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ADRIJ

SONGSOPTOK THE WRITERS BLOG | 4/15/2017 |



SONGSOPTOK INTERVIEW
FACES AND FACETS OF GLOBALIZATION

“Globalization is the process of international integration arising from the interchange of world views, products, ideas and mutual sharing, and other aspects of culture” (Wikipedia)


SONGSOPTOK:  What are you views about globalization? In the country and the society you live in, is globalization a threat or an opportunity?

ADRIJ: “Globalization and free trade do spur economic growth, and they lead to lower prices on many goods” - Robert Reich

“If you're totally illiterate and living on one dollar a day, the benefits of globalization never come to you” - Jimmy Carter

Globalization isn’t a very blatant concept. While some argue it’s a direct derivative of the age old doctrine of imperial colonialism, few others embrace it as a newfound method to bring about global unity and economic convergence. The country I hail from is still developing socioeconomically. While as an optimist I’m inclined to debate for the better side of globalization, as an economics enthusiast I need to take into account the deleterious effects it entails. My society is yet to resolve some of economics’ most basic issues (biological poverty being the most profound). Having a society which is yet to define what ‘good economics’ is in proper fashion as my background, I can only stay as ambiguous as I can when I share my mind on what I think of globalization at this stage. I fail to come to a resolution on a generic basis because I am as much an economist as a social scientist. While I do realize the practical base of a globalized world, I cannot ignore the stem of dominating occidental mentality that founds the crux of the nascent concept.


SONGSOPTOK:  To what extent is the society you live in is globalized? What are the outward manifestations, if any, in the everyday lives of the citizens?

ADRIJ: I hail from India. India has been making striding efforts to match the pace of the giants. The term which is used here, ‘society’, is very important. The biggest contribution that a globalized world can make is to obliterate the very term from the face of the earth. When one speaks on a unified world, the societal factors take a backseat. So, I take the liberty of using the word ‘economy’ instead of the term ‘society’, as globalization has never really, in all seriousness, taken into the equation the social variables, only the economic and the political ones.

Globalization in India has played a very big role. The signs of unified political economics started to show pretty early when the Indian economy was on the verge of destruction and the Mahalanobis-Nehru plan (or any Five Year Plan for that matter) had no idea what needed to be done. Dr. Manmohan Singh, erstwhile Minister of Finance, foresaw the doom that could’ve befallen us and he opened up the economy to the outside world. This had a threefold effect on our finances. The foreign exchange rate was derived in a proper manner and the highly instable Indian Rupee (INR) found its deserving place in the world map; the trade balance was addressed and the deficit accounted for (which provided the Indian planners with an opportunity to strategize their next move); the value of India's international trade had become more broad-based.

Globalization has had an effect on the everyday life of the population, and in a more positive way for the urban sector. With the proliferation of market mechanisms, the influence of the Smithsonian economic paradigm is finally showing. People now choose the commodities from a plethora of options, with variations and choice-making attitude that ensure only efficiency in the country. Undoubtedly, the cultural aspect of globalization has had tremendous effects on the Indian population. The free flow of ideas and the exchange of cultural views play prime roles in determining the mentality of the people here. From music and theatre to fashion and administration, globalization is the model which touched myriad lives simultaneously, bound them together and changed them forever.


SONGSOPTOK:  In your opinion, has the process of globalization improved the quality of life in your country? In what way?

ADRIJ: Globalization indeed has changed the lives of many for the better. In our country, the globalized market has done more good than harm. The impact on national economies of larger, transnational markets characterized by free, convertible currencies, open access to banking, and contracts enforceable by law has shown.

Growing interdependence of nations and their activities on one another, fostered by the depletion of natural resources, misdistributions of arable land, mineral resources, and wealth, as well as overpopulation is found in India. Our country needed the capital, technology, and brainpower of the wealthier countries, while the First World economies are progressively dependent on the natural and human resources. The biggest positive effect globalization had on our economy was this: A free exchange of resources which accelerates growth and brings about development and public welfare. In all actuality, this has been realized, and there has been a sharp rise in general public welfare mechanism. Modernizations in bubble communications, science and technology have contributed actively toward planarization. This has had a large-scale effect on the population which would only get accentuated in the long run. Globalization has had a great effect on the ecologies and environments of the country which are needed to be safeguarded; and lessen the negative effects rather than exploiting without regard to such concerns.


SONGSOPTOK:  One of the major effects of globalization is the significant increase in the volume of trade and monetary transactions between the different nations. Do you think that your country has benefited from this? In what way?

ADRIJ: The process of globalization has changed the industrial pattern and social life of global people, and it has had an immense impact on Indian trade system. The globalization of the economic, social and cultural structures has happened in all ages. Previously, the pace of process had been slow. Today with the start of the information technology, new ways of communication have made the world a very small place. With this process, there is a big market place. Globalization has resulted in increase in the production of a range of goods. MNCs have established manufacturing plants all over the world. As a new Indian middle class has developed around the wealth that the IT and BPO industries have brought to the country, a new consumer base has developed. International companies are also expanding their operations in India to service this massive growth opportunity. International companies that have done well in India in the recent years include Pepsi, Coca-Cola, Star Bucks, McDonald’s, and Kentucky Fried Chicken, whose products have been well accepted by Indians at large. Globalization in India has been advantageous for companies that have ventured in the Indian market. By simply increasing their base of operations, expanding their workforce with minimal investments, and providing services to a broad range of consumers, large companies entering the Indian market have opened up many profitable opportunities. Indian companies are rapidly gaining confidence and are themselves now major players in globalization through international expansion. From steel to cinema, and from cars to IT, Indian companies are setting themselves up as powerhouses of tomorrow’s global economy.

This was marketing. Let’s look at economics now. Post globalization, multilateral agreements in trade have been signed, which have even taken on new agendas as environmental and social conditions. New multilateral agreements for services and intellectual properties, communications have been under the talks which would go on to provide a very lucrative position to India in the coming days. Market economic policies have spread around the world, with greater privatization and liberalization than in earlier decades. India can now execute trade services globally – from medical advice to software writing to data processing that could never really be traded before. Globalization in the economies have taken Indian open market policies as they were and then shot it up to mammoth percentages. Huge growth markets have been realized, and numerous variables have been accounted for in the analysis of costs and benefits. In India, variables like cost advantage, customer satisfaction, government policies et al. have been addressed like never before.


SONGSOPTOK:  Do you think that globalization serves to make the already strong economies even stronger and weaker economies weaker and more dependent? Can you give us a few examples to illustrate your answer?

ADRIJ: This goes without a saying. If we look at the theoretical part of globalization in economics, we notice that globalization is founded on the basic premise of international trade and finance. Now as we know all too much, trade is viable when goods and services are exchanged. But if that is solely the case, then globalization would not be the new thing on the table. Globalization feasts on the intricacies of international economics. When we consider an open economy with no rigidity as such, we often take to calculations deriving the balance of payments of the countries involved. We take into account two of the most important things regarding said countries: Their respective productivities, and the factor of production they have in (relative) abundance. These are the primary variables for international trade, and thus globalization. Here, basic trade theory would always state that trade proves to be beneficial for the factor in abundance, and detrimental for the factor in shortage. But the countries export only the goods which are intensively manufactured by using the abundant factor of production. Here, the relative quantity plays a very important role. This is the theory which guides trade and global exchange. Globalization has proved to be a boon for a few countries like Republic of Korea (South Korea) and Singapore, which have embraced the open economy with calculated strategies (involvement) and a careful intervention policy of their respective governments. But almost simultaneously, the Sub-Saharan African nations have lost their resources to globalization more often than not. So it really depends on the mode and method of globalization that is being addressed here.

 “…even  when  there  are  new  opportunities  for  jobs  opened  by  the integration into the international economy, old jobs and occupations disappear, and there is no doubt that such ‘churnings’ in   job reallocation and dislocation raise anxiety and hostility among many workers worried about  job security. In many poor countries there is  very  little  effective  social  protection  available  from  the  state.  International organizations that preach the benefits of free trade should take the responsibility of funding and facilitating adjustment assistance programs in poor countries that can help workers in coping with job losses and getting retrained and redeployed.”
-         Pranab Bardhan (Does Globalization Help or Hurt the World’s Poor?)

Now Dr. Bardhan would also go on to state the current comparative statics the countries display when dissected, and then analyze their fiscal laws and austerity measures for the better good. This actually goes on to show the relevance of globalization in the world.

For instance, the large decline in poverty in China, India and Indonesia (countries long characterized by massive rural poverty) containing about half of the total population of developing countries. Between 1981 and 2001 the percentage of rural people living below the above-mentioned poverty line declined from about 79 per cent to about 27 per cent in China, from about 63 per cent to about 42 per cent in India, and 55 per cent to 11 per cent in Indonesia.

Some might point out: In China it could be, to a large extent, due to internal factors  like  expansion  of  infrastructure  or  the  massive  1978  land  reforms  or  policy changes relating to grain procurement prices or the relaxation of restrictions on rural-to-urban  migration.  That the  spurt  in  agricultural  growth  following  the  1978 decollectivization and land reform may be a large factor in the poverty reduction in China is suggested by the fact that a substantial part of the decline in poverty in the last two decades  already  happened  by  mid-1980’s, before the  big strides  in foreign  trade  or investment. But one cannot deny the fact that most of the economic decision-making in our time is based directly or indirectly on the global dictation. It doesn’t even have to be a compulsion. Smithsonian economics clearly states that the market mechanisms automatically edit and adjust to the flow, and oftentimes direct the flow toward the maximum efficiency.

Again, as another example, let me take countries like Mexico. In general global market competition rewards people with initiative, skills, information,  and  entrepreneurship  in  all  countries,  and  poor  people  everywhere  are handicapped by their lack of access to capital and skill formation to be able to adjust to the changing market. Workers in these developing countries are losing their jobs in labor-intensive manufactures which are now produced in poorer countries in Asia.  But foreign investment has brought new jobs in the factories at the northern border of Mexico, and there is evidence that low wage poverty is declining in the regions in Mexico that are more exposed to the international economy than others (even conceptualizing from the fact that more skilled and enterprising people migrate to the northern part of the country improving incomes there).

So we see, globalization has the ability to make the rich richer and the poor poorer. But how much of it is seen in all practicality? Dwelling in the present scenario, it’s imperative that we understand the power we hold. Both the examples go on to portray the positive (and the more profound) side to the concept. The view stays, the interpretation is what matters the most at the end of the day. How you choose to use it, depends on what you need out of it. The human rights violating cases of Africa, of blood diamond and blood gold, mining and the influence of illegality, are just other forms of the same doctrine. We cannot deny the fact that it still remains, very much real. But if used judiciously, globalization just might blur the discrepancy between the developing and the developed nations. Analogous to nuclear technology, a boon for all if used the way it’s intended.


SONGSOPTOK:  What, according to you, is the role played by the major multinational companies in globalization? Do you think that the entire process was actually put in motion by the large MNC’s for their personal profits or do you think that there has been a trickle-down effect to the economy of your country?

ADRIJ: The multinational corporations (MNCs) are both a cause and a result of the globalization process. One can view the seventeenth-century Dutch and English India companies as a teaser of what was to come. By any measure, it is clear that MNC’s are large and important, and that their role and influence have expanded as they have rapidly grown in recent years.  Coincidental with this growth, the questions that people are asking about MNC’s have also become more numerous and varied. The underlying premise behind globalization is that the transfer of wealth from the developed countries to the developing countries would eventually result in a scenario where those at the bottom of the ladder in the developing countries would benefit from the wealth flowing into their economies.  The theory has been used to justify neoliberal policies and globalization and is the driving force for all entrepreneurial activities in countries like India. However, this theory is now being questioned as the trickle down effects are now being held as negligible, with those at the top earning more and more and those at the bottom earning less and less. Hence, there is now a tendency to question the basic tenet of globalization and neoliberalism and it remains to be seen as to which theory would ultimately stand to gain. The point here is that the widening income inequality has led to protests from those at the bottom since they do not see any marked improvement in their lives even when they support the army of educated and skilled employees of the manufacturing and service sector companies. However, there is a question of benefits to the local economy outside of those who actually work. It is understood that trickledown economics might not have been very wrong. Now, what is needed is a greater flow of wealth to the bottom and this can be done by equitable growth and democratic policies that strive for betterment of all. One cannot ignore that the concept of globalization is still afloat because it is the bread earning mechanism for many MNCs. It wouldn’t have survived the test of time had that not been the case. But it also remains that general welfare is being recognized throughout the globe as a direct derivative of the concept in question. So I might as well say in this case that globalization has been the brainchild of the erstwhile MNCs in the wake of World War II, which earns them mammoth amounts of personal profits. Simultaneously it entails economic growth all over, (when redistributed) bringing in development for the countries associated with it and providing the masses with general welfare. In conclusion, true growth manifests when all sections of the society benefit and not only those at the top. Globalization has been proving to balance both together.


SONGSOPTOK:  Many economists claim that globalization is a major factor for disseminating knowledge and technology across continents and borders within a very short time. Do you support this view? Has your country benefited from this? Can you give us some examples?

ADRIJ: Traditionally services are viewed as domestic activities due to direct contact between producer and consumer and government monopoly in infrastructure sector. The emerging globalization concept brought in a new variable: digitization. As technology spread throughout the world, concentration of knowledge ceased to exist. Global digitization has altered the perception. The ascent of information and communication technology has given rise to e-commerce, e-banking, e-learning, e-medicine and e-governance. Because of that nowadays factors like common knowledge, information sharing, data matrices, and overall education have turned out to be a commodity of international trade. It is no more a public good on domestic scale, but a private good on global scale. Globalization brings education to the front lines. In the prevailing discourse around the world on globalization, education is expected to be the major tool for incorporation into the “knowledge society” and the technological economy. So the point is ultimately that: globalization is a major factor for disseminating knowledge and technology across continents and borders within a very short time, but at a cost.

India has indeed benefitted from this. Globalization of multinational corporations has been bringing several new jobs to India’s destination cities such as Hyderabad, Bangalore or Mumbai. As a result, there has been a massive increase in employment. New jobs naturally are engaging in nature and are benefiting the national accounts. Special Economic Zones (SEZs), Export Processing Zones (EPZs) et al. are set up across the country for which hundreds of people are hired. Since labor is cheap in India, developed western countries like USA and UK outsource their work to Indian companies. This in turn creates more employment. Since globalization is at work, the levels of compensation have been higher than what domestic firms would have provided at similar level of professional experience and qualification. This leads to a change in management structure. Workers are pacified with salary hikes to keep them motivated during management re-structuring.

India is a developing nation. According to the macroeconomic model of Solow, it would make use of newer resources more efficiently than developed countries with an existing set of capital resources already in profusion. In the wake of globalization, huge amount of wealth generation in Indian cities have been going on which is leading to the development of businesses. Few cities are also developing with higher purchasing power for those who are working with foreign organizations. Even the domestic organizations are encouraged to pay higher compensation to their employees who enhance people to live better quality lives. Thus these cities are witnessing better living standards and also development in business besides economic growth. This mirrors a positive sign in not only the Indian national treasury, but also in the optimistic minds of the Indian planners and strategists.


SONGSOPTOK:  Do you think that globalization actually breeds a homogenous culture? What, if any, has been the effect of globalization in the cultural sphere of your country? In your opinion, has it been positive or negative?

ADRIJ:  Definitely positive. Despite its root principle, we must never forget that globalization is a concept which should not be limited to finance. It is to go on to touch cultures and economies; to influence people and markets alike. Globalization is the first step to universal-ism as one of our professors calls it. When we address culture with the globalization point of view, we can find many punch holes of westernization and mixing of other traits and cultures into a beautifully woven blanket. The Indian culture has been open to newer faces of the world, and has been absorptive at that. Be it values, practices or norms, globalization is that wind which blows in with tremendous force. The most prominent change in the Indian culture has been its openness. It has opened itself to a lot of new ideas and designs. The face of the demography has surely changed. This reflects in myriad situations we face: be it a tête-à-tête, or a public claim. The youth dreams and the youth vision have changed. They are often more outward than not, which actually is extremely progressive in places. Sociopolitical issues in the country are being handled differently, owing to the newfound thought process that has tiptoed in as a part of globalization. The biggest take away from this globalized India is its change in its orthodox mentality that often rests on dogmatic norms. Global awareness has definitely stepped in, thus influencing the population in different rungs of the society. The effects on the rest of the world due to India have almost been similar. As India gradually gains prominence, the Indian population, its cultures and values are increasingly being introduced to the outside world. The interaction between seemingly two diverse worlds brings about newer knowledge, ideas and efficient outcomes in the globe.  Indian food, clothing and languages are as varied as they can be. It is only for the better does the world at large now recognize the Indian cuisine, fashion and tongues, and does come out to deliberately be inclusive of the rich culture and heritage they uphold. The way the foreign languages are getting prevalent in India like the French, German and Spanish, right from the school level, is the example of how much importance these languages are provided in Indian system. Slowly but constantly, there is therefore a growing convergence of world cultures and civilization structures. The human breed, however diverse they might seem at the outset, is evolving towards the commonness in way of life; and globalization is the path they have chosen.


SONGSOPTOK:  What, in your opinion, is the impact of globalization on environment? Do you think that the capitalistic growth model used by the large multinationals have a negative effect on the environment? In what way?

ADRIJ: The impact of globalization is profoundly spread throughout the world like branches of a tree. So it’s implied that globalization has had an effect on the environment some way or the other. Economic globalization impacts the environment and sustainable development in a variety of ways and through a multitude of channels.  Globalization contributes to economic growth and thereby affects the environment in many of the same ways that economic growth does:  adversely in some stages of development, favorably at others.  Globalization accelerates structural change, thereby altering the industrial structure of countries and hence resource use and pollution levels.  It basically diffuses capital and technology; depending on their environmental characteristics relative to existing capital and technology, the environment may improve or deteriorate. It transmits and magnifies market failures and policy distortions that may spread and exacerbate environmental damage; it may also generate pressures for reforms as policies heretofore thought of as purely domestic attraction to international interests.  While it improves the prospects for economic growth worldwide and increases overall global output, globalization could conceivably reduce economic prospects in individual countries, sectors and industries; such marginalization of economies and people may result in poverty-induced resource depletion and environmental degradation.

When the impact of globalization is discussed addressing the MNCs, the first person that comes to mind is A.C.  Pigou. He was the economist who addressed welfare scheme and equated it with environmental degradation and effects.

“The gravitation constant is the same always. But the economic constants — these elasticities of demand and supply — depending, as they do, upon human consciousness, are liable to vary.”
-         Arthur Cecil Pigou

Even for a country like India, where globalization has had tremendous effects, the deleterious effects that the latter entails cannot be overlooked. The capitalist growth model only rests on one principle: Profit maximization – Cost minimization. In order to achieve this target, the model takes into consideration growth and prosperity variables and often misses out the social factors that are involved. The various measures that have been taken (Pigovian taxes, social cost disparity, implied costs) were implemented only because there loomed a threat to the society if the multinational companies had indeed followed their growth models to the T.


SONGSOPTOK:  Is it possible to imagine a world today with an alternative mode of production and consumption? Is it at all necessary? If so, will you share your ideas with us? How can we, as ordinary citizens, contribute to such a model?

ADRIJ:  “The first lesson of economics is scarcity: there is never enough of anything to fully satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.” – Thomas Sowell

A world today is a very convoluted one. While there is always a scope for improvement in the social sciences, what economics has taught me is that one will never be able to get satiated. So, even if I tweak a variable or two and come up with a newer model, there will always be a faction unsatisfied. But that is exactly what economics is all about. Every discipline has a goal. Economics’ is satiation and equity with efficiency. But as we know all too well, satiation is an impossibility, and there exists a trade-off between equity and efficiency. Every model has a restructuring, every doctrine its correction. But what drives economics forward is its need to reallocate resources such that there is no excess, or dearth of any commodity. Globalization, like myriad other doctrines, is one. As economists, and most importantly fellow human beings, we can only drive ourselves to infinity, for at infinity, we achieve perfection.


ADRIJ. is currently in his undergraduate level, pursuing Economics, which happens to be one of his favorite things to spend his time reading (other than Batman comic books, guitar lessons, and reports from United Nations). He is deeply fascinated by the functionings of the economies around the world, world trade and finances: so basically everything related to the velocity of money. He also loves to debate it out in Model United Nations, dealing with international sociopolitical issues. He loves to spend a quiet evening by the sea all by himself with ABBA’s ‘Voulez-Vou’ and ‘Our Last Summer’ on a loop.

We sincerely thank you for your time and hope we shall have your continued support.
Aparajita Sen

(Editor: Songsoptok)

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