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
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