Globalization and Development

Caribbean Studies Issues in Caribbean Development Date: February 7, 2012.

Definition of Globalization
Globalization is a revolutionary macro concept about radical liberation of the worlds cultural, economic, financial and all other forms of trade and interaction across national borders with minimal restrictions (Reid, 2002). It is also referred to as the increasingly global relationship of culture, people and economic activity. Most often, it refers to economics the global distribution of goods and services through

Definition
reduction of barriers to international trade such as tariffs, export fees and import quotas. Others defined globalization as the growing economic integration of the world through the removal of barriers to trade, investment, capital, information as well as goods and services.

Globalization
Globalization is an evolutionary process. It is a result of development over many years. There is a level playing field when the world is truly globalized. It is also where everyone has an equal chance to benefit from trade and technology.

True Globalization
An example is given of something that is truly globalized that is the cell phone. Today, there is not one place in the world that has not the opportunity to use cell phones. It is so affordable that everyone can have access to one.
Characteristics
Affordable Accessible to all income family

Stages of Globalization
First stage- began with the internationalization of economic institutions of Europe and North America in the 19th and early 20th centuries. Internationalization is simply removing national borders through the of information and communication technologies. This is basically implying that people are given the option to travel to obtain an education or they can stay at home and get it by using the internet

Stages of Development
Second stage- started at the end of the second World War in 1945. At this time internationalization was back on track after been placed on pause as a result of the two world conflicts World War 1 and 2. At the time of the wars the world became divided into two, Eastern and Western ideologies, with USSR and USA on either side with opposing ideologies.

Comparison of ideologies
Eastern Western

USSR (super power) Communist Central and Planned

USA (super power) Democratic or Capitalist Free market and mixed economy where government role is limited and foreign investors are encouraged.

Stages of Development
The second stage also gave rise to some organizations such as United Nations, World Bank, IMF and the GAAT. Their combine efforts helped to stabilize many economies especially those of the developing countries and the newly independent ones as well as to increase trade in industrialized countries. The effort made was to keep a tight monitoring on the international flow of money. Stage ended in 1970s

Stages of Development
Third stage- began in the hiking of oil prices by the OPEC countries which result in the declining of dollar. Since this period the idea of free trade has spread and international capital now move cross the globe as Transnational Corporations seek to establish themselves all over. Much of this must be owed to the revolution of communications technology.

MAIN POINTS OF GLOBALIZATION

Liberal Economic Model

Submission to a liberal economic model emphasizes that people should make their own choices with their money so long as it does not infringe on the liberty of others. Its basically a free market democratic economy. Note if any Caribbean country refused such model then they would be denied the right to trade with others. For instance, Cuba and USSR.

Constriction of Capital Flow

Globalization would generally result in capital moving in and out of a country to anywhere in the world evident in Foreign direct investment. To control this countries might place restrictions on what and who they receive in their country. For example, developed countries would prefer labour capital of highly skilled and professionals. Selective immigration is being encouraged rather than freedom of movement.

Access to more Market

Both developing and developed countries have become integrated. Everyone has access to other countrys market. This gives the opportunity to choose the cheaper and the best and also aid in promoting development of countries economy.

Removal of Preferential Trade

The ACP countries usually enjoys preferential trade from the mother countries in Europe for their products of banana ad sugar. This agreement was called the Lome agreement. With globalization the introduction of liberalized trade became the culture. As a result, America fought for the removal of this preferential trade allowing every country to have a chance in showcasing their product and having an equal opportunity to have it selected.

Erasure and Hybridization of culture

As countries interact without restrictions via internet and cable etc many cultural practices were traded across borders resulting in a mixed or eroded culture. This is evident in fashion, dress, entertainment, technology and even language.

Deepening of social inequality

Globalization encourages the culture of free market. Free market if look closely is the survival of the fittest. It is about equalization of opportunity or creating a level play field. The level play field should only be seen from a certain angle and that is the fact that everyone has the opportunity to put forward their products and services for the world to choose based on the price and benefit then it is selected.

Deepening of social inequality

Also the role of government becomes less. Government was used to regulate the economy with the lessening of their power the more power individual, local or foreign investors gain. This will result in the removal of the poorer class protection. Hence, the rich gets richer and the poor gets poorer typical to that of the continuous widening of the gap between developed and developing countries.

Summary
The controversy is to come to conclusion if the Caribbean is truly experiencing globalization or internationalization. Well based on it meaning which involved a removal of the distinction between nations, free and fair trade there becomes a problem with globalization. Based on the definition, internationalization is the term that best describe what the Caribbean is in fact experiencing where there is a constant relationship with nations across the world.

Facilitators of Globalization
GAAT WTO (World Trade Organization) IMF (International Monetary Fund) World Bank Transnational organizations Technology Trade Ideologies Impact and Responses

Introduction
In the 20th century, shortly after WWII there followed reoccurrence of the Great Depression similar to that of the 1930s. The rising was partly the result of planning by politicians to lower or blur the borders that hampered trade. There work led to the Bretton Woods Conference of 1945 in New Hampshire USA. At the conference an agreement was made by major Governments to lay down the framework of institutionalization.

Introduction
During this time international monetary policy, commerce, finance and founding of several international institutions were established to facilitate economic growth and development. These institutions were the World Bank, International Monetary Fund, General Agreement on Tariff and Trade later replaced by the World Trade Organization.

Introduction
All these institutions were dedicated to achieve certain goals and put in place expected procedures and guidelines for all nations who are involved and want to benefit must adhere to in order to be granted the benefits.

The World Bank /(IBRD)

Also called the International Bank of Reconstruction and Development It was the first of the multilateral agencies to be established after the Bretton Conference of 1945. it began its operation in 1946 Located in the Washington D.C. with the president of the bank a US national. Consisted of 184 member countries.

Functions of World Bank

Provides long term loans to assist in the economic development of a country, mainly to developing countries. This is said to promote equity and productivity in education, health and industry. The loan was also used to finance reconstruction in Europe countries that were badly damaged by WWII.

Functions of World Bank

Channel flows of capital from the rich countries of Western Europe, North America, Japan and the rich oil countries to the poor mainly agricultural societies of Africa, Asia and South America. It finances infrastructural development such as roads communications, power stations, water supplies, irrigation and rural development, as well as health care in member countries.

Functions of World Bank

Offers financial and technical services to developing countries. Its engineers, surveyors, accountants, economists and other experts help countries plan and implement their development projects. The World Banks main function was to facilitate economic growth which is extremely important as it is the first stage of development but now with the revolutionary definition or concept of

Functions of World Bank

Sustainable development which includes human development the WB had to change its focus to poverty reduction.

Criticism
Tools of western Imperialism as the bank seeks to impose western culture on countries who wish to borrow and benefit. Policies benefit the rich countries through the presence of trade liberalization. Trade liberalization is removing all the preferential treatment and tariffs from all good and services provided by the developing countries. It involves giving each country equal opportunity on the market .

Criticism
US bias. The Bank supports the transnational corporations in oil gas and mining concerns even if the result is environmental destruction. It is important to note that oil and gas production require the educated and skilled workers usually such descriptions eliminate to poor class which represents the majority of the developing countries population. In conclusion it only sparks economic growth but little or no human development.

International Monetary Fund

Based in Washington D.C. Like World Bank. Operations began in 1947 and was also a plan of the Bretton Woods Conference. The IMF is funded by the countries of Japan, UK, USA, Germany, France and Saudi Arabia. Unlike the World Bank its president is a European. It has the same 184 countries as its member states.

Functions
Provides short term credit or loans to its member states. Encourages international corporation in the field and the removal of foreign exchange restrictions. Stabilizes exchange rate (financial stability) It helps countries to control their debt and gives advice on the policies most likely to encourage stable exchange rates and economic growth.

Conditions of getting the loan

Keep interest rate high to stabilize currency Devalue the currency in order to boost exports other country will find the lower rate more attractive this help to decrease imports. Reduce government spending especially in non productive sectors such as health, education, social welfare and increase taxes. Sell public and state owned companies especially utility companies to private owners as they tend to drain the country.

Results of IMF
UNEMPLOYMENT

INCREASE POVERTY
POLITICAL UNREST ECONOMIC HARDSHIP

HIGH INFLATION

World Trade Organization

Successor of the GATT Headquarters are in Switzerland Has 148 member states. Started 1995

Functions
Regulating trade in goods Administering world trade agreements Handling trade disputes Providing a forum for trade negotiations Cooperation with other international organizations Impose sanctions through its dispute settlement mechanism Monitoring national trade policies

Functions
Providing technical assistance and training for developing countries.

Benefits
Helps to promote peace in trading Handles disputes constructively Rules make life easier for all Freer trade reduces cost of living Trade raises incomes Provides more choices of products and qualities Trade stimulates economic growth The basic principles make life more efficient System encourages good governance.

MNC
Head offices located in parent country Establish outlet or branches in other countries particularly the less developed countries They seek out the best profit opportunities and are largely unconcerned with social issues as poverty, inequality and reduction of unemployment. Large scale financing, production and research in the foreign operations.

MNC
Normally manufacturing industry Frequent technological change since they are from the industrialized nation.

PURPOSE
Obtain control over the supply of resources Take advantage of cheap labour and materials in lower income societies Avoid paying tariffs on imported goods Avoid high production costs and taxes associated in their countries.

Advantage
Provides jobs Transfer of technology Diverse business practices Attract foreign investors Offers variety of goods and services Provides revenue for government through taxes. Provides social benefits and scholarships.

Disadvantages
Poses a threat to local industries Repatriation of profits to home base Creates competition among countries in the region that are vying for MNCs Pollution Imports raw material (in some cases)