Globalization on Developing Countries Globalization

¶ … Globalization on Developing Countries

Globalization is an increasingly widespread phenomenon in the world today. Indeed, an increasing amount of countries are entering the global arena in order to take advantage of all that is offered. Both developing and developed nations are now working together to create the concept of the "Global Village," in which every country, business and individual has the opportunity to create a livelihood on a global scale.

This is not to say however that globalization does not have its challenges. One of the major problems the world currently faces is the increasing gap between the rich and the poor, as well as obesity and hunger. The rich and powerful countries appear to exploit as much as they can of the environment in terms of both natural and human resources. This perception creates mistrust and resentment among poorer countries.

At the heart of this resentment and mistrust is a lack of adequate information access and resources for poor communities and countries. This lack of information creates a barrier to global entry for individuals who have traditionally relied on their environment for sustenance. Any attempt by those in power to impose policies and standards upon these communities is then met with a basic resentment and mistrust that lies in a perception that control is being taken by outsiders. This resentment can be diminished by means of information.

It is important to provide poor communities and developing countries with the empowering force of access to information. Such access will help these communities to join the global effort towards sustainable practices both for themselves and for future generations. In this way, globalization can have benefits for everybody involved, but it will take considerable effort, particularly from those in power. All countries need to make the effort to create an attitude of openness and receptivity towards each other in order to make the most of their opportunities.

In its current manifestation, globalization has been a controversial issue since the beginning of the 20th century. However, increasing individuals, businesses and countries are not beginning to recognize the reality of globalization, and are concomitantly creating strategies that will help them benefit from the phenomenon.

According to the Egypt State Information Service (2003), the current shape of globalization is the result of a revolution in communication and information. Technology such as the Internet and other electronic forms of instant and cheap communication are creating what has become known as the "global village;" a worldwide community in which individuals and nations merge by means of communication and mutual understanding.

It is also important to recognize that, while the economic sector has perhaps been most strongly affected by globalization, this is not the only sector affected at all (Egypt State Information Service 2003). Indeed, the phenomenon transcends purely economic bodies such as the GATT and the World Trade Organization in terms of knowledge, intellect, culture and communication technology. A mutual understanding among individuals and groups from widely differing cultures is then effected by means of interaction and the free flow of information. A better understanding is then created among the different nations of the world, in effect discarding geographical and other physical borders.

The Egypt State Information Service (2003) refers to this interaction as the "Quiet Dialogue." This is also important in terms of the media, and particularly for the media represented within and by developing countries. Many developing countries now have access to printed and audio-visual media from across the world by means of Internet technology. This access provides these countries with the means to enter into communication and economic interaction within the global arena. On a global scale, the possibilities opened by the Internet are therefore significant in terms of transcending centuries-old limitations imposed by poverty and isolation. Two excellent examples of such empowerment include Egypt and India, which have become important role players on a worldwide economic and cultural scale.

Another important issue to recognize is that globalization has fairly recently become the subject of increased controversy. This is particularly so in terms of developing countries. Some believe that these countries are bound to be even further victimized and exploited by the most powerful forces in the global financial sector. Others in turn believe that these very countries, as mentioned above, can be empowered to use their cultural, political and natural resources in order to empower themselves and uplift their citizens from the trap of their poverty.

Few would however disagree that globalization has not affected lives and cultures across the world. Those who ignore or deny globalization and its possible benefits, do so at their peril. Indeed, attempting to obtain distance from the globalization phenomenon rather than being part of it could have an even more dire effect than those projected for globalization itself. While globalization could set a precedent for abusing the rights of developing countries, a lack of participation creates an even greater platform for perpetuating poverty and isolation from the rest of the world. Indeed, it is undeniable that the globalization phenomenon has created a revolutionary experience throughout the world, with varying degrees of controversy, in terms of the economy, politics, technology and culture (Egypt State Information Service 2003).

In terms of the economy, globalization creates not only the opportunity for abuse and exploitation, but of approached correctly, it also provides for the free movement of commodities, services and capitals. Countries can benefit from each other by creating a balance of wealth in terms of both goods and capital in the spirit of fair trading and respect.

This is also the case in terms of scientific and technological developments. Developing countries have indeed already drawn benefits from these by having access to information through the Internet, and by being able to better care for the poor and ill by means of the latest in medical and food technology. In this way, information and ideas, along with physical commodities and capital, are made more accessible to all nations of the world by means of globalization.

For better or worse, it appears that globalization has become an unstoppable phenomenon. Individuals, businesses and countries may choose to ignore this and distance themselves, or they can choose to accept and study globalization to draw the most benefit for themselves and their citizens from worldwide information, capital, and trade.

II. DEFINITION AND CONCEPTS OF GLOBALIZATION

In addition to its current effects upon developing countries, globalization has also resulted in considerable controversy in terms of its origins. Some place it as far back as ancient Greece, while others believe that the economies of ancient cultures were simply too different from those prevalent today to qualify as globalization as it is currently known.

In this regard, Moore & Lewis (2009) note that Sir Moses Finley's writings during the 1970s began the tradition of ancient economies being entirely irrelevant for the global economy today. Indeed, Finley's opinions were left unchallenged and are even today accepted as true in most learning environments.

The authors note that, while Finley's observations regarding the ancient Greeks were much more acceptable than those he held about the Romans. Indeed, just after the turn of the millennium, British scholars began to challenge these observations to investigate certain features of ancient Roman economies as much closer to those today than had been believed in Finley's day.

According to Moore & Lewis (2009), the ancient world indeed seem to know a kind of globalization and indeed a somewhat familiar world economy, mostly involving Europe, Africa and Asia. According to the authors, a type of "hemispherization" was manifest in the trading economy from Spain to China. The authors believe that ancient history does provide some insight in the global economy of today's globalized world.

Long-distance trade for example was at the order of the day as early as during the Stone Age. The city Sumer in Southern Iraq provided trading opportunities before 3000 BCE when its temple and royal palace were transformed to become public sector spaces. Both foreign and local trade occurred here. Over the centuries, private merchants developed connections further away, which included the Indus Valley, Egypt and the Aegean in the global trade environment.

Other ancient traders included the Assyrians and Phoenicians; the latter being responsible for the origins of maritime capitalism. The first manifestation of a multinational company as it exists today was the family businesses of the House of Ashur-Imitti, operating from northern Iraq as their headquarters. Later, the majority of the world trade system moved to the Mediterranean, with Cadiz, Spain and Nineveh, Assyria being major participants.

Egypt and India were already world trading partners in the ancient worlds. This is interesting in the light of the fact that they are considered as developing countries in today's globalized environment. The development of trade across Europe and Asia further manifested itself in terms of mixing cultures. The unification of Assyria and Babylonia by the Persians for example had the effect of a cross-cultural mixture governed by a single rulership. This resulted in the first manifestation of cross-cultural management, and furthermore the link between Europe and Asia was established in this way.

India was also part of this globalized trading world. The cities within the Indus Valley

were well planned and included a trading system that was managed much in the same way as that in the Middle East. Indian socialism, combined with an economy of private managers played a significant role in the success of their trading endeavors. Moore & Lewis note that ancient India could well have been the inventor of supply-side economics. This claim is based upon the Arthashastra, an Indian manual for economic planning and political policy, and how these should integrate to ensure the economic well-being of the country. General Indian thought was however much more focused upon the afterlife than upon successful economic and trade policies in the physical world.

According to Moore & Lewis, China was far ahead in terms of technology and management theory. Chinese thought was much more practical than that of India. With the collapse of the Shou dynasty during 600 BCE, the thinkers of the time were forced to carefully construct a system for social management. The centuries that followed saw both kind leaders such as Confucius, and cruel, controlling philosophies such as that formulated by Han Fei. After the death of the Dragon Emperor, Shihuangdi, subsequent leaders made an effort to integrate China in the rest of the world's trading system once more.

These developments set the stage for the current system of globalization. Although many developing countries and advocates against globalization have offered considerable resistance as a result of fearing exploitation and abuse. However, countries such as India and Egypt are realizing the importance of participating in rather than resisting the global arena.

At the heart of such participation is the current drive towards the spread of information, the elimination of national borders, and a focus on increasing similarity rather than differences among communities throughout the world (Egypt State Information Service 2003). Others however still hold the opinion that globalization is no more than the result of individual nations to control their own economic affairs. Opponents also view globalization as an attempt at dominating the world market by a few powerful companies, while all other social and national elements are repressed by economic considerations. It has however been established that globalization, whether for good or evil, is a persistent phenomenon, particularly in the light of new communication technologies. Hence it makes little sense to demonize it or distance oneself from it.

Several international entities, agencies and concepts have arisen as a result of globalization. The most prominent of these is the World Trade Organization (WTO), established during 1995 to replace GATT. The WTO is supported by international institutions, and is established according to the Briton Woods Agreement (1944).

Multinational companies have internationalized the economy to the extent that, according to 1998 figures, 30,000 companies were responsible for more than half of the world's production. Value assets for these companies exceeded $92 trillion. Multinational companies are the most common phenomenon associated with globalization.

Proponents of globalization note that it is beneficial not only on the scale of collective businesses, but also for individuals. Individuals are able to enter the global arena and gain international recognition for their products and work. On the international scale, both individuals and businesses have the opportunity to vastly increase their wealth, and also to help in the process of eliminating poverty.

Both developed and developing countries can then draw great potential benefits from globalization. However, it must be recognized that the possibility of exploitation and abuse of human rights remain. Regulations and safeguards should therefore be in place in order to limit the potential of such problems.

III. THE IMPACT OF GLOBALIZATION ON THE ECONOMIES OF DEVELOPING COUNTRIES

A major obstacle to taking advantage of the benefits of globalization is the lack of access to sufficient information. This is particularly a risk factor for developing countries without the means to gain access to information via the Internet and other media. According to Pari Baumann (2002: 4), the rural poor face new risks because of this. Particularly, this sector of society have experienced risks from ecological and seasonal variations that they could generally anticipate to some extent. To mitigate these risks, rural poor communities have developed a complex integration of livelihood strategies.

The problem is however that globalization is increasingly affecting the environments of these people in ways that they can no longer anticipate, because they do not have the information to do so. This increases their risk of poverty and environmentally unsustainable livelihoods, as factors that they do not understand and have no knowledge of are now added to the equation. Hence these communities have no control and therefore no strategizing options to mitigate the new risks.

Baumann notes that several factors are now affecting the ability of the rural poor to mitigate their risks. These include international trade agreements on markets and natural resources. Such agreements affect the availability of products and services to the rural poor. In addition, factors such as biotechnology and natural resource extraction have rapidly increased environmental risks and social upheaval in ways that the rural poor have no way to anticipate. Structural economic reform and environmental resource management also influence and shape the lives of these communities in ways that they cannot control. It is on this basis that opponents to globalization have demonized the phenomenon for its potentially harmful and abusive effects, particularly upon the poor and upon developing countries.

Baumann also makes note of an interesting attempt to include local communities in the global effort to mitigate environmental risks. This effort is based upon the general trend of redistributing power to local communities in the form of funds and responsibilities. This means that natural resource management arrangements are being redirected towards communities, who are expected to build upon traditional practices and knowledge in order to provide a sustainable livelihood for each community. Significantly, the effect of this is an increased sense of uncertainty among the rural poor. New structures and power relations in order to effect what Baumann refers to as the "devolution" of resource management are being introduced in addition to the ones that already exist. Mostly, these new structures are unknown to the communities involved, which increases uncertainty regarding the status of their own power relationship and management arrangements.

This uncertainty is easily perceived as an abusive attempt at imposing an unknown power structure and management arrangement upon local communities. Hence it is important to ensure that these communities have communication structures in place and that arrangements are communicated effectively. In-depth knowledge and concomitant reasons for new developments will mitigate much of the uncertainty experienced within these communities.

IV. THE EFFECTS OF GLOBALIZATION ON EGYPT AND INDIA

Egypt and India are examples of developing countries that have constructively entered the global economy. Indeed, the two countries also actively collaborate with each other in their effort to make effective use of the globalization phenomenon. The Egyptian President, Mohammed Hosni Mubarak, discussed several related issues in his presidential address when visiting India during 2008.

Although both countries have been involved in global trade since ancient times, this is not to say that their former positions of powerful global economies remain. Indeed, in the eyes of many, both Egypt and India are seen as developing countries faced with several challenges in terms of globalization. According to the President, Egypt and India are entering a "new era" in this regard, which means new realities and the necessity of economic reforms.

Both countries are thoroughly aware of the fact that they need to adjust their own economies to the dictates of globalization in its current form. India has for example begun its reform policies during the early 1990s. So successful were these reforms that the country can now be seen as a key player in the economy of the world. Doubtlessly this is beneficial for the local economy, which includes both businesses and individual citizens. However, it must also be noted that this does not necessarily mean the end of uncertainty or challenges on the rural and poverty scale within the country.

Egypt is similar to India in terms of its status as a developing country, and also in terms of its progress in the global environment and policy reform. In terms of the country's macro-economic indicators, Egypt has, like India, become an economic leader in Africa and the Middle East. According to the President, the country is also seen as an attractive Foreign Direct Investment destination.

Upon this basis, the President suggested that the two countries continue their collaborative efforts. Indeed, Egypt is collaborating with many countries in order to strengthen its economic position, and with great success. The country's trade relations and diversity have for example tripled in the four years ending with 2007, reading USD 3.5 billion. Indian investment in the country amounts to about USD 800 million, involving more than 20 Egyptian companies. According to the President, India's investments have been very fruitful, resulting from the sound macro-economic policies and investor-friendly nature of these investments.

Indian investments in Egypt include companies a wide range of sectors such as industry, financing and tourism. In order to protect investments, both India and Egypt have concluded bilateral agreements. In addition to the trade agreement, the countries also have agreements for promoting and protecting investments, as well as avoiding double taxation. ICT, energy and industry are seen as the most important investment areas to ensure future financial health for both countries as well as their global partners.

In addition to renovating its economic principles and policies, Egypt is also recognizing the importance of its workforce and its citizens in making a success of the country's position in the global marketplace. The country's educational reform process has focused upon lifelong training and learning. This ensures the empowerment of individuals to break the cycle of poverty through education and building skills.

The President also emphasized the importance of basing Egyptian society upon the flow of information. It has been seen above that poor rural communities who suffer from uncertainty is in this position because of a lack of adequate information resources. Disseminating information serves an empowering function in the global market. It also ensures the health of a country's "human capital," as noted by the President. This builds not only the country's current position, but also its future success on both collective and individual terms.

Through its agreements with the EU and COMESA, Egypt has positioned itself in a strategically connecting position between the Middle East and Arab world on the one hand, and the European and African markets on the other.

According to the Egypt State Information Service (2003), it is precisely because Egypt realized the importance of participating in globalization that it has reached its current position in the world market. Globalization is best served by being open to other countries as potential business partners. Elements such as interdependence among nations and the international recognition of the role of individuals are important to make the most of the opportunities offered on a worldwide scale. Egypt and India's current position of power emerge from the fact that these countries recognize the inevitability of globalization. It is a fact that cannot be denied and a force that cannot be stopped. By taking this realization to heart, Egypt and India have both implemented targeted economic reforms to attract international investments, according to the new world economy.

When closely examined, one might also say that this openness to reform and targeted economic practices can be connected to the positions of ancient India and Egypt as international traders. In contrast to China, these countries have been part of an international trading community since ancient times. There is no elitist or purist attitude; instead, these countries are focused upon creating for themselves and the rest of the world the optimal benefit from globalization.

As Egypt realized, the challenge of globalization can be met effectively only by cooperating with the world's major economic powers. Countries with similar economies need to cooperate with each other in order to create plans from which poor communities will also benefit. In this way, globalization can be a force for tremendous good and prosperity across the world. In order to achieve these types of goals, Egypt is collaborating with several international partners in addition to India.

The most significant cooperation in terms of scale is Egypt's agreement with the United States. The latter is involved in direct investments in Egypt amounting to $3 billion, making it Egypt's second-biggest investment partner after the EU. Furthermore, Egypt is 16th of all the countries exporting to the United States. Like its agreement with India, Egypt's relationship with the United States is also built upon several bilateral agreements. These include agreements regarding the protection of investments, and the Anti-Dual Tax agreement of 1980. Furthermore, there are a number of committees and other bodies to ensure the sustainability of the connection between the countries.

Egypt also cooperates with other major countries and entities, such as its partnership agreement with Europe. The agreement promotes a balanced economic and social relationship between the countries, which is further evidence of the benefits that globalization can have for the international community. The benefits of a relationship with the European Union for Egypt are obvious. The EU represents 15 countries, among which count France, Denmark, Sweden, and Austria. It has therefore been suggested that the European Union agreement with Egypt should occur on a regional basis

Japan and China also became more prominent in the Egyptian trading world as a result of the EU agreement. The country's exports have also increased to these eastern countries as a result of the connection via the EU. Egypt is also closely connected with the Arab Common Market, which was established during the 1960s. This market was neglected until 1997, when President Mubarak called for its revival.

According to the President, such a revival would stimulate the benefits of globalization throughout the region, by providing for free economies and an increase in competition within the world market. By promoting the revival of this market, Egypt is using its favorable position to also empower the Arab market to become part of the global economy, even while concentrating on the unique challenges within the region. The homogeneous culture and social texture of the Arab countries sets the stage for internal strength within the market. According to the Egypt State Information Service (2003), there are several good reasons for this.

For any culture or country to be promoted on a worldwide scale, it is important to achieve economic integration into the world economy. This will boost the Arab economy in order to also serve its poor communities, which are particularly numerous in these areas. Some Arab countries are also very nationalistic and proud, making them unable to some extent to understand the benefits of entering the world economy. Indeed, the Egypt State Information Service indicates only 8% of the total Arab trade occurs by inter-trade, implying that considerable attention is needed in this regard. However, the report also notes that there is a strong economic link of the Arab economy with the outside world.

Egypt is most instrumental in its connection between Africa and the rest of the world. African countries are in dire need of empowerment and poverty reduction. Egypt is working with Africa and the rest of the world to boost integration and to provide initiatives for development. In this regard, Egypt is playing a central role in the Common Market for East and South Africa (COMESA). The February 2000 COMESA summit for example included Egypt, Angola, Burundi, Djibouti, Kenya, Malawi, Mauritius, and other African countries.

Egypt is therefore relentlessly working to be a truly integrated, or "joint" state, comprising its relationship with all the regions of the world. These relations go further than just a passing acquaintance, as the country is making real progress in terms of poverty reduction and the worldwide freedom of information. The country is both historically and geopolitically placed in a strategic position to accomplish this.

Egypt is therefore perfectly positioned for its attempt to maintain stability within the world's economy. It accomplishes this by means of its interactions with both global and national entities. Egypt and by association India are therefore strategically positioned order to promote market freedom by preserving the social dimension of current economic policies. On a local level, just as much as on an international level, these countries work to transcend cultural boundaries and limitations to provide upliftment for all individuals and businesses.

V. DEVELOPING COUNTRIES VS. INDUSTRIALIZED NATIONS

Developing countries can learn much from Egypt and India's strategies to maintain both their local integrity and viably enter the global arena. Egypt has for example worked specifically to find a balance between maximizing the advantages the country can draw from globalization and minimizing the concomitant disadvantages.

In terms of globalization, the country therefore works to promote its relationship with the outside world while at the same time maintaining its national security in terms of not only politics, but also of social and cultural aspects within the country. While maintaining this, Egypt's vision for globalization also includes modernizing its culture to more clearly adhere to the requirements of the global arena (Egypt State Information Service 2003).

Rather than therefore demonizing globalization as a phenomenon, it would serve developing nations better to attempt to find a balance between their own social and political integrity, and accepting the economic realities of globalization. Egypt's vision for example views globalization as an "age of wonders," and accepts it as such in order to further its own economic purposes.

In order to accomplish their current position, both Egypt and India have accepted the communication necessities of the globalized world. Significantly, this was possible by means of knowledge and education. As noted above, the main problem relating to globalization and the controversy surrounding it is the fact that those trapped in poverty have no means of accessing the necessary information to take advantage of globalization.

Poverty is a global phenomenon, even in powerful nations such as the United States.

This is even more so in developing nations. It is therefore important to understand that globalization can serve as a vehicle towards the empowerment of these sectors of society. As mentioned above, developing nations such as Egypt and India have recognized that globalization is not a phenomenon that will diminish. With the current manifestations of information and communication technology, both developing and developed nations would do best to empower their poor communities to handle the demands of globalization.

The problem of poverty and lack of access to information can also manifest itself on a countrywide scale, particularly in the case of poverty-stricken third-world countries. In such cases, developing countries that have empowered themselves, such as Egypt and India, can play an educating and empowering role. Although the associated problems are neither simple nor easy to resolve, an attitude that is open to development an collaboration would facilitate the process considerably.

In this, both developing and developed countries face considerable challenges, which do not relate only to barriers to information flow. Other issues, such as social and political restrictions, may play a role in the lack of information and barriers to global entry. Some leaders may for example display the attitude mentioned earlier, focusing upon the individual autonomy of countries, and that globalization would detract from such autonomy. This is however not a solution to handling the globalization issue. Developing countries need to understand that globalization can serve an important role in the reduction of poverty without necessarily detracting from cultural autonomy.

Egypt and India have however proven that developing countries can enter the global arena successfully. Barriers such as those noted above can be overcome with the correct attitude and if an educational role is assumed by trusted partners. Egypt's role in the Arab countries can serve as an example. Developing countries such as Egypt and India have cultures that are similar to countries where poverty and a lack of information flow still prevails. This lack of information creates the problem of mistrust. In addition to influential leaders who distance themselves from globalization, a sense of basic mistrust of the unknown may prevail among developing and poor nations. In addition, the perception can be that developed nations are exploitative and operate from a paradigm of greed. These perceptions will need to change if globalization is to become a beneficial reality for all nations.