Globalisation has emerged as one of the greatest challenges facing developing countries and Least developed Countries (LDCs). There are usually two extreme positions in the debate on globalisation, with one position arguing that the process has led to progress, created wealth, expanded opportunities and has provided an enabling environment for entrepreneurship while the other hand, there are those who associate globalisation with unemployment, poverty, maginalisation and social crises. Globalisation is seen as largely having been responsible for growing inequalities, the erosion of workers’ rights, increasing joblessness, privatisation, the dismantling of the welfare state, devaluations, the removal of subsidies, and deregulation of labour markets.
The main driving force of the current process globalisation is the search for maximum profits and cheap labour. Two factor that have played an important role in the process of globalisation are technological advances mainly in he areas of Information Communication Technology (ICT) and the operations of multilateral institutions, namely, the International Monetary Fund (IMF), World Bank (WB) and the World Trade Organisation (WTO). These two broad factors have combined to overcome natural barriers of space and time and have been instrumental in pushing for multilateral trade liberalisation. In all this, the driving agents have been the Multinational Corporations (MNCs).
What are most salient positive and negative consequences of globalisation and how can a country like Norway contribute to the international community’s efforts to capitalise on positive globalisation dynamics and alleviate the negative ones?
- The move towards market liberalisation in many countries has been reflected in deregulatory policies by governments, including the reduction of tariff barriers, facilitating the flows of capital and investment and privatisation of state-owned enterprises.
- Market liberalisation has preceded or has been forced by globalisation and both phenomena have been facilitated by the growth in world trade and foreign direct investment in recent years.
- Information technology has led to rapid financial transactions and changes in production and service locations around the world.
- Globalisation has increased market access, access to market capital, access to technology and information and increased movement of people.
- Greater income and employment opportunities. The world, as a whole, is now more prosperous and wealthier, with average per capita income tripling in the last fifty years, child mortality rates halving and life expectancy increasing by ten years since 1965.
- Closer integration, openness to trade, factor flows, ideas and information which have powerfully stimulated progress, both at economic and political levels. Greater openness will also help firms in developing countries to become a part of the international production networks and supply chains that are the main conduits of trade.
- Industrialisation, on a global scale is more likely to draw impetus from rising productivity and participation in international production networks, if barriers to imports are scaled back.
How can the positives be used to alleviate the negatives?
- Unbalanced distribution of benefits between countries. The gains from globalisation are not equally distributed, both between and within countries. Income inequality is increasing in many countries with rising job insecurity.
- Global integrated markets have financial instability as a permanent feature, the frequency of financial crises increasing with the growth in international capital flows. The human costs of such financial volatility can be high such as increased poverty, unemployment, reduced public services and increased social stress or in short, a reversal in human development
- Reduction in regulation of the labour market, leading to job insecurity, poor observance of health and safety regulations, erosion of the power of collective bargaining and low unionisation of workers
- Discrimination and gross exploitation at the workplace in violation of fundamental workers’ rights.
It is the responsibility of the entire international community to contribute to redressing the imbalances accentuated by globalisation. The following are some of the things that can be done to make globalisation work for all. Developing countries should seize opportunities created by globalisation to construct national policies that allow for strategic and gradual integration into the world economy. Increased market access and greater investment can help accelerate more equitable distribution of wealth and help alleviate poverty.
Increased FDI inflows to developing countries should be used to develop infrastructure for efficient production and delivery of goods and services. Increased capital and technology transfer from developed to poor countries can help in building a competitive environment at national and international levels. Integration and improved technology can stimulate and strengthen international action to regulate and supervise banking systems, developing better systems of early warning and crisis management.
Regional integration can strength South-South cooperation which will in future compel developed countries to work with self-confident and often demanding partners who cannot be coerced through financial power. Technology transfer can make knowledge available from the North to the South at affordable prices and conditions. Developing countries should be encouraged to implement active policies designed to increase learning and improve access to knowledge and technology.
The introduction of economic and technological partnership programmes with the full participation of all appropriate United Nations (UN) institutions can help in seeking a far-reaching solution to the problem of debt burden affecting developing and poor countries. This would help balance global economic development and ultimately promote the development of open, fair, equitable and transparent trade.
Increased demand for decent work and a stronger voice of labour can ensure a world-wide commitment to core-labour standards as a way of spreading more fairly the benefits of trade within and between countries by preventing the worst forms of exploitation and enabling trade unions to bargain for decent wages and conditions of work.
Integration and increased information exchange can be used to enhance the performance and participation of trade unions in social dialogue at national and international level in order to press for good governance and contribute to social and industrial peace.
What are key challenges for generating economic and political development in poor countries? Are there particular challenges and opportunities for a country like Norway in this perspective?
The economic opportunities and risks generated by globalisation are distributed unequally between developed and developing nations. National governments in developing countries are being weakened by the growing power of multinational corporations and capital owners.
The pressure on industrialised countries to adapt exerted by globalisation is distorting such countries’ perspective on poorer countries. The concept of state sovereignty is increasingly being eroded, thereby limiting nation states’ ability to deal unilaterally with pressing economic and political problems. The continued marginalisation of poor and developing countries in the world economy despite extensive and intensive structural adjustment reform programmes.
Lack of significant investments which are related to productive capacities to enable poor countries benefit from a more favourable process of capital of capital accumulation, technological progress and structural change. Insufficient and declining Official Development Assistance (ODA) and Foreign Direct Investment (FDI) inflows to some poor countries to fill up the domestic resource gap for development. Weak political institutions requiring strengthening,How should international aid be changed to respond to these challenges?
International aid should support the expansion of sustainable capacity building programmes in the public and private sector, through the provision of appropriate technical assistance in line with the priorities of poor and developing countries.
There should be deliberate measures to target international aid to the development of new South-South cooperation framework, including grants and concessional finance facilities. Developed countries like Norway should channel part of their ODA towards strengthening national political institutions to promote respect and enforcement of economic and social contracts, engender a vibrant civil society, supported by strong representatives organisations for workers and employers.
International assistance should also aim at meeting existing commitments to increase development assistance for poverty reduction and the Millennium Development Goals (MDGs),
Developed countries should allocate sufficient funds towards enhancing the participation of developing countries in international agreements through training of technical staff and supporting participation in meetings.
Developed countries like Norway should influence developing and poor countries to implement policies that help in creating full and productive employment as this is a key instrument for poverty eradication and equitable development.
International aid from the developed countries should be packaged in such a way that it supports the World Bank’s recent focus on improving transparency and governance it its client countries in an effort to eliminate corruption.
Norway can contribute to the process of redressing imbalances created by the current globalisation process by ensuring that Europe redefines its role in the world and redefine it, not with imperialistic intent but with the desire to seek balances that guarantee peace and international cooperation.
In view of the negative impact of global economy capital on nations that pursue policies that ensure adequate public spending on social services such as health and education, there should be deliberate steps by countries like Norway which are providing aid to developing countries to contribute to developing a new set of global rules that can help build stronger trade unions, ensure decent health and education standards and a better environment.
International aid from developing countries can be a vital instrument to promote enterprise development as well as help create a favourable environment for entrepreneurial initiatives where small and medium enterprises can compete better internationally.Key problems and challenges
The present institutions of global governance do not reflect the interests of developing or poor countries. There has been a visible failure of structural conditionality to achieve development goals as well as representing an unacceptable and usually counter- productive intrusion in decision making over national policies of poor countries. The World Bank has lacked a global strategy that is developed in conjunction with key partners and some of its programmes lack clearly defined objectives. The World Bank and IMF have defied standards of good governance by maintaining a closed leadership selection process which often shuts out leaders from less powerful countries. Incoherencies in policies between international financial institutions and other multilateral organisations which threaten the achievement of MDGs and realisation of decent work agenda. There is lack of an effective process of assessment by the WTO and individual governments, with the participation of trade unions and civil society, of the impact of existing or proposed trade liberalization on employment, the observance of trade union rights and core labour standards and the provision of services.
The industrialized North has failed to implement key provisions of existing WTO agreements that benefit poor countries, and has interpreted others in ways that erode poor countries’ competitive advantage in such areas as agriculture, textiles and leather goods.
Poor countries are being forced to implement key economic and social decisions which are a reflection of the thinking of the IMF and World Bank. The WTO has represented a model of trade liberalisation that cannot last, that increases the exploitation of workers and inequalities in terms of development.
Developing and other poor countries should be at the forefront of bring the United Nations back into the business of laying down the international cooperative framework for economic policy and development. Developing countries, themselves, must institute domestic changes alongside international reforms, given that it is how governments manage their country’s internal affairs that determines the extent to which people will benefit from globalisation as well as be protected from its negative impacts. Developed countries, such as Norway, should play an influential role in strengthening the voice of poor countries in international negotiations and agreements if globalisation is to benefit them.
The international community should demand the adoption of a policy requiring the removal of WB and IMF economic adjustment conditionality attached to debt relief, loans and grants and that such conditions should be limited to ensuring that assistance is used for its intended purposes, such as controls against corruption or diversion to military expenditures. There should increased demand on the World Bank to direct more attention on strengthening civil society and free media in the fight against corruption as priority in its interventions. Norway and other developed countries should play a leading role in defining an appropriate role for the IMF in dealing with major global challenges to economic stability and make this institutions more relevant to achieving development goals in developing countries. Norway should push for the effective implementation of the call by the World Commission on the Social Dimension of Globalisation (2004) for increased coherence between the IMF, World Bank, WTO, and other relevant UN bodies. In trying to strengthen international cooperation, multilateral institutions should be subjected to constant adjustment to meet changing realities, especially that most developing countries such as those in Southern Africa and elsewhere have maintained their commitment to continuing reforms. The developed nations, such as Norway, should prevail on the United Nations Conference on Trade and development (UNCTAD) and ensure it supports national trade and that foreign debt of developing countries remains at the centre of UNCTAD’s concerns.
Further, UNCTAD should focus its efforts on areas where it has proven expertise and a clear competitive advantage. The working relation between UNCTAD and WTO should include areas such as the implications of the Uruguay Round Agreements; trade in services; trade and environment; new and emerging issues on the international agenda and the impact of regionalism on the multilateral trading system. Developed countries should call for a review of UNCTAD’s internal structure and working mechanisms to maximise its effectiveness. Given that there are countries in the South which are emerging as donors, there is need for the rebalancing of representation in the Bretton Woods instutitions to make room for governance structures that better represents the present and future world economy.
Given the difficulties faced by Africa and other developing regions of the world in coping with the demands of the WTO, it is incumbent on the developed countries to take concrete steps to encourage the importation of goods and products from the developing countries to the industrialized countries. Although the Norwegian government has made commitments towards building international trade which is fair, it is clear that trade imbalances still continue to exist. This means that although the Norwegian government may maintain an open economy, it is not doing enough in persuading other developed countries to reduce or eliminate their protectionist attitude towards international trade.
Poor countries should continue pursuing trade negotiations aimed at reviewing the implementation of the current Uruguay Round accords. The Uruguay Round agreement is an agreement that recognized that developing countries have disadvantages that require “special and differential treatment” (SDT). The Norwegian government should live up to its pledge to work towards banning any export subsidies through the WTO. At the moment, the continued existence of these subsidies in developed countries means the Norwegian government is doing less than expected.
Industrialized countries providing incentives to their domestic firms for importing goods from developing countries. Future negotiations should aim at identifying more such measures and to work out the modalities of their operation in the developed countries. The Norwegian government should influence other industrialized countries to push for a deliberate policy move by the WTO to adopt pro-poor trade policies that are driven by global commitment to sustainable development and poverty eradication. The industrialized countries should demonstrate to the world their commitment to global development by showing sensitivity to the special challenges that developing regions face in the context of globalisation.