What is globalisation? It was the anti-globalisation movement that really put globalisation on the map.

As a word it has existed since the 1960s, but the protests against this allegedly new process, which its opponents condemn as a way of ordering people's lives, brought globalisation out of the financial and academic worlds and into everyday current affairs jargon.

But that scarcely brings us nearer to what globalisation means. The phenomenon could be a great deal of different things, or perhaps multiple manifestations of one prevailing trend. It has become a buzzword that some will use to describe everything that is happening in the world today.

The dictionary definition is a great deal drier. Globalisation (n) is the "process enabling financial and investment markets to operate internationally, largely as a result of deregulation and improved communications" (Collins) or - from the US - to "make worldwide in scope or application" (Webster). The financial markets, however, are where the story begins.

In the late 1980s and early 1990s, the business model termed the "globalised" financial market came to be seen as an entity that could have more than just an economic impact on the parts of the world it touched.

Globalisation came to be seen as more than simply a way of doing business, or running financial markets - it became a process. From then on the word took on a life of its own. Centuries earlier, in a similar manner, the techniques of industrial manufacturing led to the changes associated with the process of industrialisation, as former country dwellers migrated to the cramped but booming industrial cities to tend the new machines.

So how does the globalised market work? It is modern communications that make it possible; for the British service sector to deal with its customers through a call centre in India, or for a sportswear manufacturer to design its products in Europe, make them in south-east Asia and sell them in north America.

But this is where the anti-globalisation side gets stuck in. If these practices replace domestic economic life with an economy that is heavily influenced or controlled from overseas, then the creation of a

globalised economic model and the process of globalisation can also be seen as a surrender of power to the corporations, or a means of keeping poorer nations in their place.

Low-paid sweatshop workers, GM seed pressed on developing world farmers, selling off state-owned industry to qualify for IMF and World Bank loans and the increasing dominance of US and European corporate culture across the globe have come to symbolise globalisation for some of its critics.

The anti-globalisation movement is famously broad, encompassing environmentalists, anarchists, unionists, the hard left, some of the soft left, those campaigning for fair development in poorer countries and others who want to tear the whole thing down, in the same way that the original Luddites attacked mechanised spinning machines.

Not everyone agrees that globalisation is necessarily evil, or that globalised corporations are running the lives of individuals or are more powerful than nations. Some say that the spread of globalisation, free markets and free trade into the developing world is the best way to beat poverty - the only problem is that free markets and free trade do not yet truly exist.

Globalisation can be seen as a positive, negative or even marginal process. And regardless of whether it works for good or ill, globalisation's exact meaning will continue to be the subject of debate among those who oppose, support or simply observe it.

A recent report in the Press Gazette, the trade magazine for journalists, dealt with attempts by a BBC focus group to throw some light on how far television audiences understand news reports.

In one clip, economics editor Evan Davies referred to "globalisation - whatever that means". A panellist replied: "Well if he doesn't what it means, how the hell are we supposed to?"

Impact of Globalisation on Developing Countries and India Impact of Globalisation on Developing Countries and India by Chandrasekaran Balakrishnan Chandrasekaran Balakrishnan for The 2004 Moffatt Prize in Economics

Introduction:

Globalisation is the new buzzword that has come to dominate the world since the nineties of the last century with the end of the cold war and the break-up of the former Soviet Union and the global trend towards the rolling ball. The frontiers of the state with increased reliance on the market economy and renewed faith in the private capital and resources, a process of structural adjustment spurred by the studies and influences of the World Bank and other International organisations have started in many of the developing countries. Also Globalisation has brought in new opportunities to developing countries. Greater access to developed country markets and technology transfer hold out promise improved productivity and higher living standard. But globalisation has also thrown up new challenges like growing inequality across and within nations, volatility in financial market and environmental deteriorations. Another negative aspect of globalisation is that a great majority of developing countries remain removed from the process. Till the nineties the process of globalisation of the Indian economy was constrained by the barriers to trade and investment liberalisation of trade, investment and financial flows initiated in the nineties has progressively lowered the barriers to competition and hastened the pace of globalisation

Definition:

Globalised World - What does it mean?

Does it mean the fast movement of people which results in greater interaction?

Does it mean that because of IT revolution people can be in touch with each other in any part of the world?

Does it mean trade and economy of each country is open in Non-Intrusive way so that all varieties are available to consumer of his choice?

Does it mean that mankind has achieved emancipation to a level of where we can say it means a social, economic and political globalisation?

Though the precise definition of globalisation is still unavailable a few definitions worth viewing, Stephen Gill: defines globalisation as the reduction of transaction cost of transborder movements of capital and goods thus of factors of production and goods. Guy Brainbant: says that the process of globalisation not only includes opening up of world trade, development of advanced means of communication, internationalisation of financial markets, growing importance of MNC's, population migrations and more generally increased mobility of persons, goods, capital, data and ideas but also infections, diseases and pollution

Impact on India:

India opened up the economy in the early nineties following a major crisis that led by a foreign exchange crunch that dragged the economy close to defaulting on loans. The response was a slew of Domestic and external sector policy measures partly prompted by the immediate needs and partly by the demand of the multilateral organisations. The new policy regime radically pushed forward in favour of amore open and market oriented economy.

Major measures initiated as a part of the liberalisation and globalisation strategy in the early nineties included scrapping of the industrial licensing regime, reduction in the number of areas reserved for the public sector, amendment of the monopolies and the restrictive trade practices act, start of the privatisation programme, reduction in tariff rates and change over to market determined exchange rates.

Over the years there has been a steady liberalisation of the current account transactions, more and more sectors opened up for foreign direct investments and portfolio investments facilitating entry of foreign investors in telecom, roads, ports, airports, insurance and other major sectors.

The Indian tariff rates reduced sharply over the decade from a weighted average of 72.5% in 1991-92 to 24.6 in 1996-97.Though tariff rates went up slowly in the late nineties it touched 35.1% in 2001-02. India is committed to reduced tariff rates. Peak tariff rates are to be reduced to be reduced to the minimum with a peak rate of 20%, in another 2 years most non-tariff barriers have been dismantled by march 2002, including almost all quantitative restrictions.

India is Global: The liberalisation of the domestic economy and the increasing integration of India with the global economy have helped step up GDP growth rates, which picked up from 5.6% in 1990-91 to a peak level of 77.8% in 1996-97. Growth rates have slowed down since the country has still bee able to achieve 56% growth rate in three of the last six years. Though growth rates has slumped to the lowest level 4.3% in 2002-03 mainly because of the worst droughts in two decades the growth rates are expected to go up close to 70% in 2003-04. A Global comparison shows that India is now the fastest growing just after China.

This is major improvement given that India is growth rate in the 1970's was very low at 3% and GDP growth in countries like Brazil, Indonesia, Korea, and Mexico was more than twice that of India. Though India's average annual growth rate almost doubled in the eighties to 5.9% it was still lower than the growth rate in China, Korea and Indonesia. The pick up in GDP growth has helped improve India's global position. Consequently India's position in the global economy has improved from the 8th position in 1991 to 4th place in 2001. When GDP is calculated on a purchasing power parity basis.

Globalisation and Poverty:

Globalisation in the form of increased integration though trade and investment is an important reason why much progress has been made in reducing poverty and global inequality over recent decades. But it is not the only reason for this often unrecognised progress, good national polices , sound institutions and domestic political stability also matter.

Despite this progress, poverty remains one of the most serious international challenges we face up to 1.2 billion of the developing world 4.8 billion people still live in extreme poverty.

But the proportion of the world population living in poverty has been steadily declining and since 1980 the absolute number of poor people has stopped rising and appears to have fallen in recent years despite strong population growth in poor countries. If the proportion living in poverty had not fallen since 1987 alone a further 215million people would be living in extreme poverty today.

India has to concentrate on five important areas or things to follow to achieve this goal. The areas like technological entrepreneurship, new business openings for small and medium enterprises, importance of quality management, new prospects in rural areas and privatisation of financial institutions. The manufacturing of technology and management of technology are two different significant areas in the country.

There will be new prospects in rural India. The growth of Indian economy very much depends upon rural participation in the global race. After implementing the new economic policy the role of villages got its own significance because of its unique outlook and branding methods. For example food processing and packaging are the one of the area where new entrepreneurs can enter into a big way. It may be organised in a collective way with the help of co-operatives to meet the global demand.

Understanding the current status of globalisation is necessary for setting course for future. For all nations to reap the full benefits of globalisation it is essential to create a level playing field. President Bush's recent proposal to eliminate all tariffs on all manufactured goods by 2015 will do it. In fact it may exacerbate the prevalent inequalities. According to this proposal, tariffs of 5% or less on all manufactured goods will be eliminated by 2005 and higher than 5% will be lowered to 8%. Starting 2010 the 8% tariffs will be lowered each year until they are eliminated by 2015.

GDP Growth rate:

The Indian economy is passing through a difficult phase caused by several unfavourable domestic and external developments; Domestic output and Demand conditions were adversely affected by poor performance in agriculture in the past two years. The global economy experienced an overall deceleration and recorded an output growth of 2.4% during the past year growth in real GDP in 2001-02 was 5.4% as per the Economic Survey in 2000-01. The performance in the first quarter of the financial year is5.8% and second quarter is 6.1%.

Export and Import:

India's Export and Import in the year 2001-02 was to the extent of 32,572 and 38,362 million respectively. Many Indian companies have started becoming respectable players in the International scene. Agriculture exports account for about 13 to 18% of total annual of annual export of the country. In 2000-01 Agricultural products valued at more than US $ 6million were exported from the country 23% of which was contributed by the marine products alone. Marine products in recent years have emerged as the single largest contributor to the total agricultural export from the country accounting for over one fifth of the total agricultural exports. Cereals (mostly basmati rice and non-basmati rice), oil seeds, tea and coffee are the other prominent products each of which accounts fro nearly 5 to 10% of the countries total agricultural exports.

Where does Indian stand in terms of Global Integration?

India clearly lags in globalisation. Number of countries have a clear lead among them China, large part of east and far east Asia and eastern Europe. Lets look at a few indicators how much we lag.

Over the past decade FDI flows into India have averaged around 0.5% of GDP against 5% for China 5.5% for Brazil. Whereas FDI inflows into China now exceeds US $ 50 billion annually. It is only US $ 4billion in the case of India

Consider global trade - India's share of world merchandise exports increased from .05% to .07% over the pat 20 years. Over the same period China's share has tripled to almost 4%.

India's share of global trade is similar to that of the Philippines an economy 6 times smaller according to IMF estimates. India under trades by 70-80% given its size, proximity to markets and labour cost advantages.

It is interesting to note the remark made last year by Mr. Bimal Jalan, Governor of RBI. Despite all the talk, we are now where ever close being globalised in terms of any commonly used indicator of globalisation. In fact we are one of the least globalised among the major countries - however we look at it.

As Amartya Sen and many other have pointed out that India, as a geographical, politico-cultural entity has been interacting with the outside world throughout history and still continues to do so. It has to adapt, assimilate and contribute. This goes without saying even as we move into what is called a globalised world which is distinguished from previous eras from by faster travel and communication, greater trade linkages, denting of political and economic sovereignty and greater acceptance of democracy as a way of life.

Consequences:

The implications of globalisation for a national economy are many. Globalisation has intensified interdependence and competition between economies in the world market. This is reflected in Interdependence in regard to trading in goods and services and in movement of capital. As a result domestic economic developments are not determined entirely by domestic policies and market conditions. Rather, they are influenced by both domestic and international policies and economic conditions. It is thus clear that a globalising economy, while formulating and evaluating its domestic policy cannot afford to ignore the possible actions and reactions of policies and developments in the rest of the world. This constrained the policy option available to the government which implies loss of policy autonomy to some extent, in decision-making at the national level.

References:

Globalisation and Poverty: Centre for International Economics, Australia. WIDER ANNUAL LECTURE 6: Winners and Losers over two centuries of Globalisation: Jeffery G. Williamson. Globalisation Trend and Issues - T.K.Velayudham, Page 3, 66. Globalisation and India -Lecture : Prof .Sagar Jain, University of N.Carolina. Repositioning India in the Globalised World - Lecture : V.N.Rai. Globalisation and India's Business prospectives - Lecture - Ravi Kastia.

"Globalisation and Liberalisation" Prospects of New World Order - Dr.A.K.Ojha, Third Concept - An International Journal of Ideas, Aug 2002. The Indian and Global Business - Jan 2004, Page 30. Globalisation: Imperatives, Challenges and the Strategies, Page 39.

Globalisation: good or bad?

Lewis Williamson outlines the main arguments for and against globalisation

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Lewis Williamson guardian.co.uk, Thursday 31 October 2002 10.40 GMT

It is clear that globalisation has failed to rid the world of poverty. Rather than being an unstoppable force for development, globalisation now seems more like an economic temptress, promising riches to everyone but only delivering to the few. Although global average per capita income rose strongly throughout the 20th century, the income gap between rich and poor countries has been widening for many decades. Globalisation has not worked.

The reason globalisation has not worked is because there has not been enough of it. If countries, including the rich industrialised ones, got rid of all their protectionist measures, everyone would benefit from the resulting increase in international trade: it's simple economics. If unnecessary government regulation can be eliminated, and investors and corporations can act freely, the result will be an overall increase in prosperity as the "invisible hand" of the market does its work.

Tell that to countries that have followed this route. I doubt many people in Argentina would agree. Many developing countries have done exactly what free market evangelists such as the International Monetary Fund told them to and have failed to see the benefits. The truth is that no industrialised society developed through such policies. American businesses were protected from foreign competition in the 19th century, as were companies in more recent "success stories" such as South Korea. Faith in the free market contradicts history and statistical evidence.

You're looking at the wrong statistics. In most cases, low-income countries are the ones that have not been able to integrate with the global economy as quickly as others, partly because of their chosen policies and partly because of factors outside their control. The plain truth is that no country, least of all the poorest, can afford to remain isolated from the world economy.

Even if this were true, what about the other unwanted effects of globalisation? The power of corporations and the global financial markets adversely affect the sovereignty of countries by limiting governments' ability to determine tax and exchange rate policies as well as their ability to impose regulations on companies' behaviour. Countries are now involved in a "race to the bottom" to attract and retain investment; multinational corporations are taking advantage of this to employ sweatshop labour and then skim off huge profits while paying very little tax.

First, governments' sovereignty has not been compromised. The power of the biggest corporations is nothing compared with that of government. Can a company raise taxes or an army? No. Second, nations are not involved in a "race to the bottom". Figures last year showed that governments around the world are on average collecting slightly more taxes in real terms than they were 10 years earlier. And the argument that workers in poorer countries are being exploited is hard to support. They are clearly better off working for multinationals. If they weren't, they wouldn't work for them. In fact research shows that wages paid by foreign firms to workers in poorer countries are about double the local manufacturing wage.

But what about these so-called multilateral organisations like the IMF, World Bank and World Trade Organisation? I don't remember electing them, so what gives them the right to say how countries run their own affairs? Isn't it obvious that these organisations only serve the interests of the US and to a lesser extent the other rich countries? Their only role is to peddle the neoliberal orthodoxy - the Washington consensus - that only impoverishes the poorest nations and maximises the profits of multinationals.

It is only through organisations such as these that the less developed countries have a chance to improve their situations. The IMF is there to bail out countries that get into financial difficulties. Governments go to the IMF because the alternative is much worse. If the IMF and its sister organisation, the World Bank, were shut down, the flow of resources to developing countries would diminish, leaving the developing world even worse off. The WTO is a different kind of organisation and is run on a onecountry-one-vote basis with no regard for the economic power of each nation; every single member has a veto. In addition, no country can be compelled to obey a WTO rule that it opposed in the first place.

Globalisation and its critics Globalisation is a great force for good. But neither governments nor businesses, Clive Crook argues, can be trusted to make the case Sep 27th 2001 |From the print edition

PUBLICATION of this survey had originally been intended to coincide with the annual meetings of the World Bank and the International Monetary Fund, scheduled for September 29th-30th in Washington, DC. Those meetings, and the big anti-globalisation protests that had been planned to accompany them, were among the least significant casualties of the terrorist atrocities of September 11th.

You might have thought that the anti-capitalist protesters, after contemplating those horrors and their aftermath, would be regretting more than just the loss of a venue for their marches. Many are, no doubt. But judging by the response of some of their leaders and many of the activists (if Internet chat rooms are any guide), grief is not always the prevailing mood. Some anti-globalists have found a kind of consolation, even a cause of satisfaction, in these terrible eventsthat of having been, as they see it, proved right.

Globalisation and its critics Profits over people Grinding the poor Is government disappearing?

A crisis of legitimacy A plague of finance Who elected the WTO? A different manifesto Sources and further reading

To its fiercest critics, globalisation, the march of international capitalism, is a force for oppression, exploitation and injustice. The rage that drove the terrorists to commit their obscene crime was in part, it is argued, a response to that. At the very least, it is suggested, terrorism thrives on povertyand international capitalism, the protesters say, thrives on poverty too. Far from being the greatest cause of poverty, globalisation is the only feasible cure

These may be extreme positions, but the minority that holds them is not tiny, by any means. Far more important, the anti-globalists have lately drawn tacit supportif nothing else, a reluctance to condemnfrom a broad range of public opinion. As a result, they have been, and are likely to remain, politically influential. At a time such as this, sorting through issues of political economy may seem very far removed from what matters. In one sense, it is. But when many in the West are contemplating their future with new foreboding, it is important to understand why the sceptics are wrong; why economic integration is a force for good; and why globalisation, far from being the greatest cause of poverty, is its only feasible cure.

Undeniably, popular support for that view is lacking. In the developed economies, support for further trade liberalisation is uncertain; in some countries, voters are downright hostile to it. Starting a new round of global trade talks this year will be a struggle, and seeing it through to a useful conclusion will be harder. The institutions that in most people's eyes represent the global economythe IMF, the World Bank and the World Trade Organisationare reviled far more widely than they are admired; the best they can expect from opinion at large is grudging acceptance. Governments, meanwhile, are accused of bowing down to business: globalisation leaves them no choice. Private capital moves across the planet unchecked. Wherever it goes, it bleeds democracy of content and puts profits before people.

Who will speak up for international capitalism? Governments and businesses. What a pity that is. These supposed defenders of globalisation may do more to undermine support for it than the critics.

Rich-country governments generally present economic integration to voters as an unfortunate but inescapable fact of life: as a constraint, that is, on their freedom of action. For the past ten years, this has been the favourite excuse of any government about to break an election promise.

Multinational businesses, for their part, with their enlightened mission statements, progressive stakeholder strategies, flower-motif logos and 57-point pledges of corporate social responsibility, implicitly say that they have a case to answer: capitalism without responsibility is bad. That sounds all right; the trouble is, when they start talking about how they will no longer put profits first, people (rightly) think they are lying. If, as these defenders of economies without borders lead you to conclude, global capitalism is a cause of democratic paralysis and a cloak for old-fashioned corporate venality, even instinctive liberals ought to side with the sceptics.

With advocates like these on either side of the globalisation debatedissembling governments and businesses in favour, angry and uncompromising protesters againstit is natural that the general public stands firmly in support of neither. It has no deep commitment to international capitalism, but it can see no plausible alternative. Certainly, the protesters do not appear to be offering one. So people are mostly puzzled, anxious and suspicious. This climate of opinion is bad for democracy and bad for economic development.

This survey offers a few suggestions for a more purposeful kind of discussion. It would be foolish to suppose that consensus will ever be possible. Some of the sceptics are opposed not just to globalisation or even to the market economy but to the very idea of economic growth. That view has the virtue of coherence, at least, but it is unlikely in the foreseeable future to command a large following.

Nonetheless, in among all their weak arguments, dangerous good intentions and downright loony notions, the sceptics are hiding some important points. Clarifying what makes sense in the sceptics' case, and exposing the mistaken or dishonest arguments that politicians and businessmen are putting up against them, may serve some purpose. And a clearer understanding of the arguments for globalisation, of the problems it solves as well as the problems it creates, may help as well.

Good old invisible hand

The strongest case for globalisation is the liberal one. It is almost never heard, least of all from governments or businessmen. International economic integration, on the liberal view, is what happens when technology allows people to pursue their own goals and they are given the liberty to do so. If technology advances to the point where it supports trade across borders, and if people then choose to trade across borders, you have integration, and because people have freely chosen it this is a good thing. Also, again because people have freely chosen this course, you would expect there to be economic benefits as well.

By and large, theory and practice confirm that this is so. Adam Smith's invisible hand does its work. People choose what serves their own self-interest, each of them making that judgment for himself. The result is that society as a whole prospers and advancesspontaneously, not by design of any person or government. A liberal outlook is consistent with a wide range of government interventions. Indeed, it often demands them

All kinds of qualifications and elaborations are needed, obviously, to fill out the argument properly. This survey will offer some of them in due course. But it is essential to understand one point from the outset. The liberal case for globalisation is emphatically not the case for domestic or international laisser faire. Liberalism lays down no certainties about the requirements of social justice in terms of income redistribution or the extent of the welfare state. It recognises that markets have their limits, for instance in tending to the supply of public goods (such as a clean environment). A liberal outlook is consistent with support for a wide range of government interventions; indeed a liberal outlook demands many such interventions.

But the starting point for all liberals is a presumption that, under ordinary circumstances, the individual knows best what serves his interests and that the blending of these individual choices will produce socially good results. Two other things follow. The first is an initial scepticism, at least, about collective decision-making that overrides the individual kind. The other is a high regard for marketsnot as a place where profits are made, it must be stressed, but as a place where society advances in the common good.

Why then are governments and business leaders rarely heard to put this case? Because for the most part they are not liberals. Perhaps it goes with the job that politicians of left and right, traditional and

modern, have an exaggerated view of their ability to improve on the spontaneous order of a lightly governed society.

It would be even more naive, and contrary to all experience, to expect business itself to favour a liberal outlook. Businesses are ultimately interested in one thing: profits. The business-bashing NGOs are right about that. If businesses think that treating their customers and staff well, or adopting a policy of corporate social responsibility, or using ecologically friendly stationery will add to their profits, they will do it. Otherwise, they will not.

Does that make market capitalism wrong? On the contrary, the point of a liberal market economy is that it civilises the quest for profit, turning it, willy-nilly, into an engine of social progress. If firms have to compete with rivals for customers and workers, then they will indeed worry about their reputation for quality and fair dealingeven if they do not value those things in themselves. Competition will make them behave as if they did.

Here, then, is where the anti-business NGOs get their argument completely upside downwith genuinely dangerous consequences for the causes, sometimes just, which they hope to advance. On the whole, stricter regulation of international business is not going to reduce profits: the costs will be passed along to consumers. And it is not going to diminish any company's interest in making profits. What it may well do, though, by disabling markets in their civilising role, is to give companies new opportunities to make even bigger profits at the expense of society at large.

For example, suppose that in the remorseless search for profit, multinationals pay sweatshop wages to their workers in developing countries. Regulation forcing them to pay higher wages is demanded. The biggest western firms concede there might be merit in the idea. But justice and efficiency require a level playing-field. The NGOs, the reformed multinationals and enlightened rich-country governments propose tough rules on third-world factory wages, backed up by trade barriers to keep out imports from countries that do not comply. Shoppers in the West pay morebut willingly, because they know it is in a good cause. The NGOs declare another victory. The companies, having shafted their third-world competition and protected their domestic markets, count their bigger profits (higher wage costs notwithstanding). And the third-world workers displaced from locally owned factories explain to their children why the West's new deal for the victims of capitalism requires them to starve.

If firms ruled the world

A fashionable strand of scepticism argues that governments have surrendered their power to capitalismthat the world's biggest companies are nowadays more powerful than many of the world's governments. Democracy is a sham. Profits rule, not people. These claims are patent nonsense. On the other hand, there is no question that companies would run the world for profit if they could. What stops them is not governments, powerful as they may be, but markets.

Governments have the power, all right, but they do not always exercise it wisely. They are unreliable servants of the public interest. Sometimes, out of conviction, politicians decide to help companies reshape the world for private profit. Sometimes, anti-market thinking may lead them to help big business by accident. And now and then, when companies just set out to buy the policies they want, they find in government a willing seller. On all this, presumably, the sceptics would agree.

But they miss the next crucial step: limited government is not worth buying. Markets keep the spoils of corruption small. Government that intervenes left and right, prohibiting this and licensing that, creating surpluses and shortagesnow that kind of government is worth a bit. That is why, especially in developing countries with weak legal systems, taming capitalism by regulation or trade protection often proves such a hazardous endeavour.

If NGOs succeeded in disabling markets, as many of them say they would like to, the political consequences would be as dire as the economic ones. It is because the sceptics are right about some things that they are so wrong about the main thing.