Every
nation and society is primarily based on individuals.
Living conditions and intellectual state of these
individuals, establishes the foundation of the
country. The responsibility of progress in every
country relies on the harmonized coexistence of
its citizens, which can only be achieved by equity
and acknowledgment of human rights.
In every society, differences in
the capabilities of all ethnic groups can sometimes
vary to extreme directions. For example, one race
might be more able to do more intellectual work
than the other physically strong race. It’s
the responsibility of the leaders to provide an
environment based on equality and moderation,
protect the rights of every individual.
As the president of Justantia,
it is my duty to devise a path that could lead
our country towards the deserved economic and
social development.
The world has entered new sphere
of change, prosperous and more developed nations
have already adopted globalization, to keep in
line of progress. But somewhat unheeded outcome
and the collapse of the economies of some of our
neighboring countries, has kept me form making
a hasty decision.
I have adopted a plan, for our
sure progress, as a country we will eventually
go with the flow of globalization, but without
giving up our traditional and usual ways. A more
moderate procedure, that concentrates on decreasing
the rate of poverty and its resulting environmental
degradation.
To achieve the goal, it is imperative
to understand the basic points of the global economic
structure; its productivity and flaws. So we can
adapt it to our specific purpose.
According to Washington consensus,
following ten basic propositions of the reform
package, with minor variations, are being implanted
all over the glob during past 20 to 30 years:
Fiscal Discipline
Budget deficits, accurately calculated
to include those of provincial governments, state
enterprises, and the central bank, should be minimal
to be financed without the possible need to resort
to the inflation tax.
Public Expenditure Priorities
Improvement of policy, consists
in redirecting expenditure from areas that are
politically sensitive, which characteristically
receive more resources than their economic return
can justify, such as administration, defense,
indiscriminate subsidies, and white elephants,
toward neglected fields with high economic returns
and the potential to improve income distributions,
such as primary health and education, and infrastructure.
Tax Reform
Tax reform includes, equally spreading
the tax base and cutting marginal tax rates. The
policy is to clearly define the motives and improve
horizontal equity without compromising understood
culminate progress.
Financial Liberalization
The optimum objective of financial
liberalization is market-determined interest rates.
Exchange Rates
Countries need a uniformed exchange
rate set at a level sufficiently competitive to
bring about a speedy progress in modern exports,
and organized so as to guarantee exporters that
this competitiveness will be successive in the
future.
Trade Liberalization
Quantitative trade restrictions
should be rapidly replaced by tariffs, and these
should be progressively reduced until a uniform
low tariff in the range of 10 percent is achieved.
*Foreign Direct Investment*
Barriers hindering
the participation of foreign firms should be completely
removed; foreign and domestic firms should be
allowed to compete on equal terms.
Privatization
State enterprises should be privatized.
Deregulation
Governments should end regulations
that obstruct the entry of new firms or restrict
competition, and guarantees that all regulations
are lawfully abide by such criteria as safety,
environmental protection, or cautious management
of financial institutions.
Property Rights
The legal system
should ensure secure property rights without excessive
costs, and make these available to the informal
sector.
Positive effects of Globalization
(stats:1960-1995)
The economic restructuring, along
with integration of world economy produced a heavy
progressive effect on increasing global aggregate
output,
It helped to achieve a larger than expected international
trade.
The world real GDP increased from
US$2 trillion in 1965 to US$28 trillion in 1995.
Divided by population, the world average per capita
output increased from US$614 in 1965 to US$4,908
in 1995. In relation to trade, the volume of world
exports grew at an annual average of 6.7 percent
during 1965-1980, 4.7 percent during 1980-90,
and 6.0 percent during 1990-95. The total volume
of world trade (in terms of either export or import)
was over US $5 trillion in 1995 in contrast to
US $2 trillion in 1980. Although there had been
major growth in population, 1.9 billion people
between 1970 and 1996, yearly per capita income
growth in developing countries had averaged about
1.3 percent. Private investment had also increased
tremendously towards developing countries, during
this period. . Net foreign direct investment (FDI)
improved from a little over US$2 billion in 1970
to more than US$95 billion in 1995.
Portfolio equity flows had grown
from zero to US$32 billion during the same period,
although such increase impeded in 94-95 reflecting
the volatile nature of the equity markets. In
1992, total private capital flows started to dominate
aggregate net long-term resource flows to developing
countries.
In 1995, more than 70 percent of
such flows came from the private sector. These
stats clearly showed the potential of globalization
for developing countries.
Negative effects of globalization
Although, statistically the economic
reforms have proven its global productivity, some
difficulties have arisen with its application.
Two fundamental problems that can seriously damage
the world economy are:
1) Growing poverty
Growing poverty and inequality,
inequality among regions of the world, among nations
within regions, and among social groups within
countries. Developing countries combined, almost
doubled their actual per capita income between
1965 and 1995, critically observing the income
improvements of the industrial counties. But relatively,
most developing countries have failed to raise
their per capita incomes toward those of the industrial
countries.
With this, countries are unequally
falling into extreme low-income and high-income
category. At start, out of 108 non-oil-producing
developing countries, 52 were in the lowest-income
statistics. In 1965, but the number had grown
to 84 by 1995. This implies that, in thirty years
the vast majority of developing countries-84 out
of 108-had either stayed in the lowest-income
statistics or fallen into that statistics from
a relatively higher position
Also in this period, the global growth in income
had been found, spread very unequally-and the
inequality was still increasing, as reflected
in the relative income shares of the richest and
poorest 20% of the world’s people. "The
poorest 20% of the world's population claimed
just 1.1 percent of global income, which the richest
20% claimed 86%. Between 1960 and 1994, the ratio
of the income of the richest 20% to the poorest
20% increased from 30:1 to 78:1
2) Continued degradation
of natural environment
This is the second major problem
accompanying globalization of the world. Although
it is considered an international menace, environmental
degradation is accelerating in urban and rural
settings and in developed and developing countries.
Following are the major reasons
for degradation of environment:
Global energy, use has increased
greenhouse gas emissions from fossil fuel use
and projected increase in global warming.
Water, consumption
will increase and shortages are likely to become
one of the most pressing resource issues of the
21st century. Projections indicate that up to
two-thirds of the world's countries will undergo
moderate to high water stress by 2025.
Pollution, rapid
industrial development has led to high levels
of air, water and waste pollution in many countries.
Several forms of pollution threaten both land
and water. High levels of fertilizer use, combined
with fossil fuel and biomass burning and land
clearing have led to significant releases of nitrogen
that have, in turn, overburdened the absorptive
capacity of natural systems
*Deforestation and biodiversity*, the world's
forests continue to be under relentless pressure;
between 1990 and 1995, annual forest loss in developing
countries was estimated to be at least 13.7 million
hectares. In the majority of countries surveyed
by the FAO, forest loss has increased, which may
be attributable to increased access to previously
remote lands
This is utmost important
for us as our greatest asset is our natural rain
forest.
Another observance of the negative
global reforms was the East Asia financial crisis,
considering the environmental and other similarities
of social conditions it is important to briefly
review that particular condition.
East Asia financial crisis
The consequences of globalization
struck hard these countries, which were previously
considered the best examples of the liberalization
development. The degrading effects of their rapid
economical downfall shocked the whole developing
world.
The crisis brought out; un-equality
of recourses distribution was the culprit. Three
areas are mostly important to deal with long-term
distributional concerns
1) It is unfair
to put most control into one big holder; corrupt
gains made by the wealthy and connected are most
likely to bring about unrest.
2) There is some evidence, that
the powers of global integration and technological
advance favor the skilled, creating tension among
those who are without education.
3) It was seen that growth largely
bypassed populations living in poor areas.
The “World Bank”
‘s analysis of the situation offers this
perspective:
“East Asia’s financial
crisis and environmental problems have similar
roots: rapid growth without proper safeguards,
policies, and controls. In the financial sector,
the capacity of governing institutions and policies
has been outpaced by the growth of capital flows
and lending.
In the environmental arena, growth
has outstripped both the absorption capacity of
the environment and the speed with which policies
and institutions can respond to new challenges.
Collusion between segments of government
and parts of the private sector exerts pressure
on agencies to provide subsidies, directed credit,
and exemptions from regulations, compromising
their ability to enforce appropriate stands of
prudence and good performance.”
This brief over-view of Global
Economic Reforms, has enabled me to put forward
the following proposal:
It would not be prudent, to completely
ignore the effectiveness of the globalization
phenomenon. Costs of economic reforms seem to
pose a threat to developing countries, but at
the same time, they appear more, to be a result
of unprepared governance and mis-management.
And to achieve and provide the
better and more suitable living standard for my
people, I see no hazards to accept these reforms
as primary initiatives for progress.
However, there are some discrepancies
that I would like to reconsider. For example,
Foreign Direct Investment states that “foreign
and domestic firms should be allowed
to compete on equal terms”
Might not be a very productive
decision for a non-developed country, as it discreetly
opens-up possibilities of corruption.
In its place, I would like to see my domestic
companies possessing more rights, so they can
grow rapidly and undaunted.
Health and education,
and infrastructure: These are the basic rights
of every human-being, no society can think of
improving and competing on international level,
without providing these essential necessities,
at the least possible cost for all of its individual.
Regardless of their social status, health, education
and other utilities must be provided equally.
I would specially accentuate the technical skill
development of my people, for self-reliance and
manpower export.
Mining and light industry
(electronics/textiles): A better and
improved industry and mining capabilities can
boost country’s economy quite rapidly, equipped
and well-trained manpower will eventually lead
us in this direction.
Improved living standards
of the poor: Majority of our people live
in the rain forest. With better education, they
will become more aware of their civil responsibilities,
and with higher living standards, they will be
more efficient to return services for their country.
With lesser difference between
intellectual and work abilities of our rural and
urban population, equal distribution and management
of assets, especially of human capital will become
easier. It will affect overall growth positively.
Natural rain forest: With
our vast rain forest, Palm oil and other
possible natural forest products could become
a valuable resource for, domestic products and
as raw export material as well.
Tourism: Building
of resorts, better roads, convenient travel routes,
hotels, international airports and a competitive
entertainment industry, can be a very sufficient
alternative industry, for a tropical country.
And accepting global reforms would
mean more cooperation with developed and industrial
world, and it can open far reaching economic vistas.
In my opinion, globalization is
still a descent movement, it would still be premature
to denounce it, and there is a lot to improve
and reconsider.
References
Bamyeh, Mohammed. The Ends of Globalization.
Minneapolis: U of Minnesota P, 2000.
Cheah, Pheng and Bruce Robbins. Cosmopolitics:
Thinking and Feeling Beyond the Nation. Minneapolis:
U of Minnesota P, 1998.
Ham, Peter van. European Integration And The Postmodern
Condition: Governance, Democracy, Identity. New
York:
Routledge, 2001.
Hersh, Jacques and Johannes Dragsbaek Schmidt,
eds. Globalization And Social Change. London :
Routledge, 2000.
Huntington, Samuel P. The Clash of Civilizations
and the Remaking of World Order. New York: 1996.
Waters, Malcolm. Globalization. London : Routledge,
2000.
Weber, Steven. Globalization and the European
political economy. New York : Columbia University
Press, 2001
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