Globalisation and National Strategies
English Essay on "Globalisation and National Strategies" - Compositions on "Globalisation and National Strategies"
The globalisation of the world economy and related political developments have led to profound changes in patterns of financial transactions, investment, production, service provision, human resource management and utilisation, and industrial growth as a whole. While these changes have had a positive impact on those with access, to capital they have not touched the middle classes and had a negative impact on the vast majority who make a marginal living in the world economy. Information about the advantages to capital rich segments of society have, however, filtered down to those who are less fortunate.
Developments in information technology have created a business environment that may exist without supervision by national agencies and government. Market liberalisation and deregulation policies mandated by international trade and tariff regimes are contributing to the creation of supra-national technology transfer, production and marketing systems that transact in an environment conducive to profit maximisation.
The process of globalisation of the world economy is characterised by economic linkages that transcend national boundaries and in which the interests of capital, its utilisation, security, free movement and profit maxitnisation are acknowledged supreme and may be expected to transcend national interest by the international community. educationsight.blogspot.com This has political and strategic implications for the future of nation state as an independent entity. It also requires a response from nation states for the protection of their economy and the well being of citizens. During the 199Os several crises in the rapidly growing economies of East and South East Asia led to a review of circumstances that can result in temporary capital flow into certain areas rather than others.
There are a number of other obvious reasons for such movement of capital. These include the availability of cheap land, inexpensive labour and pro-FDI legislation. The relatively weaker economies of South Asian states have a somewhat different economic profile even though they may share some characteristics with East Asia. South Asian states were the recipients of concessional development assistance until the end of the Cold War in 1990 when the political need for such outflows ceased to exist. These states created the necessary infrastructure and industrial base using concessional assistance backed with a broad range of policies that have now been outlawed by international trade and investment regimes. These included tariff policies, import as well as export, that protected weak sectors of national economies.
Factors with an impact on globalisation and the supranational investment environment, include international trade policy covering foreign investment regulations which have carried over into domestic economic policy, resulting in the removal of many institutional barriers to trade and foreign investment. The multilateral trade negotiations (MTNs) caused the Uruguay Round furthered the goal of liberalisation of global trade as a policy replacing concessionary development assistance. It also led to the extension of GATT disciplines into areas such as trade in services, trade related investment and intellectual property rights. Significant reductions in tariffs anti internationally accepted market access arrangements have led to an increase in trade at the global level. As a result economic relations between nations are no longer just. a bilateral concern but an internationally monitored activity. This has had far-reaching implications for the economies of South Asia which are struggling to compete in the global economy not just for loans from MF’Js but for capital from the private sector as well as technology and meets for value capital from the private sector as well as technology and markets for value added goods.
The World Trade Organization (WTO) which emerged out of the Uruguay Round of negotiations under GATT established a timetable to phase out protection and subsidies for domestic producers along with a schedule for introducing liberal import policies in signatory states. In addition to other measures this required the reduction of import tariffs on all types of goods to a maximum of 35 percent and the removal of restrictions on all categories of imports. Signatories to agreements are expected to enforce WTO regulations governing international trade on pain of exclusion from world markets in case of non-compliance. The phasing out of protection through the lowering of tariffs and withdrawal of support, including subsidies, for relatively weak domestic producers aid entrepreneurs has an impact on the viability of those operating on a small margin of profit. The displacement of local products by imports can lead to the closure of such units thereby increasing unemployment depressing domestic economic activity.
Depressed economic conditions coupled with unemployment have had political repercussions. During the pas couple of years there has been a tendency to return to industrialization strategies based on import substitution and value added production that were the hallmark of economic policy in less developed countries during the 1950s, 1960s arid 1970s. The industrialised countries have retaliated indirectly, taking overt and covert protective measures to protect their market value added goods from suppliers in less developed countries. However, it. is recognized that privatization offers an opportunity to international investors to enter economies that art reverting to, earlier industrialization strategies. This may ease tension somewhat. The message of new trade regimes has been quite clear: free access to markets of countries where consumption pattern are changing mid people are just beginning to earn a little disposable income, has become a requirement for cooperation by the industrialised countries that control MFIs. Such cooperation covered not just economic development but the protection of strategic interests as well. An important parallel development has been negotiations between member states, under the aegis of ECOSOC, on a broad ranging international regime which would further the interests and guarantee the security of international capital.
These negotiations sought a consensus on establishing the legal entity of capital at par with nation states for all practical purposes, creating international legislation, and an institution to implement such legislation, negotiate, arbitrate and, where necessary, act as a court of law in disputes between states and capital. Such a regime has serious implications for foreign direct investment (FDI) and Transnational (TNC) activity in the private sector viz-a-viz nation states particularly in the key sectors of energy and communication. In the ‘weaker economies of South Asia discussion of such a regime has created reservations. The industrialised countries and regional trade groupings have devised a broad range of measures circumventing WTO regulations in their dealings with less developed countries. Less developed countries that are forced to open their markets but face discriminatory practices when they seek markets for their goods tend to avoid going into arbitration at WTO. Concerned business interests in. many less developed countries assert that their governments signed up with WTO without studying the long term implications of the move.
After the concluding round of GATT arid the creation of the WTO it has been observed that compliance with liberalizing international trade regimes that are negotiated multilaterally does not necessarily lead to the successful integration of financial systems, increased foreign investment, the transfer of technology and related positive developments: it is not necessarily those countries that have the most liberal trade policies that attract high levels of foreign direct investment in capital markets and industry. Pre-conditions for successful integration into the global economy include a strong, flexible economy, an alert and knowledgeable business community which understands international finance, commerce and production systems, the existence of an indigenous technological base and skilled labour, among other things.
On the one hand governments seek to minimize their presence in the market while on the other hand the responsibility for nurturing the economy and supervising the market in order to protect the weaker sections of society and the weakest sectors of the economy rests with it. In fact such obligations to society will continue to be the fundamental reason for differences between (national and international) capital and national governments.
There has been a tendency for governments in South Asia to forget that during 1985-1990, a period during which FDI was being facilitated, the ratio of FDI inflows to gross domestic capital formation in developing countries totaled less than 3 percent on the average and reached 4.9 percent in 1992. It has been observed that it is domestic investment, domestic enterprise and skills that are critical for industrial development and growth. While increased flows of FDI may follow and TNCs facilitate such flows as well as the transfer of technology. Nothing can happen, however, without the existence of domestic suppliers of key skills, material, components and parts.
Developments in information technology have created a business environment that may exist without supervision by national agencies and government. Market liberalisation and deregulation policies mandated by international trade and tariff regimes are contributing to the creation of supra-national technology transfer, production and marketing systems that transact in an environment conducive to profit maximisation.
The process of globalisation of the world economy is characterised by economic linkages that transcend national boundaries and in which the interests of capital, its utilisation, security, free movement and profit maxitnisation are acknowledged supreme and may be expected to transcend national interest by the international community. educationsight.blogspot.com This has political and strategic implications for the future of nation state as an independent entity. It also requires a response from nation states for the protection of their economy and the well being of citizens. During the 199Os several crises in the rapidly growing economies of East and South East Asia led to a review of circumstances that can result in temporary capital flow into certain areas rather than others.
There are a number of other obvious reasons for such movement of capital. These include the availability of cheap land, inexpensive labour and pro-FDI legislation. The relatively weaker economies of South Asian states have a somewhat different economic profile even though they may share some characteristics with East Asia. South Asian states were the recipients of concessional development assistance until the end of the Cold War in 1990 when the political need for such outflows ceased to exist. These states created the necessary infrastructure and industrial base using concessional assistance backed with a broad range of policies that have now been outlawed by international trade and investment regimes. These included tariff policies, import as well as export, that protected weak sectors of national economies.
Factors with an impact on globalisation and the supranational investment environment, include international trade policy covering foreign investment regulations which have carried over into domestic economic policy, resulting in the removal of many institutional barriers to trade and foreign investment. The multilateral trade negotiations (MTNs) caused the Uruguay Round furthered the goal of liberalisation of global trade as a policy replacing concessionary development assistance. It also led to the extension of GATT disciplines into areas such as trade in services, trade related investment and intellectual property rights. Significant reductions in tariffs anti internationally accepted market access arrangements have led to an increase in trade at the global level. As a result economic relations between nations are no longer just. a bilateral concern but an internationally monitored activity. This has had far-reaching implications for the economies of South Asia which are struggling to compete in the global economy not just for loans from MF’Js but for capital from the private sector as well as technology and meets for value capital from the private sector as well as technology and markets for value added goods.
The World Trade Organization (WTO) which emerged out of the Uruguay Round of negotiations under GATT established a timetable to phase out protection and subsidies for domestic producers along with a schedule for introducing liberal import policies in signatory states. In addition to other measures this required the reduction of import tariffs on all types of goods to a maximum of 35 percent and the removal of restrictions on all categories of imports. Signatories to agreements are expected to enforce WTO regulations governing international trade on pain of exclusion from world markets in case of non-compliance. The phasing out of protection through the lowering of tariffs and withdrawal of support, including subsidies, for relatively weak domestic producers aid entrepreneurs has an impact on the viability of those operating on a small margin of profit. The displacement of local products by imports can lead to the closure of such units thereby increasing unemployment depressing domestic economic activity.
Depressed economic conditions coupled with unemployment have had political repercussions. During the pas couple of years there has been a tendency to return to industrialization strategies based on import substitution and value added production that were the hallmark of economic policy in less developed countries during the 1950s, 1960s arid 1970s. The industrialised countries have retaliated indirectly, taking overt and covert protective measures to protect their market value added goods from suppliers in less developed countries. However, it. is recognized that privatization offers an opportunity to international investors to enter economies that art reverting to, earlier industrialization strategies. This may ease tension somewhat. The message of new trade regimes has been quite clear: free access to markets of countries where consumption pattern are changing mid people are just beginning to earn a little disposable income, has become a requirement for cooperation by the industrialised countries that control MFIs. Such cooperation covered not just economic development but the protection of strategic interests as well. An important parallel development has been negotiations between member states, under the aegis of ECOSOC, on a broad ranging international regime which would further the interests and guarantee the security of international capital.
These negotiations sought a consensus on establishing the legal entity of capital at par with nation states for all practical purposes, creating international legislation, and an institution to implement such legislation, negotiate, arbitrate and, where necessary, act as a court of law in disputes between states and capital. Such a regime has serious implications for foreign direct investment (FDI) and Transnational (TNC) activity in the private sector viz-a-viz nation states particularly in the key sectors of energy and communication. In the ‘weaker economies of South Asia discussion of such a regime has created reservations. The industrialised countries and regional trade groupings have devised a broad range of measures circumventing WTO regulations in their dealings with less developed countries. Less developed countries that are forced to open their markets but face discriminatory practices when they seek markets for their goods tend to avoid going into arbitration at WTO. Concerned business interests in. many less developed countries assert that their governments signed up with WTO without studying the long term implications of the move.
After the concluding round of GATT arid the creation of the WTO it has been observed that compliance with liberalizing international trade regimes that are negotiated multilaterally does not necessarily lead to the successful integration of financial systems, increased foreign investment, the transfer of technology and related positive developments: it is not necessarily those countries that have the most liberal trade policies that attract high levels of foreign direct investment in capital markets and industry. Pre-conditions for successful integration into the global economy include a strong, flexible economy, an alert and knowledgeable business community which understands international finance, commerce and production systems, the existence of an indigenous technological base and skilled labour, among other things.
On the one hand governments seek to minimize their presence in the market while on the other hand the responsibility for nurturing the economy and supervising the market in order to protect the weaker sections of society and the weakest sectors of the economy rests with it. In fact such obligations to society will continue to be the fundamental reason for differences between (national and international) capital and national governments.
There has been a tendency for governments in South Asia to forget that during 1985-1990, a period during which FDI was being facilitated, the ratio of FDI inflows to gross domestic capital formation in developing countries totaled less than 3 percent on the average and reached 4.9 percent in 1992. It has been observed that it is domestic investment, domestic enterprise and skills that are critical for industrial development and growth. While increased flows of FDI may follow and TNCs facilitate such flows as well as the transfer of technology. Nothing can happen, however, without the existence of domestic suppliers of key skills, material, components and parts.
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