Lest We Forget..
Globalisation: The South's Prospects
Humanity has achieved phenomenal, revolutionary progress in all fields of human endeavour, particularly over the past 50 years or so. But that progress has not touched a large majority of the global population. What might be the future scenario? It is argued that, by globalising, i.e. by integrating into the world capitalist system led by the advanced western countries, viz. the USA and other OECD countries in Europe and elsewhere, the poor countries, which lost out in the past, will gain access to benefits of global progress and will thereby be enabled to achieve rapid economic and human development. How real are the prospects for the poor countries in the present unipolar highly iniquitous global system?
The western countries shape their international trade relations as well as their stance and posture in international organisations in accordance with their own strategic and commercial interests. The on-going globalisation focuses on free market trading of goods and services and movement of capital, in both of which the developed countries hold the pre-eminent position; but free movement of labour which the developing countries can export in large numbers is not allowed. Also, non-tariff barriers restrict export of goods and services from developing to developed countries, contrary to the imperatives of global free market economics.
Obviously, this is a globalisation of which the dynamics are stacked against the interests of the developing countries. Then, there are the multinational corporations (MNCs) and transnational corporations (TNCs) originating in the West which hold a large deal of the cards in international business, industry and finance; each of the MNCs and TNCs plays its share of the deal with a view to maximising its profits and corporate power globally, which is precisely what their basic mission is as business operations.
Surely, they cannot be faulted for pursuing their legitimate mission. But, the strategies they employ in pursuing that mission and the attitude they adopt regarding social responsibilities give rise to controversies. In the on-going globalisation process, the participating developing countries need, invite and facilitate (by offering incentives of various kinds and degrees) foreign direct investments (FDIs). Because of their eagerness, consequent upon their urgent need coupled with political exigencies, to attract FDIs, they often may sign contracts or offer incentives and facilities to MNCs and TNCs, which are of dubious pay-off for them in the short run and even detrimental to their interest in the long run.
The issues to contend with include MNC and TNC attitude toward and willingness to accommodate the host country's short and long run interests, whether the MNCs bring in funds from outside or raise funds from local capital markets, whether or not they use internal pricing mechanisms (over-pricing when importing from its branches in other countries and under-pricing when exporting to other country branches) to reduce the taxable corporate income, whether they are interested in exploiting cheap labour and natural resources in host countries without regard to the consequent social and environmental costs imposed, and whether or not polluting industries are being relocated in the developing countries.
Much, of course, depends on the host country's ability to articulate its interests and negotiate terms on that basis; but these are precisely the tasks the developing countries are often ill-equipped to handle, not only because of technical capacity limitation but also because of corruption on both sides. For example, contractual obligations entered into by the Government of Bangladesh with the fertiliser company KAFCO including the supply of gas to KAFCO at very low prices, and production sharing contracts with gas drilling and lifting companies such that the Government of Bangladesh would buy the share of gas allocated to a company at international prices to be paid in foreign currency (US dollars) are subject to serious question from the point of view of Bangladesh's interests.
It is therefore essential that while offering incentives and facilities to MNCs and TNCs and entering into contracts with them in respect of particular industries, contractual terms are carefully formulated and appropriate regulatory provisions are put in place and applied strictly, keeping in sharp focus the interests of the country.
Studies have shown that country after country of the South, having opted for and pursuing global integration, has failed to gain much. Even the economies of the East and South-east Asian tigers are now shattered. Reckless expansion of business, banking operations, and construction works based on borrowed western money, without having regard to what might happen if the debts were called in, has been at the root of this bubble-burst. The governments of those counties failed to keep track of what was happening, and there was no preparation for dealing with such a large-scale withdrawal of funds. Preoccupied with being 'tigers', these countries failed to equip themselves with strong banking institutions and good corporate governance under effective regulatory systems.
There is a lot to learn from the East and South-east Asian experiences - from the way these countries achieved phenomenal economic growth over the past two decades or more and the reasons behind their present currency crisis and economic turmoil. The share market debacle in Bangladesh in late 1996/early 1997 is also a pointer to the currency related risks that free market and globalisation could entail, unless adequate regulatory safeguards are in place and properly implemented.
One must therefore ask which globalisation is it that a country is pursuing? Who globalises or integrates with whom? Who gains, who loses? What are the underlying strengths and weaknesses of a globalising developing country to face developments such as those encountered by the East and South-east Asian countries. For gaining on a sustained basis, experiences around the world seem to indicate that a country must build into its globalising process the imperatives arising from the socio-economic realities prevailing in the country and establish effective regulatory systems to ensure good and responsible corporate governance on the part of both domestic and foreign companies operating in different sectors - productive, financial or trading. This must be done as the reform process is pursued; otherwise, there may lurk in the background a big jolt and a huge disillusionment.
I am not against economic reforms or globalisation, but my concern is with the safeguarding of the reforming developing country's interests in the process so that no disillusionment and chaotic consequences may engulf it in future.
The pathway to an integration into the global system for a developing country, defined by the currently ruling paradigm of economic reforms, contains both opportunities and dangers. In order for Bangladesh to make the most of the opportunities and to put in place necessary safeguards against the dangers, it is imperative that the reform process in Bangladesh is reshaped by building into it the realities on the ground (high levels of poverty and unemployment; severe environmental degradation; low level of human capability development; agriculture and potential industries requiring support for progress, and in cases even for survival; etc).
Also, if globalisation were to work for the developing countries, upon which it is enjoined on the argument that it is to their benefit, the advanced countries should be more forthcoming than hitherto to work towards establishing an equitable world system. Indeed, if all nations of the world, advanced and developing, were to move together as an integrated global society in an orderly fashion, there is no shortcut to finding an appropriate solution to the problem of the persisting glaring inequity among nations and among population groups within nations.
Otherwise, i.e. under the business-as-usual scenario in terms of the currently ruling paradigm, the future of the global order cannot but be a mirror image of the present, only worse. The scenario, depicting as it does increasing inequity and contradictions between developed countries on the one hand and developing countries on the other, with the latter at the wrong end, cannot be morally and ethically justified. Clearly, the paradigm underpinning this scenario cannot be sustained over the long run unchallenged and without having to face serious backlash and upheavals. At the country level also, most developing countries, which are implementing the reforms as prescribed, face moral/ethical quagmires and practical unsustainability.
The message is loud and clear in both global and national contexts - which is: to mend ways or face the inevitable consequences alluded to above.
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