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by Rukmal Salgado

No sooner one tries to define globalization, a host of practical questions arise. First, there is the difficulty of defining a process of integration and change which begins in one sphere but continually affects other spheres. There is a second difficulty in attempting to define globalization, namely the amorphous multiple character of the movement. So much is happening, in so many places, in so many multiple spheres, that the process defies definition.

Globalization is a continuing revolution. It is not static. The point here being that 'globalization' is inevitable. Given the dynamism of world economics, evolution of political and international economic policy developments, specially those affecting trade barriers and technology, globalization is a natural, inevitable and concurrent development. It is, in a sense, inevitable. It simply happens and will continue to happen. We can ignore the forces of globalization to our peril or we can embrace it and use it as an opportunity to raise our living standards.

To the economist, globalization is primarily a process of integration and linkage. In more fundamental terms, it is integration in global dimensions of factors of production: capital and finance, goods and services, labour, technology (specifically new information technology), trade and markets. In economics, linkage and integration is not novel or new. What's revolutionary in globalization is the scale and the parameters of the integration process, with just not the international world or separate countries or nation states, but the entire globe, its people, resources and tradability coming within its field of operation. This is a unique and revolutionary development in world economics.

Globalization is an ongoing economic, technological, social and political integration of the world that began after the Second World War. Globalization is a process of change with its own dynamism, continually extending and expanding its spheres of impact. There is also the largeness and scale of the process of globalization. The parameters of globalization are truly global as never before in history. It is such a complex expansive phenomenon that given our limited knowledge, it is difficult to predict or visualize, let alone define in precise terms what the process of globalization is finally going to be or what its end products will be. There are several dimensions to the dynamic globalization process, including the increased internationalization of economic markets as reflected, for example, in trade and financial capital flows.

However, there are also institutional and social changes that are taking place within the geographic borders of nation states, though these are much more difficult to quantify. Institutional changes affected by globalization include policy modifications, structural changes in the organization and operation of industry and the emergence of new concepts in legal and regulatory mechanisms in trade, finance and economics.

These too, given their complexity and diversity, defy simple definition. Globalization is impacting the institutional framework in both developing and industrial countries; it is changing the way in which governments view their development role in society.

Globalization is a process that brings the world together linking goods, services and factor markets. It is the result of increasing reductions in transport costs due to technology and scale of management, cheaper and quicker communication and revolutionary changes in trade policies, tariff reductions and open markets. Both technology and policy drive globalization. Changes in technology reduce the cost of international transactions through shipping, communication and make the management of international production processes easier and cost effective through processes such as just-in-time delivery inputs.

Changes in policy causing liberalized trade and open capital markets have allowed developed country savings to be invested in developing countries and reduced the costs of capital. In addition, there are positive effects that arise from access to new technology to developing countries. Technology transmission has speeded up.

Labour

In practically every discussion of globalization, its impact on labour comes into scrutiny, in one way or another. This underlines the personal or the human factor in globalization directly linked to labour. There is also an indication here of the critical role that labour plays in all economic activity, as well as the power play characteristic of trade union and labour politics. Trade unions in both developed and developing countries have long histories of industrial bargaining.

Through trade union struggles, labour organizations have won many rights and benefits for members. These include tenure of service (job security), wages, social benefits, welfare and rights of protest. In Europe, for example, there is in place extensive welfare systems and social security benefits for the work force extending to the community at large. In the USA, the labour market is free and more flexible. In Asia too, especially in countries that have been under British colonial rule, labour has a strong power base.

We need to consider here also two categories of labour - casual labour and labour in the informal sector.

Casual labour has no particular standing in the formal labour force in a country. They are easily hired and fired. Casual labour belongs mostly to the lower ranks of the labour force, but increasingly the middle classes too, in different categories are becoming a casual work force, with piece work and no regular employment.

The other category in the work force are workers in the informal sector of an economy. The range and variety here is very wide, from odd job men to shop workers to mechanics and craftsmen. Casual workers in the informal sector are unorganized; their wages being low and often arbitrary. The other category in the workforce are the professionals.

They are in the higher rungs of the workforce. Because of their professional expertise they command good salaries and belong to the affluent in a country's workforce.

We need to consider here another aspect of labour today. This relates to general changes in the labour force as a whole. The old labels 'blue collar' and 'white collar' workers are outdated. Technology has transformed the workplace; both the factory floor and the office block. Computers and automation has taken much of the sweat out of work - another aspect is the social transformation of the worker. This is a lifestyle change. The traditional image of the humble workman, living a poor man's lifestyle is rapidly changing.

Middle-class lifestyles and values increasingly dominate worker life today. There is a higher demand for education among all social classes, including workers.

I would like to quote from the American writer and novelist, Tom Woolfe, from his book 'Hooking up'. Tom Woolfe's description of the transformation in the lifestyle of the American worker can give us an idea of the reality, if not the content of change that we too should expect in South Asia:

"By the year 2000, the term 'working class' had fallen into disuse in the United States, and 'proletariat' was so obsolete, it was known only to a few bitter Marxist academics with wire hair sprouting out of their ears. The average electrician, airconditioning mechanic or burglar-alarm repairman lived a life that would have made the Sun King blink. He spent his vacations in Puerto Vallata or Barbados.

Before dinner he would be out on the terrace of some resort hotel with his third wife, wearing his Ricky Martin cane-cotton shirt open down to the stomach, the better to allow his gold chain to twinkle in his chest hairs. The two of them would have just ordered a round of Quible sparkling water from the State of Virginia, because by 2000 the one favoured European sparkling water Perrier and San 'Pellegrino' seemed so tacky."

Tom Wolfe's description of the transformed and changed image of the typical, 21st century American worker does not apply to the Asian counterpart of the post-globalization world. But certain common trends may be discussed. These include lifestyle changes, changes in value, higher pay (applicable to certain goods and serves and workers) and new consumer patterns. A good section of workers in Asian countries today are migrant workers. Their main destination is the Middle East. The norm for them is contract work. This is a new pattern, replacing earlier patterns of worker movements like emigration of workers and indented labour.

Winners or losers?

Every system creates winners and losers. The same is true of globalization. As discussed thus far, globalization gives us the upper view, that of the mega players in globalization and their operations in global dimensions. What about the bottom view? It is here, at the bottom line that the costs and hurts of globalization are directly felt in personal and not in abstract figures.

What we have here are not trends or lines of development, but people and families. The following viewpoint, relevant in the particular context of rich and poor nations, and the role of international finance agencies in regulating the world economy, was expressed by Horst Koher, Managing Director of the International Monetary Fund (IMF), when he addressed the International Conference on Financing for Development in Moneterrey, Mexico (2002):

"I welcomed the intensive and critical debate about globalization. We need to work for a better globalization - one that provides opportunities for all, and one in which risks are contained. But let us not confuse ourselves - integration into the global economy is good for growth, and growth is essential for fighting poverty. The world needs more integration, not less. But it also needs stronger international cooperation, to guide and shape the process of globalization.

We must do our utmost to ensure that people at the local level understand this process, are engaged and have the means to take advantage of its opportunities. We need to build bridges through dialogue and cooperation to create a sense of global ethics. And must respect human rights, while recognizing personal and social responsibility."

IMF perceptions and perspectives of globalization emphasize a number of important points. One objection to globalization that is increasingly being voiced in different quarters is the absence of regulation and control of the process of globalization. IMF policy objectives, as put forward at Moneterrey by Kohler, gives us an insight to where regulation and direction in the process of globalization are needed today.

These include, if we may briefly summarize them, opportunities for all countries in the global economy to benefit from globalization, international cooperation for achieving the same, and at grass roots, greater inclusion and more sharing of the benefits of globalization by all.

In a recent IMF Economic Forum on "Globalization" David Dollar points out some positive aspects of North-South trade developments in globalization:

"North South relations had changed dramatically over the past 20 years. Developing countries once exported mostly primary products, but many have now switched to services and manufactured products which are also tied to foreign direct investment. Some developing countries may trade less today than they did 20 years ago, but some others are participating very actively in the trade side of globalization. These 'new globalizers' such as Brazil, China, India, Mexico and Vietnam include some of the world's poorest countries.

The countries that are less well integrated with the global economy are often poor, some Sub Saharan African countries fall in this group but also include a number of lower-middle income countries."

What is the impact of globalization on a country, if we take integration in the world economy as a measure of its openness to globalization? "Some argue that expanded trade markets make the rich richer and the poor poorer. Others rebutting this argument point to examples of developing countries that have successfully implemented programs of poverty alleviation through the integration of their economies into the global economy. World Bank research and other studies support this belief.'

Commenting on recent studies in the field, David Dollar makes two points. First, the research shows that developing countries that embrace globalization have generally seen acceleration in their growth rates over the past 20 plus years. During the 1990's they grew almost twice as fast as the rich countries (5% versus 2%) and even excluding China, the rate is still 3.5%. While acknowledging that casualty is difficult to prove in trade and direct investment, Dollar says investment was very good for developing country growth.

Social perspective

Globalization, an economic phenomenon, cannot be left to the care of the economists alone. The whole of society has a stake and a future in globalization. We have therefore to make globalization work effectively for the benefit of all. How do we do it? First, let us look at civil society.

The term civil society is a wide concept today encompassing broad sectors of the community. It comprises civil authorities, religious and social organizations and media. Taken in this broad sense, civil society has an affirmative role to play in maintaining norms, values and standards of peace, justice and fair play in human relations. While these are under threat, we need to censor the victimizer and stand with the victim. Among the losers in globalization are many who are victims.

The unemployed, the poor, the dispossessed and the marginalized are among them. Sometimes the challenge for civil society is to fight an issue or protest an injustice or express love and solidarity by standing with and for people who are victims. In the age of globalization, the role and function of civil society embraces all these, a challenge in fact for everyone and anyone, in one way or another, is either a winner or a loser.

Economic perspective

Globalization, in it multiple facets has integrated the world into one, raising production all around, increasing trade and creating new structures of mutuality and inter dependence in the economic world. In the political and social realm similarly, globalization has brought benefits to some - the winners - and losses to others - the losers. Significantly, the latter are predominantly among the poor and the dispossessed in the world. This raises questions of justice, social peace and fair play and how we affirm these.

Globalization is not new. It is something inevitable and must be seen as opportunity. Its benefits exceed costs. Globalization can be embraced and its opportunities exploited to raise living standards. However, important agenda in terms of goods and services and factor markets has to be addressed. The main issues are to keep the economy flexible, open and efficient. Countries should be cautious about short-term capital.

Following a proper sequence in opening markets is important. This means that countries should not be in a hurry to liberalize financial markets. This should be a long-term goal to be pursued with proper financial and monetary policy regime put in place.

(The writer possesses a postgraduate degree in International Relations from Japan .)

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