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?
ADRIJ: “Globalization and free trade do
spur economic growth, and they lead to lower prices on many goods” - Robert
Reich
“If you're totally illiterate and living on one dollar a day,
the benefits of globalization never come to you” - Jimmy Carter
Globalization isn’t a very blatant concept. While some argue
it’s a direct derivative of the age old doctrine of imperial colonialism, few
others embrace it as a newfound method to bring about global unity and economic
convergence. The country I hail from is still developing socioeconomically.
While as an optimist I’m inclined to debate for the better side of globalization,
as an economics enthusiast I need to take into account the deleterious effects
it entails. My society is yet to resolve some of economics’ most basic issues
(biological poverty being the most profound). Having a society which is yet to
define what ‘good economics’ is in proper fashion as my background, I can only
stay as ambiguous as I can when I share my mind on what I think of
globalization at this stage. I fail to come to a resolution on a generic basis
because I am as much an economist as a social scientist. While I do realize the
practical base of a globalized world, I cannot ignore the stem of dominating
occidental mentality that founds the crux of the nascent concept.
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?
ADRIJ: I hail from India. India has been
making striding efforts to match the pace of the giants. The term which is used
here, ‘society’, is very important. The biggest contribution that a globalized
world can make is to obliterate the very term from the face of the earth. When
one speaks on a unified world, the societal factors take a backseat. So, I take
the liberty of using the word ‘economy’ instead of the term ‘society’, as
globalization has never really, in all seriousness, taken into the equation the
social variables, only the economic and the political ones.
Globalization in India has played a very big role. The signs of
unified political economics started to show pretty early when the Indian
economy was on the verge of destruction and the Mahalanobis-Nehru plan (or any
Five Year Plan for that matter) had no idea what needed to be done. Dr.
Manmohan Singh, erstwhile Minister of Finance, foresaw the doom that could’ve
befallen us and he opened up the economy to the outside world. This had a
threefold effect on our finances. The foreign exchange rate was derived in a
proper manner and the highly instable Indian Rupee (INR) found its deserving
place in the world map; the trade balance was addressed and the deficit
accounted for (which provided the Indian planners with an opportunity to
strategize their next move); the value of India's international trade had
become more broad-based.
Globalization has had an effect on the everyday life of the
population, and in a more positive way for the urban sector. With the
proliferation of market mechanisms, the influence of the Smithsonian economic
paradigm is finally showing. People now choose the commodities from a plethora
of options, with variations and choice-making attitude that ensure only
efficiency in the country. Undoubtedly, the cultural aspect of globalization
has had tremendous effects on the Indian population. The free flow of ideas and
the exchange of cultural views play prime roles in determining the mentality of
the people here. From music and theatre to fashion and administration,
globalization is the model which touched myriad lives simultaneously, bound
them together and changed them forever.
SONGSOPTOK: In your opinion, has the process of
globalization improved the quality of life in your country? In what way?
ADRIJ: Globalization indeed has changed
the lives of many for the better. In our country, the globalized market has
done more good than harm. The impact on national economies of larger,
transnational markets characterized by free, convertible currencies, open access
to banking, and contracts enforceable by law has shown.
Growing interdependence of nations and their activities on one
another, fostered by the depletion of natural resources, misdistributions of
arable land, mineral resources, and wealth, as well as overpopulation is found
in India. Our country needed the capital, technology, and brainpower of the
wealthier countries, while the First World economies are progressively
dependent on the natural and human resources. The biggest positive effect
globalization had on our economy was this: A free exchange of resources which
accelerates growth and brings about development and public welfare. In all
actuality, this has been realized, and there has been a sharp rise in general
public welfare mechanism. Modernizations in bubble communications, science and
technology have contributed actively toward planarization. This has had a
large-scale effect on the population which would only get accentuated in the
long run. Globalization has had a great effect on the ecologies and
environments of the country which are needed to be safeguarded; and lessen the
negative effects rather than exploiting without regard to such concerns.
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?
ADRIJ: The process of globalization has
changed the industrial pattern and social life of global people, and it has had
an immense impact on Indian trade system. The globalization of the economic,
social and cultural structures has happened in all ages. Previously, the pace
of process had been slow. Today with the start of the information technology,
new ways of communication have made the world a very small place. With this
process, there is a big market place. Globalization has resulted in increase in
the production of a range of goods. MNCs have established manufacturing plants
all over the world. As a new Indian middle class has
developed around the wealth that the IT and BPO industries have brought to the
country, a new consumer base has developed. International companies are also
expanding their operations in India to service this massive growth opportunity.
International companies that have done well in India in the recent years
include Pepsi, Coca-Cola, Star Bucks, McDonald’s, and Kentucky Fried Chicken,
whose products have been well accepted by Indians at large. Globalization in
India has been advantageous for companies that have ventured in the Indian
market. By simply increasing their base of operations, expanding their
workforce with minimal investments, and providing services to a broad range of
consumers, large companies entering the Indian market have opened up many
profitable opportunities. Indian companies are rapidly gaining confidence and
are themselves now major players in globalization through international
expansion. From steel to cinema, and from cars to IT, Indian companies are
setting themselves up as powerhouses of tomorrow’s global economy.
This was marketing. Let’s look at economics now. Post
globalization, multilateral agreements in trade have been signed, which have
even taken on new agendas as environmental and social conditions. New multilateral agreements for
services and intellectual properties, communications
have been under the talks which would go on to provide a very lucrative position
to India in the coming days. Market
economic policies have spread around the world, with greater privatization and liberalization than in earlier decades. India can now execute trade services globally – from medical advice to software
writing to data processing that could never really be traded before. Globalization
in the economies have taken Indian open market policies as they were and then
shot it up to mammoth percentages. Huge growth markets have been realized, and
numerous variables have been accounted for in the analysis of costs and
benefits. In India, variables like cost advantage, customer satisfaction,
government policies et al. have been addressed like never before.
SONGSOPTOK: Do you think that globalization serves 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?
ADRIJ: This goes without a saying. If we
look at the theoretical part of globalization in economics, we notice that globalization
is founded on the basic premise of international trade and finance. Now as we
know all too much, trade is viable when goods and services are exchanged. But
if that is solely the case, then globalization would not be the new thing on
the table. Globalization feasts on the intricacies of international economics.
When we consider an open economy with no rigidity as such, we often take to
calculations deriving the balance of payments of the countries involved. We
take into account two of the most important things regarding said countries:
Their respective productivities, and the factor of production they have in
(relative) abundance. These are the primary variables for international trade,
and thus globalization. Here, basic trade theory would always state that trade
proves to be beneficial for the factor in abundance, and detrimental for the
factor in shortage. But the countries export only the goods which are
intensively manufactured by using the abundant factor of production. Here, the
relative quantity plays a very important role. This is the theory which guides
trade and global exchange. Globalization has proved to be a boon for a few
countries like Republic of Korea (South Korea) and Singapore, which have
embraced the open economy with calculated strategies (involvement) and a
careful intervention policy of their respective governments. But almost
simultaneously, the Sub-Saharan African nations have lost their resources to
globalization more often than not. So it really depends on the mode and method
of globalization that is being addressed here.
“…even when
there are new
opportunities for jobs
opened by the integration into the international
economy, old jobs and occupations disappear, and there is no doubt that such
‘churnings’ in job reallocation and
dislocation raise anxiety and hostility among many workers worried about job security. In many poor countries there is very
little effective social
protection available from
the state. International organizations that preach the
benefits of free trade should take the responsibility of funding and
facilitating adjustment assistance programs in poor countries that can help workers
in coping with job losses and getting retrained and redeployed.”
-
Pranab Bardhan (Does Globalization Help or Hurt the World’s
Poor?)
Now Dr. Bardhan would also go on to state the current
comparative statics the countries display when dissected, and then analyze
their fiscal laws and austerity measures for the better good. This actually
goes on to show the relevance of globalization in the world.
For instance, the large decline in poverty in China, India and Indonesia
(countries long characterized by massive rural poverty) containing about half of
the total population of developing countries. Between 1981 and 2001 the
percentage of rural people living below the above-mentioned poverty line
declined from about 79 per cent to about 27 per cent in China, from about 63
per cent to about 42 per cent in India, and 55 per cent to 11 per cent in
Indonesia.
Some might point out: In China it could be, to a large extent,
due to internal factors like expansion
of infrastructure or
the massive 1978
land reforms or
policy changes relating to grain procurement prices or the relaxation of
restrictions on rural-to-urban
migration. That the spurt
in agricultural growth
following the 1978 decollectivization and land reform may
be a large factor in the poverty reduction in China is suggested by the fact
that a substantial part of the decline in poverty in the last two decades already
happened by mid-1980’s, before the big strides
in foreign trade or investment. But one cannot deny the fact
that most of the economic decision-making in our time is based directly or
indirectly on the global dictation. It doesn’t even have to be a compulsion.
Smithsonian economics clearly states that the market mechanisms automatically
edit and adjust to the flow, and oftentimes direct the flow toward the maximum
efficiency.
Again, as another example, let me take countries like Mexico.
In general global market competition rewards people with
initiative, skills, information,
and entrepreneurship in
all countries, and
poor people everywhere
are handicapped by their lack of access to capital and skill formation
to be able to adjust to the changing market. Workers in these developing
countries are losing their jobs in labor-intensive manufactures which are now
produced in poorer countries in Asia.
But foreign investment has brought new jobs in the factories at the
northern border of Mexico, and there is evidence that low wage poverty is
declining in the regions in Mexico that are more exposed to the international
economy than others (even conceptualizing from the fact that more skilled and
enterprising people migrate to the northern part of the country improving
incomes there).
So we see, globalization has the ability to make the rich richer
and the poor poorer. But how much of it is seen in all practicality? Dwelling
in the present scenario, it’s imperative that we understand the power we hold.
Both the examples go on to portray the positive (and the more profound) side to
the concept. The view stays, the interpretation is what matters the most at the
end of the day. How you choose to use it, depends on what you need out of it. The
human rights violating cases of Africa, of blood diamond and blood gold, mining
and the influence of illegality, are just other forms of the same doctrine. We
cannot deny the fact that it still remains, very much real. But if used
judiciously, globalization just might blur the discrepancy between the
developing and the developed nations. Analogous to nuclear technology, a boon
for all if used the way it’s intended.
SONGSOPTOK: What, according to you, is the role played by
the major multinational companies in 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?
ADRIJ: The multinational corporations
(MNCs) are both a cause and a result of the globalization process. One can view
the seventeenth-century Dutch and English India companies as a teaser of what
was to come. By any measure, it is clear that MNC’s are large and important,
and that their role and influence have expanded as they have rapidly grown in
recent years. Coincidental with this growth,
the questions that people are asking about MNC’s have also become more numerous
and varied. The underlying premise behind globalization is that the transfer of
wealth from the developed countries to the developing countries would
eventually result in a scenario where those at the bottom of the ladder in the
developing countries would benefit from the wealth flowing into their economies.
The theory has been used to justify
neoliberal policies and globalization and is the driving force for all
entrepreneurial activities in countries like India. However, this theory is now being questioned as the trickle down
effects are now being held as negligible, with those at the top earning more
and more and those at the bottom earning less and less. Hence, there is now a
tendency to question the basic tenet of globalization and neoliberalism and it
remains to be seen as to which theory would ultimately stand to gain. The point
here is that the widening income inequality has led to protests from those at
the bottom since they do not see any marked improvement in their lives even
when they support the army of educated and skilled employees of the manufacturing
and service sector companies. However, there is a question
of benefits to the local economy outside of those who actually work. It is
understood that trickledown economics might not have been very wrong. Now, what
is needed is a greater flow of wealth to the bottom and this can be done by
equitable growth and democratic policies that strive for betterment of all. One
cannot ignore that the concept of globalization is still afloat because it is
the bread earning mechanism for many MNCs. It wouldn’t have survived the test
of time had that not been the case. But it also remains that general welfare is
being recognized throughout the globe as a direct derivative of the concept in
question. So I might as well say in this case that globalization has been the
brainchild of the erstwhile MNCs in the wake of World War II, which earns them
mammoth amounts of personal profits. Simultaneously it entails economic growth
all over, (when redistributed) bringing in development for the countries
associated with it and providing the masses with general welfare. In
conclusion, true growth manifests when all sections of the society benefit and
not only those at the top. Globalization has been proving to balance both
together.
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?
ADRIJ: Traditionally services are viewed
as domestic activities due to direct contact between producer and consumer and
government monopoly in infrastructure sector. The emerging globalization
concept brought in a new variable: digitization. As technology spread
throughout the world, concentration of knowledge ceased to exist. Global
digitization has altered the perception. The ascent of information and
communication technology has given rise to e-commerce, e-banking, e-learning, e-medicine
and e-governance. Because of that nowadays factors like common knowledge,
information sharing, data matrices, and overall education have turned out to be
a commodity of international trade. It is no more a public good on domestic
scale, but a private good on global scale. Globalization brings education to the
front lines. In the prevailing discourse around the world on globalization, education
is expected to be the major tool for incorporation into the “knowledge society”
and the technological economy. So the point is ultimately that: globalization
is a major factor for disseminating knowledge and technology across continents
and borders within a very short time, but at a cost.
India has indeed benefitted from this. Globalization of
multinational corporations has been bringing several new jobs to India’s
destination cities such as Hyderabad, Bangalore or Mumbai. As a result, there
has been a massive increase in employment. New jobs naturally are engaging in
nature and are benefiting the national accounts. Special Economic Zones (SEZs),
Export Processing Zones (EPZs) et al. are set up across the country for which
hundreds of people are hired. Since labor is cheap in India, developed western
countries like USA and UK outsource their work to Indian companies. This in
turn creates more employment. Since globalization is at work, the levels of
compensation have been higher than what domestic firms would have provided at
similar level of professional experience and qualification. This leads to a
change in management structure. Workers are pacified with salary hikes to keep
them motivated during management re-structuring.
India is a developing nation. According to the macroeconomic
model of Solow, it would make use of newer resources more efficiently than
developed countries with an existing set of capital resources already in
profusion. In the wake of globalization, huge amount of wealth generation in Indian
cities have been going on which is leading to the development of businesses. Few
cities are also developing with higher purchasing power for those who are
working with foreign organizations. Even the domestic organizations are
encouraged to pay higher compensation to their employees who enhance people to
live better quality lives. Thus these cities are witnessing better living
standards and also development in business besides economic growth. This
mirrors a positive sign in not only the Indian national treasury, but also in
the optimistic minds of the Indian planners and strategists.
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?
ADRIJ: Definitely positive. Despite its root
principle, we must never forget that globalization is a concept which should not
be limited to finance. It is to go on to touch cultures and economies; to
influence people and markets alike. Globalization is the first step to
universal-ism as one of our professors calls it. When we address culture with
the globalization point of view, we can find many punch holes of westernization
and mixing of other traits and cultures into a beautifully woven blanket. The
Indian culture has been open to newer faces of the world, and has been
absorptive at that. Be it values, practices or norms, globalization is that
wind which blows in with tremendous force. The most prominent change in the Indian
culture has been its openness. It has opened itself to a lot of new ideas and
designs. The face of the demography has surely changed. This reflects in myriad
situations we face: be it a tête-à-tête, or a public claim. The youth dreams and
the youth vision have changed. They are often more outward than not, which
actually is extremely progressive in places. Sociopolitical issues in the
country are being handled differently, owing to the newfound thought process
that has tiptoed in as a part of globalization. The biggest take away from this
globalized India is its change in its orthodox mentality that often rests on
dogmatic norms. Global awareness has definitely stepped in, thus influencing
the population in different rungs of the society. The effects on the rest of
the world due to India have almost been similar. As India gradually gains
prominence, the Indian population, its cultures and values are increasingly
being introduced to the outside world. The interaction between seemingly two diverse
worlds brings about newer knowledge, ideas and efficient outcomes in the globe.
Indian food, clothing and languages are as
varied as they can be. It is only for the better does the world at large now
recognize the Indian cuisine, fashion and tongues, and does come out to
deliberately be inclusive of the rich culture and heritage they uphold. The way
the foreign languages are getting prevalent in India like the French, German
and Spanish, right from the school level, is the example of how much importance
these languages are provided in Indian system. Slowly but constantly, there is
therefore a growing convergence of world cultures and civilization structures.
The human breed, however diverse they might seem at the outset, is evolving
towards the commonness in way of life; and globalization is the path they have
chosen.
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?
ADRIJ: The impact of globalization is
profoundly spread throughout the world like branches of a tree. So it’s implied
that globalization has had an effect on the environment some way or the other. Economic
globalization impacts the environment and sustainable development in a variety
of ways and through a multitude of channels.
Globalization contributes to economic growth and thereby affects the
environment in many of the same ways that economic growth does: adversely in some stages of development,
favorably at others. Globalization
accelerates structural change, thereby altering the industrial structure of countries
and hence resource use and pollution levels.
It basically diffuses capital and technology; depending on their environmental
characteristics relative to existing capital and technology, the environment
may improve or deteriorate. It transmits and magnifies market failures and
policy distortions that may spread and exacerbate environmental damage; it may
also generate pressures for reforms as policies heretofore thought of as purely
domestic attraction to international interests.
While it improves the prospects for economic growth worldwide and
increases overall global output, globalization could conceivably reduce economic
prospects in individual countries, sectors and industries; such marginalization
of economies and people may result in poverty-induced resource depletion and
environmental degradation.
When the impact of globalization is discussed addressing the MNCs,
the first person that comes to mind is A.C.
Pigou. He was the economist who addressed welfare scheme and equated it
with environmental degradation and effects.
“The gravitation constant is the same always. But the economic
constants — these elasticities of demand and supply — depending, as they do,
upon human consciousness, are liable to vary.”
-
Arthur Cecil Pigou
Even for a country like India, where globalization has had
tremendous effects, the deleterious effects that the latter entails cannot be overlooked.
The capitalist growth model only rests on one principle: Profit maximization –
Cost minimization. In order to achieve this target, the model takes into
consideration growth and prosperity variables and often misses out the social
factors that are involved. The various measures that have been taken (Pigovian
taxes, social cost disparity, implied costs) were implemented only because
there loomed a threat to the society if the multinational companies had indeed
followed their growth models to the T.
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?
ADRIJ:
“The first lesson of economics is scarcity: there is never enough of
anything to fully satisfy all those who want it. The first lesson of politics
is to disregard the first lesson of economics.” – Thomas Sowell
A world today is a very convoluted one. While there is always a
scope for improvement in the social sciences, what economics has taught me is
that one will never be able to get satiated. So, even if I tweak a variable or
two and come up with a newer model, there will always be a faction unsatisfied.
But that is exactly what economics is all about. Every discipline has a goal.
Economics’ is satiation and equity with efficiency. But as we know all too
well, satiation is an impossibility, and there exists a trade-off between
equity and efficiency. Every model has a restructuring, every doctrine its
correction. But what drives economics forward is its need to reallocate
resources such that there is no excess, or dearth of any commodity.
Globalization, like myriad other doctrines, is one. As economists, and most
importantly fellow human beings, we can only drive ourselves to infinity, for
at infinity, we achieve perfection.
ADRIJ. is currently in his undergraduate level, pursuing
Economics, which happens to be one of his favorite things to spend his time
reading (other than Batman comic books, guitar lessons, and reports from United
Nations). He is deeply fascinated by the functionings of the economies around
the world, world trade and finances: so basically everything related to the
velocity of money. He also loves to debate it out in Model United Nations,
dealing with international sociopolitical issues. He loves to spend a quiet
evening by the sea all by himself with ABBA’s ‘Voulez-Vou’ and ‘Our Last
Summer’ on a loop.
We sincerely thank you
for your time and hope we shall have your continued support.
Aparajita
Sen
(Editor: Songsoptok)
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