The impact of globalization,chukwuma ike 1and udochukwu ogbaji 2


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The impact of globalization,chukwuma ike 1and udochukwu ogbaji 2

  1. 1. THE IMPACT OF GLOBALIZATION ON THE SOCIO-ECONOMIC DEVELOPMENT OF AFRICA Udochukwu Ogbaji 1and Chukwuma Ike 2 1 Department of Political Science, Nwafor Orizu College of Education, Nsugbe, Anambra State, Nigeria. E-mail: Tel: +234(0) 8033486531 2 Department of Public Administration, Anambra State University, Igbariam. Anambra State, Nigeria. Tel: +234(0) 8037793993. ABSTRACTGlobalization is a process for advancement and increase in interaction among world’s countries andpeople facilitated by progressive technological changes in growth, communication, political andmilitary power, skill and knowledge as well as interfacing of culture and value system and practices. Itis an interaction, a socio-political, economic and cultural permeation facilitated by Governmentpolicies, private corporations, international agencies, treaties, conventions and civil societyorganizations. This paper looked into the impact or effect of globalization on the social and economicfactors needed for the development of Africa. From our investigation, Africa is at the lowest level ofintegration with the rest of the world. This implies that Africa is not likely to benefit much from theglobalization process. The research shows weaknesses and sometimes mixed results regarding theimpact of globalization on the socio-economic development of Africa. There is also evidence thatglobalization can positively affect growth in the region but such positive impact will depend on howfast Africa countries become integrated with the rest of the world and also be prepared to deal withthe adverse consequence of the situation (Orji, 2007). From our review, many scholars havesuggested that to be more integrated with the rest of the world, Africa countries must maintain strongand stable macro-economic framework, embark on institutional reforms including promoting goodgovernance in all its aspects, foster trade liberalization and regional economic integration, promotingsound banking system and financial development. Africa countries will also encourage private sectordevelopment, including foreign direct investment, improve infrastructure and encourage agriculturaldevelopment and investment in people capacity building on our own, we recommend, among othersthat Many Africa countries will also have to undertake a comprehensive reform of the civil service,aimed at improving the quality and size while enhancing its efficiency. Africa countries must alsoensure efficient, reliable and cost effective public infrastructures such as transport networks,electricity, water, telecommunications, health services and education to ensure economic security.INTRODUCTION From its rather obscure genesis, the American and French expressions in the1960s, globalization has became today the world’s vocabulary of the times as itscurrent trajectory aggressively encompasses virtually everything that takes place onthe planet in the new century world affairs which represent the contemporaryprofound and rapidly remolding of the world systems into a particular socialgeographic map by the use of military; economic and technological apparatuses,eventuating gradual erosion or limiting the capacity or power of sovereign nationstates to exercise effectively political, economic and socio-cultural control over theirterritorial domains (Omelle, 2006). 1
  2. 2. For many advanced economies critical decade for globalization since worldwar 11 was the 1970s, when the ratio of trade to out-put rose markedly in bothadvanced and developing economies in the wake of the two oil shocks. Indeveloping countries, exposure to international market picked up again in the late1980s coinciding with their movement towards trade liberalization (Slaughter andSwagel, 1997) but Africa has not really been part of this trend. Since the beginning of 1980s the international economic, political and socialscene has been dominated by the twin concept of globalization and liberalization.These concepts are said to “have set in a process whereby producers and investorsincreasingly behave as if the world economy consisted of a single market andproduction area with regional or national sub sectors rather than a set of nationaleconomies linked by trade and these phenomena flows” (Barikor, 1999). The tempoof these phenomena have also accelerated significantly in recent years resulting in awidened scope that has gone beyond the realm of the economy to encompasssocial, cultural and political norms and practices. The process of globalization has been associated with strong consequencesnot only for the economic well-being, but also social structures and politicalprocesses of countries throughout the world (Barikor, 1999). As Dharam Ghaiobserved, the different parts of the world have become so interdependent in so manyways that it is no longer possible to understand their socio-economic problems muchless do something about them, without taking into account the play of global forces.The processes of globalization have generated fundamental changes in the role andresponsibilities of a wide range of institutions - Families, Communities, Civil SocietiesInstitutions, Business Corporations, States and Supranational Organizations. Africahas not taken sufficient advantage of the process of globalization.CONCEPTUALIZING GLOBALIZATION Globalization as a concept resists any single or simple definition. Althoughoften associated with claims that the present world system is undergoingtransformation, it is an old idea (McLEAN AND McMILLAN, 2003). Nevertheless,some definitions may still provide us a clear understanding of how the processworks. Rubens Ricupero cited in Barikor (1999) sees globalization as a processwhereby producers and investors increasingly behave as if the world economyconsisted of a single market and production area with regional or national sub sector,rather than set of national economies linked by trade and investment flows. 2
  3. 3. According to John Dunning “globalization refers to the multiplicity of linkagesand interconnections between the states and societies which make up the presentworld system. It describes the process by which events, decision, and activities inone part of the world come to have significant consequence for individuals andcommunities in quite distant parts of the globe or which operate worldwide, theconcept therefore has a special connotation….. On the other hand, it also implies anintensification on the levels of interaction, interconnectedness or interdependencebetween states and societies, which constitute the world community. Accordingly,alongside the stretching goes a deepening of global processes”. In consonance with Dunning, Ajie and Ogbaji, (2009) sees globalization as “acomprehensive term for the emergence of a global society in which economic,political, environmental, and cultural events in one part of the world quickly come tohave significance for people in other parts of the world. Globalization is the result ofadvances in communication, transportation, and information technologies. Itdescribes the growing economic, political, technological, and cultural linkages thatconnect individuals, communities, business, and governments around the world.Globalization also involves the growth of multi-national corporations (businesses thathave operations or investments in many countries) and transnational corporations(businesses that see themselves functioning in a global market place).” Globalization refers to increasing global connectivity, integration andinterdependence in the economic, social, technological, cultural, political andecological spheres. It is an umbrella term and is perhaps best understood as aunitary process inclusive of many sub-processes that are increasingly binding peopleand the biosphere system. The Encyclopedia Britannica says that Globalization is the “process by whichthe experience of everyday life is becoming standardized around the world” whilesome scholars and observers of globalization stress convergence of patterns ofproduction and consumption and a resulting homogenization of culture, others stressthat globalization has the potential to take many diverse forms. Although the popular conception of globalization equates it with the growingintegration of national economies, we have used it here to also refer to the rapidspread worldwide of some dominant social, cultural and political norms andpractices. At the economic level, it is reflected in the heightened acceptance of freemarkets and private enterprise as the major process for promoting economic 3
  4. 4. activities. The essence of globalization at this level is captured by increasing trade ingoods and services, private capital flows in different forms, foreign investment,technology transfer, operations of transnational enterprises, business travel andcommunications, and migration and remittances. At the social level, globalization isconceived in terms of social relations and customs (family relations, socialorganization, etiquettes of social behaviour) and consumption pattern and life styles(consumer goods and services such as consumer durables fashion and designerarticles, food and beverages) (Barikor, 1999). Furthermore at the cultural level, it is conceived to encompass issues ofvalues, religion and identity. It also includes such leisure pastimes as television,videos, music, dance nightclubs, sports and foreign travel. Finally, at the politicallevel, globalization is reflected in the spread of pluralist systems, multipartydemocracies, free elections, independent judiciaries, non-governmental organizationand human, women and environmental rights groups (Barikor, 1999). In economics, globalization is the convergence of prices, product wages, ratesof interest and profits towards developed country norms on the role of humanmigration, international trade, movement of capital and integration of financialmarkets. The International Monetary Fund notes the growing economicindependence of countries worldwide through increasing volume and variety ofcross-border transactions, free international capital flows, more rapid andwidespread diffusion of technology. Theodore Lowi is usually credited withglobalization’s first use in an economic content. Supporters of free trade point outthat advantage suggest that comparative trade leads to a more efficient allocation ofresources, with trade benefiting in general, this leads to lower prices, moreemployment, higher output and a higher standard of living in developing countries. Libertarians and other proponents of Laissez-faire capitalism say that higherdegree of political and economic freedom in the form of democracy and capitalism inthe developed world are ends in themselves and also produce higher levels ofmaterial wealth. They see globalization as the beneficial spread of liberty andcapitalism. Liberals see it as a tool in relieving poverty and providing the poor with afoothold in the global economy.HISTORICAL PRECEDENTS The term globalization was coined in the latter half of the twentieth centuryand the term and its concepts did not permeate popular consciousness until the 4
  5. 5. latter half of the 1980s. Various social scientists have tried to demonstrate continuitybetween contemporary trends of globalization and earlier periods. Globalization is a century’s expansion of human population and the growth ofcivilization that has accelerated dramatically in the past 50years. Earlier forms ofglobalization existed during the Mongol Empire, when there was greater integrationalong the “Silk Road”. Global integration continued through the expansion ofEuropean trade, as in the 16th and 17th centuries, when the Portuguese, andSpanish Empires reached to all corners of the world. The effects on Europeanindustries were notable e.g. the silver mining in Schwas, Austria was partly gold andsilver was available from the Spanish colonies for lower prices. The globalization becomes a business phenomena in the 17th century whenthe first multinational was founded in the Netherlands. During the Golden Age, theDutch East India Company was established as a private owned company because ofthe high risks involved with the international trade, ownership was divided withshares. The Dutch East India Company was the First Company in the world to issueshares, an important driver for globalization. Liberalization in the 19th century is often called “The First Ear ofGlobalization”, a period characterized by trade growth in international trade andinvestment, between the European imperial powers, their colonies, and later theUnited States. “The First Era of Globalization” began to break down at the beginningof the First World War, and later collapsed during the gold standard crisis in the late1920 and early 1930s. Lenin’s theory of imperialism (1905) provided a seminalcritique of this period as being characterized by the exploitation of he third world bythose in the first. This theme forms the basis of many recent critiques ofglobalization. Globalization in the era since World War ll has been driven by advances intechnology, which have reduced the costs, trade, trade negotiation rounds, originallyunder the auspices of GATT, which led to a series of agreements to removerestrictions on free trade. The Uruguay round (1984 to 1995) led to a treaty to createthe World Trade Organization (WTO), to mediate trade disputes and set up a uniformplatform of trading. Other bilateral trade agreements, Including sections of Europe’sMaastricht Treaty and the North American Free Trade Agreement (NAFTA) havealso been signed in the pursuit of the goal of reducing tariffs and barriers to tradegrand. 5
  6. 6. The World increasingly is confronted by problems that cannot be solved byindividual Nation states acting alone. Examples include cross-boundary air and waterpollution, over fishing of the oceans and other degradations of the naturalenvironment, regulation of outer-space, global warming, international terroristnetworks, global trade and finance and so on. Solutions to these problemsnecessitate new forms of cooperation and the creation of new global institutions.Since the end of World War 11,(WWII), following the advent of the UN and theBretton Woods institution in the reach and power of multinational corporation and therapid growth of global civil society.MEASURING GLOBALIZATION Looking specifically at economic globalization, it can be measured in differentways. These centres around the four main economic flows that characterizeglobalization: 1. GOODS AND SERVICES: These include import as a proportion of national income or per capita of population. 2. LABOUR/PEOPLE: Migration rates; inwards or outward migration flows, weighed by population. 3. CAPITAL: Inward or outward direct investment as a proportion of national income per head of population 4. TECHNOLOGY: For example, International research and development flows; proportion of population using particular inventions “Factor-Neutral” technological advance such as the telephone, motor-car etc. To what extent a Nation-State or culture is globalized in a particular year has untilmost recently been measured employing simple proxies like flows of trade, migrationor foreign direct investment as described above. A multivariate approach tomeasuring globalization is the recent index calculated by the Swiss think tank “KOF”.The index measures the three main dimensions of globalization: economic, socialand political. In addition to three indices measuring these dimensions, an overallindex of globalization and sub-indices referring to actual economic restrictions, dataon personal contact, data on information flows and on cultural proximity is calculated. 6
  7. 7. Pro-globalists believed that the first phase of globalization which was market–oriented should be followed by a phase of building global political institutionsrepresenting the will of world citizens. The difference from other globalists is thatthey do not believe in this will, but would leave it to the free choice of those citizensvia a democratic process.1. The percentage of people in developing countries living below US $1 “(onedollar) per day has halved in only twenty years; with the greatest improvementsoccurring rapidly reducing barrier to trade and investment, yet detailed variablesmeasuring poverty should be studied instead.2. The percentage of people living on less than $2 a day has decreased greatlyin areas affected by globalization, whereas poverty rates in other areas haveremained largely stagnant. In East-Asia, including China, the percentage hasdecreased by 50.1 compared to 2.2% increase in Sub-Saharan Africa.3. Life expectancy has almost doubled in the developing world since World War1 and is starting to close the gap between itself and the developed world where theimprovement has been smaller. Infact mortality has decreased in every developingregion of the World.4. Income inequality for the World as a whole is diminishing5. Democracy has increased dramatically from there; while universal suffrage isincreased to 62. 5% in all nations having it in 2000.6. Feminism has made great advance in areas such as Bangladesh througheconomically liberating and empowering women with jobs. Supporters of globalization are highly critical of particular, current policies. Inparticular, the very high subsides to and protective tariff for agriculture in thedeveloped world, for example almost half of the budget of the European Union goesto agriculture subsidies, mainly to large farms and agriculture business, which form apowerful lobby. For instance, Japan gave 47 billion dollars in 2005 in subsidies to itsagricultural sector, nearly four times the amount it gave in total foreign aid, billiondollars each year in subsidies to its cotton sector, including 25,000 growers three 7
  8. 8. times more in subsidies than the entire USAID budget for Africa’s 500 million people.This drains the tax payers money and increases competition and efficiency, preventsexports by more competition agricultural and other sectors in the developed World,decreases competition and efficiency, prevents exports by more competitiveagricultural and other sectors in the developed world, decreases competition andefficiency, prevents exports by more competitive agricultural and other sectors in thedeveloped world due to retaliatory trade barriers, and undermines the very type ofindustry in which the developing countries do have comparative advantages. Tariffsand trade barriers thereby hinder the economic development of developingeconomies, adversely affecting living standards in these countries.ANTI GLOBALIZATION: Critics of the economic aspects of globalization contendthat it is not an inexorable process, which flows naturally from the economic needs ofeveryone as its proponent typically emphasized. The movement is very broad,including church group, national liberation factors, left-wing parties,environmentalists, and peasant unionists, antiracism groups, protectionists,anarchists those in support of relocation and others. Some are reformist while othersare more revolutionary and others are reactionary, believing globalization destroysnational industry and jobs. In terms of the controversial global migration issues, disputes revolve aroundits causes, whether and to what extent it is voluntary, necessary or unnecessary andits effects, whether beneficial or socially and environmentally costly. Proponents tendto see migration simply as a process whereby white and blue collar workers may gofrom one country to another to provide their services, while critics tend to emphasizeNegative causes such as economic, political and environmental insecurity and citeas one notable effect, the link between migration and the enormous growth of urbanslums in developing colonies. Some anti-globalization group argue that globalization is necessarilyimperialistic, and it is one of the driving reasons behind Iraqi war and is forcingsavings to flow in to the United States rather than developing nations, it cantherefore be said that “globalization” is another term for a form of Americanization, asit is believed by some observers that the United States could be one of the fewcountries to truly profit from globalization. 8
  9. 9. THE POSITIVE IMPACT OF GLOBALIZATION IN AFRICA. Globalization open people’s lives to other cultures and allow the flow of ideasand values. Information and communication technologies have eased interactionamong countries and peoples. It has eased international trade and commerce,facilitated investment and flow of capital. Globalization has freed labour acrossboundaries and facilitated easy trade. It has equally set new rules that are integratingglobal market out of a wide and diverse world.THE NEGATIVE IMPACT OF GLOBALIZATION IN AFRICA. Some cultures are being diluted and destroyed at the expense of others andnegative values are being spread all over Africa. The world is divided between theconnected, who know and who have a monopoly on almost everything and theisolated, who do not know and who practically have nothing. Globalization has encouraged illicit trade in drugs, terrorism, crime, rapidspread of diseases, prostitutions, pornography, human/female smuggling, dumpingof dangerous waste and depletion of the environment by unscrupulousentrepreneurs. (Microsoft Encarta, 2009). Globalization has facilitated “brain drain “indeveloping countries thus reducing further their human capacity. Globalization has set new global rules that have further marginalized Africa’spoor countries and people, especially in the area of trade. It has also created aglobal village of privileged people whose borders are impenetrable to the poor,unconnected and very few. The effect of Globalization on the state in Africa is notonly of an economic nature. There are international courts, international and humanrights organizations, international military converting international laws, rules andregulations to which the state is subjected. The most dramatic evidence of globalization is the increase in trade and themovement of capital (stocks, bonds, currencies, and other investments) (Ajie andOgbaji, 2009). From 1950 to 2001 the volume of world exports rose by 20 times. By2001, world trade amounted to a quarter of all the goods and services produced inthe world. As for capital, in the early 1970s only $10 billion to $20 billion in nationalcurrencies were exchanged daily. By the early part of the 21st century more than 1.5trillion worth of Yen, Euros, Dollars, and other currencies were traded daily tosupport the expanded levels of trade and investment. Large volumes of currencytrades were also made as investors speculated on whether the value of particularcurrencies might go up or down. (Ajie and Ogbaji, 2009). 9
  10. 10. Other negative impact of Globalization in Africa could be noted in the followingways: 1 OVERSTRETCHED CAPACITY TO REGULATE AND PROTECT THE ENVIRONMENT. The capacity of most Africa state to handle issues such as production of organic agricultural dumping of nucleus waste is still limited. As global actors invest and expand their activities, especially related to industrial, agricultural, mining, forest exploitation and fishing, the regulatory capacity of Public Administration in African countries, which is already limited in many respect is becoming overstretched. 2 UNDERMINING THE POWER OF THE STATE. Some African governments are finding themselves in a situation of “fait accompli” when it comes to making certain policies and decisions. Some international agencies take decisions, which are binding, on countries. This could be seen as eroding the sovereignty and power of the state. 3 UNDERMINING THE POWER OF THE STATE: Case of International Law. There is an ongoing democratization struggle in Africa. Some African countries began the process of democratizing their government, political systems etc. 4. OVERSTRETCHED CAPACITY TO HANDLE INTERNATIONAL AND COMPUTER-BASED CRIME The African state and its forces of laws and order were used to handle “traditional crime” white globalization there has been an increase on crime such as drug abuse, pornography international crime like advanced fee fraud popularly called “419” e.t.c. Progress in information technology has facilitated emergence and growth of computer-based crimes. 5. DEBT ACCUMULATION AND THE DEBT BURDEN The debt burden of Africa countries is well known. Most of the accumulation of this debt over time was as much as result of incapacity of the borrower to pay it back as it was or the ease, which the tenders gave money to the country. 6. MAKING THE TASK OF POVERTY ERADICATION MORE DIFFICULT As global actors pressurize African government to open more and more to maximize foreign investment and capital inflows and as big multinationals 10
  11. 11. and local enterprises utilize this environment to cater for their interests, the government is having less and less room to pay attention to the object poverty amongst its poor members or people.CONCLUSION.The main focus of this paper is on the impact of globalization on the socio-economic development of Africa. From our investigation, Africa is at the lowest level of integration with the rest of the world. This implies that Africa is not likely to benefit much from the globalization process. The research shows weaknesses and sometimes mixed results regarding the impact of globalization on the socio- economic development of Africa. There is also evidence that globalization can positively affect growth in the region but such positive impact will depend on how fast Africa countries become integrated with the rest of the world and also be prepared to deal with the adverse consequence of the situation (Orji, 2007). Globalization has impacted in two fold as regards African development. It has the positive and negative impact which sequel to this has improved in one way or the other, the social, cultural, political interaction and existence amongst member states. The process of globalization which entails the expansion of capital and marketforces into uncultured terrain brings along with it harsh social/economic conditionsfor the populaces. In Nigeria for instance, the imposition of IMF/World Bank’s SAPgreatly undermined the living standards of the people and exacerbated thedeterioration/decay in strategic sectors of the economy. Many scholars have suggested that to be more integrated with the rest of theworld, Africa countries must maintain strong and stable macro-economic framework,embark on institutional reforms including promoting good governance in all itsaspects, foster trade liberalization and regional economic integration, promotingsound banking system and financial development. Africa countries will alsoencourage private sector development, including foreign direct investment, improveinfrastructure and encourage agricultural development and investment in peoplecapacity building. For Africa to be effective actor in the new globalization era; thesemajor structural changes must be put in place. (a) The problem of global inequality that is the 20:80 world population spectrum-divides, where 20 represents the global hyper-rich and 80 represents the mass global poor. 11
  12. 12. (b) The global accountability/transparency question on the part of giant transnational corporations and the supranational institutions of global governance.(c) The problem of a befitting strategies or mechanisms to adopt as potent movers of new social struggles for a different form of globalization capable of addressing the plights of the vast majority of the global population, which the present globalization process fails to address.(d) Many Africa countries will also have to undertake a comprehensive reform of the civil service, aimed at improving the quality and size while enhancing its efficiency(e) Africa countries must also ensure efficient, reliable and cost effective public infrastructures such as transport networks, electricity, water, telecommunications, health services and education to ensure economic security. 12
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