Wednesday, November 8, 2006

International

CHALLENGES AND OPPORTUNITIES FOR DEVELOPING COUNTRIES

Nuzhat Khanum, Assistant Research Officer, IPRI, Islamabad

Introduction

The underlying study is an attempt to understand the phenomenon of Globalization, its challenges and opportunities for the developing countries. The study will also examine the question whether or not Globalisation is working for the poor? It will also examine how trade, growth and poverty are interlinked and how best the benefits of Globalisation can be acquired to ameliorate threat to humanity. Presumably, solutions to such problems would then avert a backlash against Globalisation.

Hence, in this backdrop, there is a need not only to discuss the “structural elementals’ of Globalisation but also to understand how it affects an individual in various capacities i.e., politically, economically, culturally, militarily. Also, it is essential to see, how Globalisation affects the society through technology and information revolution. In modern times, the type of society does not only affect the individual in sociological terms but global institutions in different fields also influence the individual. This can be termed as “global society in late modernity”

While dilating on the subject, one would note that economic aspect of Globalisation is very important. It makes the world more interdependent. Globalisation affects key actors in world politics, while it also spreads through the working of these actors. Globalisation not only affects us as a citizen but also as a “producer-consumer in the global economy”.

There is also a “functional integration” between internationally dispersed economic activities, whereas the term internationalization simply refers to the increasing geographic spread of economic activity across national borders. In socio- economic terms, the individual is affected as a “producer-consumer in the global economy.” For example, over the past years, one can see different unique patterns e.g., inflation in some Western countries also affects the Third World countries and as a result, there is a dramatic increase in unemployment. Traditional industries are also affected. However, an inverse trend is also observed in that, sometime decline of industries in the West is often matched by the growth of industries in the East. One thing gives impetus to the other. It implies that there is a “degree of functional integration between internationally dispersed economic activities”. Hence a need was felt to formulate trade rules and regulate trade, which led to the development of world trade, flow of “portfolio” investment, capital into overseas ventures, growth of Multinational Corporations (MNC’s) and international production as well as a need for global institutions such as World Trade Organization (WTO). Obviously, now the focus was how to manage Globalisation and its effects.

Globalization as a Phenomenon

Intense debate revolves around the term “Globalisation”, which is even today a contentious issue. Theorists, policy makers and even “management consultants”, have debated the origin and nature of Globalisation. However, “it has now been accepted as shorthand for the intensified and deepened cultural, economic, political and institutional interconnectedness and interdependency that has been developed between corporations, communities and states, particularly since the 1970s.”

The phenomenon of Globalisation has its negative and positive effects. One of the challenges is the eroding sovereignty of the nation state and its control ‘over domestic economic and political functions’ to other “supranational decision making bodies”. However, geographers resist such arguments and are of the opinion that “Globalisation must be seen as a set of intellectual tendencies that cumulate to produce heterogeneous and uneven processes that operate dialectically in the face of local difference.”

The Globalisation process has also empowered the Non Governmental Organizations (NGOs) that have access to funds from the international funding agencies that could work in different spheres, for example, for women rights, human rights and poverty alleviation. It has enabled millions of workforce to be employed abroad. However, on the other hand the working of global corporations can cause environmental pollution and can increase the gap between the rich and the poor. Hence, there is a need to focus on the positive aspects of Globalisation, which can bring about a positive social change and take measures to curtail its negative effects.

Globalisation is a process and not an event only; it has been progressing for most of the human history. It is multidimensional, multidirectional and an uneven phenomenon. However, it affects all actors in international relations, though with different consequences. For the sake of simplicity, Globalisation can be studied under different categories e.g., economic, social, cultural, military and environmental. However, all these spheres are interlinked and affect outcome in other areas of human activities. For example, technology affects these areas as fast transportation, communications and production technologies have improved interaction across geographic space. Industrial revolution has played an important role in this regard. This interconnectedness can best be exemplified by looking at the following pattern.

With the spread of industrial revolution, there were innovations and spread of a new form of production. The transportation and communication, thus, became easier. With the advent of a new era, resources became important for military security. Armament and heavy mechanical industries were set up and “industrial production is harnessed to military needs.” In this new environment, traditional social relationships were then displaced. The Globalisation also affects the culture in a society. The industrial revolution affects the “living environment”, through pollution, climate change etc. The environment itself affects social, cultural areas of human activity. The industrial revolution has affected society, culture, political system and environment, radically in North America and Europe . This revolution is spreading to other parts of the world with its associated pros and cons. Hence the developing countries face the challenges. It is important that they focus on its beneficial effects and acquire opportunities and also take steps to deal with its challenges and fallout.

In view of the above, a working definition of Globalisation could be:

Globalisation is a complex multilevel process where the following characteristics can be observed by: a) existence of shifts in the degree to which cultural, technological, political and economic activities are ‘stretching’ across frontiers creating a global space; b) strong changes in the intensity, speed and regularity of global interactions and processes; c) changes in the levels of interdependence between the global and the local”. Hence, we can say Globalisation affects human life in different ways.

Phases of Evolution

The World Bank basically focuses on economic integration and it identifies three waves of Globalisation.

a) First wave of Globalisation 1854 to 1914

b) Second wave of Globalisation from 1945 to 1973

c) Third wave of Globalisation since 1973

From 1945 to 1973, Cold War was at its peak. The world was divided into two blocs of states, each led by USA and USSR . There was a capitalist economy; following free market economy rules, whereas the Eastern Bloc organized under the Soviet Union , was following the communist economy. The integration was uneven. Cold War politics, then, affected every form of cooperation. European Union (EU) and the US followed the free market economy, whereas many countries i.e., newly industrialized Countries (NICs) followed the export led growth model. Some countries benefited from the system but the developing countries were marginalized. Hence such groups like G-77; New International Economic Order (NIEO) was formed to have their say in the economic matters.

In the post 1973 era, the Cold War subsided and there was a quantum leap forward in the ‘economic integration’. The free market economy became the guiding principle and global economy spread to a larger part of the world. Hence, the historical processes played an important role in the spread of Globalisation and its fallout, its weaknesses and strengths.

Key Actors

Globalisation is primarily based on intention and planning. It is predicated upon the near global distribution of human race. It is manifested through a) the predominance of the nation state system, b) the global economy c) global communication systems and d) the world military order.

The nation state consists of a) representative government b) bureaucratic administration, c) independent judiciary d) a monopoly of the legitimate means of violence and e) clearly defined procedures of international relations.

Globalisation has made nation states economically interdependent through the working of the global economy. This economic interdependence is characterized by the following attributes of international trade and international finance, “the integration of specific manufacturing processes at a global level through the development of multinational corporations” and improvement in transport and communication as well as “spread of mass production and mass consumption internationally.”

State as an actor is itself affected by the phenomenon of Globalisation. Sovereignty of the state is being eroded in the era of Globalisation, especially with the growing corporate power and by the evolution of international instruments and institutions. A question arises:

Should the role and nature of the state be redefined in international relations? Two important issues in this regard are: Is state capable of addressing new challenges and new problems of the age of Globalisation? Is it able to retain its independence with the growing corporate power? Giddens has argued that state has become a “shell institution”, inadequate to fully perform its new tasks. It is too small to solve big problems and too big to solve small problems. For example, big ecological challenges can only be tackled at a global scale while growing social inequalities at local level can be addressed by different institutions i.e., local administration or grassroots NGOs.

With regard to corporate business, the corporate business means wealth, jobs and power for the state. This issue, thus, raises complex problems. Democratic governments are, in fact, in a “complicated bargaining power situation”. They have to guarantee their citizens well being as well as to keep a “norm consistent behavior”. They have to follow ethical principles e.g., ecological balance, workers rights, gender participation etc. Hence, a totally new approach is required to retain state as an important actor of Globalisation and to preserve sovereignty of state as well as ensuring international cooperation in this new era. One approach is to diversify the decisional levels, increase real participation of stakeholders in decision making, giving attention/relevance to the local as well as collaborating with regional and international organizations. By increasing the role and participation of civil society actors and by strengthening international norms and institutions, states would then be able to address new problems, reinforcing social cohesion at the local as well as increasing international cooperation. Traditional theory that states are unitary actors has been challenged where internal dynamics do matter in today’s world.

International Organizations

In the age of Cold War, multinationals were perceived by many as agents of economic imperialism and as supporters of dictatorial regimes. It was thus seen as a challenge for the governments to check and ensure that these companies did not abuse their growing ability and power to shift capital across national frontiers to undermine public interest, However, in 1990’s the dominant feeling regarding international business changed and MNC’s were regarded as actors of development and international progress. Hence, in the new era, the role of international organizations became more important as international perceptions changed from an age of Cold War to that of an interdependent world.

In this new context, the General Agreement on Trade and Tariffs (GATT) developed and was finally replaced by the WTO, which is an important actor in discussing economic Globalisation. Some of the other main international actors include United Nations (UN), other United Nations agencies like International Labour Organization (ILO), and the Bretton Woods Institutions like World Bank and International Monetary Fund (IMF). There is a growing realization at the UN to accommodate new problems of this era. UN has taken initiatives to deal with the downsides of economic Globalisation. Kofi Annan has warned of a backlash against Globalisation from the civil society due to its negative effects. Hence the “Global Compact initiative “ aims at bringing together international institutions, civil society, private sector organizations and national governments, in a pursuit of “shared global values and effective global institutions to underpin the global market”. Whereas the ILO plays an important role in protecting workers rights.

Thus, these actors play an important role in managing the fall out of Globalisation and thus shaping the phenomenon. WTO is a trade dispute forum while other coordinates actions of states in an anarchic world; solve problems of global collective action etc. The policies adopted by Bretton Woods Institutions like IMF and World Bank would definitely affect the shape of Globalisation as a phenomenon, whereas these actors have to accommodate and respond to the challenges of this era.

Threats and Opportunities Trade, Growth and Poverty: A View

Is Globalisation working for the poor? This is an important question for assessing the opportunities provided by Globalisation and for the success of the phenomenon. What are the implications of international integration or Globalisation for inequality and poverty? Dollar and Kraay have explored this question by studying a group of developing countries that have followed the liberalization of trade or significantly opened up to international trade, during the past two decades. The writers found out that contrary to the popular beliefs, increased trade has encouraged growth and poverty alleviation and has contributed to narrowing the gap between the rich and the poor worldwide. Dollar and Kraay have focused on a study of a group of developing countries that have experienced increase in trade over the past two decades. These countries can be referred to as “post globalisers”. The member countries of the Organization for Economic Cooperation and Development (OECD) and East Asian tigers like Hong Kong , Korea , Singapore , Taiwan , and Chile , are not included. The rest of the countries were then ranked according to their increase in trade as shares of their Gross Domestic Product (GDP) over the past two decades and selected the top one- third as post-globalisers. As a group, their trade as a share of GDP, increased to 33 percent, whereas trade as share of GDP declined among non-globalisers. Dollar and Kraay have reached important conclusions that are: a) Growth rates have increased; b) Inequality has not increased systematically; c) Poverty has declined; d) Gap between rich and poor has narrowed.

Text courtesy: Excerpts from the author's article printed in the Summer issue of Islamabad Policy Research Institute publication-ed.

 Imperatives of Good Governance

K.K.Katyal, India

Opinions may differ on the degree of control to be exercised by governments and persons in authority but no one in his or her senses would underrate the need and importance of good governance. True, in the countries under foreign domination, the rulers, citing the ‘incapacity’ of the natives to administer their affairs in order to justify the colonial hold, are told that a good government is no substitute for self-government. This, however, is essentially an argument against continuance of the alien rule and not a defence of inefficiency and mal practices. We, in India , used to take this line during the time of freedom struggle but soon after independence, the national leaders, on taking over the reins of office, lost no time in focusing on the imperatives of good governance. These sentiments run through the speeches of Jawaharlal Nehru, Sardar Pate1, Maulana Azad and others. They were keen to ensure that in the flush of enthusiasm at the end of the colonial rule the people do not lose sight of the right priorities. There was no ambiguity about their exhortations. Swaraj would not be complete without good governance. They elaborated their points at great length — with pointed references to social justice, reduction of economic dis parities, eradication of poverty, provision of health-care, education and development of human and material resources.

In practice, however, the highly devised objective of good governance remains elusive in large parts of the world, India and other countries in South Asia not excluded. When the late Prime Minister, Rajiv Gandhi quoted that “for every rupee spent over the welfare projects, the intended beneficiaries secured 17 paise”, he vividly portrayed the sad reality of the governance processes. Whether corruption, delays, inefficiency, sloth or the sheer ham-handedness of the administration absorbed the remaining 83 paise was a matter of detail, which did not detract from the soundness of his observation.

The importance of good governance has increased with the augmentation of the role of governments. To cite the case of India , the administration before 1947 was mainly concerned with the collection of revenue in order to meet the expenses of the colonial administration and maintenance of law and order, in order to counter the ‘subversive’ activities, their description of the freedom struggle. The governmental functions have since then expanded enormously, covering a vast field — developmental programmes, the use of the country’s resources for people’s welfare, economic activities, operating the democratic parliamentary system, management of external relations and the like. In this situation, the potential for damage to the national interests, caused by deficiencies in governance, is much greater.

To be fair to the political elite — both in and outside the government — there is no slackening of the stress on good governance. Take the manifestoes of political parties at election time and on assumption of office by them and you will be struck by the wide range of promises made in this regard. To the extent that it reflects awareness of the governance related issues, it is to be welcomed. The real test lies in implementation and actual results, which leave much to be desired.

Here are two samples. According to The Common Minimum Programme of the ruling United Progressive Alliance, formulated in May 2004, “the UPA will set up an Administrative Reforms Commission to prepare a detailed blueprint for revamping the public administration system. E-governance will be promoted on a massive scale. The Right to Information Act would be made more progressive, participatory and meaningful. The Lok Pal bill would be enacted into law. “The UPA government will take the leadership role to drastically cut delays in high courts and lower levels of the judiciary Legal aid services will be expanded. Judicial reforms will be given a fresh momentum. As part of its electoral reforms, the UPA will initiate steps to introduce state funding of elections at the earliest”.

The reality check is revealing. During its two years in office, the UPA has somewhat improved the law on the Right to Information (thought there is still scope for betterment). But on other issues there has been little progress. The problem of judicial delays, for instance, as shown by mounting arrears in the courts at all levels, has assumed alarming proportions. What it means to common citizens is not hard to imagine. Steps for state funding of elections and establishment of Lok Pal have yet to make a meaningful advance. The proposal for a new Administrative Reforms Commission is not to be faulted. But the question is: have the recommendations made by such commissions in the past, notably the one headed by Justice Sakaria and in the case of police reforms, the one headed by a former Cabinet secretary and a former governor, Mr. Dharam Vira, been shown the desired seriousness?

Similarly, the National Agenda for Governance, adopted by the BJP-led National Alliance in 1998, succeeded but only marginally in fulfilling its claim of “closing the gap between people’s aspirations and government’s performance”.

The NDA was in power for six years but the implementation by its government of the “agenda” was far from adequate. The resolve “to deal with the malaise of defections, corruption and criminalization of politics and to prevent electoral malpractices” was no doubt highly desirable but practical steps, if any, lagged far behind. The NDA set up a Commission to review the Constitution in the light of the experience of the past 50 years but what happened to its recommendations? The promise to introduce electoral reforms on the basis of the report of the Goswami Committee could not be fulfilled.

There are at least four elements of good governance — accountability, participation, predictability and transparency. A recent report of the Asian Development Bank elaborates on these concepts.

Accountability is considered imperative to make public officials answerable for government behavior and responsive to the entity from which they derive their authority. This may be achieved differently in different countries or political structures, depending on the history, cultural milieu and value systems involved. Accountability is also seen as meaning establishment of criteria as well as oversight mechanisms to ensure that the standards are met. One of the tests is whether private actors in the economy have procedurally simple and swift recourse for redress of unfair actions or incompetence of the executive authority. Lack of accountability tends to reduce the state’s credibility as an economic partner.

Participation is important because of the underlying principle that the people are at the centre of development — they are not only the ultimate beneficiaries of development but also its agents. Since development is both for and by the people, they need to have access to the institutions that promote it. At the grass root level, participation implies that government structures are flexible enough to offer beneficiaries and other affected sections the opportunity to improve the design of implementation of public programmes and projects. This promotes’ the concept of “ownership”.

Participation in economic life by agents other than the state would cover not only the role of the private sector but also the NGOs, now growing in number.

Predictability implies the existence of laws, regulations and policies to regulate society and their fair and consistent pplication. The Rule of Law covers both well-defined rights and duties and mechanisms for enforcing them and settling disputes in an impartial manner. It requires the state and its subsidiary agencies to be as much bound by the legal system as private individuals and enterprises. In the case of economic life, to take one example, the importance of rule-based system is obvious — it is essential for the environment within which economic actors plan and take investment decisions.

Transparency means availability of information to the general public and clarity about government rules, regulations and decisions. The problem with ensuring transparency is that only the generator of information may know about it and may limit access to it. Hence the need to strengthen the people’s right to information. Transparency in government decision-taking and public policy implementation reduces uncertainty and could help inhibit corruption among officials. In this context, simple and straightforward rules and procedures are preferable to rules that provide discretion ary powers to officials.

All said and done, it is not hard to comprehend what good governance means. What is needed is the political will of the ruling class to work for this objective and awareness among the people to assert the rights avail able in the system governing their affairs. Good governance is essential for safeguarding human rights. •

Text courtesy FES New Delhi publication number 2, 2006. The author is a veteran journalist and former Associate Editor and Chief of Bureau, The Hindu, New Delhi . At present he is President, South Asian Free Media Association, India Chapter-ed.

Achim Steiner-the UNEP Executive Director

Michael Streck, Germany

Achim Steiner, 44, was born and grew up in Brazil . After finishing his studies in philosophy and economics he went into development and work in Pakistan , and was later in charge of a nature conservation project in South Africa . He worked on several continents as an advisor for sustainable development before becoming head of the World Comission on Dams. At 39 he became director general of the World Conservation Union IUCN. In mid June Steiner took up office as director of the UN Environment Programme (UNEP) based in Nairobi .

hen his name cropped up this spring people avidly started googling. Who is this Achim Steiner who, at just 44, is to become Klaus Topfer’s successor as Director of the Unit ed Nations Environment Programme (UNEP) - making him the highest ranking German national in the UN? He was a man hardly anyone knew, not even newspaper editors. Nevertheless, Achim Steiner was not exactly an unknown. He definitely has a name in environmental policy circles. But until now he was un known to the broader public. Steiner is an amicable man. Trousers, jacket and tie are more dressed-down American and practical than stylishly Italian. When he talks he seems to use his hands as much as his mouth. Apart from that the impression he gives is calm, almost contemplative. It’s hard to image him getting angry. But this restraint is deceptive.

Since June Achim Steiner has exchanged his previous idyllic workplace close to Lake Geneva as head of the World Conservation Union IUCN, the world’s largest environmental and natural resources conservation organization, for the UNEP top job in Nairobi , Kenya . When he talks about Africa his eyes begin to sparkle. He met his wife in Zimbabwe . And in Cape Town he headed the World Commission on Dams for two years. But he knows what people say about Nairobi as a UN agency location: that it’s difficult to recruit good staff for jobs there, because the city is considered unsafe, and there are no convenient flight connections. Achim Steiner stands up for the city: he says the UN cam pus is state of the art; nowadays communication is made a lot easier by video conferences and finally, Nairobi is the only place where the UN has an organizational headquarters in a developing country. He reckons this close proximity to urgent environmental problems is far more important than the creature com forts of a jet-setting work team.

In his new position Steiner wants to bring about significant changes to global environmental policies. He hopes to be able to get more things moving with UNEP than he could with IUCN, especially as the environment has gradually been reduced to a marginal issue again and sustainability has become a “a policy of the smallest possible steps”. Steiner thinks that the great progress made during the l980s and 1990s has been gambled away. He thinks the main reason for this could well be that the agreements made then between the developing countries and the industrialized countries have not been fulfilled in the eyes of the poor states. He says development aid funding has been cut and many industrialized countries haven’t fulfilled their pledges, for instance in the case of creating market access for agricultural goods:

Environmental conservation and combating poverty are a historical responsibility of the industrialized countries. The northern hemisphere has to realize this,” he says emphatically.

Things become clear in a flash: this man acts on the courage of his own convictions. And he calls old ideas into question: Steiner thinks the only way the environmental movement can be of future significance is by throwing its ideological ballast overboard — for instance the cliché that commercial enterprises are always the bogeymen. And that’s the opinion of someone who’s seen as a champion of the NGOs, and has opened the doors of the World Bank, the UN and ministries to them. Steiner’s deep-seated esteem for grass-roots organizations lies in his personal history— his involvement in many areas of development aid work in many different countries. And he still gives the impression that at any moment he could take off his suit, don overalls and boots, and disappear to drill wells somewhere in the desert. Despite this, he says that he’s under no illusions — the news about the state of the environment is often depressing. But when he utters extremely dramatic statements in a completely calm voice and reprimands faint-hearted policies, it makes you catch your breath. The way he puts things across makes his remarks less scathing. This could be one of his strengths, but in his new position it might also be a draw back. Achim Steiner does, however, possess one particular talent, which he’s going to need if he wants to make his mark international circles. It’s the ability to see things from different perspectives, “to move with enthusiasm in unfamiliar cultures”, as he puts it, and to respect other positions. What does he want to achieve as head of UNEP? Steiner thinks for a moment. Then he says he wants to point out possible dead-ends and help those affected to find a way out. His colleagues are convinced he’s capable of this, It’s said that Steiner pursues his visions with determination and conviction, and he enjoys a high level of respect internationally and within the UN. His appointment by UN Secretary General Kofi Annan above all signifies recognition of his competence. It was certain ly unusual that another German was appointed after Klaus Topfer — as a rule a successor is chosen from another country. But Achim Steiner calmly entered the fray — and won, with the power of composure.