Chapter Five

Globalization and Development

 Brainstorming
• What is globalization?
• How can it affect development?
 1. Globalization and Development
• It is recognized that development is about the
quality of people's lives and expansion of their
ability to shape their own futures.
• This generally calls for higher per-capita income
and access to basic services via economic growth.
• Moreover, it involves more equitable education
and job opportunities, greater gender equality,
better health and nutrition, cleaner and more
sustainable natural environment and expansion of
civil liberties.
Globalization defined
• Globalization has been defined as the process by which
markets and production in different countries are
becoming increasingly interdependent due to dynamics of
trade in goods and service and the flows of capital and
technology.
The growing interdependence is revealed by:
• the rising ratio of trade to output
• increased foreign investment
• international joint ventures
• inter-firm agreements
 Globalization, cont’d
• reduced trade barriers
• emergence of a relatively open international trading
system
• liberal trading policy climate created by the various
multilateral trading grounds and unilateral and
regional liberalization efforts.
Information and communication revolution in the 1990s
is a major contributor towards rising world trade to
output ratio.
• Rising ratio of world trade to world output can be
viewed as an indicator of globalization.
Globalization, cont’d
• The term globalization summarizes a variety of
processes that together increase the scale,
speed, and effectiveness of social interactions
across political, economic, cultural, and
geographic borders.
• The result is that activities and events in one
region of the globe may have transcontinental
effects, potentially reaching the far corners of
the earth.
Globalization, cont’d
• Globalization is associated with some major processes. The
most remarkable one is the integration and expansion of
world economy boosted by liberalization, capital flows,
especially, foreign direct investments(FDIs) spearheaded by
multinational corporations(MNCs), and reduction of tariff
barriers.
• The globalization of technology has led to explosive growth
of information exchange and awareness about the world.
• This in turn has led to new social movements and spread of
global values and standards. Globalization as a process is
rearranging the ordering of nations in the theatre of world
politics.
 Globalization, cont’d
• Globalization, then, is a process which has to be
structured quickly and in a positive way. If this
is to be systematically achieved, the population
of the world will have to assume a high degree
of responsibility for a common future.
• Humanity’s future will only be secured if our
intercourse with nature becomes more
respectful, sparing(careful), and sustainable.
 Globalization, cont’d
• This will require not only all of our efforts to make
use of technical advances to increase efficiency, but
will also demand that we develop new sustainable
life-styles which, at least, in part will require some
material renunciation/rejection.
• Generally, globalization, which gathered momentum
during the last quarter of the twentieth century, has
created unparalleled/matchless opportunities and
posed unprecedented/unique challenges for
development as to be discussed below.
Opportunities and Challenges of
Globalization
 Opportunities and,………
• The drastic reductions in barriers to international trade
have opened the door for export led growth. In fact,
for small and medium sized economies with limited
internal markets , the possibilities for rapid economic
growth lie, to a large extent in production oriented
towards international markets.
• The historical experiences of the last three and half
decades shows that countries that have managed to
grow at very rapid growth rates, say 7%,8% or more
per year, have all relied on strong export growth, with
exports expanding at faster rate than GDP.
 Opportunities, cont’d
• This has been the case of East Asia since the
1960s(up to their current crisis),China, since the
mid-1970s,Chile since the mid-1980s and others.
• Globalization creates , through export-led
expansion , the potential of rapid overall output
growth , increasing national wealth and contributing
to improve living standards in developing countries.
• Another benefit of globalization is the access to a
wide variety of consumption goods , new
technologies and knowledge.
Opportunities, cont’d
Globalization allows the access to ideas and international best
practices in different fields and realms and this can be:
• a new product design ,
• a new investment project,
• a new production technology,
• a new managerial practice , i.e.; it can be a certain set of
institutions that has proved successful in other places , and,
eventually , model of society.
• Of course the mere acquisitions or imitation of foreign
products , technologies or foreign social models to local
conditions with all their specificities and peculiarities is not
a guarantee of success.
 Major Threats associated with Globalization
• Indeed, globalization has its winners and its losers. With
the expansion of trade and foreign investment,
developing countries have seen the gaps among
themselves widen.
• Meanwhile, in many industrial countries,
unemployment has soared to levels not seen since
1930s, and income inequality to levels not recorded
since the last century.
• In-fact, uneven globalization will bring not only
integration but also fragmentation – dividing
communities, nations and regions into those that are
integrated and those that are excluded.
 Major Threats, cont’d
• Again, Social tensions and conflicts are ignited when there are
extremes of inequality between the marginal and the powerful.
• Research on complex humanitarian emergencies have revealed
that “horizontal inequalities” between groups - whether ethnic,
religions or social groups are the major cause of the current
wave of civil conflicts.
• Inequalities (insecurities) matter not only in incomes but in
political participation (in parliaments, cabinet, armies and local
governments), in economic assets (inland, human capital and
communal resources), in social conditions (in education,
housing and employment).
 Questions for discussion

• Can you associate/attribute the current rising

living cost/high inflation in Ethiopia to
globalization/global issue?
• Yes/no
• How/Why?
 Major Threats, cont’d
• Again in most countries, dislocations from economic and
corporate restructuring and dismantled social protection have
meant heavy job losses and worsening employment
conditions.
• Jobs and incomes have become more precarious/unstable.
Again, the pressures of global competition have led countries
and employers to adopt more flexible labor policies, and
work arrangements with no long-term commitment between
employer and employee are on the rise.
• Indeed, globalization opens many opportunities for crime,
and is rapidly becoming global out-pacing international
cooperation to fight it.
 Major Threats, cont’d
• Today, there are many drug users, threatening
neighborhood around the world.
• Illegal trafficking in weapons is a growing
business - destabilizing societies and governments,
arming conflicts in some continents.
• Another thriving industry is the illegal trafficking
in women and girls for sexual exploitation, a form
of slavery and an inconceivable violation of human
rights(Case: the Ethiopian women in Arab world).
 Other impacts of globalization on least
developed countries
• Globalization is a complex and multifaceted
phenomenon that has been credited with a wide range
of powers and effects. James Rosenau says that new
issues have emerged such as atmospheric pollution,
terrorism, drug trafficking, the financial ripple/wave
effects, currency crises, and trans-boundary diseases
such as HIV/AIDS, Birds’ flu, Ebola, COVID-19, etc.,
that are a product of interdependence or new
technologies and are transnational rather than national.
• States cannot provide meaningful and lasting solutions
to these and other issues.
Other impacts, cont’d
• Let us discuss further impacts:
1. loss of economic autonomy of the nation state: States
cannot conduct an effective monetary policy because
of international capital flows. A domestic economic
move/fluctuation has ramifications over the entire
world. The weaker states are the most vulnerable as
they cannot pursue autonomous monetary policies and
have given up control over this arena. The most
extreme example is the “phenomena of dollarization”,
with countries adopting a foreign currency and giving
up any effort to maintain their own national monetary
supply.
loss of economic autonomy
• The imposition of Structural Adjustment Programmes
(SAPs) by the IMF and World Bank on many LDCs is
another example. Organizations such as WTO set global
rules which the nations are supposed to internalize in their
domestic policy making.
2. Loss of cultural autonomy: Complementary/balanced
cultural practices within a nation help to strengthen
sovereignty by appealing to national loyalties. But
homogenization of culture destroys the distinct national
culture and poses threat to the cohesiveness of the nation-
state. We come across terms such as the Americanization
and McDonaldization of local cultures.
Loss of cultural autonomy
• These are the Western consumerist culture
which threaten the nations with dead
uniformity and lead us to what we call
“Fukuyama’s” End of History.
• Globalization has connected people with
common ethnicities and culture across the
territorial limits of states. This has fuelled the
politics of identity and legitimacy within
certain groups.
Loss of cultural autonomy
• Disappearance of a single national identity in
favor of local identities leads to competing
demands, which vitiate/weakens state
sovereignty. There is both fragmentation and
integration of culture, what James Rosenau has
termed as “fragmegration.
• Huntington’s Clash of Civilization has rightly
predicted that people’s cultural and religious
identities will be the primary source of conflict
in the post Cold War world.
 New social movements
3. New social movements and the transnational
NGOs challenge the state authority:
• The state is unable to cope single handedly with
new social issues like human rights, terrorist, and
secessionist activities, environmental issues, etc.
• These issues challenge the nation state’s status as
the final authority within its territorial boundaries.
• International human right norms are a direct threat
to sovereignty. Individuals can appeal to these
norms over and above the laws of their own country.
New social movements
• Global intervention has been legitimated on pretext of
minority rights and human rights. Apart from
intervention by international organizations and NGOs
there are cases of direct state-to-state military
intervention, like Clinton’s dispatch of American troops
to Haiti.
• The transnational NGOs can challenge not only specific
policies but also the authority of the state by demanding
accountability or shaming political leaders.
• When a social movement or NGO finds its own
government unresponsive to its demands, it turns to the
international community for help
New social movements

• Another social issue is the increased terrorist and

secessionist events around the globe. Globalization
has strengthened the hand of resistance the
changing concept of nation-state globalization and
development movements, leaving no place isolated
and augmenting people’s power as a political force
outside the state institutions. Globalization has
even facilitated the terrorist networks to operate
easily due to improved communication and
technological links worldwide.
New social movements

• We have seen instances of terror groups from various countries

collaborate to carry out an attack in a far away destination.
• Thus, the states are failing utterly even in carrying out its
primary responsibility of protection of its citizens.
• Its security role is increasingly being transferred to
international defense coalitions like NATO.
• Globalization propelled by information technology has
resulted in the mass mobilization of people which in turn
makes popular revolt possible.
• We are witness to the recent crises in West Asia and Africa.
The movement for the overthrow of tyrannical regimes started
in Tunisia through the social network sites on internet.
 Demise of the welfare state

4. Demise of the welfare state is one other area of

concern:
Globalization has turned the state into a profit making
institution. The famous “retreat of state” is a retreat
mainly from the realm of welfare and social
entitlement. Globalization is leading the civilization to
“greatest happiness but to the smallest number of
people”. Due to the withdrawal of states from the core
sectors of social life the marginalized section of society
has been exposed to the atrocities of market.
Demise of the welfare state

• The national governments are supposed to protect its people

from the pressures of intensifying international competition.
• Ulrich Beck has rightly remarked that the premises of the
welfare state, pension system, income support, state
expenditure, all are melting under globalization.
• The state has lost its control over the flow of people and ideas
within its territory. Globalization has led to greater movement
of people across borders.
• People are migrating to foreign destinations for better
education and job prospects. Thus state is losing control over
its human resources, particularly its skilled labor force.
loss of sovereignty

5. Substantial loss of sovereignty in public policy

formulations. The foreign and domestic capitalist
firms lobby the decision making institutions to take
favorable decisions especially in the form of tax
reforms, disinvestment, export-import policy, etc.
Mortgage of national resources with the MNCs is a
dangerous trend. For capital and technology the states
put for sale their own natural resources.
 Substantial loss of sovereignty

• States may argue that it would generate employment and

capital in the area but the reality is different. Morris
Szeftle is right in saying that MNCs have created as many
problems as they have solved. The MNCs in search for
less expensive locations are relocating their plants to the
low-wage, poor nations. The people are exploited and
displaced, their local culture is lost and environment
degraded. Thus, the state is said to have surrendered to
capitalist forces. The issue here is not one of authority but
rather of control. The right of states to manage their
borders is not challenged, but globalization has eroded
their ability to actually do so.
 Developing countries left behind the advantage of
Globalization
• Globalization involves integration/interdependence of world
economy particularly through international trade(export ) but
developing countries are characterized by an undiversified
export base limited to commodities (Ghana, for example, is
heavily reliant on cocoa, Honduras on bananas, and Zaire on
copper& Ethiopia on coffee). They have limited or inefficient
industrial capacity. Their infrastructure (transport,
telecommunications and energy) is inadequate or
dysfunctional. Their entrepreneurial forces are nascent or
weak. They have a shortage of managers, engineers and
technicians. Their institutions are weak, and human capital is
poorly developed. Many of them also still face high prevailing
tariffs and non-tariff barriers from OECD countries for their
agricultural, textile and metal exports – the very sectors
wherein their comparative advantage lies.
What should developing countries do
to take advantage of globalization?

Work on Educational Development

Educational Development, cont’d
• Education is a necessary condition to take
advantage of globalization.
• The impact of globalization on growth depends
on people's ability to absorb and use the
information and technology made available to
them through trade and investment.
• How ever, it will be not only the quantity but
also the quality of education which will matter
in preparing citizens to better absorb
knowledge in the information age.
 Educational Development, cont’d
• Improvement in quality should be complementary to the
expansion of education.
• If the poor can only go to lower quality schools with fewer
opportunities of getting jobs in the future, incentives for
parents to send their children to schools would be lower.
• When coverage is not universal in low income countries, a
win-win strategy is to focus on policy interventions that can
raise demand for both the quantity and quality of education
services. For example, policies designed to reduce child labor
and keep children in schools, such as lunch programs, cash
stipends for schooling can go very well with those for
improving quality of schooling as teacher training.
 Educational Development, cont’d
• A recent World Bank study on the interaction between
education and openness suggests that increases in
education and openness might have interacted to produce
especially strong returns to investment and that openness
facilitates the importation of knowledge-enhancing capital,
promotes learning by doing and provides higher payoffs to
education.
• Also, crucial for economic development is a more
equitable distribution of education across population
groups.
 Question for discussion
• Who have more benefited from globalization:
• Developed countries? Or developing
countries?
• Why and how?
The linkage between globalization
and sustainable development
 Globalization and sustainable development
• In a globalized system, increased pressures resulting
from the arrival of new products from developed
countries cause loss of customers and intense
competition to companies in developing countries .
• This double edged sword of globalization is a common
theme in the literature, with opportunities tempting
entrepreneurs to capitalize on lower tariffs, and threats
requiring an entrepreneurial attitude to improve
products and services .
• This challenge is more evident in Zimbabwe and
many other developing economies worldwide.
 Globalization and sustainable development
• Sustainable development has been adopted by the
United Nations as a guiding principle for economic,
environmental and social development that aspires to
meet the needs of the present without compromising
the ability of future generations to meet their own
needs .
• In this context, sustainable development demands the
protection of the environment and natural resources
as well as to provide social and economic welfare to
the present and to subsequent generations.
 Globalization and sustainable development
• Sustainability has been acknowledged as a major
normative regulation principle for contemporary society
which includes a long term ethical relationship of present
generations with those of the future .
• It is therefore a concept which integrates the
environmental, social, and economic aspects as three
fundamental dimensions.
• These three dimensions have been regarded as pillars of
sustainability. However, the strategies used to balance
these pillars have been criticized in recent years.
• The reality is that a lot of complex issues must be
addressed in order to balance the pillars.
What must be sustained?
1. Sustainability and equity
• For development to be sustained, a balance (equity)
must be struck among the three pillars of the
sustainable development. Equity is a key social concept
in sustainable development discourse. In policy terms,
it refers to the distribution of welfare goods and life
chances on the basis of fairness and it applies to
national, international, and intergenerational contexts
(Murphy, 2012). This very broad conception of equity
therefore covers a wide spectrum of policy areas and
includes the promotion of freedom from discrimination
on the grounds of gender, religion, or race.
Sustainability and equity
• Wherever in the world environmental despoliation and
degradation are happening, they are almost always linked to
questions of social justice, equity, rights and people’s
quality of life in the widest sense”.
• The aforementioned researchers believe that a truly
Sustainable society is one in which wider questions of
social needs; equity, welfare, and economic opportunity are
integrally related to environmental limits imposed by
supporting ecosystems.
• Many scholars agree that sustainability could be achieved
through the effective balancing of social, environmental and
economic objectives.
2. Sustainability and Integrative management
• This concept represents sustainable development’s
integrative view of aspects of social development,
economic growth and environmental protection.
• From a policy perspective, the concept of integrative
management seeks to create an integrative balance
between living and non-living assets.
• The concept of integrative management posits that
whatever changes are implemented, it is the duty of
governments to do so while working in partnership
with the private sector (Hill et al, 2014).
 3. Sustainability and global political agenda
• This concept calls for inclusivity across national boundaries in
order to achieve global sustainable development. In this regard,
sustainable development has become the central adage of
environmental policies around the globe.
• This discourse conceives the earth as one unified globe. Given the
recent economic crisis, scholars are calling for greater attention to
the effective functioning of global institution.
• The capacity, power and actions of these actors in relationship to
each other provide an understanding of the global political agenda.
• Therefore, global institutions can study policy agenda setting
processes across geographic boundaries to see how they mutually
influence each other and what value they contribute to their own
policy process.
 Environmental impacts of Globalization
• Globalization is mechanism of growth and innovation in
market. It tends to enhance the use of resources with every
country specializing in the production of goods for which it is
best suited according to natural and human resource
institutions.
• It leads to an increase in productivity, competitiveness, growth
of nations and reduction of costs but the economic expansion in
the last century had alarming consequences for global
environment.
• The new economic policies and structural adjustment
programme often predict environmental impact without
accuracy because of the complex interplay of various
economic, social, political and ecological factors.
Environmental impacts
• This will led a negative impact on the environment. The
overuse of natural resources due to increased demand and
also the removal of ecosystems due to population growth
have had a large negative impact on the environment.
• Hence the concept of sustainable development originated
for the first time, which refers to a mode of human
development in which resource aims to meet human
needs while ensuring the sustainability of natural system
and the environment, so that these needs can be met not
only in the present, but also for generations to come,
which leads to Sustainable human development.
Environmental impacts
• Globalization is altering the global environment. Some
perceive the net ecological impact of Globalization as
positive, as a force of progress and better lives.
• It fosters economic growth and cooperative institutions,
both necessary in the long run to manage the global
environment.
• Others see the net impact as negative, as a force sinking
the globe into a bog of ecological decay.
• It is accelerating the destructive process of too many
people consuming too many natural resources without
any concern for equality or justice.
 Environmental impacts
• Both the pro- and anti-globalization camps present
persuasive data and arguments.
• Globalization involves multiple and complex sets of
overlapping processes.
• Inevitably, there will be manifold and at times cross-
cutting effects on the global environment.
• In spite of the potential of globalization to economic
convergence it paved for an increase in inequality
resulting in increased environmental impacts such as
climate change, protection of the ozone layer,
biodiversity and desertification.
 Globalization and climate change
• Environmental impact of globalization severe and one
of this dimension can be climate change.
• Man-made climate change has changed the
relationships between societies and environment.
• Climate change threatens development goals with the
heaviest impacts on poor countries and people. The
impacts of climate change are already being felt
everywhere, with more droughts, more floods, more
strong storms, and more heat waves—taxing
individuals, firms, and governments, drawing
resources away from development.
Globalization and climate change
• Continuing climate change, at current rates, will pose
increasingly severe challenges to development that is
socially, economically, and sustainable.
• In addition, the climate change affected running
poverty alleviation programs in the developing
countries.
• To make well-being of poor people in the developing
countries, there is need of economic growth, but
growth alone is not enough if it does not reduce
poverty and increase the equality of opportunity.
Globalization and climate change
• Economic growth and the quality of environment should
be in equilibrium.
• Modern economic activities degraded the quality of the
atmosphere where people live. It threatens a survival of
the modern civilizations. Poor countries have fewer
resources to cope it.
• Millions of people from Bangladesh to Florida will suffer
as the sea level rises, inundating settlements and
contaminating freshwater.
• It threatens the development program particularly climate
sensitive activities like agriculture, etc. in all countries.
End of the Course

Thank you!