access to knowledge and denies

access to life&saving medicines, but which, at the same time, provides little incentive forresearch in the diseases that plague the developing countries.

Making globalisation work will also reuire a legal regime which provides cross&borderprotection for firms, but also imposes on them responsibilities, e.g., concerning theenvironment and worker rights. 0t will reuire doing something about the most pressingglobal environmental problems, especially global warmingJ it will do us little good tomake economic globalisation work, if our planet suffers as a conseuence. #nd as is sooften the case, the poorest are the most likely to suffer the most a third of 7angladeshwill be submerged, and incomes, already low, will likely fall even more.

!here are challenges too within 0ndia in making globalisation work. !he countries thathave been most successful have managed globalisation on their own terms, taken apragmatic course, eschewing ideologies and the kind of market fundamentalism on whichthe *ashington consensus neo&liberal policies were premised. +or instance, capitalmarket liberalisation has, around the world, been associated with greater instability, butnot greater growth.

0ntellectual property is important, but a poorly designed intellectual property regime canactually retard innovation and growth< it is a mistake for 0ndia 8or any other developingcountry: to imitate #merica%s intellectual property regimeJ as in so many other areas, one&siNe&fits&all policies do not work, and an intellectual property regime which was designedfor #merica would not necessarily be appropriate for 0ndia. *orse still, #merica%sintellectual property regime is not working well for #mericaJ it may be enhancing profitsfor the pharmaceutical industry, but it is impeding the advancement of science. 0t isespecially important that generic medicines are available. 0t is a matter of life and deathJthe poor simply cannot afford brand name medicines.

0n coping with globalisation, it is important too that one makes sure that credit isavailable to all sectors of the economy< in too many cases, financial services liberalisationhas been followed by the dominance of foreign banks, which make credit available toforeign enterprises and large domestic enterprises< but the flow of credit to small andmedium siNe enterprises and the rural sector dries up. !here are ways of dealing withthese problems< but, first, one has to recognise that there is a problem.So too, around the world, globalisation has been associated with growing ineualities,and unless policies are put into place to counter these, there can be increasing politicaland social instability, of the kind so manifest in atin #merica.

!he problem, as 0 have said, is not with globalisation, but with the way globalisation hasbeen managed. !he reforms 0 have suggested will at least make globalisation work better.*ith the reforms, globalisation has a chance of living up to its promise and its potential,


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of improving the living standards, not )ust of the rich in the richest country of the world,but of the rich and the poor, in both the developing and the developed world.

!ake a lesson on globaliNation

9ities are often called the melting pot of cultures. !hey subsume diverse identities,nurture anonymity and creativity and foster competition. 9ities also go beyond caste andclass moorings and propagate liberal values.

@ne of the reasons for this has been the existence of modern education systems thatpervade the cities and go on to make these as the nucleus of a large pool of talent. #vibrant city, comprising a modern talent pool, is also the lifeline of a robust society and a

progressive economy.

Singapore, realising the importance of education, is focusing on converting the countryinto a world&class education hub. !he government is pouring millions of dollars, hopingto transform both its economy and identity.

Aook at 7oston, for instance. !he city started as a studentcity but gradually ascompanies realised that there is skilled human resource available, the whole economy ofthe city changed. Manipal in 0ndia is an excellent example. # small town 4 years back,there is so much activity going on right now. @ne has to realise that cities grow aroundknowledge centers,B says 00M ucknow director 1evi Singh.

#ccording to the SundayE!%s 9E@ perception poll, Mumbai tops the chart followed by7angalore and 1elhi while the bottom runners are "atna, !rivandrum, 'aipur andGuwahati. A0 would think 1elhi would have been in top two, considering the number ofuality higher education institutes. !he city is lot more cosmopolitan and gives plentifulopportunity for global exposure,B says dean, +aculty of ManagementStudies, O P Mitra.

Every city has to realise that we are now talking about global citiNens and this is what islacking in most of the cities across 0ndia. AState funding is definitely needed but we haveto keep in mind that any amount of investment is not enough when it comes to education.*e have to create intellectual global work pool and that needs national as well asinternational exposure, which all the non&metros lack,B he adds.

!here is a lot of thrust on primary education these days but that alone cannot guarantee askilled workforce. !here are certain cities which have uality primary educationinstitutes, yet they fail to make a mark when it comes to higher education. ucknow is anexcellent example.

A!here are some of the best convent schools in the city but there is a huge gap between
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primary education and college education. 0nfrastructure is one of the issues but thegovernment also fails to recognise that there is a need to develop manpower,B adds Singh.

7ut the drive to provide world&class education should not stop with brick&and&mortar

educational institutions. A!he government cannot afford to have a short&sighted approach.0t will have to play a proactive role from urban planning sense. More often than not, thereis not enough real estate available for educational institutions. +or a city it is veryimportant to invest in its educationsystem,B says Shantanu "rakash, 9E@ of Edu9ompSolutions.

Globalisation is binding trade and markets across the world closer together. !hisintegration has raised all boats, with countries across the globe, from 9hina, #merica to

war ravaged iberia and Sudan recording unprecedented growth and low inflation.

Much of this can be attributed to efficiencies deriving from international trade, whichgrew substantially faster than G1". !wo&way merchandise and commercial services tradeas a percentage of global G1" at market prices increased from D-I in 2/? to -4I in644?.

0t is conseuently surprising that recent months have seen the emergence of a newcounter intuitive hypothesis, to which even !he Economist has lent its weight, which fliesin the face of this globalising trend. #sia is seen as the new engine of growth that coulddrive the global economy out of the recession induced by the subprime crisis in the S.>ow persuasive is this argumentH

!he argument runs roughly as follows. #s #rthur ewis pointed out in his (obel "riNelecture three decades ago, economic growth in developing countries has historically beendependent on economic prospects in @E91 countries that accountfor the ma)or share ofglobal G1". 0n 644-, the S, P, Oapan, +rance, Germany, 0taly and Spain stillaccounted for ?/I of global G1" at market prices, with the S alone accounting for63I. !heir share at purchasing power parity was I.

@ver the last few decades, however, developing countries, in particular those in #sia,have been growing much faster than @E91 countries. !hus the combined share of 9hinaand 0ndia in global G1" increased from ?.3I in 23&3? to I in 644? at """8according to the revised 09" tables:. !he share of the four largest developing 87'09:economies was 64I.

!he Economist points out that 7'09 nations are the least dependent on the S, withexports to #merica accounting for )ust /I of 9hinaKs G1", I of 0ndiaKs, DI of 7raNilKsand I of 'ussiaKs. @ver 2?I of 9hinaKs growth of .6I in the current year came fromdomestic demand.
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#sia%s share in global trade has also risen significantly. *hile global exports of goods andservices trebled between 223 and 6443, #sia%s exports increased almost ten times.9hina%s share in global exports has increased dramatically from .2I in 23&3? to /.6Iin 6444&4?.

#sia%s intra&trade has also grown substantially over the past decade. Since 6444, the shareof the S in regional exports has come down significantly 8with the notable exception of9hina:, even as exports to 9hina have risen dramatically. 0ndia%s trade with 9hina nowmatches its trade with its long&standing biggest tradingpartner, the nited States.#ccording to the 0M+, the impact of regional perturbations on domestic growth hasconseuently increased sharply over the last two decades.

!he argument is sometimes more nuanced. # recent 0M+ paper argues, for instance, thatwhile there is now closer coupling between so&called $developing economies% and @E91countries, there is greater decoupling between emerging economies and @E91 countries.

!here are also other versions of the same basic argument. Oohn #uthers described, in the+inancial !imes of +eb 62, 644/, decoupling as Lthe notion that demand for raw materialsin the developing world will allow emerging markets to grow even if there is a SrecessionL. !he $decoupling% sentiment is certainly implicit in the current boom in worldcommodity prices that are scaling historic highs despite fears of recession in @E91countries, particularly #merica.

!he decoupling hypothesis notwithstanding, the S share in 9hinese exports hasremained constant at )ust over 64I over this period, even though half its exports are nowto developing countries. 0ndeed, #sia runs a huge cumulative current account surplus ofover FD44 billion with the rest of the world, which is at the core of a fundamental globalimbalance that keeps the global financial and real economies closely coupled.

7ecause of this continuing external dependence it is difficult to see how #sia would notbe significantly affected by a S recession unless 9hina and other developing countriesare able to expand domestic demand substantially. !his would mean abandoning theircurrent mercantilist mindset, letting their currencies appreciate, thereby increasing thepurchasing power of their people.

0ndia appears to be less vulnerable to the global downtown because it is much moredependent on domestic demand for growth, being uniue amongst #sian countries incontinuing to run a current account deficit. Even so, 0ndia%s engine of growth is itsbooming services sector that is highly coupled with global, and especially S, markets.

!he Economist points out that domestic demand constitutes by far the biggest source ofG1" growth in 9hina and 0ndia. >owever, the trend over the last 64 years actuallyindicates greater coupling. 9hina%s consumption has declined from two&thirds of the G1"in 2/- to )ust over half in 644-, and 0ndia%s from /?I to three&fourths.

9hina actually ran a current account deficit 64 years agoC G1" at """ is also not the best
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# global company operates like a network and distributes operations around the world. 0tis global in the way the leadership is structured,B says =aish who runs #ccenture%s 7"@delivery network across ten countries out of 0ndia. So although the F2.3 billion#ccenture operates in ?4 countries, it does not have a headuarters. 0nstead it has five"Q centers based on industry groups. A@ur 9E@ and his leadership team are across the

world. !hey are connected virtually and travel extensively,B says =aish.

A0f you look at our revenue distribution and where our talent is based, 0 am 44I surethat there will be a time when one of the "Q centers will be in the East,B says =aish.0ndia with more than D?,444 employees is already #ccenture%s largest geography byheadcount.

9learly one big reason for globalisation is search for talent. A!here were times when wehad to walk away from an opportunity because we couldn%t get talent. !oday we knowwhere the talent is, how to train and manage it from multiple locations,B says Patherine>egmann, general manager, global integration executive, 07M and the highest&ranking

07M executive in 0ndia. Ander Sam 89hairman Samuel O "almisano: 07M has moved toa globally integrated enterprise. *e have consolidated global functions such asprocurement in 9hina, finance in 'aleigh and accounting in Manila. *e get synergy andlearn to handle scale with less people,B says >egmann.

!oday the F2. billion 07M employs 3-,444 people in 0ndia, its second largest employeebase in the world. A0n 6444 we clearly moved work for cost reasons, now we are growinghere because of skills and capability. 0n many cases today the front&end work is done in0ndia and the back end is in some other country. Rou would never see that before,B says>egmann. 07M is even changing its corporate culture to adapt to a globally integratedworld.

A07M is moving away from hierarchical management structure to an empoweredstructure,B she says adding that she herself has learnt to be less directive and morecollaborative. A0f 0 had come to this role ? years ago it would have been a problem. (ow0 have a style that is more comfortable to people here,B says >egmann.

S009@( =#ERJ 0ndians and 9hinese have embraced economic globalisation, but theenthusiasm for free market economies and global commerce is waning in the *est,especially in the nited States, according to new poll released on +riday.

*hile /2 per cent of 0ndians and 2 per cent of 9hinese support foreign trade, the figureis only ?2 per cent in the worldKs largest economy, the S, the "ew Global #ttitudessurvey of more than ?,444 people in 3 countries has found.

*hile in the two #sian giants the public support for foreign trade has remained almost
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same since 6446, in #merica it has seen a sharp decline since 6446, when 3/ per centbelieved it was having a positive impact.

0nterestingly, when it comes to views about multinational corporations the two rapidlyexpanding #sian economies of 9hina and0ndia are experiencing different trends.

!he 9hinese are now less likely to believe foreign corporations are helping their countryand while more and more 0ndians are seeing a positive impact. 0ndiaKs South #sianneighbours, 7angladesh and "akistan, also have become substantially more welcoming toforeign companies over the last five years.

0n 0ndia, 3D percent of the public believes foreign companies are having positive impacton the country, while in the S only ? percent believe foreign companies are good andthat people are better off in free market economies.

9hina cautions 0ndia to cut down the thrust on globalisation

*hen trade economist 'a)eev #nantaram visited 9hina recently to study the impact offoreign investment and commerce in that country, he wasn%t prepared for the answers hegot. >e had heard enough from fellow 0ndians extolling 9hina%s success in attractingforeign investment and commerce and complaining how we lack the smarts to learn fromit. So, he felt a sense of irony when the 9hinese told him 0ndia should not repeat 9hina%smistakes.

A9hina is realising that it can no longer sustain the fiscal burden its export&led economybrings. Everywhere 0 went, people were saying foreign companies have sueeNed us,Bsays #nantaram, a senior fellow at 0ndian 9ouncil for 'esearch on 0nternationalEconomic 'elations.

+or long, globalisation as dictated by the rich countries and the 7rettonwoods institutionshas been alternatively described as the panacea for the ills of poor countries or as the veryproblem that plunged them in the crisis.

@ne such happily&ever&after story )ust slipped out of the hands of the high priests ofglobalisation.
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9hina, the mightiest example of the virtues of international $coupling%, has made a /4&degree turn this year and substantially cut down on its globalisation thrust. 0t eliminatedtax breaks for foreign investments, limited merger deals, withdrew many of the supportschemes for export&oriented enterprises and clamped down on foreign investment inmany sectors.

!hese measures came in the wake of an increasing concern among the people andgovernment officials that the country was falling into the hands of powerfulmultinationals that left little for its people. *ith the new measures, A9hina intends to useforeign investment rather than be used by foreign investors,B one official said.

0f anything, 0ndia must learn from 9hina%s bold move to wrest the globalisation initiativefrom the *estern corporate empire and make the process one driven by developingnations. A0t is true that the benefits of globalisation have often gone to a small coterie,Bsays #nantaram. 0n 9hina, for instance, /?I of the profits generated by M(9&related

pro)ects go out of the country, leaving only ?I value for local stakeholders, he says.!he country has not been any more successful with technology transfer, often a ma)orreason for globalisation.

9ontrary to the way 9hina responds to these challenges, public policy in 0ndia has beenmeek and tentative, experts say. *hile 0ndia has not been the worst sufferer ofglobalisation despite 3 years of outward&looking policies, it has nevertheless failed todirect international attention towards the improvement of key sectors such as education,healthcare and infrastructure.

0n fact, the debate on infrastructure reeks of elitism ignoring the need to empower poorersections, economists say. A*hen you hear the discussion on infrastructure development,you will see it often revolves around airports, urban power and so on. *e are not evendiscussing the lack of very, very basic facilities in rural areasJ the lack of drinking watertaps, motorable roads or a bus stop,B says "rofessor S Subramanian of Madras 0nstitute of1evelopment Studies.

0ncreasing income disparities is becoming the most formidable challenge for 0ndia. *heneven the nited States and prosperous European countries debate how to improve socialsecurity, there has been little debate in 0ndia on enabling state interventions to give thepoor the power to benefit from economic growth. Economic progress is often measuredonly in terms of G1" growth on the fond hope that it will all percolate down to the poorpeople in the end.
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0mpact on 0ndiaJ

0ndia opened up the economy in the early nineties following a ma)or crisis that led by a

foreign exchange crunch that dragged the economy close to defaulting on loans. !heresponse was a slew of 1omestic and external sector policy measures partly prompted bythe immediate needs and partly by the demand of the multilateral organisations. !he newpolicy regime radically pushed forward in favour of amore open and market orientedeconomy.

Ma)or measures initiated as a part of the liberalisation and globalisation strategy in theearly nineties included scrapping of the industrial licensing regime, reduction in thenumber of areas reserved for the public sector, amendment of the monopolies and therestrictive trade practices act, start of the privatiNation programme, reduction in tariffrates and change over to market determined exchange rates.

@ver the years there has been a steady liberalisation of the current account transactions,more and more sectors opened up for foreign direct investments and portfolioinvestments facilitating entry of foreign investors in telecom, roads, ports, airports,insurance and other ma)or sectors.

!he 0ndian tariff rates reduced sharply over the decade from a weighted average of 36.?Iin 22&26 to 6.- in 22-&23.!hough tariff rates went up slowly in the late nineties ittouched D?.I in 644&46. 0ndia is committed to reduced tariff rates. "eak tariff rates areto be reduced to be reduced to the minimum with a peak rate of 64I, in another 6 yearsmost non&tariff barriers have been dismantled by march 6446, including almost alluantitative restrictions.

0ndia is GlobalJ!he liberalisation of the domestic economy and the increasing integration of 0ndia withthe global economy have helped step up G1" growth rates, which picked up from ?.-Iin 224&2 to a peak level of 33./I in 22-&23. Growth rates have slowed down sincethe country has still bee able to achieve ?&-I growth rate in three of the last six years.!hough growth rates has slumped to the lowest level .DI in 6446&4D mainly because ofthe worst droughts in two decades the growth rates are expected to go up close to 34I in644D&4. # Global comparison shows that 0ndia is now the fastest growing )ust after9hina.

!his is ma)or improvement given that 0ndia is growth rate in the 234%s was very low atDI and G1" growth in countries like 7raNil, 0ndonesia, Porea, and Mexico was morethan twice that of 0ndia. !hough 0ndia%s average annual growth rate almost doubled in theeighties to ?.2I it was still lower than the growth rate in 9hina, Porea and 0ndonesia.!he pick up in G1" growth has helped improve 0ndia%s global position. 9onseuently


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!he 0ndian economy is passing through a difficult phase caused by several unfavourabledomestic and external developments< 1omestic output and 1emand conditions wereadversely affected by poor performance in agriculture in the past two years. !he globaleconomy experienced an overall deceleration and recorded an output growth of 6.Iduring the past year growth in real G1" in 644&46 was ?.I as per the Economic

Survey in 6444&4. !he performance in the first uarter of the financial year is?./I andsecond uarter is -.I.

Export and 0mportJ

0ndia%s Export and 0mport in the year 644&46 was to the extent of D6,?36 and D/,D-6million respectively. Many 0ndian companies have started becoming respectable playersin the 0nternational scene. #griculture exports account for about D to /I of total annualof annual export of the country. 0n 6444&4 #gricultural products valued at more than SF -million were exported from the country 6DI of which was contributed by the marine

products alone. Marine products in recent years have emerged as the single largestcontributor to the total agricultural export from the country accounting for over one fifthof the total agricultural exports. 9ereals 8mostly basmati rice and non&basmati rice:, oilseeds, tea and coffee are the other prominent products each of which accounts fro nearly? to 4I of the countries total agricultural exports.

*here does 0ndian stand in terms of Global 0ntegrationH

0ndia clearly lags in globalisation. (umber of countries have a clear lead among them9hina, large part of east and far east #sia and eastern Europe. ets look at a fewindicators how much we lag.

@ver the past decade +10 flows into 0ndia have averaged around 4.?I of G1" against?I for 9hina ?.?I for 7raNil. *hereas +10 inflows into 9hina now exceeds S F ?4billion annually. 0t is only S F billion in the case of 0ndia

9onsider global trade T 0ndia%s share of world merchandise exports increased from .4?Ito .43I over the pat 64 years. @ver the same period 9hina%s share has tripled to almostI.

0ndia%s share of global trade is similar to that of the "hilippines an economy - timessmaller according to 0M+ estimates. 0ndia under trades by 34&/4I given its siNe,proximity to markets and labour cost advantages.

0t is interesting to note the remark made last year by Mr. 7imal Oalan, Governor of '70.1espite all the talk, we are now where ever close being globalised in terms of anycommonly used indicator of globalisation. 0n fact we are one of the least globalisedamong the ma)or countries T however we look at it.


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#s #martya Sen and many other have pointed out that 0ndia, as a geographical, politico&cultural entity has been interacting with the outside world throughout history and stillcontinues to do so. 0t has to adapt, assimilate and contribute. !his goes without sayingeven as we move into what is called a globalised world which is distinguished fromprevious eras from by faster travel and communication, greater trade linkages, denting of

political and economic sovereignty and greater acceptance of democracy as a way of life.

9onseuencesJ

!he implications of globalisation for a national economy are many. Globalisation hasintensified interdependence and competition between economies in the world market.!his is reflected in 0nterdependence in regard to trading in goods and services and inmovement of capital. #s a result domestic economic developments are not determinedentirely by domestic policies and market conditions. 'ather, they are influenced by bothdomestic and international policies and economic conditions. 0t is thus clear that aglobalising economy, while formulating and evaluating its domestic policy cannot afford

to ignore the possible actions and reactions of policies and developments in the rest of theworld. !his constrained the policy option available to the government which implies lossof policy autonomy to some extent, in decision&making at the national level.

rumJ GlobaliNation for *homH!ime to change the rules && and focus on poor workers

by 1ani 'odrik

GlobaliNation has brought little but good news to those with the products, skills, andresources to market worldwide. 7ut does it also work for the worldKs poorH

!hat is the central uestion around which the debate over globaliNationin essence, freetrade and free flows of capitalrevolves. #ntiglobaliNation protesters may have had onlylimited success in blocking world trade negotiations or disrupting the meetings of the0nternational Monetary +und 80M+:, but they have irrevocably altered the terms of the

debate. "overty is now the defining issue for both sides. !he captains of the worldeconomy have conceded that progress in international trade and finance has to bemeasured against the yardsticks of poverty alleviation and sustainable development.

+or most of the worldKs developing countries, the 224s were a decade of frustration anddisappointment. !he economies of sub&Saharan #frica, with few exceptions, stubbornlyrefused to respond to the medicine meted out by the *orld 7ank and the 0M+. atin#merican countries were buffeted by a never&ending series of boom&and&bust cycles in


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capital markets and experienced growth rates significantly below their historicalaverages. Most of the former socialist economies ended the decade at lower levels of per&capita income than they started itand even in the rare successes, such as "oland,poverty rates remained higher than under communism. East #sian economies such asSouth Porea, !hailand, and Malaysia, which had been hailed previously as Lmiracles,L

were dealt a humiliating blow in the financial crisis of 223. !hat this was also thedecade in which globaliNation came into full swing is more than a minor inconveniencefor its advocates. 0f globaliNation is such a boon for poor countries, why so manysetbacksH

GlobaliNers deploy two counter&arguments against such complaints. @ne is that globalpoverty has actually decreased. !he reason is simpleJ while most countries have seenlower income growth, the worldKs two largest countries, 9hina and 0ndia, have had theopposite experience. 8Economic growth tends to be highly correlated with povertyreduction.: 9hinaKs growth since the late 234saveraging almost / percent per annumper capitahas been nothing short of spectacular. 0ndiaKs performance has not been as

extraordinary, but the countryKs growth rate has more than doubled since the early 2/4sfrom .? percent per capita to D.3 percent. !hese two countries house more than half ofthe worldKs poor, and their experience is perhaps enough to dispel the collective doomelsewhere.

!he second counter&argument is that it is precisely those countries that have experiencedthe greatest integration with the world economy that have managed to grow fastest andreduce poverty the most. # typical exercise in this vein consists of dividing developingcountries into two groups on the basis of the increase in their tradeLglobaliNersL versusLnon&globaliNersLand to show that the first group did much better than the second. >eretoo, 9hina, 0ndia, and a few other high performers like =ietnam and ganda are the keyexhibits for the pro&globaliNation argument. !he intended message from such studies isthat countries that have the best shot at lifting themselves out of poverty are those thatopen themselves up to the world economy.

>ow we read globaliNationKs record in alleviating poverty hinges critically, therefore, onwhat we make of the experience of a small number of countries that have done well in thelast decade or two9hina in particular. 0n 2-4, the average 9hinese expected to liveonly D- years. 7y 222, life expectancy had risen to 34 years, not far below the level ofthe nited States. iteracy has risen from less than ?4 percent to more than /4 percent.Even though economic development has been uneven, with the coastal regions doingmuch better than the interior, there has been a striking reduction in poverty rates almosteverywhere.

*hat does this impressive experience tell us about what globaliNation can do for poorcountriesH !here is little doubt that exports and foreign investment have played animportant role in 9hinaKs development. 7y selling its products on world markets, 9hinahas been able to purchase the capital euipment and inputs needed for its moderniNation.#nd the surge in foreign investment has brought much&needed managerial and technical


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expertise. !he regions of 9hina that have grown fastest are those that took the greatestadvantage of foreign trade and investment.

7ut look closer at the 9hinese experience, and you discover that it is hardly a poster childfor globaliNation. 9hinaKs economic policies have violated virtually every rule by which

the proselytiNers of globaliNation would like the game to be played. 9hina did notliberaliNe its trade regime to any significant extent, and it )oined the *orld !rade@rganiNation 8*!@: only last year< to this day, its economy remains among the mostprotected in the world. 9hinese currency markets were not unified until 22. 9hinaresolutely refused to open its financial markets to foreigners, again until very recently.Most striking of all, 9hina achieved its transformation without adopting private&propertyrights, let alone privatiNing its state enterprises. 9hinaKs policymakers were practicalenough to understand the role that private incentives and markets could play in producingresults. 7ut they were also smart enough to realiNe that the solution to their problems layin institutional innovations suited to the local conditionsthe household responsibilitysystem, township and village enterprises, special economic Nones, partial liberaliNation in

agriculture and industryrather than in off&the&shelf blueprints and *estern rules ofgood behavior.

!he remarkable thing about 9hina is that it has achieved integration with the worldeconomy despite having ignored these rulesand indeed because it did so. 0f 9hina werea basket case today, rather than the stunning success that it is, officials of the *!@ andthe *orld 7ank would have fewer difficulties fitting it within their worldview than theydo now.

9hinaKs experience may represent an extreme case, but it is by no means an exception.Earlier successes such as South Porea and !aiwan tell a similar story. Economicdevelopment often reuires unconventional strategies that fit awkwardly with theideology of free trade and free capital flows. South Porea and !aiwan made extensive useof import uotas, local&content reuirements, patent infringements, and export subsidiesall of which are currently prohibited by the *!@. 7oth countries heavily regulatedcapital flows well into the 224s. 0ndia managed to increase its growth rate through theadoption of more pro&business policies, despite having one of the worldKs mostprotectionist trade regimes. 0ts comparatively mild import liberaliNation in the 224scame a decade after the onset of higher growth in the early 2/4s. #nd 0ndia has yet toopen itself up to world financial marketswhich is why it emerged unscathed from the#sian financial crisis of 223.

7y contrast, many of the countries that have opened themselves up to trade and capitalflows with abandon have been rewarded with financial crises and disappointingperformance. atin #merica, the region that adopted the globaliNation agenda with thegreatest enthusiasm in the 224s, has suffered rising ineuality, enormous volatility, andeconomic growth rates significantly below those of the post&*orld *ar 00 decades.#rgentina represents a particularly tragic case. 0t tried harder in the 224s than virtuallyany country to endear itself to international capital markets, only to be the victim of anabrupt reversal in Lmarket sentimentL by the end of the decade. !he #rgentine strategy


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may have had elements of a gamble, but it was solidly grounded in the theoriesexpounded by .S.&based economists and multilateral agencies such as the *orld 7ankand the 0M+. *hen #rgentinaKs economy took off in the early 224s after decades ofstagnation, the reaction from these uarters was not that this was puNNling it was thatreform pays off.

*hat these countriesK experience tells us, therefore, is that while global markets are goodfor poor countries, the rules according to which they are being asked to play the game areoften not. 9aught between *!@ agreements, *orld 7ank strictures, 0M+ conditions, andthe need to maintain the confidence of financial markets, developing countries areincreasingly deprived of the room they need to devise their own paths out of poverty.!hey are being asked to implement an agenda of institutional reform that took todayKsadvanced countries generations to accomplish. !he nited States, to take a particularlytelling example, was hardly a paragon of free&trade virtue while catching up with and

surpassing 7ritain. 0n fact, .S. import tariffs during the latter half of the nineteenthcentury were higher than in all but a few developing countries today. !odayKs rules are notonly impractical, they divert attention and resources from more urgent developmentalpriorities. !urning away from world markets is surely not a good way to alleviatedomestic povertybut countries that have scored the most impressive gains are thosethat have developed their own version of the rulebook while taking advantage of worldmarkets.

!he regulations that developing nations confront in those markets are highly asymmetric.0mport barriers tend to be highest for manufactured products of greatest interest to poorcountries, such as garments. !he global intellectual&property&rights regime tends to raiseprices of essential medicines in poor countries.

7ut the disconnect between trade rules and development needs is nowhere greater than inthe area of international labor mobility. !hanks to the efforts of the nited States andother rich countries, barriers to trade in goods, financial services, and investment flowshave now been brought down to historic lows. 7ut the one market where poor nationshave something in abundance to sellthe market for labor serviceshas remaineduntouched by this liberaliNing trend. 'ules on cross&border labor flows are determinedalmost always unilaterally 8rather than multilaterally as in other areas of economicexchange: and remain highly restrictive. Even a small relaxation of these rules wouldproduce huge gains for the world economy, and for poor nations in particular.

9onsider, for example, instituting a system that would allot temporary work permits toskilled and unskilled workers from poorer nations, amounting to, say, D percent of therich countriesK labor force. nder the scheme, these workers would be allowed to obtainemployment in the rich countries for a period of three to five years, after which theywould be expected to return to their home countries and be replaced by new workers.8*hile many workers, no doubt, will want to remain in the host countries permanently, itwould be possible to achieve acceptable rates of return by building specific incentives


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into the scheme. +or example, a portion of workersK earnings could be witheld untilrepatriation takes place. @r there could be penalties for home governments whosenationals failed to comply with return reuirementsJ sending countriesK uotas could bereduced in proportion to the numbers who fail to return.: # back&of&the&envelopecalculation indicates that such a system would easily yield F644 billion of income

annually for the citiNens of developing nationsvastly more than what the existing *!@trade agenda is expected to produce. !he positive spillovers that the returnees wouldgenerate for their home countriesthe experience, entrepreneurship, investment, andwork ethic they would bring back with themwould add considerably to these gains.*hat is eually important, the economic benefits would accrue directly to workers fromdeveloping nations. !here would be no need for Ltrickle down.L

0f the political leaders of the advanced countries have chosen to champion tradeliberaliNation but not international labor mobility, the reason is not that the former ispopular with voters at home while the latter is not. !hey are both unpopular. *hen askedtheir views on trade policy, fewer than one in five #mericans re)ect import restrictions. 0n

most advanced countries, including the nited States, the proportion of respondents whowant to expand imports tends to be about the same or lower than the proportion whobelieve immigration is good for the economy. !he main difference seems to be that thebeneficiaries of trade and investment liberaliNation have managed to become politicallyeffective. Multinational firms and financial enterprises have been successful in setting theagenda of multilateral trade negotiations because they have been uick to see the linkbetween enhanced market access abroad and increased profits at home. 9ross&borderlabor flows, by contrast, usually have not had a well&defined constituency in theadvanced countries. 'ules on foreign workers have been relaxed only in those rareinstances where there has been intense lobbying from special interests. *hen Silicon=alley firms became concerned about labor costs, for example, they pushed 9ongresshard to be allowed to import software engineers from 0ndia and other developing nations.

0t will take a lot of work to make globaliNationKs rules friendlier to poor nations. eadersof the advanced countries will have to stop dressing up policies championed by specialinterests at home as responses to the needs of the poor in the developing world.'emembering their own history, they will have to provide room for poor nations todevelop their own strategies of institution&building and economic catch&up. +or their part,developing nations will have to stop looking to financial markets and multilateralagencies for the recipes of economic growth. "erhaps most difficult of all, economistswill have to learn to be more humble.

financial globaliNation can help developing countries to better manage output andconsumption volatility. the essence of global financial diversification is that a country isable to shift some of its income risk to world markets. Since most developing countriesare rather specialiNed in their output and factor endowment structures, they can, in theory,obtain even bigger gains than developed countries through international consumption risk


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sharingthat is, by effectively selling off a stake in their domestic output in return for astake in global output.

!he pharmaceutical industry has taken advantage of the modern trend of globalisation toincrease their assets and influence in medical healthcare across the globe. 9ompanies

spend large amounts of money on advertising, marketing and lobbying 8government orparliament i.e. the decision&making body:. !he industry spends roughly SF2 billion ayear for that sole cause!here have also been drastic improvements to the state of third&world countries. 0n 9hina,the portion of the population living with a daily income of F&F6 per day was decreasedby ?6I in 6/ years. !his was due to the country%s participation in the *orld !rade@rganisation T and in effect, a direct participation in globalisation. nder the rules of the*orld !rade @rganisation, a developing country has options for obtaining neededmedications under compulsory licensing or importation of cheaper versions of the drugs,even before patent expiration.

"harmaceutical companies often offer much needed medication at no or reducedcost to the developing countries. !here have been numerous contributions in the past,with many more expected to follow. !he $Marks Gift% initiative donated billions of 'iver7lindness drugs in #frica. !here was also "fiNer%s gift of free or discounted +luconaNoleand other drugs to combat #01S in South #frica. GSP committed itself to give free#lbenNadole tables for, and until, the elimination of lymphatic filariasis world&wide.+inally, in 644-, (ovartis committed F3?? million in corporate citiNenship initiativesaround the world, mainly focusing on improved access to medicines in the developingworld through its access Medicine "ro)ects. !his included donation of medicine topatients affected by leprosy, tuberculosis and malaria< Glivec patient assistanceprogrammes and relief to support ma)or humanitarian organisations with emergency

medical needs.

GlobaliNation has a relatively new idea that the world has been embracing. !he positiveeffects of globaliNation are numerous and extremely beneficial for everyone in allcountries. 0t has been the most successful prosperity and anti&poverty movement inmodern history.

!he #dvantages 0nclude...

+orces businesses to compete on a global scale. !his allows the market place to

really work and gives consumers a better advantage. (o long will businesses be

able to corner markets because politicians protect them. !heyKll now to competewith foreign businesses that may or may not be able to do business moreefficiently.

9ountries move to market sectors that they are better at. !his simply means thatthe labor in a country is going to do what itKs best at. !here is no need for#mericans to do manufacturing when someone in 9hina can do it better. @urlabor is better served doing something beneficial.


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!he consumer is the real winner. 1espite the desire from some politicians to

protect workers, there are far more consumers than there are workers, but no onewants to seem to protect them. 9onsumers should not be forced to buy over pricedgoods from #merican buyers when you can get the same uality for less if it ismade in 9hina. (ow consumers can get the best products for the best prices.

Everyone grows more prosperous. Oust look at 9hina and 0ndia. 7eforeglobaliNation they were very poor countries. !he standards of living wereextremely bad. (ow these people are becoming more prosperous. !hese countrieshaving mega economic booms. "eople that could never afford a car are nowgetting them. (ot to mention the fact from the consumers side that are benefitingfrom saving money which can be used to save or spend on other things.

!hese are the positive effects of globaliNation. 0t is a movement that is pro&free trade, pro&prosperity and anti&poverty. 0t is helping the developing world raise itKs standard of livingas well as raising the standard of living in the developed world.

GlobaliNation is the increasing interconnection of people and places as a result ofadvances in transport, communication, and information technologies that causes political,economic, and cultural convergence!he word LglobaliNationL can be traced back to2Ucitation neededV. !he term has been used by economists since 2/< however, itsconcepts did not permeate popular consciousness until the later half of the 224s. !heearliest concepts and predictions of globaliNation were penned by an #mericanentrepreneur&turned&minister 9harles !aNe 'ussell who first coined the term KcorporategiantsK in /23. =arious social scientists have tried to demonstrate continuity betweencontemporary trends of globaliNation and earlier periods. !he first era of globaliNation 8inthe fullest sense: during the 2th century was the rapid growth of international tradebetween the European imperial powers, the European colonies, and the nited States.

#fter *orld *ar 00, globaliNation was restarted and was driven by ma)or advances intechnology, which led to lower trading costs.GlobaliNation in the era since *orld *ar 00was first the result of planning by economists, business interests, and politicians whorecogniNed the costs associated with protectionism and declining international economicintegration. !heir work led to the 7retton *oods conference and the founding of severalinternational institutions intended to oversee the renewed processes of globaliNation,promoting growth and managing adverse conseuences. !hese were the 0nternational7ank for 'econstruction and 1evelopment 8the *orld 7ank: and the 0nternationalMonetary +und. 0t has been facilitated by advances in technology which have reduced thecosts of trade, and trade negotiation rounds, originally under the auspices of G#!!,which led to a series of agreements to remove restrictions on free trade. !he ruguay

round 82/ to 22?: led to a treaty to create the *orld !rade @rganiNation 8*!@:, tomediate trade disputes and set up a uniform platform of trading. @ther bi& and multilateraltrade agreements, including sections of EuropeKs Maastricht !reaty and the (orth#merican +ree !rade #greement 8(#+!#: have also been signed in pursuit of the goal ofreducing tariffs and barriers to trade.ooking specifically at economic globaliNation, it can be measured in different ways.!hese centre around the four main economic flows that characteriNe globaliNationJ


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Goods and services, e.g. exports plus imports as a proportion of national income or percapita of populationabour5people, e.g. net migration rates< inward or outward migration flows, weighted bypopulation9apital, e.g. inward or outward direct investment as a proportion of national income or

per head of population!echnology, e.g. international research Q development flows< proportion of populations8and rates of change thereof: using particular inventions 8especially Kfactor&neutralKtechnological advances such as the telephone, motorcar, broadband:!o what extent a nation&state or culture is globalised in a particular year has until mostrecently been measured employing simple proxies like flows of trade, migration, orforeign direct investment, as described above.

#s globaliNation is not only an economic phenomenon, a multivariate approach tomeasuring globaliNation is the recent index calculated by the Swiss !hink tank P@+. !heindex measures the three main dimensions of globaliNationJ economic, social, and

political. 0n addition to three indices measuring these dimensions, an overall index ofglobaliNation and sub&indices referring to actual economic flows, economic restrictions,data on personal contact, data on information flows, and data on cultural proximity iscalculated. 1ata are available on a yearly basis for 66 countries, as detailed in 1reher,Gaston and Martens 8644/: U?V. #ccording to the index, the worldKs most globalisedcountry is 7elgium, followed by #ustria, Sweden, the nited Pingdom and the(etherlands. !he least globalised countries according to the P@+&index are >aiti,Myanmar the 9entral #frican 'epublic and 7urundi.U6V. @ther measures conceptualiNeGlobaliNation as 1iffusion and develop interactive procedure to capture the degree of itsimpact Oahn 644-.

#.!. Pearney and +oreign "olicy MagaNine )ointly publish another GlobaliNation 0ndex.#ccording to the 644- index, Singapore, 0reland, SwitNerland, the .S., the (etherlands,9anada and 1enmark are the most globalised, while Egypt, 0ndonesia, 0ndia and 0ran arethe least globalised among countries listed. 0n 6443, the figures for globaliNation indexfor 0ndia is 2.34 8/6nd rank: compared with "akistanKs ?6.D? 8rank 3:, 7raNil ?2.-48rank ?:, nited States /4./D 8rank 2:, P /2.62 8rank :.(otwithstanding the low level of globaliNation of 0ndian economy, the impact ofglobalisation has been highly positive in all most all spheres of economic and social lifeand virtually no negative effect. 0t is only because of opening uo of the hitherto closed,govt.&oppressed and controlled economy to the process of globalisation that has helped0ndian economy to grow rapidlyJin the last 4&6 years, 0ndiaKs economic growth hasbeen high, exports have boomed, incidence of poverty has been reduced, employment hassurged, begging by 0ndia for economic aid has stopped, long&term inflation rate has gonedown, scarcity of goods have disappeared, the uality of products available haveimproved substantially and overall 0ndia has become progressively vibrant andinternationally competititive. 0ndian companies are setting up companies abroad, 0ndiahas better technological development for the benefit of the common man 8 mobiles, roadtransport, cheap clothes, etc & only because of globalisation.Effect of globalisation on 0ndian industry has been very positive, though some industrial


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firms with the baggage of high cost, inefficient plants and processes inherited from thepast because of closed economyKs government dictated industrial policies and prioritieshad to face serious problems in the beginning. 7ut soon most of the industries havebecome more and more efficient, customer focussed and improved their internationalcompetetiveness in terma of costs, prices, product uality and variety. 0ndustrial growth

has been very high and strong during the past decade because of globalisation. Exportshave increased tremendously. 0nduan industries are also expanding abroad. +oreigncompanies have substantially increased their investments in 0ndian industries. *ages ofindustrial labour has increased substantially as they have become very productive. ockout and strikes have declined to insignificantly low levels because industrial labor ishappy. !hose who cannot be efficient and past their prime age tio retrain themselves inmodern methods and processes have been retired with very attractive voluntaryretirement schemes. !he trade unions are finding it difficult to influence industrialworkers into agitation because labor has started benefiting from the positive fallout ofglobalisation on the prosperity and growth of the industrial sector. !alented and meritedlabor is commanding premium compensation in the labor market. Several new type of

industries have also come up. Small scale industries of the past has fast grown intomedium scale companies. 0ncidence of industrial sickness has gone done drastically.>owever, the communists will not agree to this view because with industrial workersbecoming richer following increasing demand for and the wages of industriallabour.resulting from liberalisation and globalisation.0ndia has done very little reforms in agriculture to enable private and individual economicinitiative that would help harness the benefits of globalisation. 1espite this govt. createdhurdles to globalisation, 0ndian agriculture has benefited substantially from whateverlittle globalisation that has ben allowed in 0ndian agriculture.!he farmers that got theexposure to global links of markets, technology and investment, benefited in terms ofimproving their yields, getting better prices and secured offtake. 0n many areas of thecountry, tomatoe growers, potato farmers and fruit growersfarmers benefited from tie&upand collaborations with ketchup, potato chips, fruit )uices, etc. 0ndian agricultural exportshave grown where 0ndian farmers in selected pockets are competitiveJ these includespices made from agricultural produce, flowers, mangoes, other fruitsrice, vegetables,pickels, papads, tobacco, etc. !he e&choupals network created by an 0ndian company andthe spread of mobile telephones have provided on line market price and climaticinformation on on&line real&time basis and helped them to get the best prices and sell tothe most attractive buyers and brought them freedom from the clutches of the middlemenand traders. 7ecause of the resistance from the traders and the politicians, more and morefarmers are not getting the benefits of globalisationJ vested interests are stopping theentry of more professional and honest buyers of agricultural produce of high uality forsupply to urban areas through network of malls. +ishermen in Perala have increased theirincomes using mobile phones to find out the best mandis where the prices are the higheston each day. !here have not been any negative effect of globalisation on 0ndian farming.7ut faulty and restrictive policies of 0ndian politicians have made it difficult for farmersto consolidate their holdings for larger scale commercial farming, acess to large, highpaying buyers with retail chains, support of well&organised transparent mandis not ruledby traders. #s a result in many areas farmers have committed suicides because of cropfailuers and high indebtedness. sing the old 7ritish 0ndian laws of land acuisition, the


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state govts. are forcing farmers to sell their lands for industries at prices they consider)ustified rather than asking industrialists and companies to bid for agricultural land whichwill increase the market prices of land,. @nce these policy impediments are removed,globalisation will proceed in #griculture and farming in the proper way and benefit 0ndinagriculture and farming throughout the country. 0ndia does not need all the land under

agriculture now for agricultural useJ much less area would suffice to feed the nation andexport if agricultural productivity can be raise substantially through private investment inagriculture by companies that need agricultural produce for their business growth and0ndiaKs economic growth.!o reiterate, !here are absolutey no negative effects of globalisation on 0ndian farming.!he politicians are spreading rumours to get votes from farmers promising to save themfrom the threats of globalisation. !here is however threat to farmers to some extentJ theymay have to sell land against compensation to allow industrialisation to progress. !herewould also be displacement of agricultural labor as a result and they have to becompensated, rehabilitated and absorbed in the expanding industrial, construction andother service sector. 7ut all these have to take place whether 0ndia globaliNes or not.

0ndiaKs economic growth in future will demand significant rise in agricultural productivityso that some part of agricultural lands can be diverted for industrial growth andresidential accomodation. *ithout releasing agricultural land for industry, developmentof roads etc,. agriculture itself will suffer along with the farmers. !he farmers should becareful that they get fairly compensated instead of getting fooled by govts. and industriessaying that they are offering more than market price. !here is no active market foragricultural land in 0ndia. 0ndustries and Govt. should be in competitive bidding processto buy any agricultural land to get reakl fair price which may be much higher than whatthey are getting now.+arming in 0ndia urgently needs consoldation of holdings, large siNed farms andconsiderable investments that would raise 0ndiaKs farm output many fold even after givingup a part of agricultural lands for industrial and infrastructure development. !hefoodprices world over are going to shoot up. 0ndian farming needs to be allowed to makethe maximum gains. !oday, politicians are keeping the urban poor happy by keeping mostfarmers poor that helps keep food prices low. 7ut this policy will soon fail and 0ndia mayhave to import grains if farming sector does not radically improve its productivity.0ndia has done very little reforms in agriculture to enable private and individual economicinitiative that would help harness the benefits of globalisation. 1espite this govt. createdhurdles to globalisation, 0ndian agriculture has benefited substantially from whateverlittle globalisation that has ben allowed in 0ndian agriculture.!he farmers that got theexposure to global links of markets, technology and investment, benefited in terms ofimproving their yields, getting better prices and secured offtake. 0n many areas of thecountry, tomatoe growers, potato farmers and fruit growersfarmers benefited from tie&upand collaborations with ketchup, potato chips, fruit )uices, etc. 0ndian agricultural exportshave grown where 0ndian farmers in selected pockets are competitiveJ these includespices made from agricultural produce, flowers, mangoes, other fruitsrice, vegetables,pickels, papads, tobacco, etc. !he e&choupals network created by an 0ndian company andthe spread of mobile telephones have provided on line market price and climaticinformation on on&line real&time basis and helped them to get the best prices and sell tothe most attractive buyers and brought them freedom from the clutches of the middlemen


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and traders. 7ecause of the resistance from the traders and the politicians, more and morefarmers are not getting the benefits of globalisationJ vested interests are stopping theentry of more professional and honest buyers of agricultural produce of high uality forsupply to urban areas through network of malls. +ishermen in Perala have increased theirincomes using mobile phones to find out the best mandis where the prices are the highest

on each day. !here have not been any negative effect of globalisation on 0ndian farming.7ut faulty and restrictive policies of 0ndian politicians have made it difficult for farmersto consolidate their holdings for larger scale commercial farming, acess to large, highpaying buyers with retail chains, support of well&organised transparent mandis not ruledby traders. #s a result in many areas farmers have committed suicides because of cropfailuers and high indebtedness. sing the old 7ritish 0ndian laws of land acuisition, thestate govts. are forcing farmers to sell their lands for industries at prices they consider)ustified rather than asking industrialists and companies to bid for agricultural land whichwill increase the market prices of land,. @nce these policy impediments are removed,globalisation will proceed in #griculture and farming in the proper way and benefit 0ndinagriculture and farming throughout the country. 0ndia does not need all the land under

agriculture now for agricultural useJ much less area would suffice to feed the nation andexport if agricultural productivity can be raise substantially through private investment inagriculture by companies that need agricultural produce for their business growth and0ndiaKs economic growth.#s for the services sector, it is because of opening up of the economy that has allowedglobalisation to transform the services sector with the most rapid growth intelecommunications, internet, mobile telephone, #!Ms, insurance, capital markets,retailing, airlines,and of couse the software and 7"@ services industyry andentertainment industry creating wealth, income and employment opportunities. 0f therewas no globalisation, most of these activities would have remained dormant andinefficient under govt. monopolies or private oligopolies. !he exports from 0ndia hasgrown tremendously after 0ndia slowly started opening up to globalisation. Except for theold haggards of (ehruvian planning socialist politicians and the old haggards of outdatedand irrelevant, Marxist&eninist&Stalinist& Maoist ideology addicted politicians earninglivelihood and comfortable living by fooling illiterate, poor masses, and who continues tohurt 0ndiaKs economic growth, everyone knows that globalisation has been a boon to0ndian industry, 0ndian consumers, 0ndian agriculture 8could have been more:, 0ndianservices sector, 0ndian exports, 0ndian achievements in many other fields includingrunning businesses abroad. 0ndia now has a top rated capital market that was till mid224s was a shoddy place. 0ndia leads in the international software industry. Small andmedium industries in steel, engineering, pro)ect execution, travel, tourism, hotels, foodprocessing, etc are thriving. #ll these are the effects of globalisation & not withstandingthe hurdles created by the Govt. of 0ndia and the state Govt.s, or the politicians or theeconomists or the "lanning 9ommission or the bureaucrats.!here are some people in 0ndia and abroad who try to pro)ect that international trade andglobaliNation are more beneficial to rich nations and big multinationals. !hese views arenot substantiated by facts or ant consistent theory. !hese views are propounded generallyby a set of intellectuals who want to control the lives of the common citiNens of their owncountries and theselves en)oy royal life. Globalisation makes the life of these powerhungry politicians and pusedo intellectuals. 0t is globalisation that has given the 0ndian


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*#S>0(G!@(J # recent worldwide poll may have come as a shock to those who viewthe anti&globaliNation demonstrations as emblematic of a general souring mood aboutglobal economic integration. !he "ew survey found that not only was the attitudegenerally positive but there was more enthusiasm for foreign trade and investment indeveloping countries than in rich ones.

# close look at the economies of those countries shows whyJ the fast&growing economiesin the world in this era of globaliNation are developing countries that are aggressivelyintegrating with the world economy.>owever, the survey also found commonanxieties around the world that protestersoften highlight but a ma)ority of the

polled did not blame economicintegration for it. 0t is increasingly clearthat while this integration brings benefits,it also reuires complementary

institutions and policies in order toenhance the gains and cushion some ofthe risks of greater openness.

!he "ew 9enter for the "eople and the"ress surveyed D/,444 people in nations, with excellent coverage of the

developing world in all regions. 0ngeneral, there is a positive view ofgrowing economic integration worldwide. 7ut what was striking in the survey is thatviews of globaliNation are distinctly more positive in low&income countries than in rich

ones.

*hile most people worldwide viewed growing global trade and business ties as good fortheir country, only 6/I of people in the .S. and *estern Europe thought that suchintegration was Lvery good.L 0n =ietnam and ganda, in contrast, the figures for LverygoodL stood at ?-I and -I, respectively. #lthough these countries were particularlypro&globaliNation, developing #sia 8D3I: and Sub&Saharan #frica 8?-I: were far morelikely to find integration Lvery good,L

than industrialiNed countries. 9onversely,a significant minority 863I ofhouseholds: in rich countries thought that

LglobaliNation has a bad effect on mycountry,L compared to negligiblenumbers of households with that view in

developing #sia 82I: or Sub&Saharan#frica 84I:.

1eveloping nations also had a morepositive view of the institutions of

9hart . SourceJ !he "ew Global #ttitudes"ro)ect Enlarged image

9hart 6. SourceJ !he "ew Global #ttitudes

"ro)ect Enlarged image
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globaliNation. 0n Sub&Saharan #frica 3?I of households thought that multinationalcorporations had a positive influence on their country, compared to only ?I in richcountries. =iews of the effects of the *!@, *orld 7ank, and 0M+ on their country werenearly as positive in #frica 836I:. @n the other hand, only 6/I of respondents in #fricathought that anti&globaliNation protestors

had a positive effect on their country."rotesters were viewed more positivelyin the .S. and *est Europe 8D?I:.

!his "ew attitudes survey is consistentwith the findings from *orld 7ank andother research on globaliNation. 0n

general, the developing countries thathave increased their participation in tradeand attracted foreign investment haveaccelerated growth and reduced poverty.

ganda and =ietnam are two of the bestexamples, so it is not surprising thatintegration is viewed positively there.More generally, globaliNing developingcountries are growing significantly fasterthan rich ones. 0n a paper for the *orld7ank , L!rade, Growth, and "overty,L #art Praay and 0 define the top third of developing

countries in terms of trade integration as the Lmore globaliNedL countries. !his group hasseen an acceleration of its per capita growth rate, reaching a population&weighted averageof ?I annually in the 224s. 7y contrast, rich countries grew at 6I, and the rest of thedeveloping world, at & I. @ver D billion people are included, for 7angladesh 9hina,

0ndia, 7raNil, and Mexico are part of this category.

!he anti&globaliNation movement often claims thatintegration leads to growing ineuality within countries,with no benefits going to the poor. Generally, this is nottrue. !here are certainly some countries in whichineuality has risen, like 9hina and the .S., but there isno worldwide trend. Most important, in the developing

countries that are growing well as a result of integrationand other reforms, rapid growth translates into rapidpoverty reduction. !he total number of extreme poor

8living on less than F per day measured at purchasingpower parity: increased throughout history up to about 2/4. Since 2/4 that numberdeclined by 644 million, while world population increased by ./ billion. !he progress is

heartening, but there are still .6 billion people living in poverty

(otwithstanding the positive views of globaliNation in the developing world, the surveyshows that there are common anxieties around the world concerning the availability ofgood )obs, )ob insecurity, old age support, and other uality of life issues. 0nterestingly,

9hart D. SourceJ !he *orld 7ankEnlargedimage
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people tend not to blame globaliNation for lack of progress in these areas, but rather poorgovernance in their own countries. *orld 7ank research shows that openness to tradealone is not going to have much impact if that openness is not complemented by otherfactors like a sound investment climate & meaning the environment of regulation,infrastructure, and financial services & and effective provision of basic services, especially

for the poor.

Globalisation and1eveloping 9ountries7roader and deeper globalisation of commerce and industry, and of the world economy,are essential to strengthen the economic performance and prospects for many of theworld%s developing economies, and through this lifting the living standards of their

peoples. 9losed economies, and those burdened by protectionism, will underperformagainst their potential, imposing substantial costs, in terms of lost opportunities, on theirbusiness communities and ordinary citiNens.Globalisation means governments% maintaining competitive and open economies,building uponmarket&oriented policies. 0t also means recognising the constructive role globalenterprises andelectronic commerce can play in creating new opportunities, and through this strongereconomic growth and faster development.!he importance of globalisation and economic development is underscored by a recent@E91 study which looks at the potential for five of the world%s big emerging economies,

namely 7raNil, 9hina, 0ndia, 0ndonesia and 'ussia.!he @E91 pro)ects a massive shift in global commercial and economic weight over thenext 64 years, with the output of those $big ? emerging economies% rising to eual that ofthe industrialised @E91 nations T which includes the nited States, much of theEuropean nion, as well as Oapan, South Porea and #ustralia.nderstandably, the $big ?% will expect comparable standing in issues T commercial,economic and political T affecting the world economy and community of nations to thatof the existing industrialiNed nations.!he dramatic transformation of the dynamic East #sian economies over the past half&century clearly demonstrates the commercial, economic and social dividends ofglobalisation.

Economic 1evelopments@n the economic front, economic, employment and export growth have grown strongly,while thesocial dividends include declining rates of illiteracy and poverty, and longer lifeexpectancies. "ercapita incomes in the dynamic East #sian economies have shown faster long term growththan many western industrialised nations.


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'eal economic growth in East #sian economies averaged over 3 per cent annually duringthe ? years to 2/4, and then over / per cent annually in the following / years to 22/,more than double the rates of western industrialised countries. E # 1 0 ( G # S ! ' # 0 # ( 7 S 0 ( E S SGlobalisation and 1eveloping 9ountries 8Oune 44:

!he primary engines of these superior growth rates were a strong export orientation andpro&foreign investment policies. Seven of the world%s top 4 exporting countries,measured by shares of exports in G1", in 223 were located in #sia T including all of thetop ?, in descending order, Singapore, Malaysia, >ong Pong, 0ndonesia and !hailand.+or many developing nations, the most cost&effective social safety net is the depth andbreadth of the country%s linkages with the global economy, allowing them to respondflexibly and uickly toeconomic Wll&winds through new exports and capital inflows.Governments have a substantial role to play in facilitating globalisation. "olicy settingsmust beadaptable, reinforcing competitive markets and emphasising market&oriented measures.

Sound economic policies must be accompanied by balanced and transparent laws andregulations, which are administered without fear or favour by an impartial )udiciary, andan adeuately resourced and honest constabulary.9orruption in all its forms undermines broad and soundly based economic development,and itselimination should be a high priority for all governments. #t the same time, democracyand goodgovernance, as well as respect for civil liberties, can help to reinforce competitive, marketmechanisms.(ear term economic development priorities should include promoting economic stability,removing price controls, and liberalising production and marketing system, especially foragricultural products, while medium to longer term strategies should embrace privatisingstate owned enterprises, reforming sclerotic financial systems, and rethinking the role ofthe state.7usiness can also play a constructive role in assisting developing countries to realise thebenefits of globalisation.Global businesses, whether large or small, bring many benefits to host countries,particularlydeveloping nations, including greater access to foreign capital, technology and exportnetworks,through which they generate flow&on benefits to local firms and people.'esearch by the @E91 shows foreign firms create new )obs faster, and pay wages higherthan,domestic firms 8up to 6? per cent more in some cases:. @ther benefits include superiortraining and career opportunities for local people.Export&oriented manufacturing and services also perform a valuable role in developingthe labour skills, technology and general market experience and expertise which canmove developing countries into a virtuous upward cycle of productivity and incomegrowth.


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# simple example sufficesJ while westerners once derided #sian economies for producingsimplegarments, footwear and toys, they now confront fierce competition from high&brand nameplayers in computer euipment and electronics, and increasingly from software and otherinformation

technologies.Global enterprises also play a valuable role in promoting the upward, not the downward,convergence toward world standards of labour and environmental practices in developingcountries. E # 1 0 ( G # S ! ' # 0 # ( 7 S 0 ( E S SGlobalisation and 1eveloping 9ountries 8Oune 44:1eveloped countries can constructively assist developing countries to build localcapacities to realiNe the commercial, economic and social dividends of globalisation.+or the least developed countries, this should include targeted foreign aid programswhich help those nations build fundamental capacities for self&sustained economicgrowth and development.

+or other developing countries, this should also include developed countries wideningand deepening efforts to liberalise domestic and international markets for trade andinvestment, so emerging economies can better realise their competitive advantages intrade and commerce.!he #ppropriate 'esponse0n so far as developed countries feel threatened from new found competition fromdeveloping countries, the appropriate response must not be to raise protective barriers,but rather to improve the flexibility of labour and product markets, and focus onrationalising and reducing government intervention in national economies.#n ambitious and comprehensive multilateral round of trade and investment liberalisationnegotiations, would assist developed countries to realise the dividends of globalisation bystrengthening the binding rules of the global trading system.!he multilateral trading system advantages developing countries by levelling the playingfield so both large and small, industrialised and developing, countries all compete on asimilar footing. +or many developing countries, an effective multilateral regime is a soliddefence against unilateralism from larger, more aggressive nations.0f anything, the comparatively small commercial and economic siNe of most developingcountriesmeans they gain proportionately more than larger countries from the rules&based system.!he benefits of freer trade for developing countries are substantial. !he @E91 hasestimatedeliminating tariff barriers alone to trade would raise world economic growth by D per centper annum, with even larger gains accruing to developing countries both in #sia and#frica.+or example, 0ndia would gain a $free kick% euivalent to almost 4 per cent of its G1",while for9hina the benefits would be a still&substantial nearly - per cent, both of which wouldgreatly assist to reduce pressures on unemployment and poverty in these mega&economies.


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booming. 0n the process, they are significantly increasing global demand for energy thusadding to the ever present global environmental concerns. 7ut progress has been uneven.7eset by #01s, poor governments and war, the economy in many #frican countries hasdeteriorated. *ithin the more successful countries, the benefits of growth has not reachedall citiNens. !he manufacturing )obs

Workmens Compensation Act 1952

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