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JAYATI SARKAR

SONGSOPTOK THE WRITERS BLOG | 3/15/2016 |




SONGSOPTOK INTERVIEW
FACES AND FACETS OF GLOBALIZATION

 “Globalization is the process of international integration arising from the interchange of world views, products, ideas and mutual sharing, and other aspects of culture” (Wikipedia)


SONGSOPTOK:  What are you views about globalization? In the country and the society you live in, is globalization a threat or an opportunity?

JAYATI: Globalization is in a nutshell the virtual vanishing of national borders that can lead to economic, technological, social and cultural integration. In its extreme manifestation, globalization, in all its aspects, envision world as a global village. In my opinion, globalization is a process that facilitates economic, technological, social and cultural exchange among countries, and expands the potential knowledge pool of a citizen residing in any part of the world. The welfare effects of globalization, has, however, not yet been unambiguously established. Historical evidence on the effects of globalization within and between nations have been mixed and often fiercely debated. In my country, India, it is not surprising that there are people on both sides of the aisle, and by and large, globalization is viewed as a mixed blessing. On one hand, growing economic integration with the rest of the world has created more economic opportunities in terms of income and employment, but at the same time, is perceived as being instrumental in increasing poverty and  inequality in the country. On the social and cultural fronts, again, the opinions are mixed with some viewing globalization as a threat to existing social systems and national identity.  On balance, I think of globalization as an opportunity than a threat to our society.


SONGSOPTOK:  To what extent is the society you live in is globalized? What are the outward manifestations, if any, in the everyday lives of the citizens?

JAYATI: Indian society has been increasingly globalized since the early nineties.  The most obvious outward manifestations in the everyday lives of citizens especially in urban areas are the presence of international brands across the entire spectrum of products for everyday use, be it in food, cosmetics, apparels, phones, computers or cars.  The country has come a long way from banning Coca Cola in the seventies, to embracing it since the nineties; of diversifying from two to three national car makers to the entire range of international car brands including those in the super luxury segments, and the list is endless. While such outward manifestations are mainly an urban phenomenon, in some respects these cut across most income classes. Low cost communication technology, a product of globalization, has been a great leveler across income groups, where the poor and the rich, in rural and urban areas alike are harnessing the power of products such as the cell phone and low cost communication technology, and are empowered, albeit at different levels. On a lighter note, young citizens around the world, irrespective of their nationalities, are listening to similar music, watching and following similar TV shows, tuned to the latest international fashion fads, and have converging interests in several such areas, as globalization has in many ways brought down cultural barriers while at the same time promoting higher levels of cultural exchange.


SONGSOPTOK:  In your opinion, has the process of globalization improved the quality of life in your country? In what way?

JAYATI:  This question has no easy answers. To answer this question precisely, one needs to have a counterfactual, i.e., what would have happened to the quality of life in the absence of globalization. A close approximation in the case of India would be to compare the quality of life prior to the advent of globalization in India and post globalization. The other issue is how one measures the quality of life and what benchmarks are used to do so. If we focus on growth rates of macro-economic indicators as GDP and per capita GDP, growth rates in India since the nineties have consistently exceeded the ‘’Hindu rate of growth” of the pre-globalisation era. Increased incomes have allowed citizens at large to move on to higher income brackets and enjoy more ‘worldly’ comforts. However, if we measure quality of life by the Human Development Index, India has not substantially improved its position since the nineties relative to other countries and as of 2015 is  still ranked low at 130 out of 188 countries and is considered to belong to the medium human development category. Further, there is growing concern and some evidence that while incomes have increased in India, this has been accompanied by growing inequality. In fact, according to the Human Development Report of 2014, if inequality is factored in, India loses about one-fourth of its HDI value. While statistical indicators point to a mixed picture on the quality of life, an important point to highlight from a researcher’s perspective here is that it is important to establish causality, as to whether changes in the measures have been on account of globalization or has been due to other economic policies and technological changes.


SONGSOPTOK:  One of the major effects of globalization is the significant increase in the volume of trade and monetary transactions between the different nations. Do you think that your country has benefited from this? In what way?

JAYATI: Yes, surely the country has benefited from the increased volume of trade and monetary transactions on account of globalization. It has led to the growth and deepening of financial markets, availability of low cost finance for investment, increased opportunities for Indian corporates to raise capital abroad through listing in foreign stock exchanges such as the NYSE and FTSE as also to invest in international companies. In fact, outward foreign direct investment where Indian companies have acquired foreign companies has been as much a phenomenon as foreign direct investment in India. The Tata Group’s acquisitions of Corus Steel, Jaguar and Land Rover are cases in point. One however has to keep in mind that there have been costs too of increased market integration as adverse economic developments abroad have had negative implications in India in terms of shrinking economic opportunities. For instance, while there have been positive effects of increased participation by Foreign Institutional Investors (FII), FII participation has also injected more volatility in Indian capital markets due to periodic reversals of FII investments.


SONGSOPTOK:  Do you think that globalization serve to make the already strong economies even stronger and weaker economies weaker and more dependent? Can you give us a few examples to illustrate your answer?

JAYATI: This is a one of the most controversial and debatable aspects of globalization and in my opinion, there is no one answer. Additionally, I think that the positions taken on this question have been influenced (coloured?) by political and ideological beliefs. Basic economic theory of comparative advantage would predict that world inequality would go down with globalization and developing countries will be better off. However, economic history bears witness to mixed evidence and the starkly different positions that researchers and policy makers have taken on the effects across nations during the previous eras of globalization, starting with the first wave that began in the 1870s and ended with the First World War, and the second wave which started at the end of the Second World War. Extensive research conducted during these periods showed that there have been winners and losers both across countries and within countries. With regard to the third wave of globalization beginning at the last decade of the twentieth century, positions are divided on whether globalization has led to increased inequality between nations. I have not analyzed the data myself, but existing empirical cross-country evidence is mixed. For instance,  if one considers India and China, there has been well documented catching up with developed countries (whether is it due to globalization or domestic policies or both are yet to be established). If one examines the effect of financial globalization, the financial crisis of 2008 clearly led to lost incomes and recession in the developed countries, and hence paradoxically, these countries may have contributed to a reduction in world income inequality. My sense is that while income levels of developing countries have risen due to growing international integration, the benefits have been unequally distributed. The skilled workforce in India for instance has benefited compared to the low skill/unskilled work force and there is no clear evidence of a trickle down effect.


SONGSOPTOK:  What, according to you, is the role played by the major multinational companies in of globalization? Do you think that the entire process was actually put in motion by the large MNC’s for their personal profits or do you think that there has been a trickle-down effect to the economy of your country?

JAYATI: By and large, I would say a positive role.  The operations of multinationals across countries have had technological and knowledge spillovers and consumers have benefited from lower product costs/more product variety. In the case of India, I do not think that multinationals pro-actively influenced the policy shift to bringing down trade barriers and open up markets. Instead, globalization was triggered primarily by domestic exigencies, and on account of the growing evidence that trade protection and insulation of domestic markets in the real and financial sectors did not produce the desired developmental outcomes. Profit-seeking by corporates per se are not undesirable goals, if these profits are reinvested in productive activities to generate more income and employment.  Average incomes have gone up, and trickle down and spill overs have happened, but at the same time, these have not necessarily reduced income inequality. In my opinion, low skill/unskilled workers in both agricultural and non-agricultural sectors have been untouched by the globalization process.


SONGSOPTOK:  Many economists claim that globalization is a major factor for disseminating knowledge and technology across continents and borders within a very short time. Do you support this view? Has your country benefited from this? Can you give us some examples?

JAYATI:  Yes, I support this view. Yes, I think India has tremendously benefited from this. The entire telecommunications and information technology sectors are good examples.  Further,  closer interaction among countries in the public policy space has helped in the spread of best practices, in designing and developing best practice institutions, and in general, broadening  and deepening the knowledge base. Further, this has not been a one-way street from the West to the East; there have been greater knowledge and technology exchange in both directions.


SONGSOPTOK:  Do you think that globalization actually breeds a homogenous culture? What, if any, has been the effect of globalization in the cultural sphere of your country? In your opinion, has it been positive or negative?

JAYATI:  Globalisation brings about greater homogeneity of cultures than before, but at the same time preserves the core national identity. A case in point is the European Union. While there is a high level of economic integration among EU countries, the national identities in terms of cultural markers continue to be preserved. This is true even if one goes back to the earlier episodes of globalization. I think that globalization expands the ‘’cultural sphere’’ and therefore the choice set for people to associate with different elements of culture, be it in terms of entertainment, fashion, value systems etc., but does not necessarily mean that this would lead to a global culture. In my perception, the effect of globalization in the cultural sphere in India  has been on the net positive, where people are trying to choose for themselves the best of all worlds.


SONGSOPTOK:  What, in your opinion, is the impact of globalization on environment? Do you think that the capitalistic growth model used by the large multinationals have a negative effect on the environment? In what way?

JAYATI: Again, there is the issue of causality here. True, there is overall environmental degradation around the world, but whether it is due to globalization per se needs to be established. One can imagine a country which is isolated and globally insulated, but this does not necessarily mean that this would prevent environmental degradation.  While globalization can expand  access  of developed country multinationals in particular, to natural resources and enable ‘international production,” this need not necessarily lead to over-exploitation of natural resources and adversely impact the environment.  Appropriate institutional mechanisms can be put in place both at the national and international level so that globalization is not necessarily inconsistent with environmental preservation.


SONGSOPTOK:  Is it possible to imagine a world today with an alternative mode of production and consumption? Is it at all necessary? If so, will you share your ideas with us? How can we, as ordinary citizens, contribute to such a model?

JAYATI: As of now, I do not imagine a world with an alternative mode of production and consumption. Post-Second World War, there were two alternative modes of production, the socialist and capitalist modes, and as the experience of Soviet Union and Eastern European countries, and of India and China to some extent, the socialist mode of production has been discredited. Most of these economies have now transited to a capitalist mode of production while preserving some elements of socialist mode, such as the presence of public sector in some production activities. In my opinion, we now see a range of capitalist modes of production in terms of the extent of participation of the private sector in profit seeking activities. However, this is also accompanied by greater awareness that there are ‘limits’ to profit seeking to the extent it harms citizen welfare, howsoever defined. Thus, we see checks and balances coming in the form of greater participation of civil society, better institutions and government policies, redistributive policies where trickle down effects are weak, greater awareness of the social responsibility of corporations to all stakeholders and not necessarily to only shareholders, and the like. With these developments, I am optimistic that the capitalist mode of production will achieve a balance between private and social interests in the long run.

JAYATI SARKAR: PROFESSOR OF ECONOMICS AT THE INDIRA GANDHI INSTITUTE OF DEVELOPMENT RESEARCH, MUMBAI, INDIA.

We sincerely thank you for your time and hope we shall have your continued support.
Aparajita Sen

(Editor: Songsoptok)
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