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GLOBALIZATION AND TRADITIONAL INSTITUTIONS IN NIGERIA: A TALE OF TWO VILLAGES Raluca Iorgulescu Polimeni, Assistant Professor* Department of Economics, Siena College, New York, USA John M. Polimeni, Assistant Professor Department of Humanities and Social Sciences, Albany College of Pharmacy, New York, USA Diana Pociovălişteanu Faculty of Economic Sciences, “Constantin Brancusi” University, Targu-Jiu, Romania Abstract: Two Nigerian villages were surveyed to study the impact of globalization on the traditional Igbo society. Structural adjustment has impacted the two villages through economic reforms and programs such as reductions in government expenditures on social programs and the diminishing role of the public sector. As a result, the social capital and social cohesion, and the capacity for local economic development were diminished, and some village institutions were weakened. On the other hand, the institution of the extended family has allowed the two communities to form a symbiotic relationship that has helped maintain cultural traditions. The paper argues that the globalization policies of the international institutions based on the “weak” version of sustainability are over-simplified. By considering the importance of complex institutions in the development process, a more realistic picture emerges of the positive and negative effects of globalization. 1. Introduction Scholars working in the economic development field acknowledge more and more the essential role played by institutions. Some new institutional economists treat institutions as “constraints that human beings impose on themselves” [1]. A more realistic view is that institutions are repositories of incentives, rules, routines, and conventions that constrain and also enhance the ability of agents to act in specific ways. Although institutions do foster and underlie particular behaviors and habits, they can also be influenced and shaped by human action [2]. The example of economic change in rural Igboland, Nigeria, shows how the traditional development polices promoted by international institutions have failed to improve the lives of the world’s poorest and in response to these policies the traditional institutions adapted to provide relief. In this regard, the relationship between 23 globalizationunderstood as increasing interconectedness of the world economies associated with population and information flowsand institutions is critical to the development process. Globalization has not only weakened traditional institutions but has also fostered institutions that make it difficult for the poor to reap the advantages of the global market economy. In the pages that follow we examine the impact of globalization and institutional change in two Igbo villages in southeast Nigeria. The globalization process resulted in the implementation of structural adjustment policies in Nigeria. These neoliberal, marketbased policies rationalized the withdrawal of state support for social programs such as spending on health, education and basic infrastructure. Based on survey data from the traditional rural village of Umuluwe and the recently established satellite village (Obigbo) we discuss the impact of the changing economy. Globalization reinforced migration from Umuluwe to Obigbo, as larger numbers of Umuluwe residents left the impoverished village for better living conditions in Obigbo. Understanding the interdependence between them is central to understanding the impact of globalization and markets on Igboland. 2. Globalization, Poverty and Development Gowdy et al. suggest that “globalization means increased flow of capital around the world; removal of barriers to trade; increased diffusion of technology, and the internationalization of the production process. Globalization has also been perceived as a means to institutionalizing the market as the overarching mechanism for resource allocation. The question is on what extent globalization has impacted poverty and living conditions in rural communities of Africa” [3]. Some analysts argue that the poor have been made worse off by globalization, or that the benefits have accrued disproportionately to the more affluent members of society [4]. In shaping the new global economy, the World Bank’s and International Monetary Fund’s globalization policies have forced developing countries to implement market-based economic reforms–deregulating their economies, liberalizing trade policies, and reducing budget deficits–as a precondition for receiving debt rescheduling from creditor nations. The Structural Adjustment Programs have strengthened conservative demand management policies, including reduced government expenditures on social programs such as health, education, infrastructure, as well as freezing wages and public sector employment. While these reforms have improved the macroeconomic performance of some developing countries they have negatively impacted many rural communities [5]. More than fifty years after gaining their independence, and amid stories of desperation and grim poverty, it seems obvious that the “underdeveloped” countries would not be able to follow the “progressive” (Western) path toward prosperity. Nigeria currently ranks 158 out of 177 countries in the Human Development Index (HDI) of the United Nations Development Program [6]. Nigeria, like many other African countries, has experienced economic crises during the past twenty five years. The rural areas, in particular, suffer from the negative impact of national economic downturns. Globalization offers opportunities for developing countries, and Nigeria in particular would seem to have a large role to play in the growth of the global economy. The country is blessed with large reserves of petroleum; in 2003 the Nigerian share of global reserves was 3%, while the share of global production was 2.9%. The Nigerian economy is heavily dependent on the oil sector, which accounts for nearly 80% of government revenues, 90-95% of export revenues, and over 90% of foreign exchange earnings [7]. Unfortunately, Nigeria has very few refineries so gasoline is not easily available; to make the future grimmer, Nigerian oil is projected to peak at the end of this decade [8]. On the bleak side, fluctuating primary resource prices had a disastrous effect, causing real commodity prices in the 1990s to be 24 45% lower than they were in the 1980s. Also, the lack of supporting institutions and infrastructure prevent Nigeria’s poor from taking advantage of its abundant natural resources and human capital [9]. During the post-colonial period, most governments adopted a neoliberal approach to development, focused on rapid industrialization and increased GDP. This path to economic growth shifted attention away from agriculture and rural development, resulting in rapid urbanization and the emergence of a Western sub-culture which eroded some of the cooperative values and institutions of rural communities in southeastern Nigeria. Subsidies to foreign manufacturers were financed in the 1970s and early 1980s by the proceeds from the oil boom. But with the end of the boom in the 1980s, the government was forced to support its industrial policy with foreign loans, plunging Nigeria into huge debt accompanied by a crushing debt-service burden [10]. The oil wealth was not used to promote a balanced development, rural areas and local enterprises were neglected while the main beneficiaries were the foreign investors and local elites. These policies affect traditional institutions and the family structure while promoting new institutions facilitating the transfer of people and income between rural communities and rapidly growing sub-urban villages. 3. The Villages of Umuluwe and Obigbo, Nigeria The village of Umuluwe is situated within the predominantly Christian southeast region of Nigeria, and is about 20 miles west of the regional capital of Owerri. Typical for the patrilineal Igbo society, Umuluwe is a nucleated village of about 2000 people. Umuluwe is representative of rural Nigerian villages with difficult access from outside areas. The dirt roads are difficult for the very few cars owned by villagers or their visitors and there is no bus line; as a result, people cannot commute for work outside the village. Electricity was introduced in the past decade and was fully paid by the village levies, but the power is on intermittently. There is no running water; the water has to be carried from the only spring about one mile away from the center of the village. The soil has a low fertility and the absence of livestock makes agriculture unsustainable in a poor community unable to afford chemical fertilizers. The village’s main sources of income are cash crops (palm trees and fruits), water, and paving stone. Farming is mainly for subsistence; additional produce is sold at the weekly markets in neighboring villages. The additional earnings are used to buy meat, milk, sugar, and bread; villagers also use the extra income to pay community dues, and the fees for their children schooling and for health care. The Umuluwe community has social and political institutions specific to West Africa [11][12]. The extended polygamous family is the basic cell for the village network. Historically, the Igbo people have a complex and sophisticated form of political life with family governmental power much more diffused than in many places of Africa. At the extended family level (“micro” level), the main role is played by the elders. At the community level (“macro” level), the Igbo people are led by the village associations—gender separated, men’s and women’s associations—and by the elders of the village’s extended families, but without any formal, centralized political authority. The associations have power over funeral ceremonies, village level development projects, and the sanction of the misbehaving. Their role is more important than that of the elders [13]. In 1958, villagers from Umuluwe together with other migrants searching to earn cash income founded Obigbo in the oil rich coastal areas of southeast Nigeria. The relationship between Umuluwe and Obigbo is much more than a simple case of rural-urban 25 migration; the two villages are symbiotically related in terms of economic activity, village associations, life stages of the villagers, and gender roles. In Obigbo, about 20 miles from Port Harcourt, life is more comfortable than in Umuluwe in terms of running water, electricity, telephone lines, and tarred roads, even though these facilities may not function all the time. According to local estimates, nearly half of Umuluwe villagers have migrated to Obigbo. Thus, the two villages can be used to discuss the effects of globalization and urbanization. Umuluwe represents the traditional ancestors’ village while Obigbo represents the modern village associated to salaried jobs and the global economy. The two villages, Umuluwe and Obigbo, are interdependent. Umuluwe is an important source of the labor for Obigbo and the temporary migrants bring with them from their homeland some of the basic supplies—like palm oil and palm wine—which are not produced in Obigbo. Money flows back from them to the extended family left behind. For the Igbo people the spiritual life (i.e. traditional medicine, traditional legal system, and religious system) is very important and the homeland is the source of it. Migrants who become sick outside Umuluwe return home to receive traditional medicine and spiritual healing. Umuluwe represents the land of birth and the land of return at old age, the final home. When someone dies in Obigbo, the person is often buried in Umuluwe because the homeland is the final resting place for the Igbo [14]. 4. Globalization and Institutions in Igboland In May 2001, one of the authors together with Dr. Steve Onyeiwu and Dr. John Gowdy, with the help of local assistants, conducted a socio-economic survey in the villages of Umuluwe and Obigbo; the data collected provided an abundance of information about the effects of globalization and economic change on traditional institutions, new institutional arrangements created in response to rapid economic change, and institutions hindering development. During the visit to Umuluwe, two behavioral games (ultimatum and dictator games) were played to investigate the altruistic or selfish behavior in economic decision-making. The process of globalization and the structural adjustment policies implemented at the request of international financial institutions had negative effects on the communities studied. In the village of Umuluwe, the weakened local institutions are a result of reduced social capital and social cohesion, and, by diminishing the capabilities of the village, of a decreased capacity for local economic development. 4.1. Village Social Capital in Umuluwe Social capital can be understood as the social-structural resources embodied in institutions, civic communities, families, and the larger society [15]. Modernization and the associated economic reforms have affected the social capital of Umuluwe by increasing poverty and income inequality. As a result of economic liberalization, the ever increasing cost of living and the removal of subsidies on basic necessities such as health, education and fuel, exacerbated the incidence of poverty. Many villagers were forced to migrate looking for a chance for a better income and as a consequence the village was depopulated and the community life weakened. Since the social capital of the village depends on the close interactions between friends and family within the village, when people migrate farther from their village this network breaks down and the social capital is weakened. 4.2. Structural Adjustment and the Capacity for Local Development in Umuluwe The globalisation process, through its underlying philosophical foundation of ‘smaller governments,’ ‘getting the prices right,’ ‘responsibility and accountability,’ has 26 encouraged state neglect of impoverished and powerless villages at a time when state support is critical. Structural adjustment has undermined the production capacity of the villagers in Umuluwe because of the withdrawal of state support for social programs such as financing of the village primary school, the provision of electricity and water supply. The Nigerian government raises taxes⎯local, state, and federal⎯but it does not fund public projects; out of 236 villagers interviewed none acknowledged receiving any public services in return for the taxes paid during the past decade. The tax revenues are spent for projects that benefit only urban residents and the ruling class. As a result, the purpose of village associations is the execution of village development projects (i.e. electricity, primary school, and healthcare services), under normal circumstances, provided by the state. These programs are financed by imposing high levies on villagers regardless of one’s ability to pay. The survey results show that for the village as a whole total levies actually exceed total income (for almost all of the Umuluwe villagers, these levies exceed income), people have to borrow money to pay the levies and the vicious circle of poverty is perpetuated resulting in an increasing level of poverty (especially that of women who, customarily, have to provide the food for their husband and children). Overall, the income diverted for common projects reduces the investment capacity of the villagers in local production and instead of the intended economic growth the result is a deteriorating local economy. 4.3. The Weakening of Some Village Institutions in Umuluwe The weakening of village institutions is the effect of structural adjustment that induced the migration of so many of the Umuluwe villagers to sub-urban areas (such as Obigbo) and cities. Modern market forces in Igbo society have led to the breakdown of traditional gender roles and decreased the power of women associations. For example, traditionally women held significant economic power over the palm oil and cassava trades; commercialization of these crops and the cultural traditions which did not allow women to travel without a male relative made it difficult for women to compete with men in longdistance trade and transferred this economic power to men. The reduced number of people residing continuously in the village undermines village institutions and makes the enforcement of village norms and values ineffective. Traditionally, the Igbo society is based on an ethical system that promotes hard work, honesty, trust, and cooperation. People who serve their communities and maintain the moral and ethical ideals of the community are rewarded by the community by awarding them the title of “chief” which does not lead to material gains but rather to respect and reverence [16]. Chiefs represent role models for the youth, and they are considered persons of exemplary character. As a result of globalization and modernization of the Igbo society, the institution of ‘chieftancy’ lost its original moral and ethical meaning. Due to the deteriorating economic conditions in local communities, as a result of structural adjustment policies, the trend is to award the title of chief to those who donate money to the community regardless of the source of the money. As a result, well-known criminals now receive chieftaincy titles from their villages – a practice that has compromised the high moral and ethical values of the Igbo. This has increased the conflict in the Igbo community, particularly with regard to land disputes which were traditionally solved by the elders and chiefs. Most of these disputes are now resolved by the courts, rather than by the elders and the chiefs of the community which are not trusted to be neutral [17]. 4.4. Sharing and Cooperation in Umuluwe Experiencing the grim poverty of rural Umuluwe and the institutional weakening as a result of globalization, the question arises if people change and become more selfish. Ultimatum, dictator, and other behavioral games are used to address this question and the 27 results from different cultures have exposed important deviations from the standard economic model of human behavior as selfish and profit maximizing Homo economicus. In the ultimatum game a proposer is offered a sum of money and is instructed to share it with a respondent. The respondent can either accept or reject the offer. If the offer is accepted, each participant receives the aggreed upon amount. If the offer is rejected neither participant receives any money. Thus the ultimatum game captures both the motives of altruism and retaliation. In the dictator game the proposer may share as much or as little as she/he desires without fear of retaliation; the respondent cannot reject the offer. The results for Umuluwe confirm the findings from studies done across the world that individual level economic and demographic variables are not good predictors of behavior either within or across cultures; differences among cultures are large and are correlated with group norms and values, not individual attributes. In the case of Igbos, an ethic of fairness and social solidarity still prevails today that cuts across individual attributes. The persistence of altruism in Umuluwe may be explained by a number of factors, including weak market institutions, local institutions promoting fairness and cooperation, a high level of illiteracy which necessitates reliance on oral communication and a great deal of face-to-face social interaction, and the strong religious philosophy of the community based on Roman Catholicism, reinforcing traditional beliefs of rewards and punishment after death [18]. 4.5. Symbiotic Villages: Umuluwe and Obigbo In spite of the negative aspects of some weakened local institutions and decreased capacity for local economic development, the institution of extended family has allowed the communities of Umuluwe (ancestors’ village) and Obigbo (migrants’ village) to form a symbiotic relationship that has helped maintain cultural traditions. In Igbo society, polygamy is considered a sign of high social status as only a wealthy man can afford more wives. One could argue that the establishment of symbiotic villages may be a rational response to modernization; the large extended family compound where members come and go and adjust family duties accordingly is more adaptable than the western style nuclear family. The migration of Umuluwe villagers to Obigbo did not destroy the major local governance mechanism which is the power of associations. The major associations in Obigbo or Lagos are branches of the Umuluwe associations and they send representatives to annual meetings in Umuluwe of the respective association. The proof that the power of Umuluwebased associations was not eroded is the fact that Obigbo villagers still obey and pledge allegiance to decisions from the Umuluwe headquarters of the associations [19]. 5. Conclusion The discussion of the two Igbo villages shows that the effects of globalization are complex and may impact traditional societies negatively. The implementation of marketbased economic reforms and programs unaware of the cultural-institutional background is one aspect of the globalization process that has impacted severely on the two villages. Structural adjustment has meant reductions in government expenditures on social programs such as education, health, and infrastructure, and the decreased role of the public sector. The effects of the cash economy can be seen in Umuluwe and Obigbo in increasing debt and rising prices for necessities. More subtle are the negative effects on traditional values and social cohesion in village life. Migration occurs because of economic considerations, typically with migrants moving to an urban region in search of employment. In the case of the two interdependent villages discussed when the spiritual aspects of the day-to-day life are ignored and the only connection considered is the flow of remittances from Obigbo back to the extended family in Umuluwe, the relationship between the two villages is mainly parasitic. Only when the 28 society is considered as a symbiotic whole—material and spiritual—the ‘mechanism’ behind the economic life in rural Umuluwe and sub-urban Obigbo can be understood and successful policies can be designed [20]. It is hard to say at this point whether the net effects of modernization and the response to it by Umuluwe and Obigbo will be positive or negative. We do know, however, that future effects of globalization on rural Africa will depend on the particular cultural characteristics of the people affected. Economic policies designed to ease the transition to a modern economy cannot be effective without understanding the cultural context within which economic change takes place. A thorough knowledge of the indigenous institutions and of the ‘mechanism’, which is behind the social and spiritual/cultural life of the village, is necessary when designing effective policies that target local economic development. Therefore, the implications of the relationships described in this paper are important for public policy makers seeking to develop strategies for promoting gender and wage equality in both the urban and rural regions of Nigeria. By considering the importance of complex institutions in the development process, a more balanced picture emerges of the positive and negative effects of globalization. Acknowledgements The authors would like to thank the people of Umuluwe and Obigbo villages for their patience and hospitality. They are indebted to Dr. Steve Onyeiwu for all his support during the research visit to Igboland, for his insightful comments and suggestions, and for his kind encouragements. Raluca Iorgulescu Polimeni would like to thank Dr. John Gowdy for his guidance and advice. References [1] [2] [3] [4] [5] [6] [7] [8] [9] [10] [11] North, D., Institutions, Institutional Change, and Economic Performance, Cambridge, Cambridge University Press, 1990, p. 5. Hodgson, G. M., The Approach of Institutional Economics, The Journal of Economic Literature, XXXVI, 1, 1998, p. 180. Gowdy, J. M., Iorgulescu, R., Onyeiwu S., The Global Economy and Institutional Change in Rural Nigeria: A Case Study of Two Villages, in ‘Economic Globalization: Social Conflicts, Labour and Environmental Issues’ edited by Clem Tisdell and Raj Kumar Sen, Edward Elgar: Cheltenham, U.K., 2004, p. 137. Wei, S. Is Globalization Good for the Poor in China?, Finance & Development, Sept., 2002, p. 26. Onyeiwu, S., Altruism and Economic Development: The Case of the Igbo of SouthEastern Nigeria, Journal of Socio-Economics, 26, 1997, p. 407-420. 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