| PROS AND CONS OF GLOBALISATION | | | | into international systems of production."24 |
| While | | | | It is criticised that developed |
| developing countries which, in the past, were against | | | | nations receive most of the FD1, A very small |
| globalisation, have wide opened their doors for | | | | number of the developing countries, which are the |
| globalisation, many people in developed countries like | | | | relatively developed or large or fast growing in the |
| USA are angry against globalisation. American jobs | | | | developing world account for the lion's share of the |
| and wage levels are severely affected by the influx | | | | FDI flows to this category. What the critics do not |
| of cheap imports and shifting of production to low | | | | appreciate is that, as foreign investment flows are |
| cost overseas locations. According to a Business | | | | based on economic rational, it is unrealistic to expect |
| Week/Harris poll in early 2000, more than | | | | the pattern of flow to be different. |
| two-thirds of Americans believe that globalisation | | | | Another criticism is that the |
| drags down U S wages. A strong majority of the | | | | liberalisation increases the economic inequality. Even in |
| Americans feel that trade policies have not | | | | China, the liberalisation has created many island of |
| adequately addressed the concerns of American | | | | affluence. If inequality increases because of the |
| workers, international labour standards, or the | | | | worsening of the living conditions of the poor, it |
| environment. The important pros and cons of | | | | certainly is unjustifiable. But, if the increase in |
| globalisation according to the above survey are the | | | | inequality is the result of improving the economic |
| following. Productivity grows more quickly when | | | | conditions of a section, while there is no economic |
| countries produce goods and services in which they | | | | deterioration of any section, or because of the |
| have comparative advantage Living standards can go | | | | disproportionate benefits, the question is whether the |
| up faster. | | | | economic progress of some sections should be |
| - Global competition and imports keep a Hd on prices, | | | | curbed so that there will not be a widening of the |
| so inflation is less likely to deraileconomic growth. | | | | inequality. |
| - An open economy spurs innovation with fresh ideas | | | | The liberalisation may increase |
| from abroad. | | | | inequality. Further, several sectors and sections may |
| - Export jobs often pay more than other jobs. | | | | not directly and immediately benefit from mere |
| - Unfettered capital flows give the US access to | | | | liberalisation. There may also be shocks and other |
| foreign investment and keep interest rates low. | | | | adverse effects on the weaker sections. It is, |
| - The adverse effects of globalisation according to | | | | therefore, necessary that there should be real |
| the survey are: | | | | socioeconomic reforms rather than mere liberalisation. |
| - Millions of Americans have lost jobs due to imports | | | | Targeted poverty eradication programmes and social |
| or production shifts abroad. Mostfind new jobs that | | | | safety net are very important. |
| pay less. | | | | The fast growth and overall |
| - Millions of others fear losing their jobs, especially at | | | | development resulting from liberalisation could have a |
| those companies operating undercompetitive | | | | major' impact on poverty. Naisbitt points out that |
| pressure. | | | | there were an estimated 200 to 270 million Chinese |
| - Workers face pay cut demands from employers, | | | | -living in absolute poverty in 1978 (the year in which |
| which often threaten to export jobs. | | | | the liberalisation began) and their number came down |
| - Service and white collar jobs are increasingly | | | | to 100 million by 1985.2 Foreign capital has significantly |
| vulnerable to operations moving offshore. | | | | boosted investment and economic growth in China. |
| - U S employees can lose their comparative | | | | China has leaped forward on the export front too. |
| advantage when companies build advancedfactories | | | | Foreign funded enterprises contribute a substantial |
| in low-wage countries, making them as productive as | | | | chunk of the exports from China. Other countries |
| those at home. | | | | which carry out proper reforms in real earnest should |
| True, globalisation can benefit the | | | | also" be expected to reap such gains in varying |
| developing countries in several ways. It is, however, | | | | degrees. But-, half-hearted and confused measures |
| apprehended that unregulated globalisation will cause | | | | and implementational problems may create more |
| serious problems for developing countries. | | | | problems than they solve. |
| The almost universal acceptance | | | | Although the MNCs, by the virtue |
| of the market economy and the globalisation driven | | | | of their size and resources, have certain advantages |
| by private enterprise tend to aggravate most of the | | | | they may also have limitations or disadvantages in |
| harmful effects traditionally attributed to | | | | certain spheres or aspects of business. Small and |
| neocolonialism. | | | | medium firms often have some edge over the very |
| The global dominance of industries | | | | large ones in respects of standardised products -or |
| by MNCs is on [he increase. Many countries are | | | | technologies like greater flexibility and adaptability, |
| indiscriminate in liberalising foreign investment. Pepsi, | | | | lower overheads, intimacy with the customers, etc. |
| Coke and L'junk foods" are allowed even in countries | | | | Lower costs is a great advantage which firms from |
| like China. | | | | developing countries enjoy. It may be noted that the |
| A number of countries allow high | | | | major component of growth of several India |
| foreign stake even in industries where that is not | | | | pharmaceutical firms is the foreign market. They are |
| really required. This could affect domestic enterprise | | | | relying mostly on bulk drugs and generics. |
| of developing countries. | | | | What is often ignored while |
| There has been a large number of | | | | discussing the impact of the product patent is that |
| cases of takeover of national firms by foreign firms. | | | | patented drugs account for only about 15 per cent |
| In some of these cases, the domestic firms are | | | | of the India drug market. There are several more |
| driven to a situation of having to hand over the | | | | products which. would go off patent in the coming |
| majority or complete equity to the foreign partners | | | | years which can also be taken up the India firms. The |
| of joint ventures because of the inability of the | | | | new patent regime should be expected help the |
| Indian partners to bring in additional capital or some | | | | Indian industry by prompting it to give added thrust |
| other incapability." | | | | to R&D and thereby enabling Indian firms also to |
| Replacement of traditional and | | | | develop patented products. Positive signs are already |
| indigenous products by modern products, resulting in | | | | there on the horizon. |
| the ruin of traditional crafts and industries and the | | | | There are also many evidences of the better |
| livelihood of people in these sectors have also been | | | | technology brought in by the MNCs inducing or |
| happening in several countries. | | | | provoking Indian firms to absorb "similar technology |
| There should also be benefits for | | | | leading to their enhanced competitiveness and |
| employment from a liberal financial regime. Removing | | | | market expansion. |
| restrictions on capital flows should attract more FDI, | | | | C.Pavithira |
| creating more jobs for the poor by integrating them | | | | M. |