Download Globalizing Developing Nations: A Political Economy Critique

Globalisation, ICT and Developing Nations:
The Main Challenges
Sumit Roy
The Conceptual Frame
• Globalisation: a historical process encapsulates in its recent phase
compression of the world economy, based on ICT, and above all
opening up of space which transcends national boundaries while
coexisting with the nation state and inter-state and international
relations
• Essential to re-conceptualize traditional notions of national and
international relationships based on simple territorial divisions and
ushering in global relationships and a global political economy
• Gaps in studies on globalisation: often based on either abstract or
selective empirical findings with limited use of a comparative interdisciplinary approach encompassing developing-world interactions,
and the scope of state and non-state forces in shaping the process
• Aim of paper to contribute –exploring relationship between
globalisation, international relations and international political
economy-encompassing the comparative Asian and African experience
of integrating into the global economy and the role of ICT in
stimulating development
• Theoretical framework is political economy using economics and
international relations within a comparative structure
• The focus is on role of state and non state forces in shaping
globalisation within a n international and comparative frame and its
implications for growth and conflict reduction
• The analysis challenges the early studies of globalisation which
implicitly assumed that it was positive and would unfold material gains
surpassing temporary disruptions to national structures and hence
would be enthusiastically embraced by the majority of people
• Harsh reality unfolds a complex and uneven process of
integration, disintegration, marginalization and reintegration of nations, regions, and social groups into the
changing world economy
• Analysis unfolds the role of state and non-state institutions
in trying to fulfil the laudable goals of globalising and the
prospects of realizing a vision of one world with shared
universal values
Globalisation,International
Relations and Political Economy
• This section focuses on the relevance of concepts
and the emerging policies underlying the shift
from state to non-state institutions in shaping
growth and conflict reduction impinging on
institutions:international and regional institutions,
non-governmental, and multinationals
• First, the study of international and regional
institutions and its roots in ‘Regime’ theories
needs to be discussed: to assess the
separate,complementary and often conflicting
• norms based on basic Values, ideology, internal
organization structures, hierarchy, funding sources, and
devising, interpreting and reforming institutional
arrangements
• Second, the role of non-governmental organizations
supported by civil society and democratic participatory
movements can reinforce state and non-state actors and
compensate for their limitations to fulfil economic and
political goals;
• NGO’s may use their flexibility, individually and
collectively, to ensure the formulation, establishment, and
monitoring of official mechanisms and procedures for
implementing inter-state agreements
• Third, private institutions, exemplified by multinationals can shape the
flow of foreign direct investment embodying finance, technology,skills
and management to boost growth through domestic and export
markets.
• In a global world new forms of relationships are emerging between
states and multinationals, between multinationals and domestic capital,
and multinationals and international institutions.
• Against this backdrop the emergence of a new conception of IR needs
to embrace inter and intra state relationships :new forms of post cold
war conflicts, wars,and globalisation and changing domesticinternational interactions
• International Institutions:
• The role of the major ones should be analysed: the United
Nations and the Bretton Woods institutions
• Remit of the institutions may vary;they may serve as an
arena, an instrument, or an actor covering conventional
concerns-preventive diplomacy, peace making, and peace
keeping, and stimulating growth-to recent focus on the
environment, migration, crime prevention & collective
security.
• United Nations is the key institution which captures the
aims of stimulating growth and reducing conflict.
• UN’s Agenda for Peace and Agenda for Development
• Limits imposed on the UN-finance-dependence on the USA which
contributes about 25% of the budget
• Challenges faced by the UN:limits of the Security Council and the
General Assembly:latter alleged to tedious, repetitive,and without
moral and political force
• Reform of the UN:bureaucracy, duplication,financial accountability,
co-ordination of peace keeping and development activities
• The Bretton Woods institutions-the World Bank and the IMF-and the
related WTO:
• Such institutions seen as conservators of the rules, conventions, and
understandings that have moulded international economic relations
against a backdrop of the depression of the 1930’s and the costs of
failure to develop regulations and organizational structures to guide
economic policies
• Both Bretton Woods institutions and the UN confront complex
problems stemming from the nature of globalisation-exemplified by
speculative flows of finance –originating in the East Asian crisis
[1997]
• The WTO-originating in GATT-force behind the attempt to create an
open world economy-to bring about free movement of goods,
services, and investment
• Limits and strengths of GATT and subsequently the WTO to cope
with the diverse and changing nature of the global economy
• The GATT/WTO ‘Rounds,’ the rise of the UR,Uruguay Round, and
expanding free trade taking into account the interest of both developed
and developing countries-former concentrating on manufactured goods
while the latter dominated by agricultural based goods and industries
• The Seattle [1999] and the Post Seattle pursuit of a balanced world
trading system against a backdrop of attempts by other groups and
institutions-G7,UNCTAD, developing country groups-to champion the
needs to embrace the needs of developing countries-market access for
agricultural exports, support for special and differential treatment, and
liberalization which takes into account their specific stage of
development
• Doha [November 2001] Round and the Post Doha agenda:
‘implementation’ and ‘new’ issues-former centred on
agriculture,TRIPS,and services while the latter covers ‘Singapore’ or
trade and investment, the environment and trade and debt.
• At Doha developing countries dissatisfied with the outcome especially
the lack of execution of agreed norms by developed countriesespecially in agriculture and anxiety over inclusion under ‘Singapore’
of investment norms which could act as disincentives for domestic
industry, and strong opposition of including the environment; some
satisfaction over TRIPS and facilitating access to medicines by
developing countries
• At Cancun [September 2003] failure to take major steps to resolve the
problem of the critical agricultural sector-ie reducing subsidies by
developed countries, focussing on aspects of the Singapore issue
against the wishes of developing countries, and basic doubts about the
future of multilateral negotiations
Regional Institutions
• The context: emergence of nations into breakaway states, or foreign
intervention, necessitates devising legal, political and social solutions
to curb tensions, and ensure that regional institutions play a pivotal
role
• In developed world specific pockets face critical choices in ushering in
political change:exemplified by the Balkans
• In developing world many challenges underpinned by measures to be
integrated with the global economy:exemplified by the contrasting
experience of East and South Asia and Africa
• Asia:
East Asian region unfolds uncertainty, anxiety,and expectations about
the re-grouping of alliances in the post cold war era and its impact on
regional security,peace and development
South Asia:
Dominated by India- unfolds diversity in politics and economics, with
varying levels of democracy, and authoritarian regimes, with intense
inter and intra state tensions;manifesting themselves in clashes,
skirmishes, wars, and emerging rivalries over nuclear and non-nuclear
military prowess stemming from ethnic, religious, linguistic, tribal,
class,and caste conflicts-including secessionist movements
East Asia-South Asia:
Relations moulded by economic and political forces and how these
interact with changes in the global economy-exemplified by tensions
between India [South Asia] and China [East Asia]
Africa:
Integration in a globalizing world poses critical questions on
governanace impinging on bringing about economic, political and
social change
Colonial roots of interaction with the world economy, economic
structure, and post colonial relationships
Non Governmental Institutions
• NGO’s shaping economic and political goals-complementing and
compensating the traditional role of the state
• NGO’s are basically pressure groups complementing and
compensating the traditional role of the state and non-state actorsincluding international, regional, and multinationals under
globalisation
• NGO’s in the frame of ‘globalisation from below’-supported by local
socio-economic struggles against discrimination on grounds of
ethnicity,class, and gender
• NGO’s can help to redefine, reshape and challenge conventional
notions of ‘globalisation from above’
• NGO’s claim to fulfil basic needs and basic rights of the marginalized,
neglected, and poor socio-economic groups based on participatory
democratic principles
Multinationals
• Multinationals critical, though controversial in shaping the economics
and politics of globalisation-trade for instance transformed over last 50
years with some of it being conducted through it
• MNC’s impinge on the flow of direct investment embodying key
resources-finance, technology, skills, and management- to boost
productivity and growth, and pave economic transformation, based on
domestic/national and export/external markets
• The political context within which MNC’s operate is criticalconservative, liberal,and radical-impinging on the nature of bargaining,
collaboration and tensions between MNC’s and the state, MNC’s and
domestic forces,and MNC’s and non-state actors
• Forms of collaboration between MNC’s and state and non-state actors
encompass various forms of direct investment: cross border mergers,
joint ventures, and various forms of alliances
• Liberalization through SAP’s, Structural Adjustment Programmes,
MNC’s and globalisation: paving the way for foreign direct investment
Globalisation,Regionalization
and Structural Change
• Background:
• Underscored by contrasting experience of Asia, with emphasis on
East Asia, and Africa- the former symbolizing integration, and reintegration, while the latter emerges as a case of weakness and
marginalization-in the pursuit of globalizing
• Key role of key regional institutions, often supported by international
institutions, to fulfil goals of sustainable growth and interactions with
the international economy-East Asian regional institutions including
ASEAN, ASEM, and APEC-weaknesses of African regional
institutions unfolds dependence on international institutions
exemplified by the World Bank and the IMF
• Instabilities in regional-international relationships-East Asian
economic‘miracle,’ collapse,and gradual recovery in contrast to
Africa’s weak bargaining position in the international economy
encapsulated in the ‘debt crisis’ and the ensuring reliance on
East Asia:The Context
• East Asia:
• The region exposed to uncertainty and anxiety –regrouping of alliances
in the post coldwar phase and its impact on security, peace and
development
• Role of key regional bodies-APEC-encompassing both East Asian and
developed nations-in stimulating regional growth
• The East Asian ‘Miracle’:
• Typology-domestic-external linkages• [a] the level of income, savings, productive sectors, labour use, and
human development
• [b] extent and nature of external dependence-trade as a % of GDP,
external structure, including resource flows
• Interaction between [a]and [b] –can inhibit or advance transition,
structural change and integration into world economy
East Asia:’The Miracle’
Asian ‘Miracle’-role of the state and the market and insights into policies on
development consistent with national aspirations
-
marked by measures to boost agricultural and industrial production through
creative synthesis of investment, technology, and credit-including structuring
of market competition
-
while providing incentives for generating profits under domestic and export
led growth
-
The ‘tiers’ of development-First, Second,and Third
-
Second Tier more market oriented than the First Tier
Post ‘Miracle’ Crisis
• Post ‘Miracle’ Crisis:
• Collapse and subsequent gradual recovery
• Nature, causes and possible remedies-bedevilled east Asia
from 1997 onwards
• The nature of the crisis-collapse of financial markets
-a sharp rise in foreign debt
-heavy devaluation,
-falling outputs
-rising unemployment
• History of East Asian financial crisis-began in Thailand with
devaluation of the Baht-on 2 July 1977 and quickly spread to other
countries in South East Asia and adversely impacting on countries
outside East Asian region
• June 1997-end of year –the median currency devaluation –in 12 of the
largest emerging markets was 39% and in the 5 East Asian countries
hardest hit by the crisis-Indonesia, Korea, Malaysia, the Phillipines,
and Thailand-it was 80%
• International Finance Corporation emerging stock market index
dropped 25% between June-December 1997 and its Asia index fell
53%
• The crisis and ‘melting down’ had critical consequences for the global
economy
• Focus on East Asia stemmed from shock and uncertainty over the
sudden collapse of the economies and long term impact on both the
region and the world economy-including the industrialized and
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Capacity of East Asia to purchase the exports of industrialized countries,
cutbacks in foreign investment by the region and its implications for
unemployment in Europe and North America –and in turn reduction of
developing country exports to the industrialized countries
Forecasts-pessimistic-key countries-1998-Thailand, Indonesia, Malaysia and
Philippines were set to grow at 1.7% on average compared with previous
forecast of 3.7%; South Korea’s growth was adjusted to 2.5%-down from 6%while Japan’s was halved to 1.1%
Overall world growth forecasts were revised downwards from 4.3% to 3.5%
Subsequent experience shows growth rates of East Asian countries sharply
reduced with adverse impact on developed and developing countries
Roots of East Asian Crisis
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Combination of reasons:
Poor lending and borrowing policies
Oversupply of international finance
Cheap credit
Speculative ventures without effective demand fuelled by inadequacies
of domestic financial markets and corruption in allocation of finance
• Key problems confronting East Asian economiesStagnation of industries-formerly engines of growth
Declining exports
Reduced rate of growth
Increasing current account and public finance sector deficits
Financial instability
East Asian Crisis:Remedies
• Devising appropriate short,medium and long term policies
• Reducing external debts and overcoming balance of
payments problems and restoring external and internal
balance
• Harsh policies to regain confidence of international
financiers and investors
• Using regional institutions-APEC,ASEAN, and ASEM-cooperation to boost each country’s competitive capacity and
initiating inflows of foreign investment and technology
transfers
• Financial provisions by the IMF
• Regional institutions-critical-to establish regional peace and security
along with economic development
• ASEAN-for instance-Ministerial Meeting, Hanoi,23-24 July 2001focussed on positive steps towards peace, stability and co-operation in
the context of globalisation; fundamental question emerged how
ASEAN could help members reap benefits of globalization
• Prospects of East Asia making a full recovery-influenced by the
changing fortunes of the USA-exemplified by the September 2001 and
the 2003 Iraq crisis-dangers of excessive financial liberalization
creating systematic instability and recurrent crisis
South Asia
• South Asian vision of globalisation-context of regional security, peace
and co-operation within relatively ‘closed’ economies
• South Asia dominated by India-resolving deep rooted pre-liberalization
socio-economic problems and paving the way for international
competitiveness
• Acceleration of agricultural growth, agricultural reforms, and
agricultural investments, and poverty and employment programmescoupled with use of market forces to meet national goals
• Improving public sector efficiency
• Export led growth-through measures to absorb labour and enhance
skills
• Fusion of state and market forces to accomplish developmental goals
and globalise
Africa
• Historical context of integration with the world economy, commodity
dependence and economic structure, weak bargaining power and
marginalization in the world economy
• Debt crisis-1980’s onwards-encapsulating imbalances between the
domestic and the external economy-through debt relief subject to
meeting the technical,economic and socio-economic criteria of
international institutions.eg the IMF and the World Bank
• History of debt relief through HIPC, Heavily Indebted Poor Countries
Initiative, under the IMF-World Bank-stringent terms and conditions to
obtain relief encompassing reform of domestic and external sectors
• Results of HIPC debt relief limited and pose questions on the need for
measures to tackle root causes of BOP disequilibrium
•
Liberalization and globalisation for Africa a major political economy
challenge
Insights of Asian and African
Experience
• Transforming an economy from an agricultural to an industrial
economy and integrating with the world economy
• Agricultural growth critical-to boost productivity, income, savings, and
employment capacity to generate demand for industrial goods, supply
of labour to industry, investment in agriculture
• Major role of land reform in creating conditions for agricultural growth
• Supporting role of poverty and employment programmes
• Devising appropriate liberalization policies- shedding ailing industries
- selling to private sector or foreign capital
--closing them down
-making labour laws more flexible
-welcoming foreign investment where domestic capital is weak
• Develop more democratic structures
• Assess the extent to which free reign of markets
undermines confidence
• Need for information to guide investment decisions
• Pitfalls of free flows of large capital inflows-need for IMF
and World Bank cooperation-and a world financial
authority to cope with erratic capital movements and
monitoring international institutions
• Creating a more open and democratic government
ICT: The Digital Divide and
Transformation
• ICT :the major force in enabling instant
communication over space, blurring national
borders,and ushering in transnational relationships
• ICT implemented through collection, storage,
processing, and instant transmission of
information-convergence of text, sound [audio],
graphics, and vision [video] in digital form and its
application for diverse economic, social, political
and cultural goals
• This section encapsulates the ways in which ICT offers a challenge and
opportunity to stimulate development and structural change-diffusion,
efficiency, productivity, and in particular employment,and supporting
human capital development-and pave the way towards the Information
Age.
• ICT and Innovations: usefulness of ICT range from intense optimism
to much scepticismthe former emphasises the importance of ‘knowledge or information
gaps’ as a development constraint and its role in reducing North-South
gasp by increasing agricultural and industrial productivity, efficiency
of public administration and economic reforms, sharpening
competitiveness, and stimulating participation and democracy
the latter poses doubts about the claims of the benefits of ICT
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Adoption and diffusion of ICT has to be set against historical backdrop of
innovations to increase efficiency, productivity,and growth
Innovations: improvements to existing products, new product lines, additions
to existing product lines, new to the world products, cost reduction-process
developments
ICT productivity and growth- -boosting micro and macro economic and social
productivity and efficiency, reducing transaction costs, and bolstering
bargaining and competitive power across national borders
ICT, democracy and power-empowering people and re-vamping the nature of
competitive democracy ushering in participation, transparency, and
accountability by enabling diverse civil society groups, social movements, and
marginalized individuals to forge links across the local, the national, and the
global
• Adoption of ICT:diverse facets of access to ICT, patterns of use, and
the scope of policies to incorporate technology as a force in socioeconomic transformation in developed and developing nations
ICT:Developed Nations
• Developed nations:
• Access to a computer and the internet in selected OECD countriesaccess to PC’s varies between 64% and 21% and access to the internet
between 50% and about 8%
• PC diffusion in households is increasing throughout the OECD
regions-rates are highest in Netherlands, Australia, and the USinternet access generally faster than diffusion of PC’s as the necessary
investments in PC equipment and personal skills have already been
made
•
In business ICT penetration and internet access a function of firm size-smaller
business units less likely to have invested in new technologies
•
Sectoral distribution-internet access in urban areas greater than in rural areas
and members of households in urban areas more likely to be in occupations
where computers and internet a component of their work
•
Household or individual income an important determinant of the presence of
PC’s and the extent of internet use in homes
•
The annual % point change has been higher for the highest income groups and
penetration is now very high in those groups; in France for instance the highest
income group bracket had 74% PC penetration in 2000 and the lowest income
bracket only 11%;’ the growth rate from 1998-2000 was only 11%; the growth
rate from 1998-2000 was 68% for the lowest bracket compared to 47% for the
highest income bracket
ICT:Developing Nations
• Developing nations:
• Sharp contrast in diffusion of ICT in developing compared to
developed countries-major challenge for developing countries
• ICT can facilitate growth through increasing productivity, efficiency in
both the economic and the social sectors [education and health] and
scope of intensifying political empowerment
• Need to explore the lack of a clear link between ICT and productivityand measures to boost efficiency has to be accompanied by measures
to protect workers and re-thinking labour laws and collective
agreements
• Empirical observations on ICT in developing countries shows high
correlation with most measures of development-this in turn is highly
correlated with measures of development-telephones per capita
• Despite the potential links between ICT and poverty reduction direct
access by the poor to ICT very limited
• ICT offers promise in promotion of exports-especially in services-by
improving the function of markets, and increasing the quality and
efficiency of government services
ICT on the political front can enable the disadvantaged to have a voice
ICT and education: offsetting remoteness, helping alleviate shortages of
teachers, expanding distance learning, enhance technology skills
Evaluating investments against infrastructure and related needs in the
education field
ICT’s potential of improving administration and management, storage
and transmission of data, surveillance,monitoring, publications and
dissemination of medical findings
ICT’s role in governance-empowering people to exercise their rightstechnology as a vehicle for harnessing discontent and organizing
protests against injustices
ICT:Asia
• Asia
• Diffusion of ICT in East Asia-the major physical, technical, and socioeconomic obstacles and the scope of shaping and executing relevant
policies under different political systems
• East Asian countries, a national Information Infrastructure policy, and
an Internet policy
• ICT policies in East Asia embrace varying combinations of the state
and the market-China a state thrust policy; Thailand passing through
three phases with limited privatization and greater liberalization;
Malaysia policies articulated from the highest level of government
• South Asia behind in the ICT ‘digital race’ compared with developed
countries –against a backdrop of poverty and unemployment-but
countries such as India have strong research and technology
foundation, skilled labour and firm democratic tradition
• In India-ICT has to be closely linked to development strategies to
stimulate productivity, market and bargaining power in key sectorsagriculture,services, and relevant manufacturing-strengthening literacy,
skills, and knowledge
• In India-ICT and its relationship with employment creation and
reduction needs to be carefully analysed-by sector and sub-sector and
socio-economic group
ICT:Africa
• Africa:
• Inevitable ’digital gap’ between Africa and the rest of the
world-internet access, numbers of dial up subscribers, cost
of using Internet, limits of bandwidth
• Developing ICT in Africa requires strong external supportUSAID, UNDP, EU, the World Bank, IDRC programmes
in the frame of African development priorities-including
improving accessibility to ICT in rural areas through
shared public facilities and cost effective services
The Future:Beyond Globalization
• Early assessment of globalisation-implicit assumption that it was
positive and would bring material benefits surpassing any temporary
disruptions to national economic and socio-economic system
• Globalisation has to be encompassed within the context of the
emergence of largely dormant forces which had been suppressed in
the cold war ideological battles between capitalism and socialism
• Critical to challenge the avowed universal values of globalisation
• Factors underlying support and opposition to globalisation
• Urgent need to re-conceptualize globalisation-to encapsulate and
integrate universal and specific,varying, and shifting multiple local
identities which can capture global diversity
• Essential to explore policies which can fulfil such goals: this
encompasses critical economic ones linking flows of trade and finance
to sustainable growth in a historical frame
• Summary:
• Globalisation creating a space which transcends national borders but
likely to coexist with the nation state and traditional international
relations based on inter-state relationship
• Shift in policies from state to non-state institutions and increasing
focus on global rather than domestic institutions to guide economic,
social and political change
• This is underscored by a global political economy breaking down
relationships based on simple territorial divisions
• Globalisation can then usher in a vision of one world with shared
values encompassing diversity and conflict
Thank You