Politics of Globalization in the Third World Development Perspective

Abstract:

The paper endeavours to assess the political domain of globalization in the third world. Globalization progressed with ‘neo-liberalism’ in the third world. Neo-liberals therefore prescribe that globalization should be met with full-scale liberalization, deregulation, and privatization in the third world. However, the third world reality of political turmoil and economic laggard, ‘reformism’ have to be the policy framework to protect labour, the poor, and the environment from the potential harmful effects of untrammelled globalization.     

Key words: Globalization, politics, economy, culture, third world

Introduction

Globalization is the increasing interconnectedness of people and places as a result of advances in transport, communication, and information technologies that cause political, economic, and cultural convergence (Globalization, 2007). It refers to the process by which the experience of everyday life, marked by the diffusion of commodities and ideas, can foster a standardization of cultural expressions around the world (Watson, 2007). In addition, it is the concept that encapsulates the growth of connections between people on a planetary scale. In fact, globalization involves the reduction of barriers to trans-world contacts. It makes people more able—physically, legally, culturally, and psychologically—to engage with each other in “one world” (Scholte, 2007). Therefore, it is the worldwide integration of economic, cultural, political, religious and social systems. 

Globalization, in the economic term, is the convergence of prices, products, wages, rates of interests and profits towards developed country norms. Globalization of the economy depends on the role of migration, international trade, capital flow, financial market integration. The International Monetary Fund notes the growing economic interdependence of countries worldwide through increasing volume and variety of cross-border transactions, free international capital flows, and more rapid and widespread technological diffusion. (Levitt, 1983).

An extreme interpretation of this process, often referred to as globalism, sees advanced capitalism, boosted by wireless and Internet communications and electronic business transactions, destroying local traditions and regional distinctions, creating in their place a homogenized world culture. According to this view, human experience everywhere is in jeopardy of becoming essentially the same. This appears, however, to be an overstatement of the phenomenon. Though homogenizing influences do indeed exist, people are far from creating a single overarching world culture (Watson, 2006).

Chronology of Globalization

In ancient times, traders carried the most exotic and valuable goods over long distances. Caravans brought Chinese silk to the Roman Empire, and during the Middle Ages Arabs sold ivory from East Africa and spices from Indonesia to the merchants of Venice. Until about 1500, however, long-distance trade played only a minor economic role in just a few parts of the world, and nearly all of the world's people relied on foods and fibres grown within a short distance of their homes (The World of People, 2006).

The word "globalization" can be traced back to 1944. The term has been used by economists since 1981; however its concepts did not permeate popular consciousness until the latter half of the 1990s. Various social scientists have tried to demonstrate continuity between contemporary trends of globalization and earlier periods (Raskin, 2006). The first era of globalization (in the fullest sense) during the 19th century was the rapid growth of international trade between the European imperial powers, the European colonies, and the United States. Because of the first era of globalization, World War I was started. After World War II, globalization was restarted and was driven by major advances in technology, which led to lower trading costs. The term "globalization" has often been linked to the rise of corporate dominance, and is often used synonymously with the term "corporate giant", first coined by Charles Taze Russell in 1897 (KOF Index of Globalization).

A truly global economy first began to develop in the 15th century with the Age of Exploration, when political and military support from emerging nation-states and advances in seafaring technology enabled European merchants to establish trading networks that spanned the globe. Europeans established colonies, slave plantations, and trading outposts in tropical regions to grow or obtain goods unavailable in Europe, such as sugar, tobacco, coffee, and spices. Europeans also seized parts of North America and Siberia for their furs and abundant timber.

During the 19th century, industrialization in Europe and North America dramatically increased the volume and economic importance of international trade. The industrialized countries imported raw materials and foods from around the world and exported manufactured goods. Because business owners in the industrialized world retained the wealth generated from trade and manufacturing, people in other parts of the world could not afford the technology necessary to compete with the industries of Europe and North America. Without the new technologies, these people had to continue selling raw materials to obtain manufactured goods. The main exception to this pattern was Japan, whose strong government protected local producers from foreign competition and channelled the country's wealth into industrial facilities. By the 20th century the world was divided into two unequal parts: the industrialized countries and the rest of the world, which the industrialized countries dominated economically and militarily (The World of People, 2006).

The First Era of Globalization was in 19th Century, a period characterized by rapid growth in international trade and investment, between the European imperial powers, their colonies, and, later, the United States. It is important to note that liberalization and globalization are distinct. The repeal of the British Corn Laws initiated a period of liberalization which accelerated globalization. However, as economic historian Jeffrey G. Williamson has shown, the transatlantic trade altered factor prices in both Europe and the Americas, threatening the interests of politically significant factions. New trade restrictions began to rise again. Obstacles to trade among the developed nations gave a fresh impetus to the search for markets for raw materials and finished goods overseas, and a new era of imperial expansion occurred. It was in this period that areas of sub-Saharan Africa and the Island Pacific were incorporated into the world system. The Asian nations were unable to match the industrialized warfare of Europe and were made into colonies.

The "First Era of Globalization" began to break down at the beginning with the First World War, and later collapsed during the gold standard crisis in the late 1920s and early 1930s. Austria Hungary, without access to the oceans as the basis for an overseas empire, expanded into the Baltics. The assassination of the archduke by a Serbian nationalist was the trigger that released many of the tensions built into the international economic and political system. Lenin’s Imperialism, the Highest Stage of Capitalism (1916) provided a seminal critique of this period as being characterized by the exploitation of the third world by those in the first (Globalization,2007).

Globalization in the Third World Country

Globalization was there in the third world country since the civilization began. Different social theories offer different interpretations of how and why trans-world connections have grown. For example, liberal economics stresses the role of unfettered market forces in a context of technological change and deregulation. In contrast, Marxist political economy highlights the dynamics of the international capitalist system as the engine of globalization. For many sociologists, meanwhile, globalization is a product of modern rationalism. Others find their explanation of globalization in a combination of these causes. However following consequences quickened the pace of globalization and strengthened the economic links among the third world countries.

1.     Transport Extension: The vigorous developments in transport mechanisms that made the movements of people, goods and culture in the neighbouring third world countries. One of the most important changes was the drop in transport costs, made possible by the availability of inexpensive oil.

2.     Multinationals: Another key development was the emergence of more and more multinationals, or large companies with operations in more than one country especially in the developing one using the cheap labour for production.

3.      International Economic Institutions: Factor that promoted globalization was the creation of international economic institutions—such as the International Bank for Reconstruction and Development (the World Bank), the International Monetary Fund (IMF), and the World Trade Organization (WTO)—to help regulate the flow of trade and money among nations.

4.     Information Communication Technology (ICT):  Advances in telecommunications and computer technology made it much easier for managers to coordinate economic activity among corporate divisions, clients, and vendors in different parts of the world.

Approaches of Globalization

Globalization had been in political domain for long and become a matter of hot debate especially about its trend, course of policy and approaches. Four general political positions can be distinguished, although in practice many people draw on a mixture of these views or vacillate between them. These political domains of globalization are as under:

Neo-liberal: Many commentators advocate what is widely called a “neo-liberal” approach to globalization. Neo-liberalism builds on the tradition of laissez-faire economics and holds that globalization will yield maximum gains when its course is left to uninhibited market forces. Neo-liberals therefore prescribe that globalization should be met with full-scale liberalization, deregulation, and privatization. According to the neo-liberal creed, official measures should be used only to enable—and never to constrain—global market forces. The unbound global economy will then in time generate prosperity, democracy, community, and peace for all.

Reformism: A second general policy framework for globalization can be termed reformism, or global social democracy. Reformists agree with neo-liberals that market capitalism can be a major force for social good; however, they argue that these benefits can only be secured with proactive public policies that steer—and where necessary restrict—global flows. For example, many reformists advocate official measures to protect labour, the poor, and the environment from the potential harmful effects of untrammelled globalization. Some reformists also promote the principle of global redistributive taxes, for example, on foreign-exchange transactions or the profits of global companies. Reformist programmes generally envision a considerable expansion of supra-state governance through regional and trans-world institutions, and many reformists are concerned to enhance the democratic credentials of these regimes.

Progressive Radicalism: A third broad political response to globalization might be described as progressive radicalism. These critics reject the structural foundations of contemporary globalization and seek to reconstruct the process on a different basis. For example, global socialists regard capitalism as an evil that no amount of reform can correct; hence they seek to rebuild globalization with a different, post-capitalist mode of production. From another radical perspective, global postmodernists treat rationalism as incorrigibly flawed and promote an alternative globalization based on different kinds of knowledge and identity politics.

Traditionalism: A fourth approach to globalization can be dubbed traditionalism. This viewpoint regards trans-world connections as being inherently violent: globalization intrinsically undermines cultural heritage, democracy, ecological health, economic well-being, and social cohesion. In the eyes of traditionalists, globalization has nothing salvageable and must therefore be reversed. Traditionalist calls for “de-globalization” have come in a number of forms, including ultra-nationalism, religious revivalism, and certain strains of environmentalism.

Broadly speaking, neo-liberalism was the prevailing and largely unchallenged policy framework for globalization in the 1980s and early 1990s. Since the mid-1990s both traditionalist and reformist reactions against neo-liberal globalization have gathered force, though laissez-faire tendencies remain very strong at the beginning of the 21st century. Meanwhile, progressive radical approaches to globalization have to date attracted little mass following, although they may prove important in the longer term.

Third World Consequences

The consequences of globalization are prominent in the third world society which has changed the contours of social geography. However, since geography is intertwined with other dimensions of social relations, it is not surprising that globalization also has wider implications among economics, politics, culture, environment, labour rights, health and inequality issues especially in third world.

a. Economics:

Globalization substantially alters the organization of production, exchange, and consumption. Many firms “go global” by setting up affiliates across the planet. Questions of competition and monopoly can arise as a result. Relocation of production facilities across the developing world reduces transport and communication costs. Globalization also expands the “virtual economy” of information and finance, sometimes at the expense of the “real economy” of extraction and manufacturing. This global economic restructuring raises the issues of employment, labour condition and poverty in the developing world.

The differential global economies are a serious political problem in an era of globalization. Some third world countries have been unable to function at even a minimum standard of basic competence in the globalized economy. The only profitable economic activity in some of these countries is linked to criminal behaviour, such as the trade in illegal drugs, smuggling, and extortion of various kinds.   

b. Culture:

Globalization replaces the local culture with global trends of English language, attire, accent and lifestyle. It also disrupts traditional relationships between territory and collective identity. The growth of trans-world connections encourages the rise of non-territorial cultures. Thus people living more globalized life become less fixed on territory and only associated with the society by loose ethnic bond. Moreover, inasmuch as multiple cultures become densely intertwined in supra-territorial flows, globalization encourages more hybridity, where individuals develop and express a mix of identities. The globally broad casting satellite television operas try to bend the local culture than their own entity of society.

c. Inequality

In 1960 the top 20 percent had 30 times the income of the poorest 20 percent. This grew to 32 times in 1970, 45 times in 1980, and 60 times in 1990. By the end of the 20th century the top 20 percent received 75 times the income of the bottom 20 percent.

By the late 1990s the 20 percent of the world’s people living in the highest-income countries had 86 percent of the world’s income; the bottom 20 percent had only 1 percent of the world’s income. An estimated 1.3 billion people, or about one-sixth of the world’s population, have incomes of less than a dollar a day. Inequality is growing worse, rather than better. More than 80 countries had lower per capita income (income per person) at the end of the 1990s than they had at the end of the 1980s.

Africa, for example, where diamonds and other valuable resources attract criminal despots, mercenary armies have been engaged in mass killing to terrorize local populations into giving them what they want. The international arms trade and easy importation of weapons, which allows such behaviour, is a serious problem.

d. Labour Rights

To stimulate economic development many developing countries have established free-trade zones where investors are given special benefits, such as low or no taxes, and labour unions are discouraged or not allowed. These benefits have led to violations of human rights. There are violations of child labour laws, intimidation of workers seeking to have their grievances addressed, and sexual harassment. Because only 1 percent of the projected growth in the world’s labour force is expected to be in the high-income countries in coming decades, what happens to the world’s lower-income workers in the developing countries takes on added importance. It may well determine whether there will be an overall rise in living standards as productivity gains are widely shared or an overall decline if developing countries compete for jobs by holding down wages and allowing harsher working conditions to attract investment and job creation.

e. Health Issues

Life-threatening diseases represent another facet of globalization. Improvements in transportation that helped usher in globalization also made it possible for infectious diseases to spread rapidly around the globe. In 2003, for example, a deadly form of pneumonia known as severe acute respiratory syndrome (SARS) originated in China and quickly posed a worldwide health threat as airline passengers infected with the virus spread the illness.

There are other killer diseases found mostly in poorer countries. Although tuberculosis (TB) affects a small percentage of the population in rich countries, more than one-third of the world’s population was infected with tuberculosis in 2000. There are 8 million new cases of TB and 2 million deaths a year from this disease, and these numbers are climbing. More than 1.5 million people die each year from malaria, another disease that mainly impacts developing countries. Diseases spread by differential availability of clean drinking water and tainted food kill nearly 2 million people a year, mostly infants and small children and mostly among the 1.5 billion people in the world who do not have access to clean water ( Tabb,2008).

f. Environmental Issues

The global warming is due to the burning of fossil fuels, which occurs mainly in the developed, industrialized world, and the destruction of rain forests, which occurs mainly in the developing world. At least since the discovery of the ozone hole above Antarctica in the early 1980s, there has been growing awareness that air pollutants can cross borders and affect everyone living on the planet. If global warming continues, experts expect deserts to advance, particularly across West Africa, and sea level to rise, flooding coastal areas and submerging a number of Pacific Ocean island states. One-third of the world’s most populous countries would be flooded by even a small rise in sea level. While developed countries such as The Netherlands can cope, developing countries such as Bangladesh cannot afford to pay for the kind of dike system that currently protects The Netherlands.

The similar effect of climate change is evident by deglaciation taking place in most of glaciers of Nepal: the reported rates of glacial retreat range from several meters to 20 m/year. On the Tibetan Plateau, the glacial area decreased by 4.5% over the past 20 years and by 7% over the past 40 years (CNCCC, 2007).

The free flow of genetically modified animals and plants also proves to deteriorate third world ecology if introduced without proper study and planning.  

Political Globalization

Political globalization is the creation of a world government which regulates the relationships among nations and guarantees the rights arising from social and economic globalization (Stipo, 2007). Globalization has significant implications for the conduct of governance. Territorially based laws and institutions through local, provincial, and national governments are not sufficient by themselves to regulate contacts and networks that operate in trans-world spaces. Globalization, therefore, stimulates greater multilateral collaboration between states as well as the growth of regional and trans-world governance arrangements like the European Union and the United Nations. In addition, private-sector bodies may step in to regulate areas of global relations for which official arrangements are lacking, as has occurred regarding certain aspects of the Internet and trans-world finance, for instance. The resultant situation of multi-layered and diffuse governance raises far-reaching questions about the nature of sovereignty and democracy in a globalizing world.

a. Challenges to National Identity

Anti-globalism activists often depict the McDonald's, Disney, and Coca-Cola corporations as agents of globalism or cultural imperialism—a new form of economic and political domination. Critics of globalism argue that any business enterprise capable of manipulating personal tastes will thrive, whereas state authorities everywhere will lose control over the distribution of goods and services. According to this view of world power, military force is perceived as hopelessly out of step or even powerless; the control of culture (and its production) is seen as far more important than the control of political and geographic borders.

The idea of a borderless world is reflected in theories of the “virtual state,” a new system of world politics that is said to reflect the essential chaos of 21st-century capitalism. In Out of Control (1994), author Kevin Kelly predicted that the Internet would gradually erode the power of governments to control citizens; advances in digital technology would instead allow people to follow their own interests and form trans-state coalitions. Similarly, Richard Rosecrance, in The Rise of the Virtual State (1999), wrote that military conflicts and territorial disputes would be superseded by the flow of information, capital, technology, and manpower between states. Many scholars disagreed, insisting that the state was unlikely to disappear and could continue to be an essential and effective basis of governance.

The permeable international borders, the cocktail of culture and the prevalence of virtual state have dissolved the territorial and national culture and sentiment. The same is aggravated by trans-world diffusion of capable, intellectual and decisive human resource from the third world which has proved a bane. 

b. Globalization and Development

The third world had always been the hegemony of the developed country. The developing countries of Central and South America, Africa, and Asia once merely exported raw materials and cash crops (crops produced for sale overseas) in return for manufactured goods. The people in these countries provided for most of their own needs through subsistence agriculture and small-scale crafts. In time, though, people in these countries grew increasingly dependent on the global economy, because local crafts could not compete with the inexpensive-- factory-made exports of the economically developed countries (western European nations, the United States, Canada, Australia, New Zealand, and Japan). 

In order to decrease dependence, many developing countries sought to strengthen their economies by building factories, modern dams, and roads during the 1960s and 1970s. Some countries also imposed tariffs and other barriers to trade in an attempt to protect developing local industries from competition with imported manufactured goods. Governments frequently made poor financial choices, however. Infrastructure projects such as dams and highways were often too massive for local needs. Choices about industry were sometimes based on the financial interest of government leaders rather than on the best interests of the country, and protection from competition frequently resulted in inferior goods. As a result, products could not compete on the global market with the higher-quality goods from the industrialized countries. Many developing countries then had little income to pay off debts incurred during their expansion.

A few developing economies succeeded in building prosperity through industrialization during the 20th century. The most notable of these were South Korea, Taiwan, Singapore, and Hong Kong S.A.R. Like Japan during the 19th century, they established tariffs and other barriers to protect local products from foreign competition, and invested local wealth in industrial development. Also like Japan, they focused on selling the products they manufactured to foreign consumers in order to bring wealth into the country. By the end of the 20th century some experts considered these economies to be developed, rather than developing, although many of South Korea's economic successes were reversed in the financial crisis of 1997. Following a similar path, China advanced economically through a rapid expansion of manufactured exports during the late 20th century.

Meanwhile, multinationals based in the economically developed world set up low-wage manufacturing facilities in some developing countries, particularly in Southeast Asia and in Central and South America. These factories typically generated few long-term benefits for the local economy. The profits flowed outside the country to the shareholders of the foreign multinational. Also, the developing countries were forced to participate in a 'race to the bottom' to attract multinational investment. If a developing country or its people sought higher wages or enforced labour or environmental protections, multinationals often simply relocated production to a country with lower costs.

At the end of the 20th century many developing countries, especially in Africa, still lacked a strong industrial sector. These countries continued to rely on money earned from exports of cash crops and raw materials to buy manufactured goods and service their debts. An emphasis on the export of cash crops and raw materials led to increases in production. As transport became more efficient, countries began to compete to sell the same goods, and more goods and increased competition drove down prices. This cycle perpetuated poverty.

Facing an inability to attract further investment or pay for imports, many debtor nations turned to the World Bank and the IMF during the 1980s and 1990s for relief in the form of extended credit and new loans. In exchange for this relief, debtor countries had to present a plan of reforms to the lending institutions. These reforms often included privatization plans and reductions in government expenditures. The measures were intended to ensure that these countries could repay their loans, but reforms were often painful.

Conclusion

The third world countries have played actively in the process of globalization due to unstoppable diffusion of global culture, economy, politics, finance and technology. Thy have perceived consumer satisfaction, variety of choices, acculturation of good culture, awareness, education and affordable technology. It has positive ramification in their technology, awareness, finance and employment. However, due to political instability, fragile economy as a result of low supply side capacity, higher import and less export, the developing world have remained merely a consumer of the first world multinationals. The impoverished third world, as a consequence of neoliberalism—the un-intervened market economy are not competent in the global market. Therefore, certain restriction or regulation by the government, or following the ‘reformism’ approach would reap benefits globalization in the third world.

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Note: This article is an edited version of the original article, “Politics of Globalization in the Third World Development Perspective” published in Nepalese Journal of Development and Rural Studies, Vol. 5, No. 2 (July-Dec) 2008: Published by Central Department of Rural Development, Tribhuvan University, Kirtipur.