- The document discusses globalization and its impact on developing countries. It outlines the promises of global institutions like IMF and WTO but also their failures. - While globalization aims to promote trade and growth, the policies have often led to job losses and poverty without adequate safety nets. Developing countries face pressure to liberalize prematurely. - The sequencing and pacing of reforms under programs like LPG (liberalization, privatization, globalization) is important but has not always been properly customized for individual countries. This has contributed to instability and a growing backlash against globalization.

1. GLOBALIZATION AND ITS
DISCONTENTS
Dr.R.MEENAKSHI
ASSISTANT PROFESSOR
DEPARTMNET OF ECONOMICS
NIRMALA COLLEGE FOR WOMEN

2. WHAT IS GLOBALIZATION
Globalization, is the process
of interaction and integration among
people, companies, and governments
worldwide.
Economically, globalization involves
goods, services, data, technology, and the
economic resources of capital.

3. Phases of Globalization
Thomas L. Friedman divides the history of globalization into Three periods:
Globalization 1.0
(1492–1800)-
Globalization 1.0
involved the
globalization of
countries
Globalization 2.0
(1800–2000) –
Globalization 2.0
involved the
globalization of
companies
Globalization 3.0
(2000–2018)-
Globalization 3.0
involves the
globalization of
individuals.

4. 2019-
Present

5. World Trading System
Domestic Trade
Bilateral Trade
Multilateral Trade
(Global Business)
Foreign Trade

6. Routes of Globalization
The Silk Road (Chinese) was a
network of Eurasian trade routes
active from the second century
BCE until the mid-15th century.
The Indus Valley civilisation, the
first known permanent and
predominantly urban settlement,
flourished between 3500 BCE and
1800 BCE.

7. Great Economic Depression
• The Great Depression was the worst economic downturn in US
history. It began in 1929 and did not abate until the end of the
1930s. The stock market crash of October 1929 signaled the
beginning of the Great Depression.

8. Major Financial Crisis in the World
1. In 1977 in Spain
2. In 1987 in Norway
3. In 1991 in Finland & Sweden
4. In 1992 in Japan
5. In 1994 in Mexico
6. In 1997-98 In Asian Countries (the Popular Asian Crisis comprising the
emerging economies that include Hong Kong, Indonesia,
Korea, Malaysia, the Philippines and Thailand (India
escaped from the Crisis)
7. In 1998 in Columbia
8. In 2001 in Argentina
9. In 2008 in USA & the Globe as a whole
10
.
In 2010/2011 in European Union

9. Economic Reform Process in India
Origin of General Agreement on Tariffs and Trade (GATT)
:– 1948 - 1994
World Trade Organisation (WTO):- 1995
New Economic Policy, 1991
⚫ First Generation – 1991 - 1997,
⚫ Second Generation – 1997 - 2002 and
⚫ Third Generation – 2002 onwards
Impact of GATT, WTO and NEP – 1991 on different
Economic Spheres of India

10. The Basic Objectives of the all the Economic Reform
Process are L-P-G
Liberalisation
(Economies/Countries are Liberalised)
⚫ A Programme of changes in the direction of moving towards a free market
economy.
⚫ This normally includes the reduction of direct controls on both internal and
external transactions.
⚫ In this programme less use is made of licenses, permits and price controls
and there is more reliance on prices to clear the markets.
⚫ The process of reducing or removing restrictions on International Trade. This
may include the reduction or removal of tarffis, abolition of Quotas, multiple
exchange rate and removal of admistrative permits for imports or allocation
of foreign exchange. The main argument for trade liberalisation is that
exposing a country’s economy to international competition makes for greater
efficiency.

11. Privatisation
(Companies are Privatised)
⚫ The transfer of private ownership and control of assets or enterprises
which were previously under public ownership. Privatized assets may
have been under direct state ownership, or owned by local authorities
⚫ Privatization may be adopted because of belief that assets will be used
more efficiently under private ownership, to reduce the power of
central authorities, to raise revenue for the government, or to attempt
to spread propriety ownership more widely in society.

12. Globalisation
(Business are Globalised)
⚫ The process by the whole world becomes a single market. This means
that goods and services, capital, labour and technology are traded on a
worldwide basis, and information and results of research flow readily
between countries.
⚫ Globalisation means that more and more countries, both rich and poor,
are taking part in the world economy.
⚫ When business go global, the rules for fair play must also be set
globally.

13. What is the phenomenon of Globalization?
• Closer integration of countries & peoples of the world
that has been brought about by the enormous
reduction of costs of transportation and
communication, and the breaking down of artificial
barriers to the flow of goods, services, knowledge and
people across borders
• Creation of new institutions working across borders
• Three main institutions govern globalization: IMF,
World Bank and WTO

14. International financial institutions
• International Bank for Reconstruction and Development (IBRD)-World Bank-1944(to
help rebuild Europe and Japan after World War II)-Policy Making
• IMF-1945-is an organization of 190 countries, working to foster global monetary
cooperation, secure financial stability, facilitate international trade, promote high
employment and sustainable economic growth, and reduce poverty around the world.-
Funding
• GATT
• WTO
• TRIPS
• TRIMS

15. • (GATT) was established
as a global trade
organization in 1948 with
23 countries.
• GATT was set up to
regulate all multilateral
trade agreements by
granting all nations equal
access to the worldwide
market for trade
purposes.

16. Trade Rounds (1947 – 1994) – GATT WTO – 1995
Rounds Year Place/name Subjects covered Countries
I 1947 Geneva Tariffs 23
II 1949 France Tariffs 13
III 1951 England Tariffs 38
IV 1956 Geneva Tariffs 26
V 1960-61 Geneva (Dillon-Round) Tariffs 26
VI 1964-67 Geneva (Kennedy Round) Tariffs and anti-dumping 62
VII 1973-79 Geneva (Tokyo Round) Tariffs, non-tariff measures 102
VIII 1983-90 Uruguay Round Tariffs, non-tariffs rules, TRIPS,
TRIMs GATS, Dispute
Settlement, Textile, Agriculture,
Creation of WTO
125
Mr. Arthur Dunkal
Mr.Peter Rutherland
Secretary General of GATT
Director General of WTO
Mr. Reneto Ruggerio
Mr.Mike Moore
Mr.Supachai Panispkhi
Director General of WTO
Director General of WTO
Director General of WTO
Mr. Pascal Lamy
Mr.Roberto Azevedo
Director General of WTO
Director General of WTO

17. Is the change of the GATT simply a change of names and thus replace
the GATT of 1947 with the GATT of 1994

18. WTO
• In brief, the World Trade
Organization (WTO) is the only
international organization
dealing with the global rules of
trade.
• Its main function is to ensure
that trade flows as smoothly,
predictably and freely as
possible.
• The World Trade Organization
(WTO) oversees global trade
rules among nations and
mediates disputes.

22. WTO Ministerial Meetings
I 1996 Singapore Ministerial Meeting December
9-13
Mr. Mike Moore,
Director General of WTO
II 1998 Geneva Ministerial Meeting May 18-20 Mr. Mike Moore,
Director General of WTO
III 1999 Seattle Ministerial Meeting Nov. 23-
Dec. 3
Mr. Mike Moore,
Director General of WTO
IV 2001 Doha Conference (Quator) November Dr. Supachai Panitchpakdi,
Director General of WTO
V 2003 Cancun, Mexico Sep. 10-14 Dr. Supachai Panitchpakdi,
Director General of WTO
VI 2005 Hong Kong 14th Dec. 2005 Mr. Pascal Lamy
Director General of WTO
VII 2008 Geneva August, 2008 Mr. Pascal Lamy
Director General of WTO
VIII 2011 Geneva December Mr. Pascal Lamy
Director General of WTO

23. Cancun, Mexico - 2003
⚫ It is noteworthy that 150 WTO member governments (Cancun-
Mexico, 2003) account for some 97 per cent of the US $ 8
trillion worth of international trade annually.
⚫ The members of WTO have to sign a total of 28 agreements of
which 25 agreements are in the areas of goods and services
⚫ All the members are bound by these agreements. A
distinguishing feature of WTO is the absolute equality it provides
to its members.
⚫ The countries like USA, Canada, EU and Japan influence the
decisions of WTO as these countries together account for 80
per cent of the World Trade.

24. World Trade Organisation - 164 Countries
Afghanisthan- 164th country joined in July 2016
LAFTA
SAFTA
CCM
EEC
(Europea
n Union)
OPEC SAARC
ASEAN
APEC

25. TRIPS-Trade Related Intellectual Property Rights
TRIMS- Agreement on Trade-Related Investment Measures

29. Globalization and Its Discontents

30. The Promise of Global Institutions
Globalization has helped:
• Countries grow faster by opening up to
international trade
• Reduce the sense of isolation
• Millions by bringing them foreign aid benefits
Then, why has globalization become so
controversial?

31. The Promise of Global Institutions (Cont.)
• Growing divide between haves and have-nots
has left increasing numbers in the Third World
in dire poverty
• Neither has globalization succeeded in
ensuring stability
• Western countries have pushed poorer
countries to eliminate trade barriers
• Environment has been destroyed

32. The Promise of Global Institutions (Cont.)
• IMF was founded on the belief that there was a
need for collective action at the global level for
economic stability
• IMF is a public institution established with
money provided by taxpayers around the world
• Major developed countries run the show, with
only the USA having effective veto

33. The Promise of Global Institutions (Cont.)
• These institutions could have provided alternative perspectives
on challenges to development and transition but were driven
by the will of G-7
• The IMF has failed in its mission of promoting global
instability; has also been unsuccessful in guiding transition of
countries from communism to a market economy
• Jobs have been systematically destroyed before countries’
industrial & agricultural sectors were able to grow strong and
create new jobs
• Maintaining tight monetary policies has led to interest rates
that would make job creation impossible
• Those who lost jobs were forced into poverty

34. The Promise of Global Institutions (Cont.)
Reasons for this problem:
• Choice heads symbolize the institutions’ problem
• Heads chosen behind closed doors, and it has never been
viewed as a prerequisite that the head should have experience
in the developing world
• Trade barriers raising prices consumers pay/subsidies imposed
on taxpayers is a matter of less concern than profits of
producers
• Heads see the world through the eyes of the financial
community
• Current system is one of taxation without representation

35. The Promise of Global Institutions (Cont.)
• Globalization is neither good or bad. It has the
power to do enormous good
• Process of ‘globalization’ analogous to the
earlier processes in which national economies
were formed
• Unfortunately, no world government,
accountable to all the people of the world
• Current system is that of global governance
without global government

36. Broken Promises
 Ethiopia – Started doing really well on all macroeconomic
indicators like growth, inflation, employment, etc
 But then, IMF withdraws suspends the assistance to Ethiopia
 IMF insisted opening up of Banking and financial systems.
Ethiopia was not in favor of it seeing the experience of Kenya
(14 banking failures) who followed IMF guidelines
 Reasons :
 Flexible expenditure policy of Ethiopia
 An early repayment of loan
 This seemed to be a form of colonialism to Ethiopia but standrard
operating procedures for IMF

37. LPG – Liberalization, Privatization,
Globalization (Freedom to choose?)
LPG surely has the power to do a lot of good.
But at what cost?
Pursuing LPG at an alarming rate defeats the
very purpose of developing the countries.
Many LPG policies become being an end in
themselves instead of being the means to an
end.

38. Privatization (Freedom to choose?)
 Govt. spends energy doing things which they are not
supposed to be doing.
 Govts. have no business to be in business.
(Exceptions like steel industry in Korea, Taiwan do
exist)
 Privatization  More efficient.
Costs – Trimming payrolls.
Replacing unproductive workers.
Social costs
Where does privatization leave countries which have no
safety nets in place?

39. Liberalization (Freedom to choose?)
 Means removal of government interference in trade,
capital markets, financial markets, etc.
 The thrust has been on trade liberalization with the
main idea being to utilize comparative advantage.
 IMF argues that with liberalization, new and efficient
jobs would be created as they replace the old
unproductive ones. But, this is not instantaneous.
 Assistance based on the rate at which liberalization is
pursued.

40. U.S – the prosecutor, the judge and the jury.
Studies on various countries prove that steps
laid out by IMF also did not guarantee
progress. (Failures – Bolivia, Argentina, East
Asia. Success - Chile)
Premature liberalization results in increased
instability. The costs of such instability is,
disproportionately, borne by the poor
Freedom to choose? (Contd.)

41. Sequencing and Pacing LPG
Need of safety nets.
Adequate regulatory framework.
Uniform policies of IMF does not suit all.(e.g
African country). Thus, customise the policy
framework for each country.
Proper sequencing helps in adapting and
responding to the challenges of globalization.
Balancing of the trade agenda in favor of
developing countries.

42. Dr.R.MEENAKSHI

43. “If globalization continues to be conducted in the
way it has been in the past, globalization will
not only succeed in not promoting
development but will continue to create
poverty and instability. Without reforms, the
backlash that has already started will mount
and discontent with globalization would
grow.”
~ Joseph Stiglitz, Globalization and its discontents
Nobel Laureate in Economics 2001, former Chief Economist at the
World Bank.