MASTER OF ARTS

IN SOCIOLOGY
SEMESTER‐II

SOC-2.4: SOCIOLOGY OF
GLOBALISATION
CREDIT: 4

BLOCK: 1, 2, 3 & 4

AUTHOR

Prof. Navaneeta Rath

 C.D.O.E.
Education For All

ABOUT THE UNIVERSITY

Founded in 1943, Utkal University is the 17th University of the country and the first of
Orissa. It is the result of the efforts of Pandit Nilakantha Dash, Maharaja Krushna
Chandra Gajapati, Pandit Godavarish Mishra and many others who envisioned a
progressive education system for modern Odisha.

The University started functioning on 27 November 1943, at Ravenshaw College,

Cuttack. It originated as an affiliating and examining body but shifted to its present
campus spread over 400 acres of land at Vanivihar in Bhubaneswar, in 1962.

A number of Postgraduate Departments and other centres were established in the

University campus. There are presently more than two hundred general affiliated colleges
under the University. It has eleven autonomous colleges under its jurisdiction, twenty-
eight constituent postgraduate departments, 2 constituent law colleges and a Directorate of
Distance & Continuing Education. It boasts of a centre for Population Studies, a
School of Women’s Studies, an Academic Staff College, a pre-school and a high school.
The University also offers a number of self-financing courses.

NAAC accredited in its 3rd cycle with A+ status in 2023. It is a member of the
Indian Association of Universities and the Commonwealth Association of
Universities.
 C.D.O.E.
Education For All

CENTRE FOR DISTANCE & ONLINE EDUCATION UTKAL

UNIVERSITY: VANI VIHAR BHUBANESWAR:-751007

From the Director’s Desk

The Centre for Distance and Online Education, originally established as the University
Evening College way back in 1962 has travelled a long way in the last 52 years. ‘EDUCATION
FOR ALL’ is our motto. Increasingly the Open and Distance Learning institutions are aspiring to
provide education for anyone, anytime and anywhere. CDOE, Utkal University has been constantly
striving to rise up to the challenges of Open Distance Learning system. Nearly one lakh students
have passed through the portals of this great temple of learning. We may not have numerous great
tales of outstanding academic achievements but we have great tales of success in life, of
recovering lost opportunities, tremendous satisfaction in life, turning points in career and those who
feel that without us they would not be where they are today. There are also flashes when our students
figure in best ten in their honours subjects. Our students must be free from despair and negative
attitude. They must be enthusiastic, full of energy and confident of their future. To meet the needs of
quality enhancement and to address the quality concerns of our stake holders over the years, we are
switching over to self instructional material printed courseware. We are sure that students would go
beyond the course ware provided by us. We are aware that most of you are working and have also
family responsibility. Please remember that only a busy person has time for everything and a lazy
person has none. We are sure, that you will be able to chalk out a well planned programme to study
the courseware. By choosing to pursue a course in distance mode, you have made a commitment for
self improvement and acquiring higher educational qualification. You should rise up to your
commitment. Every student must go beyond the standard books and self instructional course material.
You should read number of books and use ICT learning resources like the internet, television and
radio programmes etc. As only limited number of classes will be held, a student should come to the
personal contact programme well prepared. The PCP should be used for clarification of doubt and
counseling. This can only happen if you read the course material before PCP. You can always mail
your feedback on the course ware to us. It is very important that one should discuss the contents of
the course materials with other fellow learners.

We wish you happy reading.

DIRECTOR

3
 SOC-2.4: SOCIOLOGY OF GLOBALISATION
CONTENTS
Block No Block Unit No Unit

01 The Historical and Social Context

01 02 Distinctive Characteristics of
Globalisation
03 Dimensions of Globalisation: Economic,
Globalization
Technological, Social, Cultural and
Environmental
04 Arguments in Favour and Against
Globalisation
Block No Block Unit No Unit

05 Modernization and Globalization

02 Globalisation and 06 Neo-Liberalism and Global Capitalism
Global Processes 07 Globalization and Nation State

Block No Block Unit No Unit

03 08 World Bank
Global 09 MNCs
Institutions and 10 WTO
Actors 11 IMF
12 NGOs
Block No Block Unit No Unit

13 Impacts of Globalization on Culture

04 Impacts of 14 The Ethos of Globalisation (Individualism,
Globalization Freedom and Consumerism)
15 Impacts of Globalization on Women
16 Impacts of Globalization on Poor

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 CENTRE FOR DISTANCE AND ONLINE EDUCATION, UTKAL UNIVERSITY,
BHUBANESWAR
Program Name: Master in Sociology Program Code: 010316
Course Name: Sociology of Globalization

Course Code: SOC-2.4 Semester: II Credit: 4 Block No. 1 to 4 Units No. 1 to 16

EXPERT COMMITTEE:
1. Prof. Navaneeta Rath
Dept. of Sociology Utkal University, Vani Vihar

2. Dr. Rabindra Garada

Dept. of Sociology Utkal University, Vani Vihar

3. Dr. Tanaya Mohanty

Dept. of Sociology Utkal University, Vani Vihar

COURSE WRITER:

Prof. Navaneeta Rath

CONTENT AND STRUCTURE EDITOR

Dr. Pralap Kumar Sethy
Faculty and Course Co-ordinator in Sociology, CDOE, Utkal University

PUBLISHED BY
CDOE, UTKAL UNIVERSITY

5
 SOC-2.4: SOCIOLOGY OF GLOBALISATION

CONTENT

Block / Units Page No.

Block-01 Globalization 1 - 56
Unit-01 The Historical and Social Context
Unit-02 Distinctive Characteristics of Globalisation
Unit-03 Dimensions of Globalisation: Economic,
Technological, Social, Cultural and Environmental
Unit-04 Arguments in Favour and Against Globalisation

Block-02 Globalisation and Global Processes 57 - 101

Unit- 05 Modernization and Globalization
Unit- 06 Neo-Liberalism and Global Capitalism
Unit- 07 Globalization and Nation State
Block-03 Global Institutions and Actors 102 - 158
Unit- 08 World Bank
Unit- 09 MNCs
Unit- 10 WTO
Unit- 11 IMF
Unit- 12 NGOs
Block-04 Impacts of Globalization 159 - 196
Unit- 13 Impacts of Globalization on Culture
Unit- 14 The Ethos of Globalisation (Individualism, Freedom and Consumerism)
Unit- 15 Impacts of Globalization on Women
Unit- 16 Impacts of Globalization on Poor

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 Block-01 Globalization
Unit-01 The Historical and Social Context
Unit-02 Distinctive Characteristics of Globalisation
Unit-03 Dimensions of Globalisation: Economic,
Technological, Social, Cultural and Environmental
Unit-04 Arguments in Favour and Against Globalisation

1
Unit-01 The Historical and Social Context
Structure
1.1 Learning Objectives
1.2 Introduction/ Assessment of Prior Knowledge
1.2.1 Origin of the Concept of Globalisation
1.2.2 Sociological Interpretation of the Term Globalisation
1.2.3 Theories of Globalisation
1.3 The Historical and Social Context of Globalisation
1.3.1 The First Wave of Globalisation Summary
1.3.2 The Second Wave of Globalisation
1.3.3 The Third Wave of Globalisation
1.3.4 The Fourth Wave of Globalisation
1.3.5 The Fifth Wave of Globalisation
1.4 Summary
1.5 Self Assessment Questions
1.6 Key Words
1.7 Study Guide

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1.1 Learning Objectives

After studying this unit the learner will be able to:

 Conceptualize what is globalisation and justify it as a social process
 Understand the meaning and definition of globalization
 Trace the historical emergence of globalization process
1.2 Introduction/ Assessment of Prior Knowledge

Globalisation is a distinguishing trend and feature of the modern society. As a term it had its
origin in French and American writings in the 1960s. But, it came into popular usage in the
1980s. Since then it has become a debatable topic among the academia, policy planners and
practitioners. It is a social process that has resulted in greater interconnectedness and integration
of people and nations across the borders. The process has stirred greater movement of
individuals, ideas, knowledge, capital and goods across the national borders. Simply it can be
described as a social process that has resulted in the dissemination of information, dispersion of
ideas, diffusion of knowledge and technological knowhow, distribution of resources leading to
the transformation of societies. It is a process of interaction and integration among the people,
companies, and governments of different nations, a process driven by international trade and
investment and aided by information technology. Globalization is the worldwide process of
homogenizing prices, products, wages, rates of interest and profits. It is a process by which the
people of the world are unified into a single society and it leads to the integration of national
economies into the international economy through trade, foreign direct investment, capital flows,
migration, and spread of technology. Thus, globalization is a single word describing multiplicity
of phenomena. It is omnipresent, ubiquitous and multidimensional.
Today globalization is a common usage, but invites controversial interpretations. As a term it is
poorly defined. There are some commonalities in the interpretation of the term in different
disciplines. The commonalities include terms like uniformity, standardisation through a
technological, commercial and cultural synchronisation coming from the west. Today, every
discipline has developed its own way of defining globalisation. Thus, economists define
globalisation as economic internationalisation and spread of capitalist market relations through
trade liberalization and technology transfer, economic growth, increase in employment and
income distribution. The political scientists visualise globalisation as increasing density of

3
interstate relations and development world power institutions determining global politics. To the
sociologists globalisation is the development of uniform global institutions expediting the
process of social change and leading to the emergence of a “world society”. In culture studies,
the emphasis is on the development of cultural communication influencing the culture and
identity of the groups across the nations.
Globalization can be conceived as a process (or a set of processes) which embodies a
transformation in the spatial organization of social relations and transactions, generating
transcontinental or interregional flows and networks of activity, interaction and power. It is
characterized by four types of change:
- First, it involves a stretching of social, political and economic activities across political
frontiers, regions and continents.
- Second, it suggests the intensification, or the growing magnitude, of interconnectedness and
flows of trade, investment, finance, migration, culture, etc.
- Third, the growing extensity and intensity of global interconnectedness can be linked to a
speeding up of global interactions and processes. Due to globalisation, the evolution of world-
wide systems of transport and communication increases speeding up the velocity of the diffusion
of ideas, goods, information, capital, and people.
- Fourth, the growing extensity, intensity and velocity of global interactions can be associated
with their deepening impact. This implies that the effects of distant events can be highly
significant on a local community far away and even the most local developments may come to
have enormous global consequences. In this sense, the boundaries between domestic matters and
global affairs can become increasingly blurred.
1.2.1 Origin of the Concept of Globalisation

Tracing back the etymology of the word “globalisation”, it can be pointed out that the term was
coined as early as 1959, although it gained momentum only after 1980.In 1961, the Webster
dictionary for the first time introduced the definitions of the words “Globalism” and
“Globalisation” as observed by Malcom Waters. As the very name globalisation suggests, it has
emerged from the adjective “global” meaning worldwide. Peter Kools states the adjective
“global” dates back to the 16th century England and came into world attention during the period
of expansion. The word global attained a greater attention in the writings of Mc Luhan who
referred the world to a “Global Village”in1961.To Luhan the metaphor global village refers to
4
the more united world community.
1.2.2 Sociological Interpretation of the Term Globalisation

Coming to the domain of Sociology, it can be noted that the term “Globalization” has got
extensive treatment in the hands of many sociologists. The sociologists perceive that though
economic in origin, the term has enormous social implications. To cite some examples, to
George Ritzer globalization refers to the rapidly increasing worldwide integration and
interdependence of societies and cultures. Scholte defines globalization as deterritorialization or
the growth of ‘supraterritorial’ relations between people. Globalization refers to a farreaching
change in the nature of “social space”. To quote Albrow globalisation includes “all those
processes by which the peoples of the world are incorporated into a single society, global
society”. In the languages of Ronald Robertson “Globalization as a concept refers both to the
compression of the world and the intensification of consciousness of the world as a whole.”To
Anthony Giddens, “Globalization can thus be defined as the intensification of worldwide social
relations which link distant localities in such a way that local happenings are shaped by events
occurring many miles away and vice versa” . Water defines globalization as “a social process in
which the constraints of geography on economic, political, social and cultural arrangements
recede, in which people become increasingly aware that they are receding and in which people
act accordingly”. T o quote Held et al, “Globalization can be thought of a process (or set of
processes) which embodies a transformation in the spatial organization of social relations and
transactions – assessed in terms of their extensity, intensity, velocity and impact – generating
transcontinental or interregional flows and networks of activity, interaction, and the exercise of
power”.
U. Beck has underlined the differences among ‘globality,’ ‘globalism’ and ‘globalization.’
According to him, “‘globality’ refers to the fact that individuals are increasingly living in a
‘world society’ in the sense that ‘the notion of closed spaces has become illusory. Meanwhile,
‘globalism’ is the view that the ‘world market’ is now powerful enough to supplant (local and
national) political action;” and “‘globalization’ is the blanket term to describe ‘the processes
through which sovereign national states are criss-crossed and undermined by transnational actors
and varying prospects of power, orientation, identities and networks’.
1.2.3 Theories of Globalisation

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According to Held and McGrew there are three main schools of thought relating to globalization.
The versions of these three schools about globalisation dominate the entire discourses on
globalisation. These three schools are: the Hyperglobalites School, the Skeptics School, the
Transformationalists School.
The Hyperglobalites School: The Hyperglobalites focus on economic globalization which
argues to denationalize economies and thereby creating global markets which would transcend
state control, resulting in a loss of autonomy and sovereignty for the state.
The second school of thought, that is the Skeptics School argues that globalization is a myth.
Skeptics also question what exactly is global about globalization. To them, it is not a universal
phenomenon. On this ground, the concept itself loses validity and is not specific.
The third school of thought i.e. the Transformationalists School argues that globalization has
structural consequences and is a driving force in society which influences political, social and
economic change . Globalisation is responsible for social transformation. Due to globalisation,
there is structural change in the society and a global shift with respect to power and authority
takes place following the process.
1.3 The Historical and Social Context of Globalisation
Globalisation is not a revolutionary outcome, but an evolutionary development. Even if, it is
often termed as a contemporary or modern phenomenon, it can be studied from a historical
perspective. As a process it is noted by sociologists to be antique spanning many centuries or
millennia. Herman van der Wee, one of the world’s famous economic historians of Belgium
commented globalisation is a new word for an old process that has been taking place for
centuries. This clearly indicates globalisation is a historical process. It is sometimes identified by
scholars that there are three tipping points that have led to global convergence of today under the
banner of globalisation. These are: the consolidation of Asian and Indian ocean net works having
its root one millennium before, the discovery of sea routes five centuries before with European
expansionism and the Industrial revolution galvanising the European economy two centuries ago.
However, most of these attempts were country or continent specific and more or less regional
rather than worldwide in nature. Though some scholars have tried to designate these processes as
“Proto globalisation “or “Archaic globalisation”, the currencies have not achieved much
intellectual acceptance.
Thus, globalisation is a historical process. It has witnessed many preceding stages in human

6
history which can be identified as the prelude to today’s globalisation. There is no consensus on
the initiation period of the process of globalisation among the scholars. However, all agree upon
the point globalisation is a social reality that the world has experienced due to the interaction of
complex economic, political, socio-cultural and biological factors. Economic crises leading to
political disruptions have led the foundation of global convergence. Further, social and cultural
changes have changed human vision, prompted them to explore the world around them, led to
economic expansion and changes and changed the political boundaries. Biological factors like
the break of epidemics have propelled human migration which have contributed significantly for
cultural diversities, social change and crossing the borders leading to flow of individuals, ideas
leading to cross border integration, the basic foundations of globalisation. The economist vision
of the initiation of the process of globalisation is shorter than that proposed by the historians. The
historians trace back the history of globalisation to the Industrial revolution of the west. To them
the three landmarks that symbolise the beginning of global interaction and integration include the
Industrial Revolution of the west which took place 1800 years ago, the maritime expansion
which had its origin around 1500 years ago and the integration of Asia which took place 1000
years before. However, polarised is the views of Friedman who in his famous statement The
World is Flat proposed that globalisation is of recent origin. Though it was mooring from 1945
after the end of the great depression and the world wars, it had a rapid development towards the
end of the twentieth century.
To some historians, maritime revolution was initiated by Europe by 1500s. This became a
turning point in the human history as this led to establish interconnectivity between Europe with
Asia, Sub Saharan Africa and the American continent. Maritime revolution was initiated through
the development of maritime technology and resulted in maritime exploration. This contributed
for mercantile expansion. By this revolution, humanity could triumph over geographical barriers
and the geographical segregation the nations were experiencing hitherto. This led to the influx of
new culture, knowledge, wealth into a nation. The Italian Renaissance effects, the ideals of
French and American Revolution were diffused across the European borders and this was the
beginning point of globalisation. Most historical evidence, refer 1500s as a watershed in the
evolution of the process of globalisation.
Industrial revolution was an accelerant of global integration. It opened a new era in the human
history by increasing production and the GDP in the western countries. This led to the foundation

7
for market expansion which is a precursor to globalisation. This is often termed as the second
phase of globalisation. During this phase, there was vast transformation in the production
technology and the demand of the consumers. Mass scale machine based production increased
the quantum of production which forced for expansion of the market beyond the national
borders. This resulted in colonial plunder, investments outside the national borders, colonial
expansion. This was the prelude to global integration.
Geoffrey Gunn an authority on Asian history and International Relations identifies the period
spanning from 1500 to1800 as the era of first phase of globalisation. To him the first confluence
between the east and the west took place during this period. Global capitalism was in its wake
and there was the ascendancy of the west. This was percolating to the colonies and cultural and
material exchanges were fast taking momentum. However, globalisation halted due to the two
world wars that took place in the first half of the twentieth century.
Globalisation was again spearheaded during the 1970s when the East Asia miracle took place.
This was led by the key role played by the transnational companies. Finally, in the beginning of
the twenty first century, with the awakening of the sleeping giants like China and India,
globalisation started taking a new face. During this time, all countries started rowing in the
globalisation boat. All became equal partners and participants in the process. The income
inequality started declining. The national sovereignty started eroding and the world organisations
and corporate giants began directing and dictating state power.
Thus, the historical context of globalisation can be summarised under five different phases which
can be described as the five waves of globalisation. These waves have touched the world in
different periods which are as follows.
 First wave of globalisation taking place between Third to Tenth centuries.
 Second wave of globalisation taking place between Eleventh to the end of the
Fourteenth century.
 Third wave of globalisation between Fifteenth to Nineteenth centuries.
 Fourth wave between the beginnings of twentieth century to the first half of twentieth
century.
 Fifth wave from the last two decades of twentieth century and continuing till date.
1.3.1 The First Wave of Globalisation
The first wave of globalisation refers to the period between third to tenth century B.C. This is the

8
period which marks the beginning of cross national connectivity. Andre Gunder Frank an
economist associated with dependency theory of development proposes attempts for
globalisation has been in existence since the rise of trade links between Sumer and Indus valley
civilization in the third century B.C. Thus, the rise of river valley civilizations and their
contribution for surplus production and facilitation of navigation facilities contributed
significantly for the establishment of contacts between hitherto unrelated space and people.
The Helleniistic age also noted some developments in global integration. The Hellenistic Period
is a part of the ancient period. It is associated with the eastern Mediterranean and Middle East
region. It covers the period between the death of Alexander the Great in 323 B.C and the
conquest of Egypt by Rome in 30 B.C. This period led to Greek colonisation and spread of
Greek culture. It started spreading to Asia after Alexander’s conquest of Asia. In consequence,
the Hellenistic Period is usually accepted to begin in 323 BC with Alexander's death and ends in
31 BC with the conquest of the last Hellenistic kingdom by Rome, the Lagid kingdom of Egypt.
For the Asian part, it can be lengthen to 10 BC, when the last Indo-Greek kingdom was
conquered by Indo-Sakas. Due to the Greek political presence, during this period,
commercialized urban centers were spreading from India to Spain. The Grecian cities of
Alexandria, Athens and Antioch remained at its centre.
Further, the trade links between Roman Empire and Parthian empire symbolised the
establishment of global link. During this said period, silk routes were established which added to
the process of accelerating global connectivity. The Silk Road is a historically important
international trade route between China and the Mediterranean.As China silk comprised a large
proportion of the trade along this ancient road, in 1877, it was named the 'Silk Road' by
Ferdinand von Richthofen, an eminent German geographer. The Silk Road was a network of
commercial trade routes, formally established during the Han Dynasty of China, which linked
the regions of the ancient world. It is noted that the development of the Silk Road from China to
Rome allowed 300 ships in a year sailing between Greco Roman world and India .This overcame
the geographical barriers that prevented flow of people, wealth, goods for years together.
The Islamic Golden Age was a watershed in the evolution of the process of globalisation. The
Islamic Golden Age traditionally dated from the mid-7th century to the mid-13th century at
which Muslim rulers established one of the largest empires in history. During this period, artists,
engineers, scholars, poets, philosophers, geographers and traders in the Islamic world contributed

9
to agriculture, arts, economics, industry, law, literature, navigation, philosophy, sciences,
sociology, and technology, both by preserving earlier traditions and by adding inventions and
innovations of their own. Also at that time the Muslim world became a major intellectual centre
for science, philosophy, medicine and education. In Baghdad they established the “House of
Wisdom”, where scholars, both Muslim and non-Muslim, sought to gather and translate the
world’s knowledge into Arabic in the Translation Movement. During this period, the Jewish and
Muslim traders and explorers established sustained economy across the Old world resulting in
the establishment of trade of sugar and cotton, diffusion of knowledge and technology.
The advent of the Mongol empire with Genghis Khan’s imperialist spirit too paved the way for
globalisation. Between 1206 and his death in 1227, the Mongol leader Genghis Khan conquered
nearly 12 million square miles of territory. Along the way, he cut a ruthless path through Asia
and Europe. Thus he helped to open contact between East and West. He wanted trade and goods,
including new weapons, for his nation. A Mongol caravan of several hundred merchants
approached a recently formed Khwarezmian Empire in Persia and Central Asia. Thus, cross
border exploration and migration initiated by the great imperialist was a step forward for
globalisation.
Thus, in the first phase of globalisation factors like rise of civilizations, maritime revolution,
establishment of trade links, knowledge generation and diffusion and imperialism contributed for
the establishment of cross nation connectivity and exchange of goods, ideas, knowledge and
wealth. However, this wave of globalisation came to an end with the Germanic invasion of the
Roman Empire.
1.3.2 The Second Wave of Globalisation
The second wave of globalisation spans from eleventh to the end of the fourteenth century.
Though the duration of this phase is very limited and short, yet from the outcome point of view it
is quite significant. During this phase the repercussions were quite spectacular. During this
period, large estate owners in Europe introduced technological revolution in production which
resulted in the commercialisation of agriculture. Productivity had a sharp rise due to the process
of mechanisation and it led to the generation of surplus. When subsistence agriculture was
replaced by surplus production, a need arose to expand the market to exhaust the surplus and the
profit making from production became the target. This compelled the producers to hunt for
outside markets where their products will be demanded and they started expanding the market by

10
establishing regular trade relations outside their own countries.
Another historical event of this phase was the hundred years of war fought between England and
France. This war gave a substantive boost to the process of globalisation. The Hundred Years'
War was a long struggle between England and France over succession to the French throne. It
lasted from 1337 to 1453.So it was in reality a war for "116 Years'. The war started off with
several stunning successes on Britain's part, and the English forces dominated France for
decades. Then, the struggle witnessed see-saws, moving back and forth and the success shuttling
between Britain and France. This war had a disastrous consequence on the entire European
continent. This halted trade momentum temporarily due to terror and turmoil. But it brought new
apprehensions to the people. Plagued by the fear of war, diseases and to have a sustainable
livelihood, people started out migrating from these war affected countries. This was undertaken
in groups. This cross border migration became a starting point of globalisation.
During this period of history, maritime commerce gained prominence in the port cities of
Europe. Particularly, the port cities like Venice in Italy and Bruges in Belgium played a
significant role in linking countries and transferring goods and people to outside lands. Bruges
had a strategic location at the crossroads of the northern Hanseatic League trade and the southern
trade routes. The traders of Bruges developed, or borrowed from Italy, new forms of merchant
capitalism, whereby several merchants would share the risks and profits and pool their
knowledge to markets. They employed new forms of economic exchange, including bills of
exchange (i.e. promissory notes) and letters of credit. The city eagerly welcomed foreign traders,
most notably the Portuguese pepper and spice traders. This massive trade linkage laid the
foundation of globalisation. More significant was the port city of Venice. Venice became well
known throughout the world for its flourishing trade centres and textile industry, which
connected the Western world with the East. Their location gave them an advantage over other
Italian cities to connect with other trading ports from across the world. Even before the
Renaissance, Venice had already been trading with the Islamic world as early as the ninth
century, and continued it up to the sixteenth century. During the 1200s, trade between Egypt,
Syria, Southeast Asia, Iran and China was present, especially with their trade of spices, grain,
wine, and salt. The spice trade with the east was the reason for Venice’s expansion of their high
quality textile manufacturing. The high quality woollen textiles, for example, that were put on
the market were in exchange for supply of spices from the east. Venice’s ability to find excellent

11
labour, raw materials, and capital contributed to their success in trading desirable woollen
textiles in exchange for eastern goods. The city’s “textile trade was the single most important
achievement of the Italian city state economy” during the 14th century. These trade advantages
of the city increased global interaction, exchange and integration which can be treated as
rudiments for initiating the process of globalisation.
The mid-to-late 15th century has quite rightly been called the age of Exploration and Discovery.
It was an age in which European sailors and ships left the coastal waters of the Old World and
embarked on their adventure on the vast "green sea of darkness." First, Portuguese ships, then
Spanish and finally, in the late 15th and early 16th centuries, British, French and Dutch ships set
out to discover a world, a world they originally called the Other World, but eventually called the
Mundus Novus -- the New World. This was a significant milestone in the process of global
integration and connectivity.
However, this phase came to an end because of rising competition resulting in war, plunder and
exploitation which impoverished the people to an infinite extent. There was a reaction against the
outside intrusion. No doubt this phase was significant in the process of globalisation. Market
expansion, forced migration, maritime commerce, trade and turbulence contributed significantly
to globalisation during this period.
1.3.3 The Third Wave of Globalisation
The third wave of globalisation swept the world between fifteenth to nineteenth centuries. After
1453, warfare in Eastern Europe and Asia and the fall of Constantinople to the Ottoman Turks
made overland trade difficult. So, Europeans began looking for a sea route to India and East
Asia. By this time, there were technological innovations. Navigational instruments and sails were
developing which enabled Europeans to undertake global exploration. It can be noted that the
Portuguese sailors ventured further and further southward along the Atlantic coast of Africa,
searching for a new route to Asia. The Portuguese did ultimately reach India in 1498.This made
European colonisation hassle free.
During this phase, the exploratory voyage of Columbus across the Atlantic Ocean in1492
discovered the trade routes to the new world. He made four trips to the Caribbean and South
America during the years 1492-1504. This established a link between Europe and the new world.
During the period from the late fifteenth through the seventeenth century, the Spanish empire
expanded the extent of its power, influence, and wealth throughout the world. In particular the

12
Spanish were responsible for exploring, conquering, and colonizing significant portions of
Central America, South America, and the Caribbean. The Spanish Empire, along with
neighbouring Portugal, initiated the Age of Discovery or the Age of Exploration. Compared to
Portugal, Spain succeeded in establishing more permanent and complex settlements in the New
World, largely through centralized colonial governments. During the Age of Discovery, several
other burgeoning European empires such as England and France followed the lead of the Spanish
Crown and increasingly extended their power and influence throughout the New World. Starting
in 1492, Queen Isabella of Castile and King Ferdinand of Aragon largely spearheaded the Age of
Exploration under the newly unified kingdom of Spain. Overseas expeditions and voyages were
typically sponsored by the monarchy or by members of the nobility. Spreading Catholicism and
converting indigenous people acted as a major impetus for colonization and Spanish imperial
expansion. Christopher Columbus was responsible for putting Spain into its golden age of
imperialism and colonialism. The colonial territories founded by Columbus throughout the
Americas yielded enormous wealth for the Spanish Empire and established the European
supremacy overseas until the late sixteenth century. Columbus’s discoveries also introduced the
existence of the Americas, or the New World, to European society. The world started getting
integrated.
The Age of Discovery brought a broad change in globalization, being the first period in which
Eurasia and Africa engaged in substantial cultural, material and biologic exchange with the New
World. Shortly before the turn of the 16th century, Portuguese started establishing trading posts
(factories) from Africa to Asia and Brazil, to deal with the trade of local product like gold, spices
and timber.
Global integration continued with the European colonization of the Americas initiating
widespread exchange of plants, animals, foods, human populations (including slaves),
communicable diseases, and culture between the Eastern and Western hemispheres.
The next phase is known as proto-globalization. It was characterized by the rise of maritime
European empires, in the 16th and 17th centuries, first the Portuguese and Spanish Empires, and
later the Dutch and British Empires. In the 17th century, globalization became also a private
business phenomenon when chartered companies like British East India Company (founded in
1600), often described as the first Multinational Corporation, as well as the Dutch East India
Company (founded in 1602) were established.

13
Keith Griffins writes that eighteenth century presented humankind two visions. They are:
economic prosperity based on free markets and a vision of liberty, equality and fraternity
championing the cause of democracy. A watershed event in modern European history, the
French Revolution began in 1789 and ended in the late 1790s with the ascent of Napoleon
Bonaparte. During this period, French citizens redesigned their country’s political landscape,
uprooting centuries-old institutions such as absolute monarchy and the feudal system. The
French Revolution was influenced by Enlightenment ideals, particularly the concepts of popular
sovereignty and inalienable rights. This brought rapid political transformation. Soon these ideas
had a dispersion effect across the borders of France and led to a process of homogenisation of
these ideas which is a symbol of globalisation. Prototype political institutions were in demand by
the people in many parts of the world.
The idea of economic prosperity germinated from the Industrial revolution. The Industrial
Revolution took place from the 18th to 19th centuries. It was a period during which
predominantly agrarian, rural societies in Europe and America became industrial and urban.
Industrialization marked a shift to powered, machinery, factories and mass production. The iron
and textile industries, along with the development of the steam engine, played central roles in the
Industrial Revolution. It introduced improved systems of transportation, communication and
banking. While industrialization brought about an increased volume and variety of manufactured
goods and an improved standard of living for some, it also resulted in often grim employment
and living conditions for the poor and working classes. So as an aftermath effect of Industrial
revolution, the process of migration intensified. There was phenomenal increase in production,
product diversities, and transport revolution and cash economy which were well suited to
establish and expand markets across the national borders. This became an adequate germinating
factor for globalisation. The ideals of nationalism stressing on protectionism prevented cross
border transfer of goods and people. This eroded alien contacts for a period. The period between
1870-1914, was the peak of traditional globalisation when trade, capital were moving at their
peak speed. This period was said to be the beginning of or the first phase of modern
globalisation.
1.3.4 The Fourth Wave of Globalisation
The Fourth wave of globalisation swept the world from the beginning of twentieth century to the
first half of twentieth century. The rapid innovations and technological progress during this

14
phase contributed significantly for a paradigm shift from local to global. No longer did the
producers or the people see things in local perspective, but in a global context. The focus became
concentrated on interdependence; inter connectivity instead on national development and self
interest. Up to the outbreak of the First World War, this trend continued to exist.
The first phase of "modern globalization" began to break down at the beginning of the 20th
century, with World War I. During the First World War there was large scale devastation of the
countries involved. Their economy was shattered. Global inequalities in the distribution of
wealth were escalating. Political instabilities had shaken up the backbone of the nations. To cite
an example, France faced with an acute crisis of food supply. This came as an aftermath effect of
the outbreak of the war which had left France without the ability to support itself agriculturally
since France had a shortage of fertilizers and machinery in 1917.
During this period, two ideologies emerged which refrained the countries to get assimilated in
the global integration process. These two were: isolation and protectionism. Strong sentiment of
nationalism promoted these two ideologies. Global inequalities in income and wealth distribution
generated a new awareness and gave birth to global recession and depression. Protectionism and
isolation agenda restricted international or cross national trade and raised trade barriers. These
led to the decline of globalisation for the next two decades. The Great Depression in the late
1920s and early1930s, the Wall Street crashes in 1929brought a serious rupture in the
globalisation curve. This marked the end of the fourth wave of globalisation. The Treaty of
Versailles 1919 and the Treaty of ST. Germain 1919 which were signed during the period
following the World War had contrasting bearings on international trade. Treaty of Versailles
was supportive for international trade while Treaty of St.Germain was preventive to international
trade.
By 1918, Germany was being defeated in most areas of the war. German people were hungry,
war weary and demanded peace. The German government eventually asked for an armistice, and
at the eleventh day of the eleventh month, 1918, cease-fire began. The problem of peace
continued to exist. Many people hoped that a peace settlement would prevent war from repeating
itself. On January 8th, 1918, The American President Woodrow Wilson outlined his peace
proposals to the American Congress. These became known as the ‘Fourteen Points’ and ‘Four
principles’. On November 5th, 1918, Wilson sent a note to the Germans. The Germans agreed to
an armistice and expected a peace settlement to be based upon the fourteen points.

15
Of the fourteen points the most important relating to international trade were: Seas should be free
in peace and in war to ships of all nations (Freedom of Navigation).The barriers to trade between
countries such as custom duties should be removed (free trade).
Treaty of Saint-Germaine, (1919), was signed by the representatives of Austrian one side and the
Allied Powers on the other. It was signed at Saint-Germain-en-Laye, near Paris, on Sept. 10,
1919, and came into force on July 16, 1920.It stressed on two points. Those were: self
determination of the countries from the political angle and economic self sufficiency from the
economic angle. Thus, it was not very much conducive to globalisation through international
trade. It tried to reduce interdependence of nations in terms of governance and economic
dependence.
1.3.5 The Fifth Wave of Globalisation
The Fifth wave of globalisation was founded towards the end of the World War II. This wave of
globalisation appeared with the coming up of world organisations to erode trade barriers and
facilitate cross border trade. Particularly this wave of globalisation succeeded in making
globalisation sustainable in nature.
Globalization, since World War II, is partly the result of planning by politicians to break down
borders which prevent free trade and market expansion. Their work led to the Bretton Woods
conference. The very aim of the Bretton Woods conference was to arrive on an agreement by the
world's leading politicians to lay down the framework for international commerce and finance
and to create international institutions intended to facilitate oversee trade. The Bretton Woods
Convention officially known as the United Nations Monetary and Financial Conference was a
gathering of delegates from 44 nations that met from July 1 to 22, 1944 in Bretton Woods, New
Hampshire. It agreed upon a series of new rules for the post-Second World War international
monetary system. The two major accomplishments of the conference were the creation of the
International Monetary Fund (IMF) and the International Bank for Reconstruction and
Development (IBRD). It also adopted the GATT. It prescribed that restrictions on trade should
be ended by the signatory nations as soon as possible. Under the auspices of the General
Agreement on Tariffs and Trade (GATT), a series of agreements were made to remove
restrictions on trade. In 1948, the International Trade Organisation was established as an agency
of the United Nations. It was a precursor to the establishment of the World Trade Organisation.
The GATT started a number of multilateral rounds of trade negotiations to reduce trade barriers

16
and facilitate International trade. The most remarkable of them are the Kennedy round in1964,
The Tokyo round in 1973, the Uruguay in 1986 round and the Doha round in2001.
Globalization was also driven by the global expansion of multinational corporations based in the
United States and Europe, and worldwide exchange of new developments in science, technology
and products, with most significant inventions of this time having their origins in the Western
world. Development and growth of international transport and telecommunication played a
decisive role in modern globalization.
The post 1980 period can be designated as the contemporary globalisation period. It is
characterised by acceleration and intensification of economic, political and cultural integration.
In the economic front, a major development was the enactment of The Single European Act
of1986 which created the European Common Market. The increased growth of trade, market
expansion and foreign investment gave birth to the concept of “Casino Capitalism” implying the
lack of guarantee for gain. In the political domain there started a process of “Destatization”
leading to the sinking in the sovereign power of the states. The world organisations and some
INGOS executed some functions formerly performed by the state. In the cultural field,
globalisation has resulted in the creation of a cognitive society, a leading feature of a post
industrialised society often popularly called as a “Knowledge Society”, “Information Society”
and “Programmed Society”.
The end of the cold war has given sufficient stimulus to the process of globalisation to flourish. It
has proved many theories as realities. In this context reference can be made to Francis
Fukuyama’s theory of end of history. In this theory, the theorist forecasted that liberal democracy
will triumph all throughout the world. It has come true due to the process of globalisation.
Zbigniew Brzezinski’s realistic theory imagines that all states will be acting in the world scene
with the break of the geopolitical regions with a struggle for global supremacy. It has come true
with the contemporary globalisation. Further, Huntington’s civilisation theory proclaiming that
difference between the nations in the new world order will not be of political or economic nature,
but of cultural nature has become a reality with the process of modern globalisation.
Thus, globalisation has been shaped by many social factors from time to time and through
various historical developments. However, the pace of globalisation has sometimes taken a swift
pace and sometimes is found to be retarded. The first three waves can be described as traditional
globalisation. During these phases globalisation though was taking momentum was not visible

17
on the surface. During the fourth phase, globalisation got a setback due to the war and great
depression. This was a period of decline in the process of globalisation and during the fifth stage;
globalisation started taking an added momentum. There was the resurgence of globalisation.
1.4 Summary
Globalisation is a term that has been used to explain the integration of the world, in multiple
ways – economic, political, cultural, technological and geographic. Globalisation includes “all
those processes by which the peoples of the world are incorporated into a single society, global
society”. Globalisation is manifest in the rapid flow of information, capital and goods. They
result in networks and interactions that transcend any effective monitoring and control by the
nation-states. The General Agreement on Trade in Services (1995), of the World Trade
Organisation counts education as a commercial service that can be exported, thereby expanding
its global outreach. The process of Globalisation has hitherto been accompanied by a strong dose
of Arnericanisation manifest in such symbols as 'Coca-Cola' and 'Macdonald' and has reinforced
its influence over the other regions of the world.
1.5 Self Assessment Questions
1. What is globalization?
2. How globalization emerged through historical period?
3. What are various waves of globalization?
1.6 Key Words
Globalisation: Globalization means the speedup of movements and exchanges (of human
beings, goods, and services, capital, technologies or cultural practices) all over the planet. One of
the effects of globalization is that it promotes and increases interactions between different
regions and populations around the globe.
Core: the core includes major world powers and the country that contain much of the wealth of
the planet
Periphery: it has those countries that are not reaping the benefit of global wealth and
globalization.
Semi Periphery: semi-periphery countries are the industrializing, mostly capitalist countries
which are positioned between the periphery and core countries. Semiperipheral countries
contribute to the manufacturing and exportation of a variety of goods.

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1.7 Study Guide
 Stiglitz, Joseph E. Making Globalisation Work, Penguin, U.K.
 Amin, Samir (2014) Capitalism in the Age of Globalization: The Management of
Contemporary Society (Critique. Influence. Change), Zed Books Ltd.
 Appadurai, Arjun, Modernity At Large: Cultural Dimensions of Globalization.
Minneapolis: University of Minnesota Press.
 Bhagwati, Jagdish. In Defence of Globalisation (2004), Oxford University Press.
 Holton, R. J. (1998) Globalization and the Nation-State Palgrave Macmillan.
 Frieden, Jeffry E. (2007) Global Capitalism - It's Fall and Rise in the Twentieth Century,
W. W. Norton & Company.

19
 Unit-02 Distinctive Characteristics of Globalisation

Structure
2.1 Learning Objectives
2.2 Introduction/ Assessment of Prior Knowledge
2.3 Distinctive Characteristics of Globalisation
2.3.1 Borderless world
2.3.2 Liberalization
2.3.3 Free Trade
2.3.4 Extended Economic Activities
2.3.5 Globalization is universal, but not a uniform process
2.3.6 Globalisation is a historical process
2.3.7 Globalisation is both developmental and detrimental for the society
2.3.8 Globalisation is a long term process
2.3.9 Globalisation is an irreversible process
2.3.10 Globalisation leads to hybridisation, homogenisation and harmonization
2.3.11 Globalisation leads to dispersion and diffusion
2.3.12 Globalisation is a multidimensional process
2.3.13 Globalisation is a top down process
2.3.14 Globalisation results in deterritorialisation
2.4 Summary
2.5 Self Assessment Questions
2.6 Key Words
2.7 Study Guide

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2.1 Learning Objectives

After studying this unit the learner will be able to:

 Explain the various characteristic of Globalisation
 Analyse the Approaches of Globalisation
2.2 Introduction/ Assessment of Prior Knowledge

This unit discusses about the major characteristic features of globalisation. It treats globalisation
as a social process and how it was brought into intellectual discourses and the domain of
sociological inquiry. Globalisation is a term that has been used to explain the integration of the
world, in multiple ways – economic, political, cultural, technological and geographic. Though
globalisation cannot and must not be limited to mean economic integration of the world, the term
globalisation has been, over the years, seen to be synonymous with economic globalisation.
The hallmark of contemporary society is the trend and feature of globalization. The phrase first
appeared in American and French literature in the 1960s. However, it gained popularity in the
1980s. It has now developed into a contentious issue among practitioners, policy planners, and
academics. Due to a societal dynamic, there is now more interconnection and cross-border
integration of people and nations. The method has encouraged increased movement of people,
concepts, information, money, and products between national borders. It might be summed up as
a social procedure that has caused information to be dispersed, dispersion of concepts,
dissemination of information and technical expertise, and distribution of resources resulting in
societal transformation.
2.3 Distinctive Characteristics of Globalisation

Globalisation is a social and historical reality. It is an ongoing process of social change that links
people, neighbourhoods, cities, regions and countries much more closely together than they have
ever been before. This has resulted in increasing people’s access to diversified commodities,
communities, ideas and information and thereby ensuring rapid transformations in societies. In
the initial years, globalisation was viewed essentially as an economic process. Accordingly, the
characteristics assigned to it were more economic in nature. These characteristics bagged more
economic essence and some political values. These were:

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2.3.1 Borderless world

The most outstanding economic characteristic of globalization is the introduction and practice of
a borderless world. Notions of a “borderless world” simply mean political “deterritorialization”.
“Deterritorialization” concept implies territorial component in world affairs is of much reduced
significance. The territorial structures and compartments which have, for the past few hundred
years, formed a basic component of the state system experience structural change under the
process of globalisation.It evokes images of a world in which goods, services, capital, and
information flow across national borders. In this world, the choices over where to produce,
where to establish shop, invest, and save are no longer confined within national borders .They
have taken on a decidedly global orientation. Some analysts speculate that globalization has
blurred the economic distinctions between countries, creating a “borderless world” in which
economic decisions are made without reference to national boundaries. Thus, globalisation
collapses geopolitical boundaries and compresses distance between nations. This is the most
significant characteristic of globalisation.
2.3.2 Liberalization

Globalization and liberalization are concepts closely related to one another. Globalisation can
occur only under the situation of liberalisation. Liberalization refers to the relaxing social and
economic policies which results in better integration of an economy with the global economy.
Globalization and liberalization both occur as a result of modernization. Liberalisation is a
process of liberalising the economic, industrial, investment, financial and business policies to
enhance the business, export, per capita of a particular region. In general, it refers to the removal
of restrictions; usually government rules and regulations imposed on social, economic, or
political matters. Liberalization maybe trade, economic, or capital market related. Trade
liberalization may be with regard to reducing restrictions on imports or exports and facilitating
free trade. Economic liberalization generally refers to allowing more private entities participate
in economic activity, and capital market liberalization refers to reducing restrictions imposed on
debt and equity markets. Thus, liberalisation provides ample freedom to the industrialist/
businessman to establish industry, trade or commerce either in his country or abroad; free
exchange of capital, goods, service and technologies between countries. Globalisation cannot
take place without liberalisation.

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2.3.3 Free Trade

Free trade symbolises a liberal economic order that prevents protectionism and isolation. Simply
speaking, globalization is the process of changing to the world into an integrated world from an
isolated one. Globalization is a long-term process of change towards greater international
cooperation in economics, politics, idea, cultural values, and the exchange of knowledge. The
core features of globalization are increased free trade between nations, easier movement of
capital between borders, and a massive increase in foreign investment. This results in growth for
both small businesses and multinational companies, which can access new markets across the
world. It also results in increased transport and communication between countries and continents.
2.3.4 Extended Economic Activities

Globalization as a process widens, intensifies speeds up, and increases world-wide

interconnectedness. It is characterized by four types of change. First, it involves a stretching of
social, political and economic activities across frontiers, regions and continents. Second, it is
marked by the intensification, or the growing magnitude, of interconnectedness and flows of
trade, investment, finance, migration, culture, etc. Third, it can be linked to a speeding up of
global interactions and processes, as the development of world-wide systems of transport and
communication increases the velocity of the diffusion of ideas, goods, information, capital and
people. And, fourth, it results in the growing extensity, intensity and velocity of global
interactions. In this sense, the boundaries between domestic matters and global affairs become
increasingly fluid. Globalization refers to the increasing interdependence of world economies as
a result of the growing scale of cross-border trade of commodities and services, flow of
international capital and wide and rapid spread of technologies. It reflects the continuing
expansion and mutual integration of market frontiers, and is an irreversible trend for the
economic development in the whole world at the turn of the millennium.
The general characteristics of globalisation go beyond their economic characteristics and include
the following.
1. Globalisation is a universal process, but not uniform in its result.
2. Globalisation is a historical process.
3. Globalisation is both developmental and detrimental for the society.
4. Globalisation is a long term process.

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 5. Globalisation is an irreversible process.
6. Globalisation leads to hybridisation, homogenisation and harmonisation.
7. Globalisation leads to dispersion and diffusion.
8. Globalisation is a multidimensional process.
9. Globalisation is a top down process.
10. Globalisation results in deterritorialisation

2.3.5 Globalization is universal, but not a uniform process

Globalisation takes place in every society irrespective of time and space. In every age and every
space globalisation has taken place in exclusion to the pre modern state. Today every society
developed or developing, western or oriental, big or small, conservative or liberal experience the
process of globalisation. The geographical barriers resulting in the location, isolation of a space
has not insulated it from the process of globalisation. Even the inaccessible areas of Alps or the
disconnected islands are getting the steady effects of globalisation. Further, in terms of time
globalisation has been initiated since third century B.C. Man’s craze for knowledge, exploration
and craze for resource have paved the ways for establishing interconnectivity.
Though universal as a phenomenon, no uniformity is marked in its expression. The depth and the
pace of globalisation have its longitudinal and spatial variations. At certain point of time the
depth and pace of globalisation is faster while it is retarded at certain other period of time. For
example, during the periods of peace and scientific prosperity, it has taken a swift pace while
during wars, depressions, the pace of globalisation has gone down. The rate of globalisation is
spectacularly higher in the developed areas in comparison to the pre modern and under
developed areas.
2.3.6 Globalisation is a historical process

Globalisation is a historical reality. Its intellectual ancestry can be traced back in the writings of
Adam Smith, Marx, J.S.Mill, Hecksher and Ohlin, J.M.Keynes and Lenin who long back
predicted that economic activities have a tendency to expand beyond its national setting. No
doubt globalisation is antique. Its historical roots date back to early ages.
Andre Gunder Frank argues that a form of globalization has been in existence since the rise of
trade links between Sumer and the Indus Valley civilization in the third millennium B.C .Thomas
Loren Friedman classifies the period of globalisation into three spells. They are: First phase of

24
Globalization touching the world between 1492–1800, Second phase coming in between 1800–
2000 and the third phase being witnessed after2000 and continuing till present. He states that the
first phase of Globalization involves the globalization of countries, the second phase involves the
globalization of companies and the third and final phase of globalization involves the
globalization of individuals. Globalization is an historical process that began with the first
movement of people out of Africa into other parts of the world. Travelling short, then longer
distances, migrants, merchants, and others have always taken their ideas, customs, and products
into new lands. The borrowing and adaptation of outside influences can be found in many areas
of human life. The age of discovery sweeping the world between15th to 16th Century
strengthened the process of globalisation. The discovery of America and the opening up of new
trade routes to Africa and Asia brought the world closer together. It was followed by a process of
increasing colonization and industrialization in the 18th century. This gave rise to a division of
labour. Colonies provided the raw materials and agrarian products, the industrial nations
provided the manufactured products. The flow of men, money, raw materials and outputs were
established which were strong prelude to modern globalisation. During the 19th Century the
emerging nation states increasingly cut back trade restrictions (customs duties, bureaucratic
regulations) and put the economy on the gold standard, thus providing a basis for international
monetary and financial politics. In the closing years of 20th and the beginning years of 21st
century technological progress (steamships, railroads, telegraph), internet and media revolution,
accelerated transportation and communication and established global linkage. Thus human
history bears the instances of globalisation taking place in some form or the other.
2.3.7 Globalisation is both developmental and detrimental for the society

Globalisation is the ongoing process that is linking people, neighbourhoods, cities, regions and
countries much more closely together than they have ever been before. This has resulted in
intertwining people in all parts of the world via the food they eat, the cloth they wear, the music
they listen to, the information that they get and the ideas they hold.
This interconnectedness amongst humans on the planet is sometimes also referred to as the
‘global village’ where the barriers of national and international boundaries become less relevant
and the world figuratively becomes a smaller place. The process is driven economically by
international financial flows and trade, technologically by information technology and mass
media entertainment, and very significantly, also by human means such as cultural exchanges,
25
migration and international tourism. Due to globalisation, there are signs of solidarity across
societies in support of progressive ideals such as social justice, environmental sustainability and
health as basic human right.
Supporters of economic globalization over emphasise the developmental effects of globalisation
which include, flows of trade and finance. Trade increases growth, especially in poorer countries.
Growth increases incomes, especially for the poor, so eventually there is a convergence of wealth
and higher incomes for the poor. Higher income brings better living conditions. Globalisation
makes the market highly competitive. This makes the goods inexpensive, affordable, available
and accessible. Knowledge is spread quickly and efficiently.
However, globalisation has also got its detrimental effect on the society. In course of time, the
detrimental effects are noted which are as follows. Globalization uses up finite resources more
quickly. It is a threat to sustainable development. Due to rapid spread of industrialisation
following globalisation, the world carbon dioxide emissions increase speedily. This affects the
environment. Climate change follows globalisation. Globalization transfers jobs from developed
countries to less developed countries. This creates a system of unemployment in the developed
countries. Globalization transfers investment spending from developed countries to less
developed countries. Globalization tends to move taxation burdens away from corporations onto
individual citizens. Corporations have the ability to move to locations where the tax rate is
lowest. The tax burdens are ultimately shouldered by individual citizens. Globalization
encourages dependence on other countries for essential goods and services. It halts the self
sufficiency of the nations which becomes hazardous for a country’s economy. With
globalization, goods can often be obtained cheaply from elsewhere. A country may come to
believe that there is no point in producing its own food or clothing. It becomes easy to depend on
imports. But in abnormal situations, this overdependency creates problems of starvation and
procuring basic needs for the nation. Globalization ties countries together, so that if one country
collapses, the collapse is likely to ripple through the system, pulling many other countries with it.
The detrimental effects of globalisation can be located on the industries of developing countries
which still rely on primitive and obsolete technologies. They fail to satisfy the customer’s
demand and compete in the global market. So they are pushed into sinking states. Women in
developing countries become the worst victims of the process of globalisation. Women with the
lack of skill, training become devalued and undermined in the new process of production. They

26
are pushed out of the employment market and are impoverished. Job insecurities increase with
the process of globalisation. Cross border terrorism becomes an upcoming phenomenon with the
process of globalisation. Cultural degradation and erosion of local culture are also the outcome
of globalisation. Thus, globalisation brings economic, environmental and cultural misery which
have stirred “Anti- globalisation” movement in many parts of the world. UN Secretary General
Kofi Annan describes globalization as a positive force, but it is also blind and therefore needs to
be carefully harnessed.
2.3.8 Globalisation is a long term process

Many commentators take the view that globalisation probably started some way back in the
nineteenth century. From this perspective, it is possible to identify four phases of modern
globalisation. The first phase, which peaked in about 1880, was mainly due to improvements in
transportation and automation that enabled long-distance trade. Telegraph and telephone
communication in the late 1800s facilitated information transfer, which enabled firms to manage
their supply chains.
Phase two reached its height in the first decades of the twentieth century, when territories under
the control of European colonial powers were seen as sites to establish multinational subsidiaries.
This period also saw some overseas expansion by American corporations into profitable
European markets. This phase is perceived to have ended with the economic crash in 1929,
which caused a global depression and a move to inward-looking polices by many governments
and.
The third phase was based on the lowering of tariff barriers and the resultant increase in
international trade after the end of World War II. As individuals, particularly in the richer
economies, became wealthier and the austerity of the war years faded, there was massive
increase in the demand for consumer goods.
The fourth (and final) phase of the process has depended largely on two processes of changes.
These are, first, changes in technology, such as the widespread availability of the personal
computer (PC) linked to the internet/world wide web, the increasing use of mobile
communications and the development of robotics. The second factor is the change in political
attitudes and economic policies that have allowed companies (and consumers) to take advantage
of these technological advances. It is apparent that there has been much convergence of global
economic thinking, with many more countries moving towards an acceptance of liberal, free
27
market ideas. As consumers apparently became less concerned with products’ national identities,
social trends started changing.
Theodore Levitt (1983) was one of the first academics to write about globalisation. In 1983 he
said that technology is the driving force behind the globalisation of markets and, thus, bringing a
‘converging commonality’ in countries around the planet. He suggested that communications
(e.g. TV); transport; travel; products; and processes were responsible to bring these rapid
worldwide changes.
2.3.9 Globalisation is an irreversible process

UN Secretary General Kofi Annan describes globalization as "an irreversible process, not an
option”. It does not have any swing back or look back. It is always forward looking in nature.
Technology has made globalisation faster, profitable and irreversible. An irreversible process is a
process in a system that changes from a state to another without getting back to the former.
Globalization is the next step in the progressive evolution of human societies. As such, this
development cannot and should not be stopped as it would violate the ‘natural’ laws of societal
progress. There is no turning back of the clock. This argument is reminiscent of Comte and
Spencer and it was summarized by British Prime Minister Margaret Thatcher when she declared
“there is no alternative”, referring to the global capitalist economy.
Globalization refers to the increasing interdependence of world economies as a result of the
growing scale of cross-border trade of commodities and services, flow of international capital
and wide and rapid spread of technologies. It reflects the continuing expansion and mutual
integration of market frontiers, and is an irreversible trend for the economic development in the
whole world at the turn of the millennium.
Globalization is an irreversible process. Its momentum comes from the advance of technology,
communications, information, as well as from the international flow of goods and finance. To
stop this autonomous process or to slow it down is almost impossible - even if we would restore
high protectionist walls around each nation or each group of trading nations. It would be in any
case a tragedy not just for economic progress but also for security and peace. Globalization is an
irreversible process. Globalization comprises many processes that simultaneously affect different
areas: economy, media, politics and identities, migration and the environment. Globalization is a
complex process that is not yet complete; it continuously evolves and at a fast pace than before.

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2.3.10 Globalisation leads to hybridisation, homogenisation and harmonization

Hybridisation implies mixing. Homogenisation denotes bringing symmetry or similarity.

Harmonisation means brining synthesis by removing discrepancies. Globalisation brings in its
wake all these three processes and these are intrinsically connected to culture. Cultural
homogenisation appears through the bringing of some parity in lifestyles and core values of the
people across countries and cultures around the world. The cultural heterogeneity and variance
starts evaporating due to increased contact. The cultural barriers start collapsing with the collapse
of borders. Increasing international movements of goods, people, services, information and funds
had been highly experienced in the last quarter of twentieth century as the visible effect of
globalisation. They have led to the cross-fertilisation of cultures. The culture of every society has
tried to adopt the elements of the other culture which has resulted in homogenisation of beliefs,
values, norm etc. Shrinking of distances and media systems due to globalisation have affected
social values, dress, diet, dance, practices and pattern of consumptions of the people. Cultural
diversities have been substituted by cultural homogeneity. The interaction of culture results in
mutual acceptance of elements leading to hybridisation. There is the growth of ‘cultural
supermarket’ effect that is responsible for bringing homogeneous lifestyles among the people.
Today cultural commonalities are replacing distinct national cultures. They are getting detached
from their traditional ways of life and adhering to the way of life commonly adopted by the
partner countries. Little traditions are getting submerged in the great tradition that is symbolised
as not national, but international or global culture. The advent of ‘global village’ is the outcome
of this process of homogenisation and harmonisation. However, a counter group of sociologists
suggest globalisation promotes multiculturalism. Globalization goes hand in hand with
localization, regionalization of culture.
2.3.11 Globalisation leads to dispersion and diffusion

Diffusion implies spread. Globalization involves the diffusion of ideas, practices and
technologies. There is a broadening, deepening and speeding up of world-wide
interconnectedness in all aspects of life due to the process of globalisation. A global shift takes
place due to the rapid innovations. These innovations not only change the landscape of the
locality where it has its origin, but soon gets dispersed and diffused all throughout the world due
to the collapse of borders and due to the effects of satellite connections, digitalisation process

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and media effects.
2.3.12 Globalisation is a multidimensional process

The concept of globalisation in its initial stage was thought to be an exclusively economic
process. Later on it was noted that it has got political, cultural, ideological and social
implications. Today globalisation is conceived as a multidimensional process because of its
connection with society, economy, polity, ideology and culture.
Socially it implies intensification, extension of social relations affecting individual’s interaction,
institutions, social processes etc. Economically, it means opening up of national market, free
trade and commerce among nations, and integration of national economies with the world
economy. Politically, it means limited powers and functions of state, more rights and freedoms
granted to the individual and empowerment of private sector. Culturally, it means exchange of
cultural values between societies and between nations; submergence of local culture by a global
culture through a process of cultural homogenisation and ideologically, it means the spread of
new ideas like liberalism and capitalism.
2.3.13 Globalisation is a top down process

Globalisation has a trickling down effect. In the modern era, it is western origin in character. It
emanated from the developed countries and the western based MNCs (multinational
corporations) spearheaded them. Technologies, capital, products and services were transferred
from the developed to the developing countries. The developing countries are at the receiving
end. The developing countries accept the western values, practices, adapt to them and get
influenced by the impacts of globalisation.
2.3.14 Globalisation results in deterritorialisation

According to Malcolm Waters (2001), there are three types of human exchanges that can be
more easily globalized and get deterritorialized. They are: material exchanges, power exchanges
and symbolic exchanges.
Material exchanges refer to any interaction involving the transmission of material items, such as
factory work, trade in goods, tenancy. Material exchanges tend to be localized in spaces. Raw
materials – agricultural goods, petroleum – are extracted from specific locations. Factories are
located where labor is available and cheap. Manufactured goods are transported to western

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markets for sale and consumption.
Power exchanges refer to the exercise of leadership through coercion or legislation. For
instance, by definition, the exercise of power applies not only to territories but also to
international relations, that is, relations between nation-states, such as war, diplomacy or
alliances. Power exchanges therefore extend internationally and go beyond national territories.
Symbolic exchanges refer to any form of communication, exchange of information or data. This
includes the mass media, the entertainment industry, advertisement and propaganda, etc.
Symbolic exchanges involve the transmission of signs and symbols. Because technology makes
it possible to disseminate symbols rapidly and widely, symbolic exchanges can be easily
detached from territories and therefore, globalized.
Based on these forms of exchange, Waters proposes a globalization theorem (a proposition that
can be demonstrated as true). The theorem is “Material exchanges localize, political exchanges
internationalize and symbolic exchanges globalize.” Thus, these are some of the visible
characteristics of globalisation. All these characteristics are intrinsically associated with the
process. They go together to characterize the process.
2.4 Summary

Globalisation is a term that has been used to explain the integration of the world, in multiple
ways – economic, political, cultural, technological and geographic. Globalisation includes “all
those processes by which the peoples of the world are incorporated into a single society, global
society”. Globalisation is manifest in the rapid flow of information, capital and goods. They
result in networks and interactions that transcend any effective monitoring and control by the
nation-states. The General Agreement on Trade in Services (1995), of the World Trade
Organisation counts education as a commercial service that can be exported, thereby expanding
its global outreach. The process of Globalisation has hitherto been accompanied by a strong dose
of Arnericanisation manifest in such symbols as 'Coca-Cola' and 'Macdonald' and has reinforced
its influence over the other regions of the world.
2.5 Self Assessment Questions
1. What is globalization?
2. How globalization can be understood through different characteristics?
3. What borderless world.

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2.6 Key Words

Borderless world: it explains about the societies where border can’t restrict interchange.
Deterittorialisation: it means the idea, culture, technology and knowledge go beyond the fixed
territory.
Multidimensional: it means something having various angle and direction.
2.7 Study Guide
1. Mehra, Sohan S. (2012) Modernisation, Globalisation and Social Transformation, Creon
Publications.
2. Vago, Steven (2003) Social Change, Pearson.
3. Charlton, Bruce and Andras, Peter (2003) The Modernization Imperative, Exeter.
4. Frieden, Jeffry E. (2007) Global Capitalism - It's Fall and Rise in the Twentieth Century,
W. W. Norton & Company
5. Holton, R.J. (1998) Globalization and the Nation-State Palgrave Macmillan.

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 Unit-03 Dimensions of Globalization: Economic, Technological, Social,
Cultural and Environmental

Structure
3.1 Learning Objectives
3.2 Introduction/ Assessment of Prior Knowledge
3.3 Dimensions of Globalisation
3.3.1 The Economic Dimensions of Globalisation
3.3.2 The Cultural Dimensions of Globalisation
3.3.3 The Social Dimensions of Globalisation
3.3.4 The Technological dimensions of Globalisation
3.3.5 The Environmental Dimensions of Globalisation
3.4 Summary
3.5 Self Assessment Questions
3.6 Key Words
3.7 Study Guide

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3.1 Learning Objectives

After studying this unit the learner will be able to:

 Explain the various dimensions of Globalisation
 Analyse the purview of Globalisation within society
3.2 Introduction/ Assessment of Prior Knowledge

One of the prominent characteristics of globalisation is that it is multi dimensional. Dimensions

refer to the areas on which globalisation casts its impact. No longer, the effects of globalisation
are confined to the economy alone. They move far beyond the economy and affect other sectors
of the society. According to Anthony Giddens there are essentially four dimensions of
globalisation. They are: the world capitalist economy, the nation-state system, the world military
order and the global (international) division of labour. However, today looking at the all
pervasive character of globalisation, the influences of globalisation can be discussed from
different perspectives. They are: economic, social, political, technological, cultural, and
environmental. The following sketch can best describe the perceived dimensions of
globalisation.
However, it should be borne in mind that globalisation does not always yield a positive impact,
but many times, it has its negative impacts too. All these dimensions are discussed from both
positive and negative aspects.
3.3 Dimensions of Globalisation

3.3.1 The Economic Dimensions of Globalisation

Right from the detection and conceptualisation, the term globalisation was essentially thought to
have economic dimension. According to Deepak Nayyar, the most notable and discernible
economic impact of globalisation is noted through the expansion of economic activities across
the boundaries of nation states. It is marked with increasing economic integration and growing
economic interdependence between countries of the world. There is an increased cross border
movement of goods, technology, people, information etc. The internationalization of economic
activities however is not of recent origin. It began with the voyages and with the rise of the
European maritime powers. This process was further accelerated by the spread of

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industrialization in the nineteenth century. The key period in the process of Internationalization
occurred between 1870 and 1914 when transport and communication networks expanded rapidly
around the world which led to the significant growth with a considerable increase in the level of
interdependence between rich and poor nations. There were very large flows of capital from
European to other parts of the world. The foreign direct investments made by the rich nations in
the developing world not only heightened the degree of interconnectedness, but tried to bring a
considerable degree of development in the poor nations. This led to the growth of resources,
export, import potentials, standard of living of the people of the developing world. The new
economy is truly global because it is non-territorial. Investors can choose where and when to
invest or withdraw capital from any part of the world. In terms of financial investment and trade,
the world is now a single place.
A second economic dimension of globalisation relates to the growth of the world economic
organisations. In 1944, about 44 nations signed the Bretton Woods Conference which was held
in order to stabilize the world economy in the post World War II era. Bretton Woods is a small
New Hampshire town where the victors met in 1944 to establish the basis of a worldwide
economic order that would prevent such devastating economic crises as the Great Depression. In
order to monitor the world economy, three economic institutions were created. They were the
International Monetary Fund (IMF) ,The International Bank for Reconstruction and
Development (IBRD later renamed the World Bank) ,The General Agreement on Tariffs and
Trade (GATT, renamed the World Trade Organization in 1992) .For about thirty years, this
system remained in place and provided economic stability and prosperity to Western nations.
The third economic dimension of globalisation was the off shoot of the neoliberal economy.
Since 1970s, the world economy took a drastic turn from managed economy to a neoliberal
economy under the pressure of conservative governments such as the Reagan administration in
the United States and the Thatcher government in the United Kingdom. With respect to this,
Chinese economic reforms began in 1980’s which opened China to globalization. China’s
experience prompted many other countries like India to open the economy in 1990’ to
globalization which was institutionalized with privatization and liberalization.
Globalization opened new potentials for development and creation of wealth. But there are
divergent views on the economic impact of globalization. Few argue that the present model of
globalization has increased the problems of unemployment, inequality and poverty, while others

35
contend that globalization helped to reduce these aspects by preventing concentration of
resources.
Markets have expanded and have been diversified due to globalisation. Competitive role players
have appeared in the markets. Prices of the products are determined by the competing groups and
monopolistic markets are getting extinguished due to the impact of globalization.
Globalisation has encouraged commercialisation, collaborations and corporatisation. It has
created a consumerist culture. Economically, globalization has increased the standard of living of
the people and thereby ensuring prosperity to the nations.
The rise of MNCS and TNCS are the most visible economic impacts of globalisation.
Transnational corporations (TNCs) are different from multinational corporations (MNCs). A
MNC is a corporation with outlets in different countries. For instance, McDonalds has outlets in
many different countries. A TNC treats the world as a single space and distribute its networks of
production, distribution and consumption where conditions are the most favourable. For instance,
Disney has several amusement parks in different Western countries. In such parks, visitors buy
merchandise made in countries such as Bangladesh. As a result, local economies become
integrated into global economic networks. Local economies also have to adapt constantly to
global competitions.
One of the most perceptible economic impacts of globalisation is the satellite revolution, media
boom, advent of the knowledge economy. It is described as the second industrial revolution.
Outsourcing and in sourcing of services have created job opportunities for the world population.
There is a deterritorialisation of business operations and distribution of goods and services.
Economic dimension of globalisation finds manifestation through the process of rapid
urbanisation. Quality of production improves in terms of process adopted, product designing and
product delivery, time consumed for production and market penetration.
Globalisation has created new economic powers like Japan, Taiwan and Korea. Skill, education
and training are fast developing among the human resource of all the countries. There is the East
Asian Economic Miracle due to rapid industrialization and economic growth in Japan, Taiwan,
Korea and China.
There is the growth of international financial markets, equities and other forms of international
investments as the economic outcomes of the process of globalisation.
Capitalism as an economic order has dominated all the national economies. Capitalism, also

36
known as the free-enterprise or free-market system, is the economic structure that permits people
to use their private property with minimal interference from the government. Under capitalism,
people are free to work at jobs of their own choice, sell their products or services at whatever
prices they wish, and to select from among various product- and service-providers for the best
value. Manuel Castells (1996) has argued persuasively that in the last twenty years or in the
twentieth century, a new economy emerged around the world. He characterizes it as a new brand
of capitalism.
However, the economic dimensions of globalisation have both pros and cons. On its negative
side, critics comment that globalisation is salvation for the rich and curse for the poor. It has led
to the uneven distribution of global resources. Due to the liberalised economies, resources are
carried from the poor to the rich nations who can afford to pay for the resources. There is no
restriction on this one way transfer of resources. This impoverishes the source nation and
enriched the destination nation. Thus, there becomes the concentration of resources in the rich
nations. This brings gross discrepancy in the distribution of resources. Globalisation brings
resource imbalance between countries.
Globalisation heightens the rate of international migration leading to a deficit of trained, skilled
workforce in the poor nations. There is a commoditisation of labour force in the labour market
which is said to be dirty, dangerous and difficult. Sometimes it results in human trafficking and
presents the world a new form of bonded labour. For e.g. the Middle East economy rests upon
the labour flow from South Asian countries. Many times it results in the exploitation of the poor
labourers.
But today, globalization has increased the gap between rich and poor and has led to the
marginalization of certain sections of the society. The developed countries are the one much
benefited out of the entire process. There is neither employment creation nor the decreases in
inequality. Unemployment and inequality automatically arise by increasing trade and FDI. The
developing countries on the other side, injecting the western idea of capitalism into their own
economy without considering the basic foundations are bearing a sordid consequence. The
changed strategy of economic transaction and trade with the rest of the world has led to the
concentration of wealth and the demise of the socialist principle leading to the creation of
poverty amidst plenty.
The environmental costs of economic globalisation are far reaching. The MNC’s are blindly

37
concerned only with profit making ignoring the cost that society has to pay for it. The global
climate change along with extinction of many species is the resultants of the globalization to a
great extent. Though the international organizations have fixed the limits of carbon emission and
other pollutants, it is still pro developed countries that hamper the growth of developing
countries.
Thus the economic impacts of globalization can be very diverse in different areas of the world
giving rise to concentration and marginalization phenomena. As there is a skill biased
technological change, the increased import of capital goods will lead to increased inequality.
Increased trade was meant to foster economic growth but it’s one sided dividend deliveries are
benefitting the rich nations and establishing world divides.
So, the critics describe the new economic order arising from globalisation as “disorganized
capitalism”, “manic capitalism”, “casino capitalism” or “hypercapitalism”. Capitalists, investors
and TNCs are among the winners of the global casino, whereas workers and developing
countries are generally on the losing side. For instance, if the government of a developing
country wants to attract corporate investment, it has to make itself attractive, that is, remove
restrictions such as labor laws, health and environmental regulations and impose minimal
taxation. Such policies further deteriorate the living conditions of the majority of the population
and limit the government’s ability to provide social services and may potentially destabilize the
country.
Globalisation leads to economic seclusion. The global poor are left behind the slipstream. There
is huge wealth gain for the industrialised countries, but the sub Saharan countries live in extreme
poverty.
There are no guarantees that the wealth from inward investment will benefit the local
community. Often, profits are sent back to the country where TNC is based. Transnational
companies, with their massive economies of scale, may drive local companies out of business. If
it becomes cheaper to operate in another country, the TNC might close down the factory and
make local people redundant.

3.3.2 The Cultural Dimensions of Globalisation

The cultural dimensions of globalisation are far reaching in character. Culture refers to the
learned and shared human patterns or models for living. It consists of the symbolic, ideational,
38
and intangible aspects of human societies. All these get heavily influenced due to the process of
globalisation. Cultural globalization simply means the extensiveness, intensiveness, velocity and
impact of cultural flows – transmission of symbols, ideas, artistic and consumption products – on
a global scale. Technologies of transport and communication facilitate cultural diffusion and an
emerging global consciousness. And as our globalization theorem shows, symbolic exchanges
are the ones most easily globalized, cultural dimension is therefore essential to the understanding
of globalization.
The cultural dimensions of globalisation are noted through the process of homogenisation,
harmonisation and hybridisation. With the process of globalisation, comes the process of cultural
globalisation. The most distinct process of cultural globalisation is the process of cultural
homogenisation. Homogenisation simply implies sameness. Due to globalisation most cultures
progressively become the same mostly through the spread of western and American culture
whose main characteristic is to emphasize consumption and monetary gains. The spread of a
consumerist and pecuniary culture is the outcome of the process of globalisation. These are the
twins of capitalism. Such cultures are spread through the mass media. As a greater share of the
world’s population become able to receive electronically and digitally transmitted information,
they become integrated into a world culture dominated by western and especially American
cultural products, such as movies, music, and television programs that promote the hyper
capitalist way of life.
Thus, cultural homogenisation is a necessary off shoot of the process of globalisation. The world
is becoming smaller due to this process of cultural homogenisation. The cultural barriers that
segregated the nationals of different nations is collapsing. People throughout the world are all
becoming more alike. “Globalism” is the culture of the new world created after globalisation.
Keeping this in mind Friedman comments that “The World is becoming flat”. To quote Barber
we are into a “McWorld” which is dominated by the spread of the Mc Donald Culture. There is a
westoxication of cultures.This process is facilitated by the creation of media empires, such as
AT&T, Sony, CNN, Walt Disney, and News Corporation. These transnational media
conglomerates control about 2/3 of the revenues of the industry. The massive expenditure on
advertisement by these industries and generation of revenues from the corporate has heavily
influenced the local cultures. Today pop and fusion music, discotheques, rock and roll, baileys,
western sports like cricket, car racing, horse races, scuba drives are becoming common to the

39
cultures of all societies. Dresses like denim, arrow, Louis Phillip and drinks like Coca Cola,
Limca, and Pepsi have dominated the daily lives of the remotest groups of people.
Thus, the cultural distinction is soon fading away due to globalisation and there is cultural
homogenisation through the emergence of what can be called a common global culture. This is a
major shift in the cultural pattern arising out of globalisation.
Cultural globalisation manifests itself through cultural hybridisation. It means the merging and
blending of different cultures to create new and original cultural products that then spread
globally. This phenomenon is visible in the thriving business of world music or ethnic cuisine
available in most parts of the world. Globalisation spearheads the process of migration and
tourism due to the opening of the borders. To quote Waters, migration brings the periphery to the
centre whereby previously ethnically homogeneous nations turn to multiculturalism. Tourism
brings the centre to the periphery. As a result of global tourism, western countries have created
what Turner and Ash called ‘pleasure peripheries’, that is, areas where specific populations from
western countries spend their leisure time, displacing local cultures for luxury hotels staffed with
English-speaking natives. To cite some examples: they are the Asian countries of Bangkok,
Thailand, Malaysia and Singapore, The European countries like Switzerland, Austria, Vatican
City etc. Global tourism is an integral part of cultural globalization as it does treat the world as a
single place but also gives legitimacy to local or hybrid cultures that can be consumed as
commodities by western tourists.
Thus, due to globalisation, the local context is shaped more by global issues.
Experience “here” is tied more to events “there”. Today global event are felt like local
occurrences and local occurrences get a global manifestation. This creates new sensations in
culture. People and culture become less confined to specific places. Culture, identity, and
tradition are disrupted and reworked.
As a result of these global flows, new ways of living and new forms of culture are created.
Culture no longer remains confined to the national borders. People soon adopt transnational
culture due to continuous cross border interactions and intrusions. This brings cosmopolitanism
to a culture resulting in– hybrid cultural forms.
Globalisation results in cultural harmonisation. When there is a confluence of global and local
culture, there is cultural harmonisation. The term used for this is glocalisation. Glocalisation is a
blending of "global" and "local." The term first appeared in a late 1980s publication of the

40
Harvard Business Review .According to sociologist Roland Robertson, who is credited with
popularizing the term, glocalization primarily encompasses how regional tendencies intersect
with the proliferation of global corporations. At a 1997 conference on "Globalization and
Indigenous Culture," Robertson stated that glocalization "means the simultaneity --- the co-
presence --- of both universalizing and particularizing tendencies."Glocalization involves the
managed meeting of the growing global arena with localized, everyday life. Glocalization's goal
is to ensure a globalized world in a stable and integrated place, while also protecting the cultural
heritage of local areas. Simply speaking glocalisation is to trace global elements in local way of
life and to detect local elements in global forum. This prompts regular interaction between the
world and the local culture and impacts the lives of the people who adhere to a particular culture.
Arjun Appadorai in his book “Modernity at large: Cultural Dimensions of Globalisation” talks
about five dimensions of globalisation which have tremendously influenced the culture of
societies. They are:
 Ethnoscapes
 Mediascapes
 Ideascapes
 Financescapes
 Technoscapes

To Appadurai, ethnoscape includes the ever shifting “landscape of persons who constitute the
shifting world in which we live: tourists, immigrants, refugees, exiles, guest workers, and other
moving groups and persons”. They not only change their habitations but carry with them the
culture of their place of origin to the place of destination, thereby influencing the culture of that
place to a great extent. Mediascapes “refer both to the distribution of electronic capabilities to
produce and disseminate information (newspapers, magazines, television stations and film
production studios) which are now available to a growing number of private and public interests
throughout the world and to the images of the world created by these media”. Media reflections
tend to be image centered, narrative-based accounts of strips of reality and heavily influencing
the culture of the people who are exposed to it. Technoscapes describe situations where “the
global configuration both mechanical and informational, now moves at high speeds across
various kinds of previously impervious boundaries” driven by “increasingly complex
relationships between money flows, political possibilities, and the availability of both unskilled

41
and highly skilled labour . It has a great propensity to influence culture and bring changes in it.
Finanscapes refer to the flow of capital. It gives coverage to “currency markets, national stock
exchanges, and commodity speculations which bring phenomenal change not only in the
standard of living but with the culture associated with it. Ideoscapes refer to concatenations of
images, which have directly political bearings and frequently have to do with the ideologies of
states. Ideological changes pervasively affect and alter culture, particularly, political culture.
Thus simply speaking, Ethnoscape refer to flows of people such as tourists and immigrants.
Technoscape include technology that crosses boundaries. Financescapes refer to flows of
currency markets. Mediascapes refer to mass media technology and images. Ideoscapes also
refer to images but specifically to the political and ideological aspects.
The cultural dimensions of globalisation have their detrimental effect on society. Globalisation
promotes cultural particularism. It refers to the process of defining one’s culture, identity and
solidarity in a very narrow and local way. By undermining the cultural monopoly of the nation-
state, globalization has fostered the emergence or re-emergence of local and tribal culture as well
as transnational cultural products. This phenomenon has occurred in many places such as
Mexico, where the indigenous populations of the Chiapas state, started a revolutionary
movement in 1993 to gain their cultural, political and economic autonomy from the Mexican
state. This is also the case in some European countries where minority cultures such as the
Britons or the Basques find more support for their local traditions with the European Union than
with their national governments (France and Spain, respectively).
Particularism has also taken the form of religious fundamentalism, a trend observed in most
world religions, such as Christianity and Islam. Fundamentalism has always been at odds with
modernity and the spread of modern western consumer culture. Members of fundamentalist
movements find their identity not in the nation or the local community, but in the world
community of believers who share their views, as in the case of Al Qaeda.
Globalisation also has generated heterogeneity in a rigid form. The world is fragmenting, and
people are emphasizing our difference more. “Tribalism”, “Jihad” are soon taking shape leading
to a “ Clash of Civilizations”.
Globalisation often increases risk behaviours such as smoking and alcohol consumption,
increasing social conflict, loss of identity, dislocation and dissatisfaction. Others argue that
greater cultural exchange is likely to increase tolerance and understanding, while more access to

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information can create lifestyle and social changes with health benefits, such as gender equality,
greater respect for human rights, less stigmatization of people living with HIV/AIDS, on the
basis of class, caste, ethnicity and gender.
For many, the result of global communications is the global village, a term referring to the
increased contact between cultures, identities and views across national boundaries those result
from the application of modern communications. This represents a positive view of globalization
in which societies come closer together and develop shared values and interests.
Global communications play an extremely important role in the cultural dimensions of
globalization. The term refers to the use of new information communication technologies such as
the Internet, mobile phones, e-mail, and satellite TV. These technologies are becoming cheaper
and more widely available. The increasing ease and speed of global communication has both
direct and indirect influences on health. For example, global advertising campaigns may increase
levels of tobacco use but, on the positive side, the Internet democratizes access to information,
making it easier for health professionals to access and share knowledge, information, and ideas
on health.
Despite advances in global communications, a massive “information gap” remains between
developed and developing countries. Ownership and influence over the content of
communications is important. All that can be said with certainty is that the integration of global
markets and communication channels leads to a much higher level of interaction which has a
necessary bearing on cultures.
3.3.3 The Social Dimensions of Globalisation

Globalisation today is least seen as having economic bearing, but more as having social bearing.
Its social repercussions are far reaching in character. As a process it touches every fringe of the
society, thus bring changes in the individuals, institutions, social values, issues, nature of social
movements, social organisations, social policies. The social dimensions of globalization relate to
the impact of globalization on the life and work of people, their families, and their societies.
Concern is often raised about the impact of globalization on employment, working conditions,
income and social protection. Beyond the world of work, the social dimension includes security,
culture and identity, inclusion or exclusion from society and the cohesiveness of families and
communities. Added to this, its influence on the ideological currents that sustain society, polity
needs a mention.
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With the wake of globalisation, individuals all throughout the world have witnessed a change in
their identity. Narrow local community identities are replaced by a broad global identity. There is
the inclusion of the hither to excluded groups in the society through movements, activism,
development of new consciousness and policies. In the period following globalisation, the
society has witnessed many progressive laws which recognise the human rights of the
stigmatized groups like the lesbians, gays, transgender etc. In 2011, the United Nations Human
Rights Council passed its first resolution recognizing LGBT rights. As of July 2015, eighteen
countries, most of them located in the Americas and Western Europe, recognize same-sex
marriage and grant most of the rights to its LGBT citizens. The same is with regard to gender
and ethnicity. Increased communication, media reflections, networking among groups of
activists has played a significant role in materialising this identity issues.
Gill criticizes globalization for the “Intensification of alienation, exploitation and
commodification of human life and nature” There is a growing insecurity for human existence in
the period following globalisation. Globalisation has promoted tour, travel and trade. By this
women as a group become the worst victims of exploitation, desertion and trafficking. Single
headed households are on rise. Cross border terrorism threats the security of millions of people.
Globalization has reorganized global class relations in the world-system. No longer classes are of
local origin or confined to localities. Waves of economic and political integration through
increasing trade and investment have been accompanied by a process in which both elites and
masses have oscillated from predominantly local and national consciousness and organization
toward increasingly transnational and global identities and interconnections. A transnational
capitalist class has now emerged whose field of social reproduction is the globe itself, since it
easily bypasses national workers organisations. The multinational companies are the main
institutional form of this transnational capitalist class and the magnitude of the transformations
which they are creating in the world economy. In fact, more than a third of the world’s industrial
product is produced by them, and an even higher percentage traded amongst them. There is a
“triple alliance” between the multinational companies, the local capitalist elite and the “state
bourgeoisie” which has led to the emergence of the new class structure.
Globalisation affects different groups of women in different places in different ways. On the one
hand, it may create new opportunities for women to be forerunners in economic and social
progress. With the advent of global communication networks and cross-cultural exchange, there

44
seems to be a change in the status of women. However, globalisation has indeed promoted ideas
and norms of equality for women that have brought about awareness and acted as a catalyst in
their struggle for equitable rights and opportunities. On the other hand, it has exacerbated gender
inequality in a patriarchal society, especially in the developing world. In many cases, it has led to
further marginalisation and impoverishment of women in the informal labour sector by labour
displacement.
According to a United Nations Development Fund for Women reports, over the past two decades
the process of globalisation has contributed to widening inequality within and among countries,
coupled with economic and social collapse in parts of Sub-Saharan Africa and countries in
transition like in Eastern Europe and the former Soviet Union and financial crises in Asia and
Latin America. The process of globalisation is least people-centred and more profit-centred and
is least accountable to women. This brings massive gender inequality in society. The world lives
in a contrast. It goes on formulating gender responsive policies and in reality, it witness gender
insensitive practices.
As another report on ‘The Realisation of Economic, Social and Cultural Rights:Globalisation and
its Impact on the Full Enjoyment of Human Rights’, presented to the United Nations Economic
and Social Council’s Sub-Commission on the Promotion and Protection of Human Rights in its
fifty second session, highlights:
Among the distinct groups of society upon whom globalisation’s impact has been most telling,
women clearly stand out. Women have entered the workforce in large numbers in states that have
embraced liberal economic policies. Critics of liberalisation argue that following the World
Trade Organisation regulations the states have brought about a change in national policies so as
to allow the free entry of foreign corporations, to give more incentives to big businesses rather
than to small firms, and to lift import controls on agricultural products. This has resulted in
further marginalisation of rural and indigenous women.
Globalisation has also increased women’s unpaid work as social services are privatised. As
producers also women have to suffer exploitation in terms of low wages, poor working
environment, instability of employment, and denial of right to representation. The neoliberal
ideology resulting in the recession of the state from welfare activities have brought gross
problems for women. This has limited the access of the women to development benefits like
education, health, food security.

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The impact of globalisation on various ethnic groups of the societies is also quite spectacular.
Alison obseves with the advent of globalisation, there is a breakdown of people’s localised
ethnic identities and it is replaced by loyalties to larger communities. Ethnic conflicts have
ceaselessly troubled the world in the Balkans, Rwanda, Burundi, Sudan, Indonesia, the Middle
East, Afghanistan, Northern Ireland, and countless other locations.
Globalisation seriously affects social institutions. Institutions like marriage, family, polity,
economy, education, religion have been influenced by the process of globalisation. Today, no
longer marriages are confined to the boundaries of community, class and groups. The borderless
world has enabled people to opt for cross community, cross culture and cross boundary
marriages. Parental roles in marriage negotiations are taken up by institutions like alliance
centres and internets. The longevity of marriages is also getting reduced due to migration of
people. Live in relationships are substituting the institution of marriage which is neither healthy
nor desirable for a stable and sustainable society. So far as the families are concerned, mobility
increasing in a phenomenal way has reduced the family bonding and ties and has made the
family relations very thin. Members of a family remain widely dispersed. The role of the family
as the principal care unit of the society for the young and the aged is declining, shifting the
burden to emerging institutions of crèches and old age homes. Single headed households are on
rise.
Similarly, political institutions are undergoing changes due to the process of globalisation. Two
fundamental transformations have affected the shape and form of modern politics. The first of
these involved the development of territorially based political communities. The second has led
to an era of emerging multilayered regional and global governance. The second however is
progressively increasing with the process of globalisation. One of the major impacts of political
globalization is that it reduces the importance of nation states. Many nations have organized
themselves into trade blocs. Emergence of supra national institutions such as the European
Union, the WTO, the G8, and The International Criminal Court etc replaced or extended the
national functions to facilitate international agreement. This has reduced the sovereignty of
nation states in taking important decisions with respect to their country where we see massive
intervention of these organizations in all fields. Another major impact of globalization is the
increased influence of Non Governmental Organizations in public policy like humanitarian aid,
developmental efforts etc.

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The religious institutions are not free from the influence of globalisation. The process of
secularisation has been strengthened due to globalisation. The major consequences of
globalization have been the transformation of traditional religions and belief systems, religious
values subdued by consumerist values, cyber culture, social fads, and changing work ethics and
work rhythms, the rise of religious fundamentalism. On the other hand, pluralism and tolerance
are promoted due to the trans border migration of the people.
Education as an institution is also thoroughly influenced by globalisation. There is the
internationalisation and standardisation of higher education. Education is becoming privatized
and there is a qualitative leap in the content, pedagogy and coverage of education. Vocational,
technical and professional education is taking momentum to cater the demands of the
competitive global market.
Education as an institution is also thoroughly influenced by globalisation. There is the
internationalisation and standardisation of higher education. Education is becoming privatized
and there is a qualitative leap in the content, pedagogy and coverage of education. Vocational,
technical and professional education is taking momentum to cater the demands of the
competitive global market.
Globalisation has presented new social issues. Trafficking, terrorism, ecological degradations,
poverty and unemployment grapple the world today. Ethnic conflict plagues the globe. With the
process of globalisation social disparities both within and between countries have increased.
Both physical and human resource move from the poor to the rich nations. The world is divided
into two halves. The smaller half comprises of the economically affluent nations while the bigger
half consists of the economically poor nations. Some regions of the world increasingly become
drifted from economic and social progress, while in others economic advance is accompanied by
precarious employment and social crisis. Cross-border economic transactions put national social
systems and social norms under pressure. The emergence of a global labour market intensifies
competition and there is a surplus of labour which put the local labour force at threat. Further, to
maximize profit the rich nations outsource their jobs to other countries where they gat cheap
labour force. This brings unemployment of a high magnitude in the rich nations.
Globalisation has given birth to new social movements. The world has witnessed new human
rights movements among the gays, lesbians, transgender and homosexuals. Social movements
are no longer localised rather they are globalised.

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Globalization has impacted ideological changes. Globalisation has strengthened the ideology of
popular participation, social inclusion, humanitarism, human rights, social justice, capitalism,
democracy. Added to all these, it insists upon and results in the development of the ideology of
globalism, environmentalism. All these ideological currents are generating a new wave of
consciousness and are now guiding and governing the world population.
3.3.4 The Technological dimensions of Globalisation

The technological dimension of globalization refers primarily to the advancements of ICT. ICT
has fuelled the communication and information revolution of recent years. Globalisation has
introduced innovations in production technologies. New production technologies, have produced
efficiencies in production and created the so-called "postFordist" era of manufacturing. The
technological dynamic of globalization includes everything from the internet and mobile phones,
which have done much to create the "interconnectedness" of the world, to improved logistics
systems, which have enabled industries worldwide to function more efficiently and profitably, to
modern agronomic practices, which are restoring infertile lands and opening up new
opportunities in agriculture.
‘Globalization’ has presented to the world many new inventions, innovations and interventions.
Strictly speaking, the economic application of new ideas and knowledge is not only ‘technical’,
insofar as it can also be organizational, managerial, and institutional. The new technologies such
as ICTs, biotechnology, new materials, etc., have been found to intensify the science–technology
interface. Together they have impacted the complex processes of organizational, institutional and
infrastructural change .
Technology has contributed for the fertile meeting of different societies. If the assimilation and
transfer of technology required lengthy time spans in the past, today it takes place with a much
higher intensity and speed. New technologies play a fundamental part in making globalization
possible. Without aeroplanes, telephones, satellites, computers and televisions it would not be
possible to transfer information from one place to another, thus allowing for the speed and the
intensity which characterize the modern world. These give rise to a rate of diffusion and transfer
of knowledge which is greatly superior to that of the past. In other words, it was the new
technologies that allowed the emergence of the ‘global village’. Technology has broken the
barriers of time and distance.
The coming of a society based on knowledge has proceeded hand in hand with the proliferation
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of technological inventions. International trade and direct investments abroad have substantially
increased, thus rendering the national economic systems increasingly integrated with each other.
The pace of globalization and that of technological change have in fact been strictly interrelated
and, from a long-term perspective, it appears less important to establish which one should be
considered responsible for triggering the other rather than to establish that they mutually enforce
each other. Generation, transfer and diffusion of innovations are possible due to globalisation
and in turn, these make globalisation feasible in the inaccessible areas of the planet.
The presumption here is that for many years there has been a circular process in which new
technologies act as a ‘lubricant’ for economic and social globalization. In turn, globalization,
while facilitating the circulation of people, goods, capital and above all, ideas and knowledge,
allows for the sustenance of a historically unprecedented rate of technological change. The
concept of globalization of innovation thus comes to be the zip between the two fundamental
phenomena of modern economies: the increased international integration of economic activities
and the raising importance of knowledge in economic processes.
3.3.5 The Environmental Dimensions of Globalisation

There are environmental dimensions of globalization that are equally important both for the
future of the life support system of the planet and for their impacts on human society.
The present rapid rate of globalization, driven by economic forces and materialistic aims, is
creating many environmental problems. Our explosive population growth, accelerated
consumption and technological innovations have increased the scale of human impacts so that
they are pushing planetary limits. Climate change, stratospheric ozone depletion, biodiversity
loss, is the planetary problems that require global cooperation and management. The increasing
movement of goods around the world has produced problems of invasive species, the spread of
toxic chemicals and hazardous wastes, and growing quantities of wastes that are ever more
expensive to dispose of safely. Global trade puts the same pressures on natural resources
everywhere. A tree is a potential source of wood chips whether it is growing in Siberia, Canada
or Papua New Guinea. Since the non-market values of trees and forests, such as for watershed
management or biodiversity conservation, are not presently factored into the global trading
system, unregulated trade has been very damaging to the natural capital of many countries.
Despite the widespread insistence on national sovereignty over natural resources, the only
solution is to manage such resources at the global level for the benefit of the whole planet. This
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is leading to the steady expansion of mechanisms for global environmental governance, with
institutions for decision-making, regulation and harmonization that essentially are extending the
federal concept to the global level. However, our present ad hoc methods of global legislation,
negotiating and adopting a new convention for each environmental problem, will eventually
bring us to a global legal gridlock. It will become essential to find a more coherent way to
regulate and adjust the behaviour of states and companies in the common interest.
3.4 Summary

The widespread movement of capital, labour, goods, and services across national borders
contributes to the definition of economic globalisation. Growing interconnection and economic
integration between national and regional economies is a key feature. There's much more to
economic globalisation than the flow of commodities and services, even though this type of
globalisation is frequently examined through the examination of bilateral and multilateral trade
flows and the agreements that oversee them. Globalised capital markets have existed for a while.
Transferring technology is undoubtedly a worldwide problem. In addition, labour markets have
become more regionalized in recent years.
Technological globalisation is the one that affects all eight types of globalisation. For example,
technology accelerates the globalisation of the economy and culture. Thus, the many "types" of
globalisation are not distinct ideas; rather, they are all influenced by one another.
The political dimension stands as a foundational pillar in shaping societies, governance systems,
and international relations. It embodies both advantages and disadvantages that significantly
impact the functioning of nations and the global community. While the political dimension
serves as a platform for democratic governance, policy formulation, and conflict resolution, it
also grapples with challenges such as inefficiency, polarization, and corruption.
In conclusion, the double impact that the global network has on national cultures positive and
negative is how the cultural aspects of globalization are typically discussed. The adoption of
foreign cultures to enhance local ones is linked to the expected benefits of wealth and cultural
development for developing nations. However, national cultural identities face additional
difficulties due to the fact of cultural globalization, which is sparked by information
technologies, perpetuated by them, and embodied through Americanization. Traditional values
are undermined and disregarded, inequality and social unrest increase, and ethnic groups all over
the world are invaded by a uniform, US-led global culture.
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3.5 Self Assessment Questions
1. What is economic dimension of globalization?
2. What is political dimension of globalization?
3. How culture is changed due to globalization?
4. What do you experience in environmental condition due to globalization?
3.6 Key Words

Dimension: The word "dimension" can be used to describe a variety of features, viewpoints, or
criteria that help in comprehending or assessing a specific topic, event, or idea. It suggests that
there are several aspects or components to a bigger picture.
Economy: The system and structure of producing, distributing, and consuming products and
services inside a nation, a region, or the entire planet is referred to as the economy. It includes all
of the actions and relationships that people, organisations, governments, and other organisations
have while producing and trading products and services to meet the needs and desires of people.
Liberalisation: In general, liberalisation refers to a relaxation of restrictions, usually in areas of
social or economic policy. Most often, the term is used to refer to economic liberalisation,
especially trade liberalisation or capital market liberalisation; the policies often referred to as
neo-liberalism.
Technology: The use of scientific information, abilities, techniques, and instruments to produce
goods, address issues, and enhance workflows across a range of industries is referred to as
technology. It includes a broad range of material and immaterial components that are employed
to successfully complete particular activities or goals.
Politics: The methods, behaviors, and activities that people and groups use to decide, exert
authority, and rule over a community or an organization are collectively referred to as politics. It
includes a broad range of tasks pertaining to power and resource allocation, policymaking, and
governance.
Free Trade: A system or policy that permits the interchange of products and services between
nations without enacting substantial obstacles or limitations, like tariffs, quotas, or onerous
regulations, is known as free trade. It encourages cross-border movement of products and
services, which advances global trade and economic collaboration.

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3.7 Study Guide
 Stiglitz, Joseph E. Making Globalisation Work,Penguin,U.K.
 Stiglitz, Joseph E. Globalization and its Discontents, W.W. Norton & Company.
 Bhagwati, Jagdish, In Defense of Globalisation, Oxford University Press.
 Appadurai, Arjun, Modernity At Large: Cultural Dimensions of Globalization.
Minneapolis: University of Minnesota Press.
 Avasthi, D.M., Fundamentals Of Globalization And Indian Economy, Duke University
Press.

52
 Unit-04 Arguments in Favour and Against Globalisation
Structure
4.1 Learning Objectives
4.2 Introduction/ Assessment of Prior Knowledge
4.3 Arguments in favour of globalization
4.4 Arguments against Globalisation
4.5 Summary
4.6 Self Assessment Questions
4.7 Key Words
4.8 Study Guide

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4.1 Learning Objectives

After going through this unit the learner will be able-

1. To analyse the arguments in favour and against globalization.
4.2 Introduction/ Assessment of Prior Knowledge

Increased foreign direct investment in countries due to the reduction in investment barriers has
also fuelled growth, development and progress. Globalisation has resulted in improved
environmental awareness as the internet has increased access to information and helped for
diffusion of safe environment related knowledge. Increased trade integration has brought
integrity, interdependence among nations. It has reduced hegemonic attitude of the supposed rich
nations and has reduced the threat of war and promoted peace.
4.3 Arguments in favour of globalization
 The economies of countries that are more engaged with the global economy have
consistently grown much faster than those that have maintained closed economies – on
average by about 2.5 percent.
 Faster economic growth resulting from globalisation, usually leads to increases in
peoples’ living standards.
 Improved wealth leads to better health care and cleaner water, increasing peoples’ life
expectancy under globalisation.
 Increased foreign direct investment in countries due to the reduction in investment
barriers has also fuelled growth, development and progress.
 Globalisation has resulted in improved environmental awareness as the internet has
increased access to information and helped for diffusion of safe environment related
knowledge.
 Increased trade integration has brought integrity, interdependence among nations. It has
reduced hegemonic attitude of the supposed rich nations and has reduced the threat of
war and promoted peace.
 Improved technology has reduced costs and changed the way the world communicates.
It has connected the people and parts of the planet.
 Adult illiteracy rates are falling in developing countries.

54
  Democracy is making headway. Modern communications and the global spread of
information have led to the toppling of undemocratic regimes.
 Multinational companies have adopted improved standards for workplaces and wages –
usually paying more than local companies in developing countries.
 International migration has led to greater recognition of diversity and respect for cultural
identities, which is improving democracy and access to human rights.
4.4 Arguments against Globalisation
 The social and economic costs of globalisation are very high. This causes people to suffer
hardship.
 Countries unable to take advantage of globalisation fall further behind. Global rich poor
divide grows.
 Increased trade and travel have increased the spread of human, animal and plant diseases,
like AIDS.
 Increased interdependence of countries has greater vulnerability to economic problems –
like the recent global recession. It also reduces the self sufficiency of the nations.
 The environmental costs of globalisation are very high. Multinational companies defeat
the environmental codes in developing countries. The hitherto safe planet becomes an
unsafe habitation for humanity.
 Major economic powers control the international economic bodies which become
hegemonic over the developing world. This leads to economic colonisation. They treat
the developing countries not as their partners, but parasites.
 Trade liberalisation and technological improvements change economies and can lead to
unemployment.
 Modern communications have spread an awareness of the differences between countries
and increased demand for migration to richer countries. Barriers to migration have been
increased in richer countries leading to more people smuggling.
 Globalisation has caused a brain drain to richer countries making the poor countries
drained off their talents.
 Indigenous and national culture and languages are eroded by the modern globalised
culture.

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  Globalisation has heightened cross border terrorism, trafficking which are putting the
lives of millions in misery.
4.5 Summary

Though globalization has many advantages but it also creates many difficulties for the people.
The social and economic costs of globalisation are very high. This causes people to suffer
hardship. Countries unable to take advantage of globalisation fall further behind. Global rich
poor divide grows. Increased trade and travel have increased the spread of human, animal and
plant diseases, like AIDS. Increased interdependence of countries has greater vulnerability to
economic problems – like the recent global recession. It also reduces the self sufficiency of the
nations.
4.6 Self Assessment Questions
1. In what context globalization is helpful for the society?
2. How globalization brings difficulties to human life?
4.7 Key Words

Hardship- implies difficulties to the life of common people.

4.8 Study Guide
 Bhagwati, Jagdish, In Defense of Globalisation, Oxford University Press.
 Appadurai, Arjun, Modernity At Large: Cultural Dimensions of Globalization.
Minneapolis: University of Minnesota Press.
 Avasthi, D.M., Fundamentals Of Globalization And Indian Economy, Duke University
Press

56
 Block-02 Globalisation and Global Processes

Unit- 05 Modernization and Globalization

Unit- 06 Neo-Liberalism and Global Capitalism
Unit- 07 Globalization and Nation State

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 Unit-05 Modernization and Globalization
Structure
5.1 Learning Objectives
5.2 Introduction/ Assessment of Prior Knowledge
5.3 Modernization and Globalization
5.4 Defining Modernisation
5.5 Modernisation: A Single Word with Many Implications
5.6 Modernisation and Westernisation
5.7 Modernisation and Tradition
5.8 Characteristics/Attributes of Modernisation
5.9 Defining Globalisation
5.10 Globalisation and Modernisation
5.11 Summary
5.12 Self Assessment Questions
5.13 Key Words
5.14 Study Guide

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5.1 Learning Objectives

After going through this unit the learner will be able-

1. To discuss the meaning of modernization.
2. To understand the features of modernization.
5.2 Introduction/ Assessment of Prior Knowledge

Globalisation is a powerful social force emerging in full strength in the turn of the twentieth
century which has been carried on to the present century. It is a social process that has affected
the existing institutions of the society and the continuing social processes. Debates hover around
the positive and negative repercussions of globalisation on the social processes and economic
and political institutions. The optimists believe that to some extent, globalisation has
strengthened these institutions and processes by giving them a momentum and adding vigour to
them. But there are the sceptics who believe that globalisation has brought renovations in the
structure and functions of these institutions. To them, globalisation has led to the demise of the
institution of the nation state and has established global capitalism which may in the long run
prove to be detrimental for the society. Similarly globalisation has stimulated the process of
vigorous modernisation due to the compression of distance. Geopolitical boundaries are in a
process of collapse and the western influence on the non western societies is on rise. But still
debates have not been resolved. It has become difficult to establish whether globalisation is a
forerunner of modernisation or it is spearheaded by the process of modernisation. Similarly, the
role of globalisation in establishing global capitalism is a point of debate and the future of the
nation states in the era of globalisation is a point of hot discussion. All these can be resolved by
discussing them in detail.
5.3 Modernization and Globalization

Modernisation and globalisation are the phrases that have dominated development literature in
different periods of history. While modernisation dominated the world as a process during the
colonial and the post colonial era, globalisation became the buzz word in the 1970s. Both have
development connotations and associations exemplifying changes in the structure, functions,
culture, human relations and practices of the people of the societies. Modernisation as a
terminology seems to be a precursor to globalisation, making an early appearance in the

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development literature. As processes, both are spontaneous and are beyond the control of human
beings. Both have a catalyst role in transforming the world. No doubt, both modernisation and
globalisation are means to provide a change face to the world.
Simply speaking, modernisation as a concept refers to the process in which society undergoes
industrialisation, urbanisation and other social changes that completely transform the lives of
individuals. Modernisation is a historically inescapable process of social change. As a process it
had its origin with the Industrial Revolution in England and the Political Revolution in France.
Modernisation first occurred in the West through the twin processes of commercialization and
industrialisation.
Globalisation on the other hand, is a consequence of the expansion of the American and
European culture across the planet via settlements, colonisations and cultural replications and has
a direct impact on the capitalist development across the nations. Sociologists like Robertson
comment globalisation has been there since the dawn of human civilization, but it is
modernisation that has given it an accelerated pace. Thinkers like Turner suggest globalisation
served as a carrier and courier of the process of modernisation. These ideas strengthen the thesis
that globalisation and modernisation are supplementary and complementary to each other.
 The following propositions run as corollaries from the broad statement given above.
 Globalisation and modernisation are different names signalizing the same process of
development.
 They are contemporal.
 They are inseparable from each other, one triggering the other.
 Both are causal and consequential to each other.
 Modernisation is unavoidable and capitalism following globalisation is compelling.
 Modernisation is cutting across traditions and globalisation is cutting across nations.
5.4 Defining Modernisation

Modernisation as a term gained currency in the 1950s and 1960s and was popularised by
American scholars. The term is a derivation from the Latin root “modo” meaning contemporary
or just now or the latest. ‘Modernising’ means simply giving, up old ways and traditions to
recent or most recent ones. The general features of a developed society are abstracted as an ideal
type and so a society is called ‘Modern’ to the extent it exhibits modern attributes. Indicators like

60
development of nationalist ideology, democratic associations, increasing literacy, high level to
industrialisation, urbanisation and spread of mass media of communication, social mobility
symbolise modernisation.
The term modernisation is defined from three different perspectives. They are:
 A historical perspective
 Revealistic perspective and
 An analytical perspective

The historical perspective is subscribed by Eisenstadt and Moore who proclaim the society takes
a changed shape on time scale. The revealistic perspective focuses on the expressive aspects
which symbolise modernisation. The breakthrough with the traditional arrangements reveals that
the society is in the process of modernisation. The analytical perspective is emphasised by
Smelser who says modernisation can be estimated from the development of science and
technology, movement of the society from subsistence to surplus economy, machine power
replacing human power, rapid urbanisation, representative government, adult suffrage,
competing political parties, democratic decentralisation in the political field and in the social
sector though the spread of literacy, development of specialisation, spread of secularisation,
increase in social mobility.
There is general agreement that, modernisation is a type of social change which is both
transformational and progressive in its effects. It is also as extensive in its scope. As a
multifaceted process, it touches virtually every institution of society. According to Huntington,
modernisation is a multifaceted process involving changes in all areas of human thought and
activity. After, Black, Smelser are the notable theorists who carefully distinguish the task of
definition from that of description. Wilbert E. Moore defines modernisation as “the ‘total’
transformation of a traditional or pre-modern society into the types of technology and associated
social organisation that characterise the ‘advanced’, economically prosperous, and relatively
politically stable nations of the Western World”. According to Neil J. Smelser, the term
modernisation “refers to the fact that technical, economic and ecological change ramify through
the whole social and cultural fabric”.
5.5 Modernisation: A Single Word with Many Implications

In the process of the conceptualisation, different scholars have adopted different approaches to

61
comprehend the nature and dimension of modernisation. The heterogeneous meanings which
have been attached to the concept of modernisation have been due to a wide range of interests,
level of abstraction and degrees of attentiveness to definitional problems. Careful examination of
the concept reveals that the attributes and indicators of modernisation as have been conceived are
the products of diverse influence and are interdisciplinary in nature.
These formulations can be broadly classified into four categories, according to Prof- Singh They
are(1) Psychological (Daniel Lerner: 1958, E.C. Banfield: 1958 and David McClelland: 1961),
(2) Normative (G.A. Almond and S. Verba: 1965, Lucian Pye and S. Verba: 1965, E. Shills:
1961, R.N. Bellah: 1964, C. Greetz: 1963), (3) Structural (T. Parsons: 1964, K.W. Deutsch:
1961, D. Apter: 1965 R. Bendix. 1964 S N Eisenstadt: 1966, F.W. Riggs: 1964, M. Weiner:
1962) and (4) Technological (M.J. Levy: 1966, E.F. Hagen: 1962, W.W. Rustow: I960).
The psychological formulations link this process with a set of motivational attributes or
orientations of individuals. Daniel Lerner calls it “Psychic mobility”, McClelland characterises it
as “Achievement orientation”, whereas Banfield calls it “Commitment to consensual ethos.”
The normative formulation of modernisation consists of such values as rationalism,
individualism, humanism and commitment to liberal tradition, civic culture and secular values. It
differs from the psychological, especially to the extent to which primacy is laid down on a set of
norms or values which form a pattern and enjoy relative autonomy over individual motivations
and consciousness.
The structural formulation of modernisation links this process with ingredients such as rational
administration, democratic power systems, more integrating and consensual basis of economic
and cultural organisation, attachment to universalistic norms in social roles and democratic
associations. These, according to Talcott Parsons, are the structural prerequisites of a modern
society. Deutsch uses an inclusive phrase -social mobilisation to connote some important
structural adaptations in society which form parts of the process of modernisation. Modernisation
as a complex process of “systematic transformation manifests itself in certain socio-demographic
features termed as social mobilisation’ and structural changes”, says Eisenstadt.
Scholars like M.J. Levy, E.E. Hagen and W.W. Rostow have emphasised on the technological
concept of modernisation where it is described in terms of economic resources and the use of
inanimate power. In such formulations modernisation is associated with material inputs and
developmental infrastructures, which bring about qualitative and progressive mobilisation in the

62
total resources of the society.
Thus, it can be concluded that the term modernisation has its disciplinary interpretation.
Economists visualise it in terms of growth and development, sociologists in terms of
differentiation, psychologists in terms of greater motivation and achievement instincts among the
population and political scientists in terms of political innovations like the development of new
political culture, institutions etc.
There are social scientists who have equated modernisation with single type of social change
whereby traditional societies acquire the attributes of modernity. Banjamin Schwartz draws upon
Max Weber to define modernisation in terms of the expansion of man’s rational control over his
physical and social environment.
5.6 Modernisation and Westernisation

Modernisation and westernisation are often used interchangeably. But, the terms are
diametrically different from each other. Modernisation has wider implications than
westernisation. Modernisation refers to the overall changes in the structure and functioning of
individuals and institutions of the society, but westernisation refers to the changes that occur due
to western contact. To quote Daniel Lerner in the process of modernisation even though the third
world countries emulate the western traditions and practices, modernisation is not westernisation.
Yogesh Atal observes modernisation is more effective than westernisation as some indigenous
models are emphasised and it gives a wide coverage.
Smelser and Lerner clarify that economic development is a precondition to modernisation, but it
is not the end in itself. Modernisation covers a wide array of phenomena to be effective in nature.
To Bendix industrialisation is a prelude to modernisation. Irrespective of these fundamental
differences between the two terms, in many instances they are used in close association to each
other.
Modernisation theories were originally formulated in response to the new world leadership role
that the United States took on after World War II. As such they had important policy
implications. Second, modernisation theories suggest the replacement of traditional values, and
the institutionalisation of democratic procedures.
5.7 Modernisation and Tradition

The concept of modernisation comes from Wilbert Moore who argues that for most purposes

63
modernisation may be equated with industrialisation. According to this approach, modernity
does not necessarily weaken the tradition. The relations between the traditional and the modern
do not necessarily involve displacement, conflict or exclusiveness. Modernisation then, becomes
a transition, or rather a series of transitions from primitive, subsistence economies to technology
intensive, industrialised economies, from subject to participant political cultures, from closed
ascriptive status systems to open achievement oriented systems and so on (Lerner, Black,
Eisenstadt, Smelser and Huntington).Modernisation is generally viewed as extensive in scope, as
a ‘multifaceted process’ which not only touches at one time or another virtually every institution
of society, but does so in a manner such that transformations in one institutional sphere tend to
produce complementary transformations in the other.
Modernity and tradition are mutually exclusive. They are essentially asymmetrical concepts. The
modern ideal is set forth and then everything which is not modern is labelled traditional
(Rustow).
5.8 Characteristics/Attributes of Modernisation

The modern society is characterised by ‘differentiation’ and ‘social mobilisation’. Eisenstaedt

calls them as the pre-requisites of modernisation. As social systems modernise, new agencies of
social structures emerge to fulfil the functions of those defunct agencies and institutions of the
society.
When different agencies of the social structure specialise in performing some specific tasks, it is
called differentiation. To put it in another way, differentiation refers to the development of
functionally specialised societal structures. According to Smelser, modernisation generally
involves structural differentiation. Through the process of modernisation, a complicated structure
that performed multiple functions is divided into many specialised structures that perform just
one specialised function each.
To Eisenstadt social mobilisation implies the process in which major clusters of old social,
economic and psychological commitments are eroded and broken and people become available
for new patterns of socialisation and behaviour. It is a process by which the old social, economic
and psychological elements are transformed and new social values of human conduct develop
and get accepted in the society. The various components of modernisation include:
industrialisation, urbanisation, secularisation, media and communication revolution, increasing
literacy and spread of education, information boom, technological up gradation and development
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of a scientific spirit.
Thus modern society is characterised by a rapid development of mass communications, spread of
literacy and education. In contrast to traditional society, modern society also evolves much better
health care services resulting in longer life expectancy among the population and higher rate of
occupational and geographical mobility. Socially, the family and other primary groups having
diffused roles tend to have specialised roles. Modernisation provokes technological leverage.
There is a shift from the use of human and animal power to inanimate power, from tool to
machine. Machine based production replace human based production. There is qualitative and
quantitative growth in production. There is of growth of wealth, technical diversification,
differentiation and specialization leading to a novel type of division of labour, industrialisation
and urbanisation. Thus, modernisation touches different spheres of society like economic,
political, educational and sociocultural.
In economic sphere some scholars have analysed the characteristics of modernisation. Robert
Ward highlights ten characteristics of economic modernisation. These characteristics include the
intense application of scientific technology and inanimate sources of energy, high specialization
of labour and interdependence of impersonal market, large- scale financing and concentration of
economic decision-making and rising levels of material well-being etc. Self-sustaining economic
growth and an endeavour to institutionalise the control of economic growth through planning
have been emphasized by Cornell. To sociologist like Marion Levy, a society is ‘more or less’
modernized to the extent that its members use inanimate sources of power or use tools to
multiply the effects to their efforts.
Eisenstadt talks about some of the key characteristics of economic modernisation. They are:
 Substitution of inanimate power like steam, electricity or atomic for human and animal
power as the basis of production, distribution; transport and communication,
 Separation of economic activities from the traditional settings, increasing replacement of
it by machine and technology
 Growth of the secondary (industrial, commercial) sector and tertiary sector (service)
occupations.
 Growing specialization of economic roles and units of economic activity, production.
 Rapid and visible industrialisation is the hall marks of economic modernisation.

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Political scientists like R.E. Ward and Rustow have attempted to provide certain characteristics
of political modernisation. A modern polity, they argue, is highly differentiated and functionally
specific system of Government organization. There is a high degree of integration within this
Government structure. The political decisions are driven by rational and secular principles and
are highly efficient. Achievements in the place of ascription become the basis of the allocation of
political roles. The judicial and regulatory techniques are based upon a predominantly secular
and impersonal system of law.
Education system in a modernised society promotes various professional and vocational skills,
the imparting of scientific education. The supply side of educational services also becomes
greatly diversified and differentiated.
There are two crucial aspects of modernisation: One is the institutional or organizational aspect
and the other is the cultural aspect. Whereas the first aspect of approach stresses ways of
organizing and doing, the second assigns primacy to ways of thinking and feeling. Manning
Nash presents the definition in the following way: Modernity is the social psychological
framework, which facilitates the application of science to the process of production and
modernisation is the process of making societies, cultures, and individuals receptive to the
growth of tested knowledge and its employment in the ordering business of daily living.
The socio-psychological approach considers modernisation mainly as a process of change in
ways of perceiving, expressing and valuing. The psychological formulations of modernisation
link this process with a set of motivational attributes or orientation of individuals which are said
to be mobile, activistic and innovational in nature. Daniel Lerner calls it “psychic mobility”, an
adaptive characteristic in man to respond to his environment with a sense of empathy, rationality
and constricted participant style.
Modernisation involves not only changes in the institutional level but also fundamental changes
at the personal level, a change in modes of thinking, beliefs. Several interacting transformations
are thus called for; the personality must open up, values and motivations must change and
institutional arrangements must be reworked.
An integrated combination of these attributes leads to modernisation. The changes occur both at
the individual (micro) and social systems (macro) levels and these two levels are not mutually
exclusive. In consonance with the structural changes towards modernisation of societies, changes
in the attitudes, beliefs and behaviour of the people also come about. From the above discussion

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it is evident that modernisation involves structural changes and that bring changes in the attitudes
and belief of the people.
There is general agreement that, modernisation is a type of social change which is both
transformational in its impact and progressive in its effects. It is also extensive in its scope. As a
multifaceted process, it touches virtually every institution of society.
5.9 Defining Globalisation

Globalization is the ongoing social process of greater interdependence among countries and their
citizens. It is a complex and multifaceted phenomenon. It is the process of international
integration as a product of exchange of world views, products, ideas and other aspects of culture
in which worldwide exchange of national and cultural resources occurs. Globalization broadly
refers to the expansion of global linkages, the organization of social life on a global scale, and
the growth of a global consciousness, hence to the consolidation of world society. According to
the sociologist, Roland Robertson,” globalization as a concept refers both to the compression of
the world and the intensification of consciousness of the world as a whole.” Globalisation
describes a process by which national and regional economies, societies, and cultures have
become integrated through the global network of trade, communication, immigration and
transportation. It is a process of interaction and integration among the people, companies, and
governments of different nations, a process driven by international trade and investment and
aided by information technology. This process has effects on the environment, on culture, on
political systems, on economic development and prosperity, and on human physical wellbeing in
societies around the world. The WHO defines globalisation as “Globalization, or the increased
interconnectedness and interdependence of people and countries, is generally understood to
include two interrelated elements: the opening of borders to increasingly fast flows of goods,
services, finance, people and ideas across international borders; and the changes in institutional
and policy regimes at the international and national levels that facilitate or promote such flows. It
is recognized that globalization has both positive and negative impacts on development.”
Globalization is characterized by four types of change:
- First, it involves a stretching of social, political and economic activities across political
frontiers, regions and continents.
-Second, it suggests the intensification, or the growing magnitude, of interconnectedness and
flows of trade, investment, finance, migration, culture, etc.
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- Third, the growing extensity and intensity of global interconnectedness can be linked to a
speeding up of global interactions and processes. The evolution of world-wide systems of
transport and communication increases the velocity of the diffusion of ideas, goods, information,
capital, and people.
Fourth, the growing extensity, intensity and velocity of global interactions can be associated with
their deepening impact such that the effects of distant events can be highly significant elsewhere
and even the most local developments may come to have enormous global consequences. In this
sense, the boundaries between domestic matters and global affairs can become increasingly
blurred. In sum, globalization can be thought of as the widening, intensifying, speeding up, and
growing impact of world-wide interconnectedness.
5.10 Globalisation and Modernisation

The interrelationship between globalisation and modernisation is quite intricate. They are
intertwined with each other and are inalienable in nature. Though sociologists agree upon the
fact that both are inter related, there is often an argument about which processes is a predecessor
and which is a successor. However, it is established that there cannot be any modernisation
without globalisation and it is modernisation which stimulates and expedites and speeds up the
process of globalisation. So, both are causal and consequential for each other.
Globalisation is interconnectivity or interlinking of culture, economy, polity and society across
the national borders. It symbolises a process by which national borders collapse and flow or
exchange of individuals, ideas, finance become easier and smoother. All these elements
contribute for modernising a society. If we define modernisation as referring to the process in
which society undergoes industrialisation, urbanisation and other social changes that completely
transform the lives of individuals, globalisation becomes the catalyst in ensuring all these
features of modernisation. Globalisation is progressive as it diffuses ideas, innovations, practices
which make a pre modern society shed its old ideas and practices and adopt new ways of
thinking and working to become modern.
Social science history clearly project globalisation and modernisation are complementary to each
other. The writings of Karl Marx to Daniel Bell and Max Weber to Samuel Huntington have
projected cultural changes have come over the societies due to the impact of alien invasions,
infiltrations and penetrations. All these have not only facilitated cultural change but are
responsible for cultural modernisation of traditional societies. Globalisation has a strong
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correlation with modernisation. From the early modernisation (i.e. when Columbus discovers
America in 1492) to today’s modernisation, there has been a rapid acceleration on globalisation.
The development of globalisation has been escalated to the maximum level especially after the
20th century. This period is also the third phase in modernisation, which is signified by the
globalisation of modernisation. The globalisation of modernisation emerges through
industrialisation, urbanisation, capitalism, modern nation states, and mass social movement. In
other words, globalisation has been accelerated by these five processes.
Globalisation promotes efficient use of resources. This leads to better economic development.
There comes a change in the work environment, work culture, diversification of the employment
market, creation of new job opportunities, and development of the contents of education,
pedagogy which bring more egalitarian, humanistic, secular, non feudalistic and democratic
values which symbolise modernisation of a society.
Wilbert E. Moore defines modernisation as “the total transformation of a traditional or pre-
modern society into the types of technology and associated social organisation that characterise
the ‘advanced’, economically prosperous, and relatively politically stable nations of the Western
World.” Globalisation is responsible for rapid technological transfer. Technology no longer
remains the monopoly of the country of origin, but soon spreads to other nations where
production goes on. Thus, the technologically impoverished nations gain the new technological
supports and knowhow which ease their burdens of production and bring them economic
prosperity which symbolise modernisation. Further, due to globalisation and the spread of
technology, media revolution takes a concrete shape. There is the spread of communication and
communication technology develops at a greater speed. News and information services develop.
The ITC play a significant role in bringing attitudinal changes, increasing the awareness of the
people, in changing their perception which culminate in increasing participation in public affairs.
This is a visible characteristic of modernisation. Conscious political participation, public opinion
become the foundations of stable and lasting democracies and is the emblem of political
modernisation.
The two crucial aspects of modernisation; the institutional or organizational aspect and the other
are the cultural aspects are enormously driven by the process of globalisation. The institutions of
marriage, family, kinship, caste, education, religion, education, property and legal system
undergo drastic and dramatic changes due to the impact of globalisation. Emerging international

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laws of human rights, social justice, equality, distributive justice have come to prevail over the
national laws due to the homogenisation effects of globalisation. So the traditional institutions
have shed with their rigidities and have acquired new characteristics over the years following
globalisation. The weakening of sectoral laws has brought transitions in these institutions giving
them a modernised orientation in their structures and functioning.
No less significant is the influence of globalisation in modernising the culture of a society. Mass
tourism has been an ongoing feature of the world due to globalisation. This has stimulated the
cross fertilisation of ideas, practices through cultural exchange. Now the global features are
identified in the local institutions, individual ways of life and the local features are carried over
to the global level. Dress, diet, drink, dance are undergoing tremendous changes due to cultural
hybridisation, harmonisation and homogenisation effects. All these have brought tremendous
cultural modernisation in the Asian and African countries. Without globalisation modernisation
remains a myth. History clearly projects globalisation and modernisation have gone hand in hand
and have served complementary to each other. The writings of Karl Marx to Daniel bell and Max
Weber to Samuel Huntington have projected that cultural values have definite and determined
effects on society and cultural changes and cultural changes have come over due to the impact of
alien invasion, infiltration and penetration which have enormous impact on cultural change and
affected modernisation.
Modernisation has been an impact of global conquest originating in Europe. It led to the spread
of European culture and rationality in the Asian and African countries. Thus, conquests not only
led to political expansion, but the intensification of cultural contact and adoption of new cultural
values leading to modernisation. Globalisation was spearheaded during the period of colonial
expansion. Jameson and Miyoshi proposed that intellectual, cultural and technological advance
in the colonised countries was the product of Europeanization as Europe was emulated by poor,
less civilized people of the world.
World historians comment that shrinking of the world started as early 1492. Mass migration,
cross cultural and cross country trade, warfare and colonisation have changed the course of the
nations politically, economically and socially. Characters like Madona, Michael Jackson,
Corporate logos like Mc Donald, Nike have brought modernisation in the culture of traditional
countries. It is not only, globalisation that brings modernisation, but modernisation to a great
extent influences the process of globalisation. Modernisation in many instances is a precursor to

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globalisation. Modernisation is accepting the most recent one. When a society is prepared and
practises to transit to the emerging trends, then modernisation takes place. It is transformative
and progressive which help to accept and adopt globalisation.
Political modernisation brings changes in the political ideologies, norms and functions of the
political institutions making them adopt the global standard practices like democracy, focusing
on human rights and ideological shifts from parochialism to universalism. Structural adjustments
became possible in India due to the modern outlook of the system of governance which could
venture out to bring changes in the system to make it conducive for accepting globalisation.
Progressive political ideologies signalising modernisation enabled the governments to open their
borders and market of the nations to mainstream the nation with the process of globalisation and
to smoothen the process of globalisation. Economic modernisation resulting in the optimum use
of resources no doubt gave a boost to the economies to move from subsistence to a surplus state.
This increased productivity. Modernisation of the labour force helped to add quality to
production, modernisation of technologies increased the quantum of production to enable the
nations to join the competitive global market with the introduction of product diversities. This
made the local connected with the global and facilitated the process of globalisation.
Psychological modernisation resulting in greater motivation for achievement was also pro
globalisation. It increased the needs of the people and propelled them to move out of their
national boundaries which helped for increasing global connectivity. Structural modernisation
resulted in changing institutions like the institution of education, religion and media. The
introduction of modern education, secular outlook and media revolution helped to galvanise the
process of globalisation. They became highly yielding for spreading the process of globalisation
by changing the attitude of the people, making them more advanced to go for innovations,
technological inventions, spurring of new ideas. Media could connect people of far flung places
and the interconnectedness started increasing. All these became a prelude to and mechanisms for
spearheading globalisation.
Thus, modernisation is both an input and output of the process of globalisation. So also
globalisation is an outcome and a stimulant to the process of modernisation. So, modernisation is
unthinkable without the process of globalisation and globalisation is inconceivable without the
process of modernisation.

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5.11 Summary

Mass migration, cross cultural and cross country trade, warfare and colonisation have changed
the course of the nations politically, economically and socially. Characters like Madona, Michael
Jackson, Corporate logos like Mc Donald, Nike have brought modernisation in the culture of
traditional countries. It is not only, globalisation that brings modernisation, but modernisation to
a great extent influences the process of globalisation. Modernisation in many instances is a
precursor to globalisation. Modernisation is accepting the most recent one. When a society is
prepared and practises to transit to the emerging trends, then modernisation takes place. It is
transformative and progressive which help to accept and adopt globalisation.
5.12 Self Assessment Questions
1. What is modernization?
2. Discuss the characteristics of modernization.
3. What is interrelation between globalization and modernization?
5.13 Key Words

Modernization: modernisation as a concept refers to the process in which society undergoes

industrialisation, urbanisation and other social changes that completely transform the lives of
individuals.
Globalisation: is a consequence of the expansion of the American and European culture across
the planet via settlements, colonisations and cultural replications and has a direct impact on the
capitalist development across the nations.

5.14 Study Guide

1. Mehra, Sohan S. (2012) Modernisation, Globalisation and Social Transformation, Creon
Publications.
2. Vago, Steven (2003) Social Change, Pearson.
3. Charlton, Bruce and Andras, Peter (2003) The Modernization Imperative, Exeter.
4. Frieden, Jeffry E. (2007) Global Capitalism - It's Fall and Rise in the Twentieth Century,
W. W. Norton & Company.
5. Amin, Samir (2014) Capitalism in the Age of Globalization: The Management of
Contemporary Society (Critique. Influence. Change) , Zed Books Ltd.

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6. Bhagwati, Jagdish N. In Defence of Globalisation (2004), Oxford University Press.
7. Holton, R. J. (1998) Globalization and the Nation-State Palgrave Macmillan.
8. Dhanapala, Jayantha (2001) Globalization and the Nation-State, Colorado Journal of
International Environmental Law and Policy.
9. Wolf, MARTIN (2001) Will the Nation-State Survive Globalization? Foreign Affairs.
10. Göksel, Nilüfer Karacasulu (2012) Globalisation and the State, sam.gov.tr/wp-content/
11. Bertucci, Guidoand Alberti, Adriana Globalization and the Role of the State: Challenges
and Perspectives, unpan1.un.org/intradoc/groups/public/documents/

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 Unit-06 Neo-Liberalism and Global Capitalism
Structure
6.1 Learning Objectives
6.2 Introduction/ Assessment of Prior Knowledge
6.3 What is Neo Liberalism?
6.4 The history of neo-liberalism
6.5 Principles of Neo liberalism
6.6 Features of neo-liberalism
6.7 The Rise of Neo liberalism
6.8 Neo liberalism in Practice
6.9 What is Global Capitalism?
6.10 Neo liberalism and Global Capitalism
6.11 Summary
6.12 Self Assessment Questions
6.13 Key Words
6.14 Study guide

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6.1 Learning Objectives

After going through this unit the learner will be able-

1. To discuss the meaning of neo-liberalism.
2. Analyse the features of neo-liberalism
6.2 Introduction/ Assessment of Prior Knowledge

Neo liberalism is a political and economic ideology based on specific principles while
globalisation refers to the worldwide process in sway. The relationship between the two is quite
intricate, one serving to stimulate the other and finally each serving as an input for the other.
Both are complementary and supplementary to each other. This relationship between the
ideological base and the process can be analysed and proved by highlighting the discussion on
the following three points.
 What is neo liberalism?
 What is global capitalism?
 How one stimulates the other?

6.3 What is Neo Liberalism?

Neo liberalism is a market driven approach to economic and social policy based on neo classical
theories of Economics. It makes an advocacy for maximising the role of private business sector
in determining the political and economic priorities of the state. The term “neo liberalism”
became an ideological paradigm that fixed priorities on markets, productivity, efficiency,
consumer choice, transactional behaviour. According to the Collins dictionary, neo liberalism is
a modern politicoeconomic theory favouring free trade, privatization, and minimal government
intervention in business, reduced public expenditure on social services, etc.
Neo liberalism is the dominant and pervasive economic policy agenda of the present world. It is
a powerful and expansive political agenda of class domination and exploitation. Perry Anderson
describes it as ‘the most successful ideology in world history’.
Thus, neo liberalism as an approach to economic and social studies refers to the process in which
control of economic factors is shifted from the public sector to the private sector. Drawing upon
principles of neoclassical economics, neo liberalism suggests that governments are to reduce

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deficit spending, limit subsidies, reform tax law to broaden the tax base, remove fixed exchange
rates, and open up markets to invite external trading parties. It also proposes the government to
limit the practice of protectionism, privatize state-run businesses, allow private property and
back deregulation to give way to a free market economy.
As the very name “Neo liberalism” indicates, it is a revival of “liberalism”. In other words, this is
the ideology of liberalism reincarnated. Liberalism, as a political ideology, was eclipsed for a
period of time from political discussions, policy-making and in political prophecy and practice.
This has emerged in more recent times in the period following globalisation. To be more
specific, liberalism has undergone a process of initial growth, intermediary decline, and finally a
recent rejuvenation. Neo liberalism is a collection of economic policies support by an ideological
commitment. It argues for the reduction of state-intervention in the economy and a promotion of
laissez-faire capitalism in order to promote human well being, economic efficiency and personal
freedom.
6.4 The history of neo-liberalism

Alternatively, neo liberalism might be perceived of as a distinct ideology. It has its intellectual
ancestry in the philosophy of liberalism. In this context, it can be asserted here that neo
liberalism shares some historical roots and some of the basic vocabulary with liberalism in
general. Elizabeth Martinez and Arnoldo García define neo liberalism as a set of economic
policies that have become widespread during the last 25 years or so. Under this ideology, the rich
grow richer and the poor grow poorer.Around the world, neo-liberalism has been imposed by
powerful financial institutions like the International Monetary Fund (IMF), the World Bank and
the Inter- American Development Bank. The capitalist crisis over the last 25 years, with its
shrinking profit rates, inspired the corporate elite to revive economic liberalism. That's what
makes it 'neo' or new. This sense of the word 'neo liberalism' is widely used in Latin America.
However, neo liberalism is more a phenomenon of the rich western market democracies, than of
poor regions.
Liberalism in economics had its roots in the writings of a Scottish economist, Adam Smith.
Smith published a book in 1776 called The Wealth of Nations. In this book, Smith advocated the
abolition of government intervention in economic matters. To him there should be no restrictions
on manufacturing, no barriers to commerce, and no tariffs imposed by the government. On the
other hand; he argued free trade was the best way for a nation's economy to develop. Such ideas
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were "liberal" in the sense of no controls. This encouraged the capitalists to make huge profits as
they wished.
"Liberalism” reflects itself in political, economic, or even religious ideas. Political liberalism has
been a strategy to prevent social conflict. It is treated as a progressive ideology pro poor in
character. Economic liberalism prevailed in the United States through the 1800s and early 1900s.
Then, the Great Depression of the 1930s led economist John Maynard Keynes to propagate a
theory that challenged liberalism as the policy suiting to the dreams and desire of the capitalists.
To Keynes without government intervention, economic prosperity is a myth and people friendly
economy will never appear. Non intervention of the government simply results in the misery of
the people. These ideas had much influence on President Roosevelt's New Deal programme.The
belief that government should advance the common good became widely accepted and defeated
the non interference of government ideology promoted by the liberals.
Over the years, it was noted government intervention resulted in economic slackness rather than
motivating generation of profit. This was against the norms of capitalism and negated economic
prosperity to the nations. Finally, it resulted in capitalist crisis over the last 25 years, with its
shrinking profit rates. This inspired the corporate elite to revive economic liberalism. Keeping
the revival of the ideology of liberalism once again in a new form, the prefix "neo" or new is
added. Now, with the rapid globalization of the capitalist economy, neo-liberalism has surfaced
on a global scale. Starting in the second half of the 20th century, neoliberalism became
increasingly prominent as a form of governance in countries around the world. The term
"neoliberalism" is used to describe a variety of movements away from state control or protection
of the economy towards corporate control of the market, particularly beginning in the 1970s.
6.5 Principles of Neo liberalism

Neoliberalism, in theory, is essentially about making trade between nations easier. It is about
freer movement of goods and resources. It encourages enterprises to find cheaper resources, to
maximize profits and efficiency. The goal is to be able to allow the free market to grow. To
accomplish this, neoliberalism requires the removal of various controls deemed as barriers to free
trade, such as:
 Tariffs
 Regulations

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  Certain standards, laws, legislation and regulatory measures
 Restrictions on capital flows and investment

According to Elizabeth Martinez and Arnoldo Garcia the focal points of neo liberalism include:
 Freedom for the movement of capital, goods and services. It also includes the de
unionization of labor forces and removals of any impediments to capital mobility, such as
regulations. The freedom is from the state, or government.
 Reducing public expenditure for social services, such as health and education, by the
government.
 Deregulation and to allow market forces to act as a self-regulating mechanism.
 Privatization of public enterprise (things from water to even the internet).

Richard Robbins, in his book, Global Problems and the Culture of Capitalism summarizes some
of the guiding principles behind this ideology of neo liberalism. These principles are:
 Sustained economic growth is the way to human progress.
 Free markets without government “interference” would be the most efficient.
 Economic globalization would be beneficial to everyone.
 Privatization removes inefficiencies of public sector.
 Governments should mainly function to provide the infrastructure to advance.

The rule of law would respect to property rights and contracts.

The additional boosting activities for neo liberalism are:
 Freedom of trade in goods and services.
 Freer circulation of capital.
 Freer ability to invest.
6.6 Features of neo-liberalism

Neo liberalism has its distinct features. The features of neo-liberalism include:
1. The Rule of the market: Neo-liberalism propagates to promote "free" enterprise or
private enterprises. It makes an advocacy to liberate enterprises from any bonds imposed
by the government (the state). On the other hand, the hidden agenda are to reduce wages
by de-unionizing workers and eliminating workers' rights that had been won over by

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 them after many years of struggle. It proposes to remove price controls by the
government. It is vocal about total freedom of movement for capital, goods and services.
To the neo liberalists “an unregulated market is the best way to increase economic
growth, which will ultimately benefit everyone." A general characteristic of neo
liberalism is the desire to intensify and expand the market, by increasing the number,
frequency, repeatability, and formalisation of transactions. The ultimate (unreachable)
goal of neo liberalism is to create a universe where every action of every being is a
market transaction, conducted in competition. It's like Reagan's "supplyside" and "trickle-
down" economics .But in reality, experience shows wealth has not trickled down very
much and the social costs have proved to be damaging.
2. Cutting Public Expenditure on Social Services: The neoliberal ideology is against the
notion of state welfare. To the propagators of this ideology, the state is a mere facilitator,
not a key role player to cater services like education and health care. The state needs to
withdraw itself from implementing safety nets and protective measures for the poor
which involves a bulk of expenditure from the state exchequer. They also propose a
limited role of the state in the maintenance of roads, bridges, water supply hither to taken
as the essential services coming within the mandates for a state.
3. Deregulation: The neo liberalists are for the notion of deregulation. To them, state
regulation is anti market and defeats the profit motive. So, they propose to reduce
government regulation of everything that diminishes profits. Their philosophy allows the
state to be just a spectator not the umpire.
4. Privatisation: The neo liberal ideology believes that state is the best which governs the
least. They are against the notion of public sector and government control and
government management. They propose to transfer state-owned enterprises, goods and
services to the hands of private investors. This includes banks, key industries, railroads,
toll highways, electricity, schools, hospitals and even fresh water. To them it will bring
efficiency, increase productivity and bring better economic prosperity and development
to nations.
5. Elimination of the Concept Public Good or Community Ownership: To the advocates
of neo liberal ideology, “Every one’s responsibility is no one’s responsibility.” So, they
want to insist on "Individual responsibility." To them it should not be the state

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 responsibility to ensure essential services to all. Property and profit need not have a
shared character. Those who have the power to generate them should have a greater share
of it. Individual ownership brings accountability and this accountability enables wealth to
grow in society.
6.7 The Rise of Neo liberalism

The nineteen seventies was a decade witnessing increased accumulation of capital,

unemployment, inflation and a variety of fiscal crises. It was realised that excessive government
intervention was responsible for bringing economic and social catastrophes. At this juncture, two
counter debates dominated the world. They were: “Social democracy with central planning” and
‘liberating corporate and business power and establishing market freedom”. It was advocated
that the second debate if put into practice can be the panacea to overcome the crises. As the first
option was already tried with and was not yielding in character, the shift was to the second
option. By, 1980, the second group triumphed over the first and got established under the banner
of neo liberalism. Thus, neo liberalism was prompted as a mechanism for global trade and
investment for all nations to prosper and develop fairly and equitably. It intended to make trade
easier between nations. It is about the free movement of good, resources, enterprises to maximise
profit and efficiency. Around the world, neo-liberalism has been imposed by powerful financial
institutions like the International Monetary Fund (IMF), the World Bank and the Inter-American
Development Bank. It is reigning all over Latin America.
The first clear example of neo-liberalism at work came in Chile. The Chicago economist Milton
Friedman is the father of this neo liberal ideology. In1973, the neoliberal philosophy was put into
practice in Chile. Other countries followed it. However, the worst effects of neo liberalism were
experienced by Mexico where wages declined 40 to 50% while the cost of living rose by 80%.
Over 20,000 small and medium businesses failed and more than 1,000 state-owned enterprises
were privatized in Mexico. Critics comment "Neo liberalism means the neo- colonization of
Latin America." Latin America was put into a new form of colonisation bringing drastic disaster
to the milieu.
In the United States, neo-liberalism destroyed the welfare programs. The rights of labor
(including all immigrant workers) were withdrawn. There was a cut backing of social programs.
Thus, neo liberalism has its inherent draw backs. The beneficiaries of neo-liberalism are a
minority of the world's people. Arnold Gracier criticises neo liberalism as benefitting a minority
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but plaguing a majority. Neo liberalism is criticised for contributing to global poverty.
Innovation and growth seldom contribute to serve the immediate needs of the world’s common
milieu. This practice has given rise to world inequalities.
Neo liberalism is not simply an economic structure, it is a philosophy. This is most visible in
attitudes to society, the individual and employment. Neo-liberals tend to see the world in term of
market metaphors. The market metaphor is not only applied among nations, but among cities and
regions as well. In neoliberal regional policy, cities are selling themselves in a national and
global marketplace of cities. They are considered equivalent to an entrepreneur selling a product,
but the product is the city (or region) as a location for entrepreneurs.
Today, neoliberal policies are seeing positives and negatives. Under free enterprise, there have
been many innovative products. Growth and development for some have been immense.
Unfortunately, for most people in the world there has been an increase in poverty and the
innovation and growth has not been designed to meet immediate needs for many of the world’s
people. Global inequalities on various indicators are sharp. For example:
6.8 Neo liberalism in Practice

Neo liberalism arose out of Chicago School Economics. It was spearheaded by the economist
Milton Friedman. Critical writers often trace the ideological lineage of neo liberalism back to the
Chicago School, the Austrian School and the writings of Milton Friedman, Fredrich von Hayek,
and James Buchanan. In governments around the world, the neoliberal revolution has been
underway for thirty years. Ronald Reagan in the United States of America and Margaret
Thatcher in United Kingdom became the pioneers in putting neo liberal premises and prophecy
into practice. Reagan's famous formulation “Government is not the solution to our problems;
government is the problem” gave a boost to popularise the U.S. commitment to adhere to the
neoliberal philosophy. The Reaganian administration tried to percolate the idea among the public
that-
 Economy is a self-regulating entity that always balances out.
 Government is inefficient and costly.
 Private business is efficient and therefore the best way to solve our problems.
 Wealth trickles down from the wealthiest to the middle class and the poor.

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6.9 What is Global Capitalism?

World capitalism has experienced a profound restructuring through globalisation over the past
few decades. Existing forms of capitalism has been transformed to make it fundamentally
distinct from its earlier incarnations. Globalisation constitutes a qualitatively new epoch in the
ongoing and open-ended evolution of world capitalism. Global capitalism is the fourth and
current epoch of capitalism. It is different from earlier epochs of mercantile capitalism, classical
capitalism, and nationalcorporate capitalism. All these forms were the systems, which were
previously administered by and within nations. But capitalist activities now transcend nations,
and thus are transnational, or global, in scope. In its global form, all aspects of the system,
including production, accumulation, class relations, and governance, have been disjoined from
the nation and reorganized in a globally integrated way that increases the freedom and flexibility
with which corporations and financial institutions operate.
Four types of capitalism have dominated the world in different times. They are: market-led,
state-led, corporate led and social democratic capitalism. But global capitalism today is market-
led capitalism along with corporate led capitalism. In his book Latin America and Global
Capitalism, sociologist William I. Robinson explains that today’s global capitalist economy is
the result of “...worldwide market liberalization and the construction of a new legal and
regulatory superstructure for the global economy... and the internal restructuring and global
integration of each national economy. The combination of the two is intended to create a ‘liberal
world order,’ an open global economy, and a global policy regime that breaks down all national
barriers to allow the free movement of transnational capital between borders and the free
operation of capital within borders in the search for new productive outlets for excess
accumulated capital.” The process of globalizing the economy began in the mid-twentieth
century. It marks a number of qualitative shifts in the capitalist system. These are discussed
below.
1. The production of goods is global in nature. First is the rise of truly transnational
capital and a new global production and financial system. Today all nations have been
integrated, either directly or indirectly to this new global financial and production system.
Today, we have a global economy, in which nations are linked to each more organically
through the trans nationalisation of the production process, of finance, and of the circuits
of capital accumulation. No single nation-state can remain insulated from the global
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 economy or prevent the penetration of the social, political, and cultural superstructure of
global capitalism. Corporations can now disperse the production process around the
world, so that components of products may be produced in a variety of places, final
assembly done in another, none of which may be the country in which the business is
incorporated. In fact, global corporations, like Apple, Walmart, and Nike, for example,
act as megabuyers of goods from globally dispersed suppliers, instead of as producers of
goods.
2. The relationship between capital and labour is global in scope, highly flexible, and
thus is very different from the past epochs. Because corporations are no longer limited
to producing within their home countries, they now, whether directly or indirectly
through contractors, employ people around the world in all aspects of production and
distribution. In this context, labour is flexible. It implies that a corporation can draw
worthy workers from any part of the globe and can relocate production to areas where
labour is cheaper or more highly skilled.
3. The financial system and circuits of accumulation operate on a global level. Wealth
held and traded by corporations and individuals is scattered around the world in a variety
of places. This has made taxing wealth very difficult. Individuals and corporations from
all over the world now invest in businesses, financial instruments like stocks or
mortgages, and real estate, among other things, wherever they please, giving them
opportunity to establish influence in communities far and wide.
4. There is now a transnational class of capitalists (owners of the means of production
and high level financiers and investors). The shared interests of these capitalists shape
the policies and practices of global production, trade, and finance. Relations of power are
now global in scope, and relations of power affect social life within nations and local
communities. There is the rise of a Transnational Capitalist Class (TCC), a class group
that has drawn in contingents from most countries around the world, North and South,
and has attempted to position itself as a global ruling class.
5. The policies of global production, trade, and finance are created and administered
by a variety of institutions that, together, compose a transnational state. There is the
rise of Transnational State (TNS) apparatuses. The epoch of global capitalism has
ushered in a new global system of governance and authority that impacts what happens

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 within nations and communities around the world. The TNS is constituted as a loose
network made up of trans and supranational organisations together with national states. It
functions to organise the conditions for transnational accumulation. The core institutions
of the transnational state are the United Nations, the World Trade Organization, the
Group of 20, the World Economic Forum, the International Monetary Fund, and the
World Bank. Together, these organizations make and enforce the rules of global
capitalism. They set an agenda for global production and trade.
6. Global capitalism has led to the growth of transnational exploitation and
inequalities: Due to global capitalism, novel relations of inequality, domination and
exploitation on a global scale are on rise. No longer class exploitation is industry specific
or within local, regional or national boundaries. But, it cuts across all these limits.
Inequalities are now transnational. They relate to North-South inequalities.
6.10 Neo liberalism and Global Capitalism

Often the terms 'global capitalism' and 'neo liberalism' are used interchangeably. Authors like
Boans and Gans-Morese ; Thorsten argue that neo liberalism is the main driver of global
capitalism and that global capitalism itself can be seen as both the effect of, and the move
towards, neo liberalism. Neo liberalism is an economic theory and an ideological conviction that
supports maximizing the economic freedom for individuals and thus reducing the amount of state
intervention to the bare minimum. In this regards, it does advocate the elimination of
government-imposed restrictions on transnational movements of goods, capital and people. All
these support the process of the rapid development of global capitalism. This implies that the
state should assume a highly minimal and purely regulatory form and should refrain from most
forms of economic intervention. This will promote market expansion and market diversity. An
expanded market mechanism is expected to bring economic efficiency, enlarge the choices of the
people, bring competitive pricing and thus, increase the economic transactions and bring
prosperity to the investing nations. As Litonjua argues, deregulated market proposed by neo
liberal theorists promotes global capitalism. Through the adherence to neo liberal ideology,
international players get an easy get through into the national markets of different nations.
Further, when the state recedes, the transnational class of capitalists (owners of the means of
production and high level financiers and investors) shape the policies and practices of global
production, trade, and finance. This establishes and flourishes global capitalism. Consequently,
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although global capitalism cannot in anyway be seen as synonymous with neo liberalism, it
could in fact be a product of neo liberalism.
The ‘Neoliberal’ revolution led to a wave of privatization of State Owned Enterprises (SOE)
starting in the 1970s. SOEs are companies where the state owns or controls a substantial part of
the enterprise. Indeed, according to neoliberal theory, SOEs ought to be dismantled due to the
constraining effects it would have on individuals’ freedoms to conduct business. This is needed
to float the idea that market mechanisms are a better way to ensure correct pricing and economic
efficiency due to competition. The market under such situations is driven by global financiers
and global production units who control production and finance which were erstwhile controlled
by states. This global production and financing mark the establishment of global capitalism.
Neo liberalism not only opens avenues for global finance and production, but allows labour to
operate in a cross national level which is a major premise of global capitalism. When labour
functions on trans national basis, exploitation of labour also takes place on a global scale which
symbolises global capitalism. The predominant account of the emergence of neoliberal policies
argues that a series of economic crises during the 1960s and 1970s led to the denouncement of
more interventionist state policies such as ‘Keynesianism’ or ‘embedded liberalism’. This shift
was notably instigated by the Thatcher and Reagan administrations, in the U.K. and the U.S.
respectively. The policies by these governments were transported globally. They were forcefully
imposed and implemented by the International Monetary Fund’s (IMF) ‘structural adjustment
programs’ and the formulation of a list of economic policy propositions known as the
‘Washington Consensus’.
Starting in the late 70s and early 80s, the Thatcher government instigated large-scale
privatization programs and that, since then, the world has seen an increased amount of
privatization. The implementation of privatization policies is considered to have followed as a
pragmatic response to the economic difficulties of the 70s and the need to reduce government
expenditure. The Thatcher government became a model for the U.S. Reagan administration,
which, during the late 1980s, initiated a similar privatization program. This was termed as
Reaganomics. However, unlike the Thatcher government; Reagan seemed more inspired by
laissez-faire, neoliberal doctrine, and antigovernment themes. This is evident from his platform,
which, according to Henig (1989/90:661) advocated “the need to restrain meddlesome
bureaucrats, reduce taxes, unleash the entrepreneurial spirit, [and] provide help to those who help

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themselves”. It was not until the late 80s that privatization became a worldwide phenomenon
with the bulk of the privatization programs occurring in Latin America, and to a lesser extent in
Asia and sub-Saharan Africa before peaking up in the 90s with the liberalisation of the former
Soviet-bloc European countries. Thus, privatization which is a principle of neo liberalism
promoted global capitalism. According to neoliberal theory, taxation and redistributive policies
are seen as an infringement on personal freedom and government interference with private
property. Although the welfare state is considered to be positively associated with other forms of
freedom, such as opportunities arising from the availability to health and educational provisions
(Lindbeck 1987:4), the mechanisms to sustain the welfare-state are thought to constitute ‘theft’.
Neoliberal theory, if realized, would thus require the abolition of the welfare state.
Thus, global capitalism has led to the privatization and the abolition of the welfare state which
are incorporated in the neo liberal prophecy. On the other hand, the importance that International
Financial Institutions (IFIs) and the Washington Consensus have placed on the removal of trade
barriers and capital controls in an attempt to liberalize the global economy and have proved to be
influential for the process of global capitalism. Further, the neoliberal argument to increase
consumer choices, freedom to conduct business has been spear headed by the growth of global
capitalism.
Thus, the 1980s witnessed chronic economic crisis in Europe and Asia. The collapse of the
Communist block at the end of the1980s led to generate strong opposition against state
intervention. There started a campaign for market reform policies. The sad demise of
communism led communist countries to initiate various market reforms. The lead role was noted
with the Socialist Federal Republic of Yugoslavia under the stewardship of Ante Markovic and
the People’s Republic of China under the leadership of Deng Xiaoping. The democratic
governments in different parts of the world started an advocacy for individual economic rights,
subsidising and withdrawing control and to minimise the role of the government to just a
facilitator to promote free trade. Stress was shifted to market centric economy and to spread
industries through multinational and transnational corporations. Certain key schools emerged as
the promoters of neo liberal theory and as such gave a stimulus to the growth of global
capitalism. To cite some examples, the Chicago school vehemently criticised the Keynesianism
which was a dominant doctrine of the world till 1980s. It substituted the theory of efficient
market to have better economic growth and promote the plights of the people. Countries

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gradually started getting wedded to neo liberal theories and significantly opted for the capitalist
mode of production.
Both the Liberal and the Labour party in Australia started adopting neo liberal ideologies since
1980s.Introducing micro economic reforms, the reigning party from 1983-1996 pursued
economic liberalisations. The reforms were marked through privatization of government
corporations, deregulation of markets, and reduction of tax protections. Superannuation
Guarantee system was implemented in1992 to increase national saving and reduce future
government liability for old age pensions. Privatization of education was introduced by Higher
Education Contribution Scheme. VAT was introduced on goods and services. Canada too
adopted the neoliberal ideology and went for more corporatisation. The country soon witnessed a
growth in production by133% and reduction in government investment by 30 %.
In Chile, the prototype adherence to the neoliberal ideology was noted. Milton Friedman in his
commentary on Miracle of Chile noted three principal strategies followed by the country
following the adoption of the neo liberal strategy which finally gave birth to capitalism. These
were:
 Economic liberalization
 Privatisation of state owned companies
 Stabilisation of inflation

Since 1995, China has the distinction of having the world’s most liberal capital markets as
observed by the Heritage Foundations and the Wall Street Journal. By 1990 China’s per capita
income surpassed that of U.K. Thus, global capitalism is both a product of and is a stimulant to
the establishment of the neoliberal ideology. On the other hand, neo liberalism boosts the
development and establishment of global capitalism and is sustained by global capitalism. This is
evident from the market and government practices of the countries cited above. So, it can be
concluded that though neoliberal ideology is treated as the emanating point of global capitalism,
it is global capitalism that enables neoliberal ideology to get institutionalised and sustained.
6.11 Summary

Global capitalism has led to the privatization and the abolition of the welfare state which are
incorporated in the neo liberal prophecy. On the other hand, the importance that International
Financial Institutions (IFIs) and the Washington Consensus have placed on the removal of trade

87
barriers and capital controls in an attempt to liberalize the global economy and have proved to be
influential for the process of global capitalism. Further, the neoliberal argument to increase
consumer choices, freedom to conduct business has been spear headed by the growth of global
capitalism.
6.12 Self Assessment Questions

1. What is global capitalism?

2. Discuss the meaning of neo-liberalism.
6.13 Key Words
 Neoliberalism: A political approach that favours free-market capitalism, deregulation, and
reduction in government spending.
 Privatisation: The transfer of ownership, property or business from the government to the
private sector is termed privatization.

6.14 Study Guide

1. Amin, Samir (2014) Capitalism in the Age of Globalization: The Management of
Contemporary Society (Critique. Influence. Change), Zed Books Ltd.
2. Bhagwati, Jagdish N. In Defence of Globalisation (2004), Oxford University Press.

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 Unit-07 Globalization and Nation State

Structure
7.1 Learning Objectives
7.2 Introduction/ Assessment of Prior Knowledge
7.3 What is the nature of Globalisation?
7.4 What is the Nation-State?
7.5 Globalization and Nation State Debates
7.6 What Impact Has Globalization Had on the Nation-State?
7.7 Future of the Nation States
7.8 Summary
7.9 Self Assessment Questions
7.10 Key Words
7.11 Study Guide

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7.1 Learning Objectives

After going through this unit one will be able-

1. To discuss the relation between globalization and nation state.
7.2 Introduction/Assessment of Prior Knowledge
 The role of the nation-state in globalization is a complex one. Globalization is generally
recognized as the fading or complete disappearance of economic, social and cultural
borders between nationstates. It raises a twofold argument relating to the nation state. The
first argument hovers around the proposition that globalisation is a threat to the
continuation of the nation state. The second argument focuses on the idea that
globalisation strengthens the nation states by reducing their burdens and adding economic
prosperity. Some scholars have theorized that nation-states, which are inherently divided
by physical and economic boundaries, will be less relevant in a globalized world. So, to
these scholars globalisation is a challenge to the concept of nation states. But, there is a
counter group who advance the argument that globalisation strengthens the nation states.
To them, the modern form of globalization will not spell the end of the modern nation-
state. Globalisation results due to expanded trade and communication and results in
strengthening the nation states in pulling more capital, investment and strengthening the
market base which determine and drive economic development. Governments' ability to
tax and redistribute incomes, regulate the economy, and monitor the activity of their
citizens has increased beyond all recognition. In no way the national sovereignty is at a
loss, but it is at a gain. So to bring a conclusive balance between the two contrary
arguments, the discussion can be carried forward by Examining the basic nature of
globalisation.
 By defining the basic features of the nation state.
 By brining the existing theses relating to them into the fold of discussion.
 By analysing the impact globalisation has on the nation states in reality.
 Centring the discussion on the future of the nation states.
 Drawing a conclusion.
7.3 What is the nature of Globalisation?

When we analyse the basic nature of globalisation, Scholte wrote that globalization is a

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distinctive and significant feature of recent world history. It has got social, economic and
political dimensions. All these aspects are interrelated and over lapping. The political aspect of
globalisation influences the acquisition and distribution of power and the economic aspect relates
to resource distribution, production, market. All these affect the existing social institutions,
relations. Thus, each aspect shapes the other.
Giddens mentioned that globalization generally includes four elements namely extensity,
intensification, velocity and deepening impact. Extensity refers to social, political and the
economic activities stretching across national frontiers. This is possible due to the greater
rapidity ensued from the advance in technology and communication. The flow of ideas and
goods over the globe leads to greater interdependence i.e. intensification. At this point the local
issues reflect itself in the global scene and the global issues percolate to the local level. Thus,
there is the process of extension of boundaries of occurring. The velocity of the flows is quite
high. All together every issue transgresses the regional boundaries and reach every corner of the
globe. This has a deepening impact on the issue and the milieu. Thus, they have their political
repercussions. Political decision making involves diverse population and groups from local to
global and the state boundary becomes meaningless.
7.4 What is the Nation-State?

A nation state is generally defined as a country which is ruled under one government.
Specifically, the nation state is constituted by the government assuming a legal and moral right to
exercise sole jurisdiction, supported by force in the last resort, over a particular territory and its
citizens. This involves institutions for managing domestic and foreign affairs. As it is defined in
Elmer Social Science Dictionary that nation-state is Modern state in which a government has
sovereign power within a defined territorial area, and the mass of the population are citizens. In
addition, ‘Sovereignty’ in it modern form is a highly distinctive political claim which means to
have exclusive control on a definite territory. It includes control over political and economic
activities within their border to articulate and achieve policy goals independently. To conclude, it
can be said that a nation state is marked with the characteristics of having a population, territory,
a government and sovereignty.
7.5 Globalization and Nation State Debates

Overall, there are five theses that must be discussed to carry on the debate on the impact of

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globalization on the nation-state. These are the Hyperglobalist Thesis; the Sceptical Thesis; the
Complex Globalization thesis; the New Institutionalist thesis; and the Ideational Globalization
thesis. Each of these theses project and portray the impact of globalisation on nation states from
its own angle.
The hyperglobalist perspective as an approach sees globalization as a new epoch in human
history. This new epoch is characterized by the declining relevance and authority of nation-
states, brought about largely through the economic logic of a global market. Economies are
becoming “denationalized.” This thesis, argues that the world we live in today is different from
the world we were living in the yesterdays. It is now borderless in nature, particularly in
economic terms. The world is undergoing tremendous transformations. The depth and
dimensions of these transformations are far reaching. They visualise with increasing economic
globalization, transnational governance organizations are becoming increasingly important. The
result is that national governments are losing influence and are forced to operate increasingly
according to rules they do not create.
Hyperglobalists view globalization as something that is a real force, aiming to produce a global
social culture which are exemplified by sipping coke, watching Disney, waiting at McDonalds,
and resulting in a single global economy. Thus, they ensure that the effects of globalization reach
the remotest societies and in its progress diminish the constraints inflicted by nation-states. They
view this as a good thing, where possibilities and opportunities arise enabling societies to be
'enriched' by the phenomena of globalization.
The Sceptical thesis criticizes this thesis by suggesting that contemporary world is not really
different from before. Hirst and Thompson, argued that the world economy is actually less open
and integrated than it was before the First World War, and rather than a ‘globalized economy’, it
is an ‘internationalized economy’. Thus, they acknowledge that globalization is a myth; that it is
not a ‘globalized’ world but an ‘internationalized’ one. The sceptical perspective on
globalization views current international processes as more by fragmented and regionalized than
globalized. In fact, according to sceptical authors, the “golden age” of globalization occurred at
the end of the 19th century. Current processes show, at best, a regionalization. It conceals the
reality of an international economy segmented into three major regional blocs in which national
governments remain very powerful. They conceive it as one in which the principal entities are
economies. The flow of trade and investments are far from being global, and despite there is

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increasing activities of Multinational Companies (MNCs) across borders, most firms remain to
operate from their distinctive home country. Scholars in the sceptical perspective view global
capitalism as a myth. The growth of multinational corporations does not mean that nation-states
are no longer relevant for governing the flows of economic benefits. Sceptical authors point to
the fact that multinational corporations are still tied primarily to their home states or regions, and
these ties produce benefits for these states or regions. Authors with a sceptical perspective reject
the notions of the development of a global culture or a global governance structure. They choose
to define economic globalization as internationalized economy, within which nation states are
still the central actor.
On the other hand, the Complex Globalization theorists, such as Held and Dicken, view the
globalization is complex. It is beyond economic aspect and touches every other aspects of a
society. To them, globalisation is not only about economic, but also covers other aspects:
political, social, and cultural. According to Held and McGrew, globalization refers to a shift or
transformation in the scale of human organization that links distant communities and expands the
reach of power relations across the world’s regions and continents. Held et. al .suggest that, in
fact, the nation-state remains an important actor in global political economy. Its role is, indeed,
experiencing a reconfiguration. They are in the same opinion with sceptics on the argument:
nation-state’s government is not the passive victims of internationalization but, on the contrary,
its primary architects. At the core of this thesis, is a belief that contemporary globalization is
reconstituting or‘re-engineering’ the power, functions and authority of national governments.
The New Institutionalist thesis, brings out a difference between market liberal and social
democratic regimes. To them, this difference guides modern nation states. They contrast liberal
market economies (LMEs) such as the US and UK, with coordinated market economies (CMEs)
such as Germany and Scandinavia. To them in the liberal market led economies, state is
governed by market forces without its autonomy. On the contrast in the coordinated market
economy, the state brings coordination among markets. The state intervention is reduced in
liberal market led economies. But the state competency remains intact in a coordinated market
economy.
Another prominent thesis is the Ideational Globalization. In this context, Hay and Marsh, in their
idea of Demystifying Globalization suggest that the idea of globalisation should be the focus of
discussion. It is our ideas that shape our behaviour. Thus, the role of ideas is important in

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shaping the world today. For instance, the United States (U.S.) adopted the idea advocated by
Neoliberal thinking that it favours the opening of foreign markets by political mean and state
always seeks to maximize its interests in all issue-areas. Institutionalists note the proliferation of
private and often oligopolistic networks of transgovernmental and non-governmental
organizations under globalisation. They argue that globalization, rather than obstructing the
nation-state, actually provides an enabling character to it. They state that nation-state indeed may
undergo common pressures, yet the existence of domestic institutions can obstruct or enable
states in facing the pressures of globalization.
Hay, while approving the sceptics that there is not enough evidence that the world is globalized,
suggests that globalization may play a powerful role in ideational terms, and might weaken the
nation-state. This thesis emphasizes the demystifying globalization in a way what globalization
had had impact on the nation-state depends on the way nation-state sees the globalization itself.
The idea shapes the way nation-state responds and reforms its decision-making process. In
conclusion it can be stated that today’s world politics is part of the process of globalisation and a
product of globalisation. The ‘stretching’, ‘deepening’, and ‘broadening’ processes involved in
globalisation have their influence on world politics and the nation states coming within them. It
is noted by the increasing of international organizations, NGOS, the mobility of MNCs across
borders, international regional integrations, and international and regional trade activities
alongside the trade institutions have modified the functions of nation states. The reconfiguring
shape of contemporary world politics has challenged and impacted the nation-states.
7.6 What Impact Has Globalization Had on the Nation-State?

Three distinct aspects of globalisation have posed challenges for the nation states. The first is the
reduced ability of the nation state to exert influence on its economy when economic transactions
take place increasingly at the global level. The second is the rise of the transnational bodies. The
transnational bodies may be the political bodies like the U.N., it may be political bodies like the
NAFTA, a combination of the two like the European Union, or some form of the NGO (ranging
from business to civilian pressure groups). The third aspect is the emergence of super national
and sub national centers of power.
A Reduced Ability of the Nation State to Regulate the Economy:
With the wake of globalisation, the nation states find themselves with a reduce ability to control
their capital, to legislate and to influence or regulate their domestic markets. All these three
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functions were the hall mark of the nation state and made it supreme within its territorial
boundary. Holton (1998) observes “Flows of investment, technology, communications and
profits across national boundaries are the most striking challenges of globalisation to nation
states.”The regulatory ability of the nation state is reduced to a great extent as most of the
transactions take place outside its sovereign borders where it has nocontrol. To quote Hirst and
Thompson (1996) the nation state is side lined by the world market forces which prove to be
stronger than the most powerful states. The nation state therefore has a reduced control over
economic transactions and loses control over capital which it needs to sustain itself. The nation
state is subsumed under the global economic system and is dropped down to the level of a local
authority of the global system. Instead of becoming a policy maker; a unit of international
relations, it becomes a mere provider of public goods and infrastructure to global system of
production and global business.
Over the last few decades, national boundaries have broken down. In today’s truly global
society, men, money, materials and ideas travel across borders in huge numbers and quantities
and at high speed. Many corporations build parts in a variety of countries. Manufacturing takes
place across countries and is no longer monopolised by a particular nation. The rapid growth of
international investing has further globalized the economy. Globalization often leads to trans
nationalism. Trans nationalism is supposed to overshadow nationalism, which is considered to be
the foundation of a nation state.
A "globalized" economy can be defined as one which compresses time and distance that were
impeding economic transactions. In a globalised world, the costs of transport and
communications are zero and the barriers created by national jurisdictions and boundaries have
vanished. But these national boundaries were demarcating the areas where the nations were
exercising their sovereign power, the hall mark of the nation states. Over the past five centuries,
technological change has progressively reduced the barriers to international integration.
Transatlantic communication has evolved from sail power. It has witnessed many developments
like the invention of steam power, the telegraph, the telephone, commercial aircraft, and now to
the satellite communications and internet. Yet states have become neither weaker nor less
important during this odyssey. On the contrary, in the countries with the most advanced and
internationally integrated economies, governments' ability to tax and redistribute incomes,
regulate the economy, and monitor the activity of their citizens has increased beyond all

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recognition. This has been especially true over the past century. It is assumed that globalization
is embedded in Neoliberal theory. Neoliberal theory is built on the conviction of classical
liberalism and proposes that market forces will bring prosperity, liberty, democracy, and peace to
the whole of humankind. These theorists advocate the removal of state controls on prices, wages,
and foreign exchange rates. Such activities have challenged the political structure. They put
restrictions on both the sovereignty and autonomy of states. As such the dominance of the
political structure is at stake and there is the depletion of state authority.
Globalisation also puts the nations into greater competitions from the western countries. A
potential effect is that nation-states are forced to examine their economic policies in light of the
many challenges and opportunities that multinational corporations and other entities of
international commerce present. Multinational corporations challenge nation-states on the unique
issue of foreign direct investments. The prerogative of the nation states in the field of production,
pricing and marketing become quite shrinking. Globalization also creates a sense of
interdependence among nations, which diminish the self sufficiency of nations and make them
weak.
The role of the nation-state in a global world is largely a regulatory one. Global interdependence
has put restrictions on national independence. While the domestic role of the nation-state remains
largely unchanged, states that were previously isolated are now forced to engage with one
another to set common international commerce policies. These interactions lead to diminished
roles for some states and exalted roles for others.
Transnationalism has also occurred at the political level. International organizations, such as
the United Nations and the World Trade Organization, play an ever-increasing role on the
political stage. Nations are becoming over dependent on them for military protection and
economic security. To cite an example, in the case of the European Union, national boundaries
have very little meaning. All citizens can travel, live, and work freely throughout the European
Union, and all internal tariffs and trade restrictions have been abolished. Some residents see
themselves as citizens of a new European Union nation, not of their smaller countries.
Transnational governments and groups literally transcend geographical and political boundaries
which were a formidable part of the nation states.
Thus, the World Organisations are increasingly taking the place of the nation states. World Trade
Organization, the United Nations, and the World Bank are just a few examples of international

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organizations that sometimes act like governments or play a substantial role in international
relations. Other examples include the Organization of American States, the North Atlantic Treaty
Organization, the Organization for Economic Cooperation and Development, and the
Organization of Petroleum Exporting Countries.
A "globalized" economy can be defined as one in which neither distance nor national borders
impede economic transactions. This is a world where the costs of transport and communications
are zero and the barriers created by differing national jurisdictions have vanished. Over the past
five centuries, technological change has progressively reduced the barriers to international
integration.
Globalization is often perceived as destroying governments' capacities to do what they want or
need, particularly in the key areas of taxation, public spending for income redistribution, and
macroeconomic policy.
Finally, as the world economy continues to integrate and cross-border flows become more
important, global governance needs to be improved. Global governance will come not at the
expense of the nation states, but empowering the nation states.
Thus, the economic challenges of globalisation to nation states are one of the decreased
legislative ability. The nation state’s sovereign power remains dwarfed under the market forces.
Market forces guide and govern the state policies. On the one hand the state loses control over
the economy and on the other; it becomes controlled by the emerging world economy and
transnational system of production.
The Rise of the Transnational Bodies:
The outstanding characters of nation states lie in its sovereign power and autonomous status. For
these two features the nation state, enjoys legitimacy of the citizens within its specified
boundary. But in the era of globalisation, the transnational bodies are emerging and are affecting
the sovereignty and autonomy of the nation states. Today governance is not confined to national
governments and national boundaries but to global institutions and have a global reach. This
challenges the legitimacy commanded by the nation states. Under the impact of liberalization,
privatization and globalization, the hold of the governments on economies is slackening. The
influence of international bodies, multinational corporations and external agencies is on the
ascendance. The developing countries invite and accept foreign funds to develop their
infrastructure and thereby the control of local resources is taken over by multinational corporate

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houses that acquire uncontrolled access to local economic resources. The ill-effects of
globalization on economic systems and on domestic policies are evident. The policies of LPG
curtail the state's welfare activities by reducing expenditure in populist spheres. This leads not
only to the reduction of a major function of the state, but decline in the self sufficiency,
efficiency of the nation states. The states no longer remain to be the owner of strategic industries,
but are the mere managers of their activities.
Transnational bodies include the IGOS, INGOS, big corporate houses. IGOs such as the
European Union, The International Monetary Fund and the World Trade Organisation/ GATT
have accumulated international legislative and coercive power and have posed a threat to
national sovereignty of the traditional nation states. The INGOS like Green Peace International,
Amnesty International have connected themselves to diverse people from far flung areas of the
globe and have undermined the importance of the nation states which fail to connect to the
people so directly. INGOS having the ability to unite and mobilise people for common cause,
collective interests are having global financial and political influence and creating powerful
lobby groups which affect the autonomy and mobilisation capacity of the nation states. Finally,
transnational corporations in the process of pursuing their own interests and targets pressurise the
nation states for tax and trade relaxations and the nation states become timid before them for
creating their production base through these TNCs.
Super national and Sub National Centers of Power
Globalisation distributes power between sub national and super national bodies. A limitation is
marked on the part of the nation states to manage regional issues having global ramifications.
Sometimes regional issues like governance, health social problems spread to global level. This
becomes difficult for the traditional nation state to handle. For this there is a polarisation of
power distribution between super and sub national centers. The super national power centres are
the UN, WTO, GATT, EU, IMF etc. Those bodies do not seem to have supreme legislative
power, yet their influence in influencing national policies, international trade, taxations and
relations speak of their supreme role in international and national system of governance. These
are threats to national sovereignty and these organisations denounce the supreme authority of the
nation states. Any decision of the UN today becomes a national mandate and the signatory state
becomes a mere implementer of this decision. Regional and local governments are getting
eclipsed under such super national power centres.

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Similarly, sub national power centers are also developing with the wake of globalisation and are
substituting the functions and powers of the traditional nation states. Many of the problems
afflicting the world today -such as poverty, environmental pollution, economic crises, organized
crime and terrorism –are increasingly becoming transnational in nature, and cannot be dealt with
only at the national level, or by state to state negotiations. Greater economic and social
interdependence seems to affect national decision-making processes in two fundamental ways. It
calls for a transfer of decisions to the international level. Due to an increase in the demand for
participation it also requires many decisions to be transferred to local levels of government. This
implies that “public policies are undertaken at different levels". Thereby, globalization entails
complex decision-making processes, which take place at different levels, namely sub-national,
national and global level, paving the way to a growing multilayered system of governance.
Global cities as sub-national places are developing with the process of globalisation. In such sub
national places, multiple global circuits intersect. In such cities it is noted that several cross
border actors inter play and their practices intersect. For instance, at least some of the circuits
connecting are noted in the cities of Sao Paulo, Miami, New York, and Shanghai.
7.7 Future of the Nation States

Thus today nation states face multiple challenges due to the process of globalisation. But
theorists conceptualise as to how nation states will respond to these challenges. To them there are
three ways of responding to such emerging challenges. They are rather three views. They are:
 Nation states are dissolving and have become obsolete.
 Nation states find themselves in new roles and are in need of more organisational ability
for stabilising the trends of globalisation.
 Nation states face restructuring and it will not disappear, but will be transformed into an
altered nation state different from the traditional welfare state.

Dissolving of the Nation States

It is noted that the nation states are becoming dysfunctional and losing their sovereign power and
autonomy due to the growth of super national agencies like the WTO, IMF, TNCs etc and local
actors in the era of globalisation. The territorial sovereignty is getting dwarfed under the
influence of many new role players like the UN and the INGOS. In economic decision making
they are finding themselves to be handicapped. Today economic decisions are guided and

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governed by international developments. In politics, citizen’s loyalty is declining for their nation
states and this affects the sovereign capacity of the nations. So, when the economic decision
making power and the political power of a nation state are sinking, it becomes obvious that the
nation states are getting dissolved in the era of globalisation.
Resilient Nation State
The second view is about a resilient nation state. Few authors like Gilpin suggest the nation state
is still becoming stronger as the purview of its activities is increasing with the process of
globalisation. Globalisation has presented a new role to the nation state and as such it has to
appear with a new face. Today’s nation state is not merely a welfare state. It has to be a
competitive nation state to maintain its international identity and sustainability. For this, it has to
step into new roles like framing policies supporting research and development, technological
innovation, dispersion and dissemination, making market expansion policies, increasing the
quality and quantity of production, introducing product diversification, encouraging and
attracting foreign investment to increase GDP. These were never the concern of the nation states
in the yesterdays. Globalisation has opened new roles for the states. States stepping into these
roles can flourish and the states receding from such responsibilities are apt to perish. So, authors
like Mc Grew suggest the state autonomy are not actually getting curbed. But it depends upon
the adaptive character of the nation states and the smartness of the nation states to enlarge its
activities and thereby autonomy. Till the date nation states are the important institutions to
decide the rule of law. They have not dissolved or are not going to be dissolved.
The Altered Nation State
It is often debated that the nation states had existed in one form, have taken another form and are
to change into a third form in the wake of the process of globalisation. Till the date, there is
actually no denationalisation, or the death of the nation state. Only the role has undergone
changes. With the erosion of the concept of public services, and rise of private services, the state
is transformed from a welfare state to a competitive state. Till the date, some key Constitutional
functions continue to exist with the state, civic functions are declining and thereby reducing the
burdens of the state. But, the state is given the new responsibility of generating effective
investments, productive returns which were never its concern days back. This has no doubt
increased the struggle for survival of the states. It seems that there is a change in the power
structure and power relations within the state. But it cannot be equated with the demise of the

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state. Few stereotype functions giving authority to the state like collection of taxes, providing
security and controlling law and order have remained unaltered till the date. There is a paradigm
shift in the state ideology, activities relating to economy. But this symbolises the nature of an
altered nation state in the place of a dying nation state.
7.8 Summary

Thus, it can be concluded the future of the nation state in the era of globalisation is clearly
contested. The three views pertaining to death of the nation state, resilience of the nation state
and the alteration of the nation state provide different impression about its future. But, everything
depends on the efficiency and the efficacy of the state itself. Whether it will perish or flourish
depends on how it adopts itself and alters its role with the demands of globalisation. The rigidity
of the state will negate its existence, but its flexibility will take it a way ahead. From an altered
state it will become a resilient state even with the counter effects of globalisation.
7.9 Self Assessment Questions
1. What is the interrelation between globalization and nation state?
2. Discuss what is nation state.
7.10 Key Words

Nation-state- A nation state is generally defined as a country which is ruled under one
government
7.11 Study Guide
1. Mehra, Sohan S.(2012) Modernisation, Globalisation and Social Transformation, Creon
Publications.
2. Vago, Steven(2003) Social Change, Pearson.
3. Charlton, Bruce and Andras, Peter (2003) The Modernization Imperative, Exeter.
4. Frieden, Jeffry E. (2007) Global Capitalism - It's Fall and Rise in the Twentieth Century,
W. W. Norton & Company.

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 BLOCK-03 GLOBAL INSTITUTIONS AND ACTORS

Unit- 08 World Bank

Unit- 09 MNCs
Unit- 10 WTO
Unit- 11 IMF
Unit- 12 NGOs

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 Unit-08 World Bank

Structure
8.1 Learning Objectives
8.2 Introduction/ Assessment of Prior Knowledge
8.3 The World Bank
8.4 Origin of the World Bank
8.5 Structure of the World Bank
8.6 Agencies of the World Bank
8.7 Objectives of the World Bank
8.8 Functions of the World Bank
8.9 Criticisms against the World Bank
8.10 Summary
8.11 Self Assessment Questions
8.12 Key Words
8.13 Study Guide

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8.1 Learning Objectives

After going through this unit one will be able-

1. To discuss the origin of World Bank.
2. To understand the structure and functions of World Bank.
8.2 Introduction/ Assessment of Prior Knowledge

The World Bank functions as an international organization that fights poverty by offering
developmental assistance to middle-income and low- income countries. By giving loans and
offering advice and training in both the private and public sectors, the World Bank aims to
eliminate poverty by helping people help themselves. Under the World Bank Group, there are
complimentary institutions that provide assistance. The World Bank is based in Washington. The
World Bank is not actually a bank in the common sense. Instead, it consists of two development
institutions - the International Bank for Reconstruction and Development (IBRD) and the
International Development Association (IDA).
8.3 Origin of the World Bank

The World Bank was created at an international conference convened in Bretton Woods, New
Hampshire, United States in July 1944. It was established in 1944 to rebuild post-World War II
Europe under the International Bank for Reconstruction and Development (IBRD). The goal of
the conference was to establish a framework for economic cooperation and development that
would lead to a more stable and prosperous global economy. John Maynard Keynes and Harry
Dexter White were the intellectual founding fathers of the World Bank. White was the chief
international economist at the U.S. Treasury. Under Keynes' able leadership, the Bank articles
were drafted successfully. The organization procedure of the World Bank was suggested in the
draft made by Keynes. The World Bank was the world's first multilateral development bank, and
was funded through the sale of World Bonds. Its first loans were sanctioned to France and other
European countries, but soon it lent money to Chile, Mexico and India to build power plants and
railways. By 1975, the Bank also lent money to countries to help with family planning, pollution
control and environmentalism.
8.4 Structure of the World Bank

The bank consists of the Board of Governors, the Board of Executive Directors and the Advisory

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Committee, the Loan Committee and the president and other staff members. All the powers of
the bank are vested in the Board of Governors which is the supreme policy is making body of the
bank.The board consists of one Governor and one Alternative Governor appointed for five years
by each member country. Each Governor has the voting power which is related to the financial
contribution of the Government which he represents.
The Board of Executive Directors consists of 21 members, 6 of them are appointed by the six
largest shareholders, namely the USA, the UK, West Germany, France, Japan and India. The rest
of the 15 members are elected by the remaining countries. Each Executive Director holds voting
power in proportion to the shares held by his Government. The board of Executive Directors
meets regularly once a month to carry on the routine working of the bank. The president of the
bank is appointed by the Board of Executive Directors. He is the Chief Executive of the Bank
and he is responsible for the conduct of the day-to-day business of the bank. The Advisory
committees are appointed by the Board of Directors. There is also another body known as the
Loan Committee. This committee is consulted by the bank before any loan is extended to a
member country.
8.5 Membership and Agencies of the World Bank

There are 186 member countries that are shareholders in the IBRD, which is the primary arm of
the WBG (World Bank Group). To become a member, however, a country must first join the
International Monetary Fund (IMF). The size of the World Bank's shareholders, like that of the
IMF's shareholders, depends on the size of a country's economy. There is an obligatory
subscription fee, which is equivalent to 88.29% of the quota that a country has to pay to the IMF.
In addition, a country is obligated to buy 195 World Bank shares (US$120,635 per share,
reflecting a capital increase made in 1988). Of these 195 shares, 0.60% must be paid in cash in
U.S. dollars while 5.40% can be paid in a country's local currency. The president of the World
Bank happens to be the largest shareholder. The largest stakeholder is the United States of
America. There is a Board of Governors. Throughout the year, however, powers are delegated to
a board of 24 executive directors (EDs). The five largest shareholders - the U.S., U.K., France,
Germany and Japan - each have an individual Executive Director. The additional 19 executive
directors represent the rest of the member states as groups of constituencies. Of these 19,
however, China, Russia and Saudi Arabia have opted to be single country constituencies, which
mean that they each have one representative within the 19 executive directors. This decision is
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based on the fact that these countries have large, influential economies, which requires that their
interests be voiced individually rather than diluted within a group. The World Bank gets its
funding from rich countries as well as from the issuance of bonds on the world's capital markets.
The term “World Bank” generally refers to the IBRD and IDA, whereas the World Bank Group
is used to refer to five institutions collectively. These five institutions are:
i. The International Bank of Reconstruction and Development (IBRD), established in
1945, which provides debt financing on the basis of sovereign guarantees.
ii. The International Financial Corporation (IFC), established in 1956, which provides
various forms of financing of without sovereign guarantees, primarily to the private
sector;
iii. The International Development Association (IDA), established in 1960, which
provides concessional financing (interest-free loans or grants), usually with sovereign
guarantees;
iv. The Multilateral Investment Guarantee Agency (MIGA), established in 1988, which
provides insurance against certain types of risks, including political risk, primarily to
the private sector; and
v. The International Centre for Settlement of Investment Disputes (ICSID), established
in 1966, which works with governments to reduce investment risk.
8.6 Objectives of the World Bank

The objectives of the World Bank are as follows:

1. To provide long-run capital to member countries for economic reconstruction and
development.
2. To induce long-run capital investment for assuring Balance of Payments (BoP)
equilibrium and balanced development of international trade.
3. To provide guarantee for loans granted to small and large units and other projects of
member countries.
4. To ensure the implementation of development projects in post war reconstruction period.
5. To promote capital investment in member countries by the following ways;
(a) Providing guarantee on private loans or capital investment.
(b) Providing loans for productive activities on considerate conditions.

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8.7 Functions of the World Bank

The World Bank strives to bridge the economic divide between poor and rich countries. To
accomplish this objective it tries to divert the resources of the rich countries into poor countries
and accelerate their growth. It does this to achieve sustainable poverty reduction. Thus, the main
function of the WBG is to eliminate poverty and to provide assistance to the poor by offering
loans, policy advice and technical assistance. The World Bank helps the poor countries to reduce
their debt burden and enable them for their debt service payments while encouraging social
expenditure.
The World Bank is playing a main role in providing loans for development works to member
countries, especially to underdeveloped countries. The World Bank provides long-term loans for
various development projects of 5 to 20 years duration. Bank can grant loans to a member
country up to 20% of its share in the paid-up capital. The quantities of loans, interest rate and
terms and conditions are determined by the Bank itself. Generally, Bank grants loans for a
particular project duly submitted to the Bank by the member country. The debtor nation has to
repay either in reserve currencies or in the currency in which the loan was sanctioned. Bank also
provides loan to private investors belonging to member countries on its own guarantee, but for
this loan private investors have to seek prior permission from those counties where this amount
will be collected.
The World Bank provides various technical services to the member countries. For this purpose,
the Bank has established “The Economic Development Institute” and a Staff College in
Washington. Another issue on which the Bank has recently been focusing is supporting programs
for HIV/AIDS. The WBG has also been focusing on reducing the risk of projects by means of
better appraisal and supervision mechanisms as well as a multidimensional approach to overall
development. It also takes up activities like support for legal reform, educational programs,
environmental safety, anti-corruption measures and other types of social development. The Bank
encourages all of its clients to implement policies that promote sustainable growth, health,
education, social development programs focusing on governance and poverty reduction
mechanisms, the environment, private business and macroeconomic reform.
For more than twenty years, the Bank has imposed stringent conditions, known as "Structural
Adjustment Programs," on recipient countries. It has forced the recipient countries to adopt
reforms such as deregulation of capital markets, privatization of state companies, and downsizing
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of public programs for social welfare. Privatization of water supplies, fees for public schools and
hospitals, and privatization of public pensions are among the most controversial Bank reforms.
8.8 Criticisms against the World Bank

Criticism of the World Bank encompasses a whole range of issues. They generally centre on
concern about the approaches adopted by the World Bank in formulating its policies, and the
way they are governed. While the WBG strives to create a poverty-free world, there are groups
that are passionately opposed to this type of international patron. The opponents believe that, due
to the fundamental structure of the Bank, the already existing imbalance between the worlds’s
rich and poor is only exacerbated. The system allows the largest shareholders to dominate the
vote, resulting in WBG policies being decided by the rich but implemented for and by the poor.
This can result in policies that are not in the best interests of the developing country in question.
Many times the political, social and economic policies of the developing nations are have to
moulded around WBG resolutions which is a reflection of western hegemony. While the Bank
insists that "fighting poverty" is its first priority, many critics believe, instead of that it is
responsible for rising poverty. Many also criticize its cosy relationship with Wall Street and the
United States Treasury Department. So, critics comment through the World Bank there is the
Americanisation of the developing countries which is not a healthy sign. This leads to a system
of neo colonisation or financial colonisation.
The World Bank provides training, assistance, information and other means that lead to
sustainable development of the developing nations. For this, the bank provides huge loans.
Opponents have observed that developing countries often have to put health, education and other
social programs on hold in order to pay back their loans. The social sector development becomes
retarded thereby. Opposition groups have protested by boycotting World Bank bonds. These are
the bonds that the WBG sells on global capital markets to raise money for some of its activities.
These opposition groups also call for an end to all practices that require a country to implement
structural adjustment programs - including privatization and government austerity measures - an
end to debt owed by the poorest of the poor, and an end to environmentally damaging projects
such as mining or the building of dams.
Critics of the World Bank are concerned about the ‘conditionality’ imposed on borrower
countries. The World Bank often attaches loan conditionality based on what is termed the
‘Washington Consensus’, focusing on liberalisation—of trade, investment and the financial
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sector, deregulation and privatisation of nationalised industries. Often the conditionality is
attached without due regard for the borrower countries’ individual circumstances and the
prescriptive recommendations by the World Bank fails to resolve the economic problems within
the countries. On the other hand, it aggravates the domestic challenges faced by the nations.
With the World Bank, there are concerns about the types of development projects funded. Many
infrastructure projects financed by the World Bank Group have social and environmental
implications for the populations in the affected areas and criticism has centred on the ethical
issues of funding such projects. For example, World Bank-funded construction of hydroelectric
dams in various countries has resulted in the displacement of indigenous peoples of the area.
This brings new protests and requires attention of the government. The World Bank’s role in the
global climate change finance has also caused much controversy. Civil society groups see the
Bank as unfit for a role in climate finance because of the conditionality and advisory services
usually attached to its loans. The Bank’s undemocratic governance structure – which is
dominated by industrialised countries – its privileging of the private sector and the controversy
over the performance of World Bank-housed Climate Investment Funds have also been subject
to criticism in debates around this issue. Moreover, the Bank’s role as a central player in climate
change mitigation and adaptation efforts is in direct conflict with its carbon-intensive lending
portfolio and continuing financial support for heavily polluting industries, which includes coal
power.
There are also concerns that the World Bank working in partnership with the private sector may
undermine the role of the state as the primary provider of essential goods and services, such as
healthcare and education, resulting in the shortfall of such services in countries badly in need of
them. As an increasing shift from public to private funding in development finance has been
observed recently, the Bank’s private sector lending arm – the International Finance Corporation
(IFC) – has also been criticised for its business model and encouraging the increasing use of
financial intermediaries such as private equity funds.
8.9 Summary

Irrespective of the criticisms and concerns, the World Bank has become a dominant international
institution of the globalised world. Without its role the development of the developing world is
unimaginable today.

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8.10 Self Assessment Questions
1. What is World Bank?
2. What is the function of World Bank?
3. What is the structure of World Bank?
8.11 Key Words

World Bank- it was established in 1944 to rebuild post-World War II Europe under the
International Bank for Reconstruction and Development.
8.12 Study Guide
1. World Bank Group (2011) A Guide to the World Bank.
2. Kapur, Deves, Lewis, John P., Webb, Richard (1997) The World Bank Its First Half
Century, Brookings Institution Press.
3. Peet, Richard(2009) Unholy Trinity: The IMF, World Bank and WTO,ZED books.
4. Vreeland, James Raymond (2003) The IMF and Economic Development, Cambridge
University Press.
5. International Monetary Fund https://www.imf.org/
6. Bryan, Mercurio(2009) Reflections on the World Trade Organization and the Prospects
for Its Future in Melbourne Journal of International Law.
7. VanGrasstek, Craig(2013) the History and Future of The World Trade Organisation
WTO Publications.
8. Pitelis, Christos; Roger Sugden (2000). The Nature of the Transnational Firm. Routledge.
9. Crotty, Epstein and Kelly (1998). Multinational Corps in Neo-liberal Regime. Cambridge
University Press.

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 Unit-09 MNCs

Structure
9.1 Learning Objectives
9.2 Introduction/ Assessment of Prior Knowledge
9.3 Defining MNCS
9.4 Characteristics of Multi National Corporations (MNCs)
9.5 Types of MNCs
9.6 Lead MNCs of the World
9.7 The Reasons behind the Growth of MNCS
9.8 Significance of Multi National Corporations (MNCs)
9.9 The Challenges posed by MNCs
9.10 Summary
9.11 Self Assessment Questions
9.12 Key Words
9.13 Study Guide

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9.1 Learning Objectives

After going through this unit the learner will be able-

1. To discuss the characteristics of MNCs.
2. To understand the types of MNCs.
9.2 Introduction/ Assessment of Prior Knowledge

MNCs stand for Multi National Companies. A multinational company is an enterprise operating
in several countries but managed from one (home) country. Technically speaking, any company
or group that derives a quarter of its revenue from operations outside of its home country is
considered a multinational corporation. A multinational corporation is a corporation or an
enterprise that manages production or delivers services in more than one country. Two important
concepts relate to the multinational corporations. These are: home country and host country.
Normally, the management headquarters of the MNC in one country known as the home country
and its operation in several other countries known as host countries. A multinational corporation
(MNC) is an enterprise that engages in foreign direct investment (FDI). A firm is not really
multinational if it just engages in overseas trade or serves as a contractor to foreign firms.
9.3 Defining MNCs

The term ‘Multinational’ is widely used all over the world to denote large companies having vast
financial, managerial and marketing resources. MNCs are like holding companies having its head
office in one country and business activities spread within the country of origin and other
countries. Multinational firms arise because cheap labour and raw material inputs are located in
other countries. Multinational corporations (MNCs in short) are also known as Transnational
Corporations (TNCs), Super National Enterprises, Global companies and so on.
According to Prof. John H. Dunning, “A multinational enterprise is one which undertakes
foreign direct investment, i.e., which owns or controls income gathering assets in more than one
country; and in so doing produces goods or services outside its country of origin, i.e., engages in
international production.” A multinational corporation has also been defined as “an enterprise:
which owns and/or controls producing facilities such as factories, mines, oil refineries,
distribution channels, offices, etc in more than one country.” According to another definition,
“Any business corporation in which ownership, management, production and marketing extend

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over several national jurisdictions is called a multinational corporation.”
9.4 Characteristics of Multi National Corporations (MNCs)

The following characteristics can be attributed to the MNCs.

Giant Size: The most important feature of the MNCs is their gigantic size. Their assets and sales
run into billions of dollars and they also make supernormal profits. On a global basis, MNCs
generate about half of the world’s industrial output and account for about two-thirds of world
trade.
International Operation: Multinational companies operate in the whole world. It extends its
business worldwide. In such a corporation, control resides in the hands of a single institution. But
its interests and operations sprawl across national boundaries. The Pepsi Cola Company of the
U.S operates in 114 countries. An MNC operates through a parent corporation in the home
country. It may assume the form of a subsidiary company in the host country. The foreign
control may range anywhere between the minimum of 51 per cent to the full, 100 per cent. A
MNC thus combines ownership with control. The branches and subsidiaries of MNCs operate
under the unified control of the parent company. Mostly MNCs from developed countries
dominate in the world markets.
Oligopolistic Structure: Through the process of merger and takeover, etc., in course of time a
MNC comes to assume awesome power. This coupled with its giant size makes it oligopolistic in
character. So it enjoys a huge amount of profit. This oligopolistic structure makes the
multinational corporations the hot bed of conflicts and evils.
Spontaneous Evolution: MNCs is usually grow in a spontaneous and unconscious manner.
“Creeping incrementalism” sometimes provides a company its multinational character. Both
choice and accident make a corporation multinational. Many firms become multinationals by
accident. Cheap labour, cheap resources available and easy accessibility in the host country make
the multinationals move towards them.
Collective Transfer of Resources: A MNC facilitates multilateral transfer of resources. Usually
this transfer takes place in the form of a “package” which includes technical know-how,
equipment’s and machinery, materials, finished products, managerial services, and soon.“MNCs
are composed of a complex of widely varied modern technology ranging from production and
marketing to management and financing. All these get dispersed throughout the host countries
where the MNC roots its company.
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American dominance: Another important feature of the multinationals is the American
dominance. In 1971, out of the top 25 MNCs, as many as 18 were of U.S. origin. Today to the
same scenario persists. This makes the U.S.A the business tycoon of the world and the
Americanisation of the globe takes place.
High efficiency: The MNCs operate their business with efficiency. They use advanced
technology. They also involve keenly in research works. They used many trained person that
helps in the production of quality goods.
9.5 Types of MNCs

There are four categories of multinational corporations:

A multinational, decentralized corporation with strong home country presence,
A global, centralized corporation that acquires cost advantage through centralized production
wherever cheaper resources are available,
An international company that builds on the Parent corporation's technology and R&D, or
A transnational enterprise that combines the previous three approaches. According to UN data,
some 35,000 companies have direct investment in foreign countries, and the largest 100 of them
control about 40 percent of world trade.
9.6 Lead MNCs of the World

The following are some of the lead MNCs of the world known to every household.
Microsoft Corporation
Microsoft Corporation was founded in Albuquerque, New Mexico, on 4th April 1975 by Bill
Gates and Paul Allen. Its head offices are in Redmond, Washington. Bill Gates currently
operates as its Technology Adviser, John W. Thompson is the Chairman and Satya Nadella is its
CEO.
Nokia Corporation
Nokia is one of the leading names in the world of network infrastructure and technologies based
on locations. It deals in advanced technologies as well. Its head offices are in Espoo, Finland and
it operates around the world including India. The prime area of focus for Nokia is to create
technologies that will lead the way to the future.
Nestle
Nestle is one of the top names in the world of food and beverages across the world. It has been in

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existence for more than 140 years and operates in at least 197 countries. It employed 3, 39,000
people in various capacities in 2014. Its objective is to be the top name in the world of nutrition,
wellness and health.
Coca Cola
One of the leading global brands in beverages, Coca Cola offers its complete portfolio of
products in India with drinks, energy drinks, juices, tea, packaged water and coffee. Coca Cola
offers more than 3,500 beverages around the world. It employs 25,000 people for systemrelated
operations in India. It also has 1, 50,000 indirect employees. Together with its franchisees, Coca
Cola has 56 bottling plants in India. In its 35 years of existence in India, Coca Cola has done
well financially and played a major role in the economic growth of India. It has also played a
major role in the innovation that has taken place in the country’s beverage sector.
Procter and Gamble
Procter and Gamble is one of the top names as far as consumer goods are concerned. It was
founded in Cincinnati, Ohio, on 31st October 1837 by William Procter and James Gamble. Its
head offices are located in Cincinnati. It operates all over the world with the exception of Cuba.
Alan George Lafley is its Chairman, CEO and President.
IBM
IBM or International Business Machines Corporation is a leading name in the world of computer
hardware, software and IT consulting. It was founded by Charles Ranlett Flint in Endicott, New
York. At present, its head offices are in Armonk, New York. It operates across 170 countries.
Ginni Rometty serves as its Chairman, CEO and President. It has 3, 79,592 employees.
PepsiCo
One of the top names in the world of beverages, PepsiCo is headquartered in Purchase, New
York. It was founded in 1896 at New Bern, North Carolina by Donald Kendall and Herman Lay.
At present, its products, including its most famous brand Pepsi and its chips, can be found all
over the world including India. Its present CEO and Chairman is Indra Nooyi.
9.7 The Reasons behind the Growth of MNCS

The growth of MNCs can be ascribed to a combination of two main factors. They are: the uneven
geographical distribution of factor endowments and market failure. Regional disparities in
resource concentration provide opportunity to some firms to have assets that are superior to those
in many other countries. These firms conclude that they can only successfully exploit these
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assets by transferring them across national boundaries within their own organizations rather than
by selling their right of use to foreign-based enterprises. Secondly, when they observe market
saturation in their home country, they make a move towards the host country to keep their
production and profit intact.
The development of MNCs dates back to several centuries, but their real growth started after the
Second World War Majority of the MNCs are from developed countries like U.S.A, Japan, UK,
Germany and European countries. In recent years MNCs from countries like Korea, Taiwan,
India, China, etc. are operating in the world markets.
9.8 Significance of Multi National Corporations (MNCs)

The multinational corporations today have a revolutionary effect on the international economic
system and the national economies. The growth of international transactions of the
multinationals has affected the more traditional forms of capital flows and international trade for
many economies. Today they constitute a powerful force in the world economy.
Financial and Technological Resources and Expertise: MNCs provide immense resources and
investments, technology, innovation and expertise to the host societies. A culture of research and
development is encouraged and human resources are developed, at least within the organization.
MNCs also contribute significantly to the national exchequer by paying taxes.
Good Business Practices: Good governance, organizational transparency, clear command
structures, and performance-based evaluation and incentives programs for employees encourage
the merit system. MNCs introduce a professional working environment and culture for local
organizations to emulate, thereby promoting sound management and business education.
Comforts of Life: In some cases, large-scale economies, quality control and a healthy
competition lead to price cuts and other benefits for the end-user. People have more access to the
comforts of life with a large variety of choices.
Infrastructure Improvement: Many MNCs help in improving the infrastructure and provision
of basic needs in their specific areas of operation. They either do so directly or provide funds for
this purpose to civil society organizations. This also improves business conditions within and in
the vicinity of the areas where they are operating.
Pluralism: MNCs help boosting cross-boundary interaction among people. Even education,
particularly, business education, has taken on a global perspective. The global perspectives and
opportunities for crosscultural understanding increase the adaptability of students to alien
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environments. This leads to the mixing of cultures and practices and encourages pluralism as
well as competition.
Economic development: The MNCs play an important role in the economic development of
underdeveloped countries. They have been the agents of modernization, movers of economic
growth and economic integration in the period following globalization.
Gap filling: The first important contribution of MNCs is its role in filling the resource gap
between targeted or desired investment and domestically mobilized savings. The country can fill
this gap with foreign direct investments from the MNCs. It is put into a better position to achieve
its target rate of economic growth.
The second contribution relates to filling the foreign exchange or trade gap. An inflow of foreign
capital can reduce or even remove the deficit in the balance of payments if the MNCs can
generate a net positive flow of export earnings.
The third important role of MNCs is filling the gap between targeted governmental tax revenues
and locally raised taxes. By taxing MNC profits, governments are able to mobilize public
financial resources for development projects.
Fourthly, Multinationals not only provide financial resources but they also supply a “package” of
needed resources including management experience, entrepreneurial abilities, and technological
skills. These can be transferred to their local counterparts by means of training programs and the
process of ‘learning by doing’.
Moreover, MNCs bring with them the most sophisticated technological knowledge about
production processes while transferring modern machinery and equipment to capital poor
countries. Such transfers of knowledge, skills, and technology are assumed to be both desirable
and productive for the recipient country. The MNCs also bring several other benefits to the host
country.
The MNCs create job opportunities in the host countries. The employment market diversifies
and proliferates. The domestic labour benefits in the form of higher real wages. The local
markets of the host countries are fed by the product diversification introduced by the MNCs.
Prices are lowered due to greater competition. The consumer benefits by way of lower prices and
better quality products. Investments by MNCs also induce more domestic investment.
Ancillary units are set up to ‘feed’ the main industries of the MNCs. This creates more
employment possibilities.

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9.9 The Challenges posed by MNCs

Nevertheless, MNCs can also pose problems for host societies in the spheres of social and
economic development and cultural diversity. These are discussed below.
Conflicts of Interest: MNCs are commercial organizations and their only interest is to gain
maximum return on their invested capital, occupy market shares and ensure their long-term
competitiveness. This leads to conflict of interests between the MNCs and host societies. Host
countries expect MNCs to work in harmony with the social and political needs of their societies
and communities, whereas the MNCs make their choices based purely on economic criteria. This
conflict of interests leads to conflict within societies.
Increasing Materialism and Consumerism: MNCs promote a culture of conspicuous
consumption. For this, they change the design of the products very fast and the older ones lose
relevance in a short span of time. This triggers consumerism among the people. Consumerism
has an overwhelming impact on people. Changing dress, diet, drink, use of consumable goods
propels them for lavish spending. This they take as a status symbol. Sometimes people go for
exhibiting a life style which does not commensurate with their income. They get into debt traps.
Many times people swayed away by extreme forms of consumerism ignore the essential needs
which deteriorate their quality of life. This makes the society sick too.
Corruption and Crime: Extreme materialism promoted by MNCs corrupt people. Material and
moral instinct seldom go hand in hand. Crime rates escalate due to the consumerist attitude
fostered by the MNCs. People try to strengthen their buying power by short cut and easy means.
For this they use violence and adhere to corrupt practices. But at the end of the day there is moral
degradation of the people, but material prosperity of the MNCs.
Healthcare Attitudes: MNCs have given birth to a new set of health problems among its
employees. Lifestyle-related ailments are on the rise. Hectic routines, targets and deadlines are
resulting in stresses and pressures. A destructive lifestyle has led to a host of medical crises like
stress, mid-life crisis, ulcers, nervous disorders, hypertension, obesity, cardiac disease, diabetes
etc.
Brain Drain: The lucrative salaries of the MNCs attract talent from the host countries. Cross
national employment is becoming common due to the rise of the MNCs. The term “brain drain”
is commonly used for the situation when talent goes out to other countries. The MNCs thus
promote brain drain. The host country fails to get the services of talented people whom it had
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nurtured so far.
Cultural Changes: MNCs use, develop and continually refine their marketing tactics to create
consumers’ need for their products. They use social marketing and rigours advertisements with
the celebrities to project their products, especially affecting the youth, women and children as
they are generally attracted to glamour. Special events, festivals and campaigns are organized to
create hype. This changes the dress, diet, dance, drinks traditionally used by a culture. With the
spread of MNCs’ operations in a society, the importance of foreign languages increases. All
these bring cultural changes.
Negative marketing: When introducing their products, MNCs exaggerate the qualities to the
level of cheating and lying. Aggressive campaigns with false claims are launched. Local
products are ridiculed. Children and youth are special targets, while women are treated as
commodities to project the products, affecting the existing value framework of the societies.
Business promotion through charity: Some MNCs are involved in charitable and welfare work
in the host societies as well. However, the amount given by them in charity is not comparable to
their profits. Charity is used as a means to make profit.
Violation of human rights: Exploitation of workers by large business corporations is a common
phenomenon. Most workers are exposed to hazardous and inhuman conditions, overexertion and
financial abuse. The labour legislations are rarely adhered to. This affects labour interest and
social security are minimal under the MNCs.
Stresses on the Family: MNCs affect the host society’s family fabric in many ways. The new
cultures and lifestyles introduced by MNCs prove to be harmful to the family fabric in host
societies. Overspending and living beyond means eventually creates economic pressures and
develops tensions and stresses within families. Women working in MNCs encounter severe role
conflicts. Parents have little time for their families, particularly children. The caring role of the
family declines.
9.10 Summary

MNCs have both a positive and a negative impact on host societies, even in the developed world.
MNCs have contributed a lot in the growth of developed countries and both have progressed side
by side. The negative impacts of MNCs have given birth to a strong and vibrant global justice
movement. The negative impacts of MNCs need to be addressed through some positive
interventions. MNCs need to conduct social research related to the host societies’ problems and
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to contribute certain portions of their profits to social sector development, particularly education
and human resource development in the host societies. Host countries should pressurise MNCs to
look into the local needs, ensuring that benefits and burdens of MNCs are evenly distributed and
favour lower-income groups, protect culture. Fair trade, environmental protection should be
imposed on the MNCs to make them not only economy friendly, but eco supportive in character.
Under such situations the MNCs can achieve their desired purpose.
9.11 Self Assessment Questions
1. Discuss the role of MNCs.
2. Explain the function of MNCs.
9.12 Key Words

MNCs- large companies having vast financial, managerial and marketing resources.

9.13 Study Guide

1. World Bank Group (2011) A Guide to the World Bank.
2. Kapur, Deves, Lewis, John P., Webb, Richard (1997) The World Bank Its First Half
Century, Brookings Institution Press.
3. Peet, Richard(2009) Unholy Trinity: The IMF, World Bank and WTO,ZED books.
4. Vreeland, James Raymond (2003) The IMF and Economic Development, Cambridge
University Press.
5. International Monetary Fund https://www.imf.org/
6. Bryan, Mercurio(2009) Reflections on the World Trade Organization and the Prospects
for Its Future in Melbourne Journal of International Law.
7. VanGrasstek, Craig(2013) the History and Future of The World Trade Organisation
WTO Publications.
8. Pitelis, Christos; Roger Sugden (2000). The Nature of the Transnational Firm. Routledge.
9. Crotty, Epstein and Kelly (1998). Multinational Corps in Neo-liberal Regime. Cambridge
University Press.

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 Unit-10 WTO

Structure
10.1 Learning Objectives
10.2 Introduction/ Assessment of Prior Knowledge
10.3 Origin of the W.T.O.
10.4 Difference between the W.T.O and the GATT
10.5 Structure of the W.T.O
10.6 Membership of the W.T.O
10.7 Objectives of the W.T.O
10.8 Source of Funds of the W.T.O and Management of Fund
10.9 Functions of the W.T.O
10.10 The Role Played by the WTO
10.11 Criticisms against the W.T.O
10.12 Summary
10.13 Self Assessment Questions
10.14 Key Words
10.15 Study Guide

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10.1 Learning Objectives

After going through this unit the learner will be able-

1. To discuss what is WTO.
2. To know how WTO functions.
3. To know the structure of WTO.
10.2 Introduction/ Assessment of Prior Knowledge

WTO stands for the World Trade Organisation. As the very name suggests, the World Trade
Organization (WTO) is the only global international organization dealing with the rules of trade
between nations. At its heart are the WTO agreements, negotiated and signed by the bulk of the
world’s trading nations and ratified in their parliaments. The goal is to help producers of goods
and services, exporters, and importers conduct their business. Its main function is to ensure that
trade flows as smoothly, predictably and freely as possible between nations. The national
government apply to join the WTO and if accepted as members, the member nations commit to
abide by the rules and settle disputes in an agreed upon way.
10.3 Origin of the W.T.O.

The WTO came into being in 1995. But its evolution spreads over a period of the past 50 years.
It came as a successor to the General Agreement on Tariffs and Trade (GATT). At the end of the
Second World War, it was decided that international institutions were needed to assist in the
process of economic recovery. Negotiators at that time were conditioned by the experience of the
1930sworldwide depression and the extreme measures of trade protectionism that were
formulated to recover from the situation. At a 1947 United Nations Conference on Trade and
Employment in Havana, Cuba, a proposal was discussed to create an International Trade
Organization (ITO). At that time, the International Monetary Fund and the World Bank were at
their germinating point. The ITO became the third pillar and was equipped with strong decision-
making and dispute settlement powers to oversee the multilateral trading system.
The origin of the WTO can be traced back to the creation of the International Trade Organization
at the 1944 Bretton Woods' Conference. The terms of the ITO charter were being drafted and
debated. The process began in February of 1946 and lasted until a final draft was produced in
March 1948. Representatives from a group of 17 nations assembled in Geneva and concluded an

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interim agreement (GATT) to lower trade barriers and tariffs among themselves. While the
GATT functioned well enough, the leading members wished to replace it with a world-wide
trade-regulating body like the WTO for a number of reasons. First, the GATT rules applied to
trade only in merchandise goods. In addition to goods, the WTO covers trade in services and
trade-related aspects of intellectual property (through the agreement on Trade-related Aspects of
Intellectual Property Rights— TRIPs). Second, while GATT was selective in application. The
agreements which constitute the WTO are almost all multilateral and, thus, involve commitments
for the entire membership. Third, the WTO dispute settlement system is faster, more automatic,
and thus much less susceptible to blockages, than the old GATT system.
The GATT was a set of rules, a multilateral agreement, with no institutional foundation, only a
small associated secretariat which had its origins in the attempt to establish an International
Trade Organization in the 1940s. By contrast, the WTO is a permanent institution with its own
secretariat. Moreover, the GATT was applied on a "provisional basis" while the WTO
commitments are fully and functionally permanent. For the above reasons, the creation of a new,
permanent trade body became one of the principal objectives through the GATT's Uruguay
round, which ran from 1986 to 1994. A draft for the new international trade body, the WTO, was
drafted and formally approved at the Ministerial Conference held in the ancient trade center of
Marrakesh in July of 1994. Under the terms of the so-called "Final Act" signed there, the GATT
was replaced by the WTO on 1 January 1995. The bulk of the WTO's current work comes from
the 1986-94 negotiations called the Uruguay Round and earlier negotiations under the General
Agreement on Tariffs and Trade (GATT). The WTO is currently the host to new negotiations,
under the “Doha Development Agenda” launched in 2001.
10.4 Difference between the W.T.O and the GATT

The main differences between the GATT and the WTO can be described by the as follows:
 The GATT was provisional. Its contracting parties never ratified the General Agreement,
and it contained no provisions for the creation of an organization. The WTO and its
agreements are permanent. As an international organization, the WTO has a sound legal
basis because all members have ratified the WTO Agreements, and the agreement
themselves describe how the WTO is to function.
 The WTO has “members.” GATT had “contracting parties”.
 The GATT dealt with trade in goods.
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  The WTO deals with trade in services and intellectual property as well.
 The WTO dispute settlement system is faster and more automatic than the old GATT
system. Its rulings cannot be blocked.
10.5 Structure of the W.T.O

The main WTO Body responsible for decision-making is the Ministerial Conference which is
expected to meet every two years. The first of such meetings was held in December, 1996 in
Singapore. During the two years between the meetings, the functions of the conference are
performed by the General Council, which meets as a dispute settlement body when it considers
complaints and takes necessary steps to settle disputes between member countries. It is also
responsible for carrying out reviews of the trade policies of individual countries, on the basis of
the reports prepared by the WTO Secretariat.
The General Council is assisted in its work by the:
i. Council for trade in goods, which oversees the implementation and operation of
GATT 1994, and its associate agreements;
ii. Council for trade in service, which oversees the implementation of GATTS.
iii. Council for trade-related aspects of Intellectual Property Rights (TRIPS) which
oversees the operation of the Agreement on TRIPS.

The WTO Councils:

The WTO covers goods, service and trade-related intellectual property rights. A description of
these three groups follows below. These, councils came into existence in their current shape only
in 1995, after the official establishment of the WTO (a result of the Uruguay Round).
The structure of the WTO is dominated by its highest authority, the Ministerial Conference,
composed of representatives of all WTO members, which is required to meet at least every two
years and which can take decisions on all matters under any of the multilateral trade agreements.
The day-to-day work of the WTO, however, falls to a number of subsidiary bodies; principally
the General Council, also composed of all WTO members, which is required to report to the
Ministerial Conference. As well as conducting its regular work on behalf of the Ministerial
Conference, the General Council convenes in two particular forms - as the Dispute Settlement
Body, to oversee the dispute settlement procedures and as the Trade Policy Review Body to
conduct regular reviews of the trade policies of individual WTO members. The General Council

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delegates responsibility to three other major bodies - namely the Councils for Trade in Goods,
Trade in Services and TradeRelated Aspects of Intellectual Property. The Council for Goods
oversees the implementation and functioning of all the agreements covering trade in goods,
though many such agreements have their own specific overseeing bodies. The latter two
Councils have responsibility for their respective WTO agreements and may establish their own
subsidiary bodies as and when necessary.
Three other bodies are established by the Ministerial Conference and report to the General
Council. The Committee on Trade and Development is concerned with issues relating to the
developing countries and, especially, to the “least-developed” among them. The Committee on
Balance of Payments is responsible for consultations between WTO members and countries
which take trade-restrictive measures, under Articles XII and XVIII of GATT, in order to cope
with balance- of-payments difficulties. Finally, issues relating to WTO’s financing and budget
are dealt with by a Committee on Budget.
10.6 Membership of the W.T.O

The WTO has nearly 153 members accounting for over 97% of world trade. Decisions are made
by the entire membership. This is typically by consensus. A majority vote is also possible but it
has never been used in the WTO. The WTO’s agreements have been ratified in all members’
parliaments. The WTO’s top level decision-making body is the Ministerial Conferences which
meets at least once in every two years. Below this is the General Council (normally ambassadors
and heads of delegation in Geneva, but sometimes officials sent from members’ capitals) which
meets several times a year in the Geneva headquarters. The General Council also meets as the
Trade Policy Review Body and the Disputes Settlement Body.
At the next level, the Goods Council, Services Council and Intellectual Property (TRIPs) Council
report to the General Council. Numerous specialized committees, working groups and working
parties deal with the individual agreements and other areas such as, the environment,
development, membership applications and regional trade agreements.
10.7 Objectives of the W.T.O

The important objectives of WTO are:

1. To improve the standard of living of people in the member countries.
2. To ensure full employment and broad increase in effective demand.

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 3. To enlarge production and trade of goods.
4. To increase the trade of services.
5. To ensure optimum utilization of world resources.
6. To protect the environment.
7. To accept the concept of sustainable development.

10.8 Source of Funds of the W.T.O and Management of Fund

The WTO secretariat, based in Geneva, has around 600 staff and is headed by a Director-
General. Its annual budget is roughly 160 million Swiss Francs. It does not have branch offices
outside Geneva. Since decisions are taken by the members themselves, the secretariat does not
have the decision making the role that other international bureaucracies are given.
10.9 Functions of the W.T.O

Among all the WT0 functions, there are two functions that are the most important. Those are:
 Settling trade related dispute and making trade negotiations in a common forum.
 Ensuring the operation, administration and implementation of the agreements signed.

In addition, it is the duty of the World Trade Organization to propagate and review the national
policies of trade around the globe. Another of the WTO’s priorities is assisting developing low-
income, least developed and transitioning countries in adjusting to disciplines and rules of WT0
through technical training and cooperation.
Additional Functions of the WTO.
The WTO is the international organisation to manage trading system in a globalised world. As
there is an increase in trade volume, issues such as violation of intellectual property, subsidies,
trade barriers and protectionism come up. This happens due to the special laws formulated by
each nation state relating to trading. The WTO serves as the nation’s mediator when problems
arise. The World Trade Organization is an economic analysis and research centre. It makes
regular global research on the state of international trade and produces reports. The WT0 also
closely cooperates with the other two system components, the World Bank and the IMF.
It is the duty of the World Trade Organization to go about facilitating operation, administration
and implementation and further the objectives of the Multilateral Trade Agreements and this
Agreement and shall also provide the operation, administration and implementation framework

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of the multilateral Trade Agreements.
 With a view to achieve coherence in global economic policy making, the World Trade
Organization cooperates with the affiliated agencies of the International Bank for
Reconstruction and Development and with the International Monetary Fund.
 Among its members, the WTO provides the negotiations forum concerning their trade
multilateral relations in matters that enshrined in the Agreement.
 The WT0 is in charge of administering the trading policy review mechanism.
 The World Trade Organization plays a vital role in settling the disputes arising out of
international trade.
 The Trade Policy Review Mechanism is administered by the WTO.

The secretariat’ s main duties pertain to supply technical support for the various councils and
committees and the ministerial conferences, to provide technical assistance for developing
countries, to analyze world trade and to explain WTO affairs to the public and media. The
secretariat also provides some forms of legal assistance in the dispute settlement process and
advises governments wishing to become members of the WTO. GATT is now the WTO’s
principal rule-book for trade in goods. The Uruguay Round also created new rules for dealing
with trade in services, relevant aspects of intellectual property, dispute settlement and trade
policy reviews.
Through these agreements, WTO members operate a non-discriminatory trading system that
spells out their rights and their obligations. Each country receives guarantees that its exports will
be treated fairly and consistently in other countries’ markets. Each country promises to do the
same for imports into its own market. The system also gives developing countries some
flexibility in implementing their commitments.
10.10 The Role Played by the WTO

Till the date the WTO has been a facilitator in promoting hassle free international trade. Its role
can be assessed from the way it has made movement of goods, services across the borders
possible, protected the intellectual property rights, settled the disputes and reviewed the trade
policies from time to time. Goods:
It all began with trade in goods. From 1947 to 1994, GATT was the forum for negotiating lower
customs duty rates and other trade barriers. The text of the General Agreement spelt out

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important, rules, particularly non-discriminations since 1995, the updated GATT has become the
WTO’ s umbrella agreement for trade in goods.It has annexes dealing with specific sectors such
as, agriculture and textiles and with specific issues such as, state trading, product standards,
subsidies and action taken against dumping.
Services:
Banks, insurance firms, telecommunication companies, tour operators, hotel chains and transport
companies looking to do business abroad can now enjoy the same principles of free and fair that
originally only applied to trade in goods. These principles appear in the new General Agreement
on Trade in Services (GATS). WTO members have also made individual commitments under
GATS stating which of their services sectors, they are willing to open for foreign competition
and how open those markets are.
Intellectual Property Rights:
The WTO’s intellectual property agreement amounts to rules for trade and investment in ideas
and creativity. The rules state how copyrights, patents, trademarks, geographical names used to
identify products, industrial designs, integrated circuit layout designs and undisclosed
information such as trade secrets “intellectual property” should be protected when trade is
involved. The WTO has taken enormous efforts to protect them for the nations.
Dispute Settlement:
The WTO’s procedure for resolving trade quarrels under the Dispute Settlement Understanding
is vital for enforcing the rules and therefore, for ensuring that trade flows smoothly. Countries
bring disputes to the WTO if they think their rights under the agreements are being infringed.
Judgments by specially appointed independent experts are based on interpretations of the
agreements and individual countries’ commitments.
The system encourages countries to settle their differences through consultation. Failing that,
they can follow a carefully mapped out, stageby-stage procedure that includes the possibility of
the ruling by a panel of experts and the chance to appeal the ruling on legal grounds. Confidence
in the system is established by the observing the number of cases brought to the WTO and
getting resolved by the WTO.
Policy Review:
The WTO has its Trade Policy Review Mechanism. Its purpose is to improve transparency, to
create a greater understanding of the policies that countries are adopting and to assess their

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impact. Many members also see the reviews as constructive feedback on their policies.All WTO
members undergo periodic scrutiny, each review containing reports by the country concerned
and the WTO Secretariat. Where countries have faced trade barriers and wanted them lowered,
the negotiations have helped to liberalize trade. But the WTO is not just about liberalizing trade,
and in some circumstances its rules support maintaining trade barriers — for example to protect
consumers or prevent the spread of disease.
WTO helps to settle disputes: This is a third important side to the WTO’s work. Trade relations
often involve conflicting interests. Agreements often need interpreting. The most harmonious
way to settle these differences is through some neutral procedure based on an agreed legal
foundation.
10.11 Criticisms against the W.T.O

The functions and role of the WTO have encountered heavy criticism. The following criticisms
are being labelled against the WTO.
 The WTO is fundamentally undemocratic. The policies of the WTO impact all aspects
of society and the planet, but it is not a democratic, transparent institution. The WTO
rules are written by and for corporations which have a greater access to the negotiations.
Citizens’ input by consumer, environmental, human rights and labour organizations is
consistently ignored. This indicates the heavy bent of the WTO to corporate discretion
and dominance and make it a corporate forum than a people’s forum.
 The WTO does not create a fare and just society. The WTO believes that creating a world
of “free trade” will promote global understanding and peace. On the contrary, the
domination of international trade by rich countries for the benefit of their individual
interests fuels anger and resentment among the poor nations. To build real global
security, international agreements are needed that respect people’s rights to democracy
and trade systems that promote a free just society. But till the date WTO has failed to
ensure this.
 The WTO tramples labour and human rights. WTO rules prioritise the “rights” of
corporations to profit. They overlook human and labour rights. The WTO has failed in
promoting internationally recognized labour standards. Human values and social

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 protection are getting buried under the commercial values promoted by the WTO. In the
name of profit child labour, inhuman conditions of labour are increasing.
 The WTO lays stress on privatizing essential services: The WTO seeks to privatize
essential public services such as education, health care, energy and water. Privatization
means the selling off of public assets to run for profit rather than the public good. The
WTO’s General Agreement on Trade in Services, or GATS, includes a list of about 160
threatened services including elder and child care, sewage, garbage, park maintenance,
telecommunications, construction, banking, insurance, transportation, shipping, postal
services, and tourism. In some countries, privatization is already occurring. This affects
the poor to a great extent and makes them more deprived and disadvantaged.
 The WTO destroys the environment. The WTO attempts to deregulate industries
including logging, fishing, water utilities, and energy distribution, which will lead to
further exploitation of these natural resources. This affects the environment. In many
instances the WTO disregards the national environment protection laws on the ground of
creating barriers to trade. This has a heavy cost on the environment and as such on lives.
 The WTO policies kill people. The WTO’s fierce defence of ‘Trade Related Intellectual
Property’ rights (TRIPs)—patents, copyrights and trademarks comes at the expense of
health and human lives. The WTO has protected for pharmaceutical companies’ ‘right to
profit’ against governments seeking to protect their people’s health by providing
lifesaving medicines in countries in areas like sub-Saharan Africa, where thousands die
every day from HIV/AIDS. By this, the WTO demonstrates that it favours corporate
profit over saving human lives.
 The WTO worsens inequality. Inequality has worsened both internationally and
nationally. The UN Development Program reports that the richest 20 percent of the
world’s population consume 86 percent of the world’s resources while the poorest 80
percent consume just 14 percent. WTO rules have hastened these trends by opening up
countries to foreign investment and thereby making it easier for production to go where
the labour is cheapest and most easily exploited and environmental costs are low.
 The WTO policies increase hunger.The corporate control of food distribution has put 800
million people worldwide into chronic malnutrition. According to the Universal
Declaration of Human Rights, food is a human right. In developing countries, as many as

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 four out of every five people make their living from the land. But the leading principle in
the WTO’s Agreement on Agriculture is that market forces should control agricultural
policies has affected food security. WTO policies have allowed dumping of heavily
subsidized industrially produced food into poor countries, undermining local production
and increasing hunger.
 The WTO undermines local level decision-making and national sovereignty.Local
policies aimed at rewarding companies who hire local residents, use domestic materials,
or adopt environmentally sound practices are essentially illegal under the WTO. Many
countries are even changing their laws and constitutions in anticipation of potential future
WTO rulings and negotiations. Keeping these negative consequences in view,
international opposition to the WTO is growing. Massive protests in Seattle in1999
brought over 50,000 people together to oppose the WTO. In Cancún, Mexico and Hong
Kong, China, the WTO met thousands of activists in protest, scoring a major victory for
democracy. Developing countries refused to give in to the rich countries’ agenda of WTO
expansion and caused the talks to collapse. Thus, it is high time now that the WTO needs
to revisit its policies to create an equalising world to give equal space to the poor nations,
marginalised population.
10.12 Summary

The WTO worsens inequality. Inequality has worsened both internationally and nationally. The
UN Development Program reports that the richest 20 percent of the world’s population consume
86 percent of the world’s resources while the poorest 80 percent consume just 14 percent. WTO
rules have hastened these trends by opening up countries to foreign investment and thereby
making it easier for production to go where the labour is cheapest and most easily exploited and
environmental costs are low.
10.13 Self Assessment Questions

1. Discuss the function of WTO.

2. Discuss the structure of WTO.

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10.14 Key Words

WTO- World Trade Organisation is an autonomous institution who regulates international trade
ctivities.
10.15 Study Guide
1. World Bank Group (2011) A Guide to the World Bank.
2. Kapur, Deves, Lewis, John P., Webb, Richard (1997) The World Bank Its First Half
Century, Brookings Institution Press.
3. Peet, Richard(2009) Unholy Trinity: The IMF, World Bank and WTO,ZED books.
4. Vreeland, James Raymond (2003) The IMF and Economic Development, Cambridge
University Press.
5. International Monetary Fund https://www.imf.org/
6. Bryan, Mercurio(2009) Reflections on the World Trade Organization and the
Prospects for Its Future in Melbourne Journal of International Law.
7. VanGrasstek, Craig(2013) the History and Future of The World Trade Organisation
WTO Publications.
8. Pitelis, Christos; Roger Sugden (2000). The Nature of the Transnational Firm.
Routledge.
9. Crotty, Epstein and Kelly (1998). Multinational Corps in Neo-liberal Regime.
Cambridge University Press.

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 Unit-11 IMF

Structure
11.1 Learning Objectives
11.2 Introduction/ Assessment of Prior Knowledge
11.3 Origin of the IMF
11.4 Structure of the IMF
11.5 Membership of the IMF
11.6 Objectives of the IMF
11.7 Source of Funds of the IMF
11.8 Management of Funds
11.9 Functions of the IMF
11.10 Criticisms against the IMF
11.11 Comparison between the IMF and the World Bank
11.12 Summary
11.13 Self Assessment Questions
11.14 Key Words
11.15 Study Guide

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11.1 Learning Objectives

After going through this unit you will be able-

1. To discuss the role of IMF.
2. To understand the structure and functions of IMF.
11.2 Introduction/ Assessment of Prior Knowledge

The IMF stands for the International Monetary Fund. It is located in Washington D.C. The
International Monetary Fund (IMF) is an organization of 188 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. The IMF is
responsible for the creation and maintenance of the international monetary system, the system by
which international payments among countries take place. It thus, strives to provide a systematic
mechanism for foreign exchange transactions in order to foster investment and promote balanced
global economic trade.
The IMF was originally designed to promote international economic cooperation and provide its
member countries with short term loans so they could trade with other countries (achieve balance
of payments). Since the debt crisis of the 1980's, the IMF has assumed the role of bailing out
countries during financial crises (caused in large part by currency speculation in the global
casino economy) with emergency loan packages tied to certain conditions, often referred to as
structural adjustment policies (SAPs). The IMF now acts like a global loan shark, exerting
enormous leverage over the economies of more than 60 countries. These countries have to follow
the IMF's policies to get loans, international assistance, and even debt relief. Thus, the IMF
decides how much debtor countries can spend on education, health care, and environmental
protection. The IMF is one of the most powerful institutions of the globalised world today.
11.3 Origin of the IMF

The IMF was conceived at a UN conference in Bretton Woods, New Hampshire, United States,
in July 1944. The 44 countries at that conference sought to build a framework for economic
cooperation to avoid a repetition of the competitive devaluations that had contributed to the
Great Depression of the 1930s.White was the chief international economist at the U.S. Treasury.
In 1944, he drafted the American plan for the IMF that competed with the British Treasury

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blueprint drafted by Keynes. Created in 1945, the IMF is governed by and accountable to the 188
countries that make up its near-global membership.
The International Monetary Fund was founded on 27th December, 1945. A treaty called the
Articles of Agreement was signed by 29 member countries. The next year, the first meeting was
convened by the Board of Governors in Savannah, State of Georgia, United States. The purpose
of the meeting was to elect the executive directors, draft the bylaws, and decide the permanent
location of the IMF’s headquarters. The Board of Directors selected Washington D.C as the
headquarters of the International Monetary Fund. The financial operations of the IMF started on
1st March, 1947.
11.4 Structure of the IMF

The IMF has a hierarchical structure.

Board of Governors
The Board of Governors is the highest decision-making body of the IMF. It consists of one
governor and one alternate governor for each member country. The governor is appointed by the
member country and is usually the minister of finance or the head of the central bank.
Ministerial Committees
The IMF Board of Governors is advised by two ministerial committees, the International
Monetary and Financial Committee (IMFC) and the Development Committee. The IMFC has 24
members, drawn from the pool of 188 governors. Its structure mirrors the Executive Board and
its 24 constituencies. As such, the IMFC represents all the member countries of the Fund.
The Executive Board
The IMF's 24-member Executive Board takes care of the daily business of the IMF. Together,
these 24 board members represent all 188 countries. Large economies, such as the United States
and China, have their own seat at the table but most countries are grouped in constituencies
representing 4 or more countries. The largest constituency includes 24 countries
11.5 Membership of the IMF

The Fund is an autonomous organisation affiliated to the UNO. It is financed by the participating
countries, with each country’s contribution fixed in terms of quotas according to the relative
importance of its prevailing national income and international trade. Thus, the quota assigned to
a country is determined by its contribution to the capital of the Fund. The quotas of all the

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countries taken together constitute the total financial resources of the Fund. Moreover, the
contributed quota of a country determines its borrowing rights and voting strength. India being
one of the largest quota-holders (600 million dollars) has the honour of having a permanent seat
on the Board of Executive Directors. Each member nation of the IMF is required to subscribe its
quota partly in gold and partly in its own currency. Specifically, a member nation must
contribute gold equal to 25 per cent of its quota or 10 per cent of its gold stock and U.S. dollar
holdings, whichever is less. The portion of subscription paid in a nation’s own currency is
generally paid in the form of deposit balance in favour of the IMF held in the nation’s central
bank. Thus, the Fund gets a pool of foreign currencies to lend, together with gold enables it to
acquire additional amounts of currencies whenever its initial supply of some currencies becomes
depleted.
The original members of the IMF were the 29 nations whose governments had ratified the
Articles of Agreement by 27 December 1945. Any state, whether a member of the UN or not,
have a chance to become a member of the IMF in accordance with terms prescribed by the Board
of Governors. The IMF had 184 members as on 12 December 2002. By 2015, it has grown to
188.Membership in the IMF is a prerequisite to membership in the IBRD. A member may
withdraw from the IMF at any time, and its withdrawal becomes effective on the day that a
written notice to that effect is received by the Fund.
If a member state fails to fulfil its obligations under the IMF Articles of Agreement, the Fund
may declare that country ineligible to use its resources. If, after a reasonable period has elapsed,
the member state persists in its failure to live up to its obligations, the Board of Governors may
require it to withdraw from membership. The Third Amendment of the IMF's Articles of
Agreement came into force on 11 November 1992. It allows for the suspension of voting and
related rights of a member that persists in its failure to fulfil its obligations under the Articles.
11.6 Objectives of the IMF

Basically the followings are the general objectives of the IMF:

 To promote exchange rate stability among the different countries.
 To make an arrangement of goods exchange between the countries.
 To promote short term credit facilities to the member countries.
 To assist in the establishment of International Payment System.

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  To make the member countries balance of payment favourable.
 To facilitate the foreign trade.
 To promote international monetary corporation.
11.7 Source of Funds of the IMF

The initial capital of IMF was 8.5 billion dollar which was contributed by the 49 members. The
quota of each member country was fixed in proportion to the national income and volume of
foreign trade. Every country was required to pay in the form of gold and domestic currency.
11.8 Management of Funds

The twelve member executive committee manages the affairs of IMF. Five members are the
representatives of U.K, U.S.A, China, France and India. The remaining is elected by the other
member countries.
11.9 Functions of the IMF

The following are the major functions of the IMF:

1. It functions as a short-term credit institution.
2. It provides machinery for the orderly adjustments of exchange rates.
3. It is a reservoir of the currencies of all the member countries from which a borrower
nation can borrow the currency of other nations.
4. It is a sort of lending institution in foreign exchange. However, it grants loans for
financing current transactions only and not capital transactions.
5. It also provides machinery for altering sometimes the par value of the currency of a
member country. In this way, it tries to provide for an orderly adjustment of exchange
rates, which will improve the long-term balance of payments position of member
countries.
6. It also provides machinery for international consultations.

In fine, the Fund contributes to the promotion and maintenance of high levels of employment
and real income and to the development of the productive resources of all member
nations.The lending operations of the Fund technically take the form of sale of currency. Any
member nation running short of foreign currency may buy the required currency from the
Fund, paying for it in its own currency. Since each member contributes gold to the extent of

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25 per cent of its quota, the Fund freely permits a member to draw up to the amount of its
gold contribution. Additional drawings are permitted only after certain careful and strict
scrutinies. Since the purpose of the Fund is to ensure temporary and long-term loans, it
expects repayment of loans within 3 to 5 years. The Fund has also laid down provisions
relating to exchange stability. Members are required to declare the par values of their
currencies in terms of gold as a common denominator or in terms of U.S. dollar. Thus, under
IMF arrangements, gold retains its role in determining the relative values of currencies of
different nations. And once the par values of different currencies are fixed, it is quite easy to
determine the exchange rate between any two member nations.
However, if at any time a member country feels there is a fundamental disequilibrium in its
balance of payments position, it may propose a change in the par value of its currency, i.e.,
its devaluation. But devaluation is allowed or even advised by the IMF for the purpose of
correcting a fundamental disequilibrium and not for undue competition or for other
advantages. Thus, the decision to devalue should not be taken unilaterally by the member
concerned, but only after consultation with the Fund. The Fund has laid down that member
countries should not adopt a system of multiple exchange rates. That is to say, there should
not be two or more rates between the currency of one member country and that of any other
member country. This was necessary to prevent countries deviating from the principle of
fixed exchange rates. Secondly, it was laid down that a member country should not purchase
or sell gold internationally at prices other than those indicated by the par values. In essence,
these provisions were laid down in order to secure exchange stability. At the same time,
exchange depreciation or devaluation is permissible only for correcting a fundamental
disequilibrium in the balance of payments of a country. Similarly, the Fund may ask a
member enjoying a persistent surplus position to revalue its currency and set things right.
With a view to eliminate or minimise exchange control tactics, the Fund laid down that there
should be no restrictions in ordinary trade and other current transactions. Although the Fund
laid down that exchange controls and other restrictions should not be used for normal current
transactions, it allows their use at all times to control international capital movements,
especially capital flights. Moreover, exchange controls are expressly permitted in the case of
currencies which may be declared “scarce” by the Fund. It is also permitted during the
“transition period.” Thus, the elements of exchange control have been incorporated in the

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 provision of the Fund. In short, the IMF may be described as a bank of central banks of
different countries, because it collects the resource of the various central banks in the same
way in which a country’s central bank collects cash reserves of all the commercial banks,
assists them in times of emergency.
However, while a central bank can control the credit policy of its member banks, the Fund
cannot control the domestic economic and monetary policies of member nations. It only
seeks to maintain a multiple payments system through an orderly adjustment of the exchange
rates.
11.10 Criticisms against the IMF

The following are some of the important criticisms against the IMF.
 The IMF has created an immoral system of modern day colonialism. It’s insistence to opt
for structural adjustment programmes has put its negative impacts on the poor
counties.The IMF has put the global economy on a path of greater inequality and
environmental destruction. The IMF's structural adjustment policies (SAPs) ensure debt
repayment by requiring countries to cut spending on education and health; eliminating
basic food and transportation subsidies; devaluing national currencies to make exports
cheaper; privatize national assets; and freeze wages. Such belt-tightening measures
increase poverty, reduce countries' ability to develop strong domestic economies and
allow multinational corporations to exploit workers and the environment .The IMF has
heightened the wealth and knowledge divide among the nations creating an economic
colonisation in the place of political colonisation.
 The IMF is accused for serving the interests of the wealthy countries and Wall Street.
Rich countries dominate decisionmaking in the IMF because voting power is determined
by the amount of money that each country pays into the IMF's quota system. So, it
creates an undemocratic situation. It’s a system of one dollar, one vote. The U.S. is the
largest shareholder with a quota of 18 percent. Germany, Japan, France, Great Britain,
and the US combined control about 38 percent.
 The IMF is alleged to be imposing fundamentally flawed development model.The IMF
forces countries from the Global South to prioritize export production over the
development of diversified domestic economies. Nearly 80 percent of all malnourished

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 children in the developing world live in countries where farmers have been forced to shift
from food production for local consumption to the production of export crops destined
for wealthy countries. The IMF also requires countries to eliminate assistance to domestic
industries while providing benefits for multinational corporations -- such as forcibly
lowering labour costs. Small businesses and farmers can't compete. Wage earners fail to
earn a stable and sizable wage to support their families and live in deplorable conditions.
The cycle of poverty is perpetuated, not eliminated, as governments' debt to the IMF
grows.
 The IMF is criticised as a secretive institution with no accountability. The IMF is funded
with taxpayer money, yet it operates behind a veil of secrecy. Members of affected
communities do not participate in designing loan packages. The IMF works with a select
group of central bankers and finance ministers to make polices without input from other
government agencies such as health, education and environment departments.
 IMF policies promote corporate welfare. The IMF always encourages corporate to grow.
To increase exports, countries are encouraged to give tax breaks and subsidies to export
industries. Public assets such as forestland and government utilities (phone, water and
electricity companies) are sold off to foreign investors at rock bottom prices. This creates
problems for the indigenous industries and people. People fail to get the welfare and
subsidy services of the national governments. This creates poverty amidst plenty.
 The IMF hurts workers. The IMF frequently advises countries to attract foreign investors
by weakening their labour laws. It insists to eliminate collective bargaining laws and
suppressing wages. The IMF's mantra of "labour flexibility" permits corporations to fire
at whim and move where wages are cheapest. According to the 1995 UN Trade and
Development Report, employers are using this extra "flexibility" in labour laws to shed
workers rather than create jobs. As a result of this workers are affected in both the
developed and developing countries and unable to arrange their livelihood. Workers in
the U.S. are also hurt by IMF policies because they have to compete with cheap,
exploited labour. The IMF's mismanagement of the Asian financial crisis plunged South
Korea, Indonesia, Thailand and other countries into deep depression that created 200
million "newly poor."

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 Women become the worst victims of The IMF's policies.Structural Adjustment
Programmes create labour displacement. The burdens of labour displacement fall
disproportionately on women. The withdrawal of basic services like free education,
health by the government makes it difficult for women to meet their families' basic needs.
When education costs rise due to IMF-imposed fees for the use of public services
(socalled "user fees") girls are the first to be withdrawn from schools. User fees at public
clinics and hospitals make healthcare unaffordable to those who need it most. The shift to
export agriculture also makes it harder for women to feed their families. Women have
become more exploited as government workplace regulations have become more
stringent due to economic reforms.
 IMF Policies are noted to be affecting the environment in a negative way. IMF loans and
bailout packages are paving the way for natural resource exploitation on a staggering
scale. The IMF does not consider the environmental impacts of lending policies, and
environmental ministries and groups are not included in policy making. The focus on
export growth to earn hard currency to pay back loans has led to an unsustainable
liquidation of natural resources.
 The IMF is labelled with the criticism of bailing out rich bankers, creating a moral hazard
and greater instability in the global economy.The IMF routinely pushes countries to
deregulate financial systems. The removal of regulations that might limit speculation has
greatly increased capital investment in developing country financial markets. Most of this
capital is invested shortterm, putting countries at the whim of financial speculators. Such
bailouts encourage investors to continue making risky, speculative bets, thereby
increasing the instability of national economies. During the bailout of Asian countries,
the IMF required governments to assume the bad debts of private banks, thus making the
public pay the costs and draining more resources away from social programs.
 It is observed that IMF bailouts deepen, rather than solves economic crisis. During
financial crises -- such as with Mexico in 1995 and South Korea, Indonesia, Thailand,
Brazil, and Russia in 1997 -- the IMF stepped in as the lender of last resort. Yet the IMF
bailouts in the Asian financial crisis did not stop the financial panic -- rather, the crisis
deepened and spread to more countries. In South Korea, the IMF sparked a recession by
raising interest rates, which led to more bankruptcies and unemployment. Under the IMF

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 imposed economic reforms in 1995, the number of Mexicans living in extreme poverty
increased more than 50 percent and the national average minimum wage fell 20 percent.
Thus, The IMF instead of giving solutions heightens economic crises.
11.11 Comparison between the IMF and the World Bank

There are many commonalities between the IMF and the World Bank.
 Both the International Monetary Fund and the World Bank were formed together at
Bretton Woods, New Hampshire, in July 1944.
 Both of them were created to support the world economy. The IMF exists to preserve an
orderly monetary system; the World Bank performs an economic development role.
 Both organizations have their headquarters in Washington, D.C.
 The IMF supervises the economic policies of its members and expects them to allow free
exchange of national currencies. To keep this financial order, the IMF also acts as a
provider of emergency loans to members who run into difficulties, in exchange for a
promise from the member to reform its economic policies.
 The World Bank finances economic development among poorer nations by funding
specific and targeted projects, aimed at helping to raise productivity. The World Bank
consists of two organizations: the International Bank for Reconstruction and
Development (IBRD) and the International Development Association (IDA). The IBRD
lends to developing nations at preferential interest rates, while the IDA only lends to the
poorest nations, on an interest-free basis.
 Although the IMF is an agency of the United Nations, it has its own charter, structure and
financing arrangements. The IMF not only works with its 188 members, it also
collaborates with the World Bank, World Trade Organization and agencies of the United
Nations. To become a member of the IMF, countries must apply and be accepted by the
other members. Because membership of the World Bank is conditional on being a
member of the IMF, the World Bank also has 188 members. These members govern the
World Bank through a Board of Governors.
 The IMF raises its money through membership fees, known as quotas. Each member
country pays a quota based on its relative economic size so that the larger economies pay
more. The World Bank raises most of its money through borrowing, by issuing bonds to

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 investors; it also receives grants from donors. Irrespective of such commonalities, there
are many differences between the two organisations. The differences are as follows.
 The IMF looks after the international monetary system while the World Bank seeks to
promote the economic development of the world's poorer countries. The IMF promotes
exchange stability and orderly exchange relations among its member countries while the
World Bank assists developing countries through long-term financing of development
projects and programs.
 The IMF assists all members--both industrial and developing countries--that find
themselves in temporary balance of payments difficulties by providing short- to medium-
term credits while the World Bank provides to the poorest developing countries whose
per capita GNP is less than $865 a year special financial assistance through the
International Development Association (IDA).
 The IMF supplements the currency reserves of its members through the allocation of
SDRs (special drawing rights); to date SDR 21.4 billion has been issued to member
countries in proportion to their quotas while the World Bank encourages private
enterprises in developing countries through its affiliate, the International Finance
Corporation (IFC).
 The IMF draws its financial resources principally from the quota subscriptions of its
member countries while the World Bank acquires most of its financial resources by
borrowing on the international bond market. The IMF has at its disposal fully paid-in
quotas now totalling SDR 145 billion (about $215 billion) has an authorized capital of
$184 billion, of which members pay in about 10 percent while the World Bank has an
authorized capital of $184 billion, of which members pay in about 10 percent The IMF
has a staff of 2,300 while the World Bank has a staff of 7,000.
11.12 Summary

After seventy years of existence there are strongly conflicting views on the importance and role
of the IMF for today’s international economy, and on its effectiveness. On the one hand there are
those who see the Fund as having adapted well to the changing world environment on the other
hand, there are still a group who perceive it as a devastating organization producing undesirable
consequences like neocolonisation, economic colonization and environmental catastrophes etc.

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All said and done, the IMF can be said to be a proactive international organization of the post
globalised world and of the present millennium.
11.13 Self Assessment Questions
1. What is IMF?
2. What is the function of IMF?
3. What is the structure of IMF?
11.14 Key Words

IMF- is a internationally recognized monetary institution

11.15 Study Guide
1. World Bank Group (2011) A Guide to the World Bank.
2. Kapur, Deves, Lewis, John P., Webb, Richard (1997) The World Bank Its First Half
Century, Brookings Institution Press.
3. Peet, Richard(2009) Unholy Trinity: The IMF, World Bank and WTO,ZED books.
4. Vreeland, James Raymond (2003) The IMF and Economic Development, Cambridge
University Press.
5. International Monetary Fund https://www.imf.org/
6. Bryan, Mercurio(2009) Reflections on the World Trade Organization and the Prospects
for Its Future in Melbourne Journal of International Law.
7. VanGrasstek, Craig(2013) the History and Future of The World Trade Organisation WTO
Publications.
8. Pitelis, Christos; Roger Sugden (2000). The Nature of the Transnational Firm. Routledge.
9. Crotty, Epstein and Kelly (1998). Multinational Corps in Neo-liberal Regime. Cambridge
University Press.

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 Unit-12 NGOs

Structure
12.1 Learning Objectives
12.2 Introduction/ Assessment of Prior Knowledge
12.3 Defining NGOs
12.4 Genesis and Growth of NGOs
12.5 Characteristics of NGOs
12.6 Types of NGOs
12.7 Significance of NGOs
12.8 The Challenges posed by NGOs
12.9 Summary
12.10 Self Assessment Questions
12.11 Key Words
12.12 Study Guide

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12.1 Learning Objectives

After going through this unit you will be able-

1. To discuss about the origin of NGOs.
2. To understand types of NGOs.
12.2 Introduction/ Assessment of Prior Knowledge

NGOs stand for Non Governmental Organisations. Since the 1980s, nongovernmental
organizations (NGOs) have emerged as an important force working to democratize decision-
making processes, protect human rights and provide essential services to the most needy. They
have become (NGOs) quite prominent in the field of international development in recent
decades. They are now recognized as key third sector actors on the landscapes of development,
human rights, humanitarian action, environment, and many other areas of public action. In recent
years, the arena of NGO action has expanded rapidly from local and national settings and the
international level. The institutional transformations that are occurring in the context of
globalization have seen international actors such as United Nations agencies, regional
organizations, finance and trade institutions and transnational corporations — as well as NGOs.
NGOs have been late-comers to this evolving system of global governance but are now finding
ways to influence the international decision-making process associated with development issues.
12.3 Defining NGOs

Non-governmental organizations, or NGOs, were first called such in Article 71 in the Charter of
the newly formed United Nations in 1945. While NGOs have no fixed or formal definition, they
are generally defined as nonprofit entities independent of governmental influence.
A non-governmental organization (NGO, also often referred to as "civil society organization" or
CSO) is a nonprofit group, principally independent from government control, which is organized
on a local, national or international level to address issues in support of the public good. Task-
oriented and made up of people with a common interest, NGOs perform a variety of services and
humanitarian functions, bring public concerns to governments, monitor policy and programme
implementation, and encourage participation of civil society stakeholders at the community
level. Some are organized around specific issues, such as human rights.
The World Bank defines NGOs as “private organizations that pursue activities to relieve

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suffering, promote the interests of the poor, protect the environment, provide basic social
services, or undertake community development.”
A non-governmental organization (NGO) is a non-profit, citizen-based group that functions
independently of government. NGOs, sometimes called civil societies, are organized on
community, national and international levels to serve specific social or political purposes, and
are cooperative, rather than commercial, in nature.
A non-governmental organization (NGO) is any non-profit, voluntary citizens' group which is
organized on a local, national or international level. Task-oriented and driven by people with a
common interest, NGOs perform a variety of service and humanitarian functions, bring citizen
concerns to Governments, advocate and monitor policies and encourage political participation
through provision of information dissemination. Some are organized around specific issues, such
as human rights, environment or health. They provide analysis and expertise, serve as early
warning mechanisms and help monitor and implement international agreements.
In practice, the term “NGOs” is used to describe non-profit making which seek to influence the
policy of governments and international organizations and/or to complement government
services (such as health and education). They usually have a formal structure, offer services to
people and are, in most cases, registered with national authorities. NGOs vary huge in their size,
scope of activity and goals.
NGOS are civil society organisations. Civil society is seen as a social sphere separate from both
the state and the market. Civil society organizations (CSOs) are non-state, not-for-profit,
voluntary organizations formed by people in the social sphere. This term is used to describe a
wide range of organizations, networks, associations, groups and movements that are independent
from government and that sometimes come together to advance their common interests through
collective action. Traditionally, civil society includes all organizations that occupy the 'social
space' between the family and the state, excluding political parties and firms.
12.4 Genesis and Growth of NGOs

The term, "non-governmental organization" or NGO, came into currency in 1945 because of the
need for the UN to differentiate in its Charter between participation rights for intergovernmental
specialized agencies and those for international private organizations. The term thus has its roots
in the history of the United Nations. When the UN Charter was drawn up in 1945, the
designation ‘non-governmental organization’ was awarded to international non-state
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organizations which gained consultative status in UN activities. Professor of anthropology,
Richard Robbins, in his book, Global Problems and the Culture of Capitalism suggests a few
reasons why NGOs have become increasingly important in the past decade or so. Amongst them,
the important are:
 The end of the Cold War made it easier for NGOs to operate.
 Communications advances, especially the internet, have helped create new global
communities and bonds between like-minded people across state boundaries and this laid
the foundation of International NGOs.
 Increased resources, growing professionalism and more employment opportunities in
NGOs also strengthened the NGO movement.
 Perhaps most important, Robbins suggests that NGOs have developed as part of a larger,
neoliberal economic and political agenda. Shifts in economic and political ideology have
lent to increasing support of NGOs from governments and official aid agencies in
response.

From the late 1980s, NGOs assumed a far greater role in development than previously. NGOs
were first discovered and then celebrated by the international donor community as bringing fresh
solutions to longstanding development problems characterized by inefficient government to
government aid and ineffective development projects. Within the subsequent effort to liberalize
economies and “roll back’’ the state as part of structural adjustment policies, NGOs came to be
seen as a cost-effective alternative to public sector service delivery. In the post-Cold War era the
international donor community began to advocate a new policy agenda of ‘‘good governance’’
which saw development outcomes as emerging from a balanced relationship between
government, market, and third sector. Within this paradigm, NGOs also came to be seen as part
of an emerging ‘‘civil society.’
Important changes in mainstream development thinking and practice, including new ideas about
participation, empowerment, gender, and a range of people- centered approaches to poverty
reduction work gave a boost to the worldwide mushrooming of NGOs. NGOs embodied ‘‘a
philosophy that recognizes the centrality of people in development policies,’’ and that this along
with some other factors gave them ‘‘comparative advantages’’ over government. NGOs have
their distinct advantages over government organisations. The following among them need a

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mention:
 NGOs have the competency of achieving the correct relationship between development
processes and outcomes;
 NGOs have a wider reach to the poor and the target groups.
 NGOs can stir better participation among the people and thereby can create a
participatory development process.
 NGOs can make the bottom- up approach of policy possible.
 NGOs are more flexible and responsive to their works;
 NGOs are able to work with and strengthen local institutions;
 NGOs have the ability to achieve outcomes at less cost.
12.5 Characteristics of NGOs

Fowler (1988) has identified two key distinctive characteristics of NGOs. Firstly, the relationship
of the NGO with intended beneficiaries is based upon principles of voluntarism rather than those
of control which is typical of a government. This means that intended beneficiaries are involved
in program design and management and if this happens, the programs stand a better chance of
success as they are more likely to be relevant and attractive. Secondly, it is argued that NGOs
have a task oriented approach that permits them to achieve appropriate organizational
development, which encourages change and diversity rather than control and uniformity, which
may hamper progress. The followings are some of the characteristics of the NGOs which make it
different from Government organisations.
Voluntary:
NGOs are formed voluntarily by citizens with an element of voluntary participation in the
organization, whether in the form of small numbers of board members or large numbers of
members or time given by volunteers.
Independent:
NGOs are independent within the laws of society, and controlled by those who have formed
them or by elected or appointed boards. The legal status of NGOs is based on freedom of
association—one of the most basic human rights.
Not-for-profit:
NGOs are not for private personal profit or gain. NGOs may, in many countries, engage in

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revenue-generating activities, but must use the revenue solely in pursuit of the organization’s
mission. Like other enterprises, NGOs have employees who are paid for what they do. Boards
are not usually paid for the work they perform, but may be reimbursed for expenses they incur in
the course of performing their board duties.
Not self-serving in aims and related values:
The aims of NGOs are to improve the circumstances and prospects of people and to act on
concerns and issues detrimental to the well-being, circumstances, or prospects of people or
society as a whole.
12.6 Types of NGOs

NGOs can be classified on various criteria and accordingly, different types of NGOs emerge.
On the Basis of Orientation: Basing on orientation NGOs can be
Charitable NGOs: Doing charity for the needy, poor, providing disaster relief .For e.g. Red
Cross
Service NGOs: Making provision of health, family planning or education. For e.g. CARE
Participatory NGOs: Accelerating self-help projects with local people involvement .For e.g.
Habitat for Humanity
Empowering NGOs: Helping poor people develop a clearer understanding of social, political,
and economic factors. For e.g. Amnesty International
On the basis of operation: Basing on the level of operation, NGOs can be-
 Community-based Organizations (CBOs) arise out of people's own initiatives. These
can include sports clubs, women's organizations, and neighbourhood organizations,
religious or educational organizations. There are a large variety of these, some supported
by NGOs, national or international NGOs, or bilateral or international agencies, and
others independent of outside help. Some are devoted to raising the consciousness of the
urban poor or helping them to understand their rights in gaining access to needed services
while others are involved in providing such services.
 Citywide Organizations include organizations such as the Rotary or lion's Club, chambers
of commerce and industry, coalitions of business, ethnic or educational groups and
associations of community organizations. Some exist for other purposes, and become

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 involved in helping the poor as one of many activities, while others are created for the
specific purpose of helping the poor.
 National NGOs include organizations such as the Red Cross, YMCAs/YWCAs,
professional organizations etc. Some of these have state and city branches and assist local
NGOs.
 International NGOs range from secular agencies such as Save the Children organizations,
OXFAM, CARE, Ford and Rockefeller Foundations to religiously motivated groups.
Their activities vary from mainly funding local NGOs, institutions and projects, to
implementing the projects themselves.

On the basis of Acronyms: Basing on acronyms, NGOs can be

INGO
INGO means international non govt. organisation. For example UNO and ILO are INGO.
BINGO
BINGO means business oriented international NGO. CARE, Red Cross and Green peace are the
examples of BINGO.
ENGO
ENGO means environmental NGO. World Nature Organisation.
GONGO
GONGO means govt. operated NGO.
QUANGO
QUANGO means quasi autonomous NGO. National Institute for Clinical Excellence (NICE)
TANGO
TANGO means Technical assistance NGO
CSO
CSO means civil society organisation. Action Aid Types of NGO on the basis of World Bank’s
classification.
1. Operational Operational NGO is that type of NGO which are created for development
projects.
2. Advocacy Advocacy NGO is that type of NGO which are created for awareness
generation projects. Broadly, four basic types NGOs can be noted. They are:

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 Humanitarian aid groups: The primary objective of humanitarian aid is to save lives,
alleviate suffering, and maintain human dignity both in emergency response and
developmental projects. Examples are: Norwegian Refugee Council, American Refugee
Committee, Doctors of the World, Direct Relief International, Mercy Corps International
(MCI), International Medical Corps, CARE Volunteers in Technical Assistance, Save the
Children etc.
Advocacy groups: Such INGOs do not supply aid per se, instead focus on advocacy of
specific issues to draw public, national, international attention with the aim of making a
difference immediately and changing policy Examples: Human Rights Watch, Amnesty
International, International Rescue Committee, Refugees International, Physicians for
Human/Health Rights.
Faith-based groups: These are humanitarian aid groups originally founded on faith
principles but do not use religion as a part of the aid given. Examples are Mercy Corps or
International Rescue Committee, Shelter Now, Habitat International, Cure International,
World Vision, Catholic Relief Services, Church World Service, Norwegian Church Aid.
Missionary aid groups: These NGOs seek to “spread the word” using humanitarian aid to
access to those who need conversion, more or less conditional aid Examples: of such INGOs
are Samaritan’s Purse, Hope Ships.
12.7 Significance of NGOs

The end of the Cold War had brought a ‘power shift’ in which national governments increasingly
found that they now had to share their authority within the globalizing economy, with a growing
number of international organizations and NGOs. Globalization meant that states were gradually
being confronted with the weakening or even undermining of their power and authority, and now
faced the challenge of governing through the management of relationships with NGOs. The
emergence of NGOs as increasingly high-profile players in the new processes of global
governance is itself an outcome of liberal globalization. Increasingly, the existence of NGOs is
proving to be a necessity rather than a luxury in societies throughout the modern world.
Prompted by the inadequacies of the state and the market, citizens across the globe have
developed organizations of civil society – NGOs – to help address a wide variety of social needs.
The rapid growth and expansion of NGOs worldwide attest to their growing critical role in the
development process. At the international level, NGOs are perceived as vehicles for providing
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democratization and economic growth in Third World countries. Within Third World countries,
NGOs are increasingly considered good substitutes for weak states and markets in the promotion
of economic development and the provision of basic services to people. NGOs are seen as a
catalyst for societal change. They realise people’s need at the local or ground level and become
responsive to the needs and problems of their clients. NGOs are sensitive to the needs of the
marginalised population usually the poor, women and children. By targeting and reaching to the
marginalized and disadvantaged groups in society, NGOs are being heralded as "important
vehicles for empowerment, democratization and economic development."
In the era of globalisation stressing on a neo liberal economy where market dominates and state
gradually disappears on the development front, some NGOs are "driven by strong values and
interests, geared toward empowering communities that have been traditionally disempowered."
International donor agencies see NGOs as "having the capacity and commitment to make up for
the shortcomings of the state and market in reducing poverty." NGOs come to the rescue of the
powerless, poverty stricken people. Their greatest potential lies in generating self-help solutions
to problems of poverty and powerlessness in society. NGOs being independent, efficient, less
bureaucratic, grassroots oriented, participatory in character contribute tremendously to
sustainable development in the grassroots. But for NGOs to remain independent of donor or elite
control and achieve their social and economic goals, they have to work diligently toward
capacity building and financial sustainability. In this context, it can be noted that NGOs have
come not only as supplements to state efforts but sometimes they act as substitutes for state
endeavour. Particularly, when state funding is being withdrawn and state is in a receding state,
NGOs are gaining prominence as vehicles of welfare, development progress and change.
NGOs are increasingly playing an important role in the development process of most Third
World countries. The growing importance of NGOs in the development process is attributed to
the fact that they are considered suitable for promoting participatory grassroots development and
self-reliance, especially among marginalized segments of societynamely, the poor, women and
children. In fact, some NGOs seek to organize and involve the marginalized groups in their own
development. And sometimes, they try to link their clients to the powerful segments of society
by providing access to resources that are normally out of reach to the poor. For example, within
development-oriented NGOs, microfinance institutions (MFIs) try to contribute to the economic
improvement of the poor by bringing in new income from outside the community, preventing

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income from leaving the community, providing new self employment opportunities and
stimulating backward and forward linkages to other community enterprises.
Most development-oriented NGOs in the Third World use innovative development strategies and
interventions such as the "minimalist cost effective approach (favored by microfinance
institutions/poverty lending programs), "assisted self-reliance" or "participatory development."
Overall, NGOs appear well suited to adapt the use of such innovative strategies because of their
small-scale of operations, flexibility and great capacity to mobilize resources and to organize
people to solve their own problems. The new development strategies perceive people as active
participants of their own development. These "bottom-up" development strategies stand in sharp
contrast to the "top down" capitalist and state socialist models of development. Both the
capitalist model based on "trickle-down" and the state socialist model of "egalitarian
development" based on central/state planning of economic activity have failed to meet basic
needs of the poor, women and children and have not helped these marginalized groups to solve
their own problems. Both models offer no real choice to the poor about immediate local
problems faced or needs. Both forms of institutionalized "top-down" directed development
discourage popular citizen participation and de-emphasize people-centered development activity.
And finally, both models stress large-scale, capital intensive projects that are susceptible to elite
control, corruption, and inefficiency.
NGOs deliver small miracles every day, miracles that governments and United Nations agencies
fail to deliver. In the developing world, the role of NGOs is often critical. In years of drought or
famine, the non governmental organisations have been pivotal in providing food to those most
marginalised. NGOs often provide essential services in the developing world that in developed
countries governmental agencies or institutions would provide. Normally, NGOs provide
services that are in line with current incumbent governmental policy, acting as a contributor to
economic development, essential services, employment. In a wider approach, NGOs are also the
source and centre of social justice to the marginalised members of society in developing
countries or failed states. NGOs are often left as the only ones that defend or promote the
economic needs and requirements for developing states.
Thus, NGOs have three primary roles in advancing modern societies. First, NGOs provide
opportunity for the self-organization of society. NGOs enable citizens to work together
voluntarily to promote social values and civic goals which are important to them. They promote

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local initiative and problem-solving. Through their work in a broad array of fields –
environment, health, poverty alleviation, culture & the arts, education, etc. – NGOs reflect the
diversity of society itself. They are established and sustained by individuals working collectively
in their communities. By empowering citizens and promoting change at the “grass roots”, NGOs
both represent and advance the pluralism and diversity that are characteristic of vibrant and
successful modern societies.
Second, NGOs preserve a unique and essential space between the forprofit sector and
government. Clearly private enterprise is efficient at producing goods and private wealth.
Government is best when it focuses on providing and managing public goods. The nonprofits,
nongovernmental sector helps fulfil the common good. A vibrant third sector provides a fulcrum
for balancing the state and the free market. This middle ground is an essential arena for
promoting additional checks and balances in society. Only independent organizations can serve
as watchdogs of both government and business. At the same time, NGOs can build creative and
productive partnerships across and among the three sectors – partnerships that draw on the
unique strengths of each to advance the common good.
Finally, NGOs enable experimentation and social change by taking on challenges that that the
public and private sectors simply can’t or won’t. Civil society organizations are able to take risks
that are economically unacceptable to business and politically unacceptable to government. In
modern societies across the globe, countless innovations pioneered by NGOs have subsequently
been adopted as government policy. Numerous models of service delivery that are considered
“best practice” today were devised, tested, and improved over many years of experimentation by
NGOs. In addition, NGO advocacy campaigns induce reluctant governments to adopt policy
reforms and force improvements in business practices.
As modernizing economies increasingly shift to free markets and private enterprise, they often
experience a decline in social cohesion and an increase in economic and social inequity. In these
circumstances the nongovernmental sector has proven to be an essential mitigating force that
helps create a healthier balance between the potential excesses of capitalism and the
inefficiencies and limited resources of the state. This has certainly been the case in my own
country.
The United Nations has recognised the special role that NGOs hold. The Millennium
Development Goals, as well as the United Nations Development Programme have recognised the
work put in by NGOs in developing countries.

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12.8 The Challenges posed by NGOs

The following are the challenges faced by NGOs.

Lack of Funds: NGOs face difficulty in finding sufficient, appropriate and continuous funding
for their work. They have limited resource mobilization skills. They heavily depend on donors
for getting funds. There is a lack of financial, project and organizational sustainability.
Poor Governance: NGOs suffer from poor governance. Many NGOs mismanage their
resources. This defames them and puts an end to their lives.
Absence of Strategic Planning: Few NGOs have strategic plans which would enable them to
have ownership over their mission, values and activities. This leaves them vulnerable to the
whims of donors and makes it difficult to measure their impact over time.
Poor Networking: It is a major challenge. It is the cause of duplication of efforts, conflicting
strategies at community level, a lack of learning from experience and an inability of NGOs to
address local structural causes of poverty, deprivation and under-development. Negative
competition for resources also undermines the reputation of the sector and the effectiveness of
NGO activities at community level. As a result there is a great deal of suspicion among NGOs.
Many NGOs, large and small, intervene at community level without any community mapping
and implement projects without due regard to ongoing community initiatives.
NGO politics: NGOs compete with one another for funds. This not only brings conflict among
them, but they indulge into politics and sometimes take recourse to unethical means to arrange
funds for their sustainability. This impairs their vision, mission and action.
Poor Communications: Many NGOs have little or no access to reliable email and internet
connections. They receive almost no literature on development issues and are generally out of
touch with issues of global, regional and national importance. This keeps them away from
delivering the need based development services.
Limited Capacity: NGOs have limited technical and organizational capacity. Few NGOs
undertake capacity building programmes for them. Weak capacity in fund raising, governance,
technical areas of development, and leadership and management paralyse their functions.
Development Approaches: Many NGOs still focus upon a “welfare” approach rather than
“right’s based” approach. They fail to create awareness for sustainability and ownership of
development interventions by communities. This fails to make the people the real participants
and keep them at the recipient level. This is not encouraged by the donor agencies and creates
problems in NGO funding.

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Relationships with INGOs: Local NGOs fail to compete with the INGOs. INGOs often
intervene without any concern for the building of sustainable local communities. They pay
government and community members to participate in their projects while local NGOs have no
facility for doing so. INGOs pay high salaries and attract personnel which keep the local NGOs
at loss.
Political Interference: NGO leaders encounter the interference of local politicians and civic
leaders as a major hindrance to their work. Where NGOs are involved in sensitive issues, such as
land disputes, local leaders can threaten NGOs with de-registration. This political interference
mars their autonomy in functioning.
Regional NGO Networks: Regional and thematic networks are often absent for NGOs. For this
the NGOs fail to share research, approaches, resources, capacity to work. They stick to their
traditional vision, mission and action which do not prove to be delivering for development.
New NGO Act: The NGO Bill and Acts, provides both opportunities and threats to the NGO
community. Restriction on NGO operations, accountability fixing makes them operate under
stringent controls. On the one had their area of operation is expanded, on the other hand the
financial liberty is withdrawn which puts a restriction on the mode of their functioning.
Selected INGOs provide potential partnerships: Progressive INGOs look for partner with
local institutions and have the ability to provide financial, technical and institution building
support. Some also support thematic and issue-based advocacy initiatives that enhance local
networking and address the structural causes of poverty, inequity and injustice. Many NGOs are
devoid of these specialities needed. This creates identity crisis for them and sustainability
problems.
Thus, with the wake of the 21st century, when globalisation is in full sway, NGOs hold a great
promise to provide self-help solutions to problems of poverty and powerlessness in many Third
World societies. They are increasingly making up for the shortcomings of the state and market in
reducing poverty in Third World countries. Furthermore, their future role in development is
expected to increase precisely because of favourable international donor support. Their growing
role and expected contribution to Third World development, NGOs are considered to be panacea
and the "magic bullet" for solving the problems of development. Development landscape of the
globalised world cannot become visible without the substantive role of the NGOs.

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12.9 Summary

As modernizing economies increasingly shift to free markets and private enterprise, they often
experience a decline in social cohesion and an increase in economic and social inequity. In these
circumstances the nongovernmental sector has proven to be an essential mitigating force that
helps create a healthier balance between the potential excesses of capitalism and the
inefficiencies and limited resources of the state. This has certainly been the case in my own
country. The United Nations has recognised the special role that NGOs hold. The Millennium
Development Goals, as well as the United Nations Development Programme have recognised the
work put in by NGOs in developing countries.
12.10 Self Assessment Questions
1. Discuss the structure of NGOs.
2. Discuss the importance of NGOs.
3. Describe the challenges faced by NGOs.
12.11 Key Words

NGOs- is a non-profit organization works in different sectors of society.

INGO- it is the International Non-Government Organisation.
12.12 Study Guide
1. World Bank Group (2011) A Guide to the World Bank.
2. Kapur, Deves, Lewis, John P., Webb, Richard (1997) The World Bank Its First Half
Century, Brookings Institution Press.
3. Peet, Richard (2009) Unholy Trinity: The IMF, World Bank and WTO, ZED books.
4. Vreeland, James Raymond (2003) The IMF and Economic Development, Cambridge
University Press.
5. International Monetary Fund https://www.imf.org/
6. Bryan, Mercurio (2009) Reflections on the World Trade Organization and the Prospects
for Its Future in Melbourne Journal of International Law.
7. VanGrasstek, Craig (2013) the History and Future of The World Trade Organisation
WTO Publications.
8. Pitelis, Christos; Roger Sugden (2000). The Nature of the Transnational Firm. Routledge.
9. Crotty, Epstein and Kelly (1998). Multinational Corps in Neo-liberal Regime. Cambridge
University Press.

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 BLOCK-04 IMPACTS OF GLOBALISATION

Unit-13 Impacts of Globalization on Culture

Unit-14 The Ethos of Globalisation (Individualism, Freedom and Consumerism)
Unit-15 Impacts of Globalization on Women
Unit-16 Impacts of Globalization on Poor

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 UNIT-13 IMPACTS OF GLOBALIZATION ON CULTURE

Structure
13.1 Learning Objectives
13.2 Introduction/ Assessment of Prior Knowledge
13.3 Discourses relating to The Impact of Globalisation on Culture
13.4 The Three H syndrome
13.5 The Particular Impacts of Globalisation on Culture
13.6 Summary
13.7 Self Assessment Questions
13.8 Key Words
13.9 Study Guide

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13.1 Learning Objectives

After going through this unit you will be able-

1. To discuss the impact of globalization.
2. To understand the Three H syndrome.
13.2 Introduction/ Assessment of Prior Knowledge

Globalization has put its footprints on every sphere of life. Globalization is the resultant of the
interchange of worldly views, opinions and the various aspects of the culture everywhere around
the world. The interchange of world views, information and ideas has resulted in a major
transformation of the lifestyle and living standard of people globally. Culture is no bar to this
transformation process. The deep rooted traditions and customs have loosened up their hold with
the emergence of globalization. Integration has changed the cultural identity of many
communities by introducing modernity. It has created an international platform for maintaining
evenness in the living mode of the people all over the world. Globalization was initiated with the
masses travelling to other geographic areas for exploration. This brought inter exchange of ideas
and cultures. Cultural practices of the exploring community and the explored community were
equally changed by such meeting and exchange. This took an added momentum in the period
following globalisation. In the era of globalisation, the various means of telecommunication,
social media, and most importantly the internet have played a big role in the intermingling of
cultures culminating in transplantations, transitions and ultimate transformations of culture.
13.3 Discourses relating to The Impact of Globalisation on Culture

Two powerful scenarios dominates the public discourse about the cultural consequences of
globalization. The one very common scenario represents globalization as cultural
homogenization (for example Benjamin Barbers McWorld). In this scenario the culturally
distinct societies of the world are being overrun by globally available goods, media, ideas and
institutions. In a world where people from Vienna to Sidney eat Big Macs, wear Benetton
clothes, watch MTV or CNN, talk about human rights and work on their IBM computers culture
tend to become alike and the distinct identities tend to get eroded. This endangers local cultures.
As these commodities and ideas are mostly of western origin, globalization is perceived as
westernization in disguise. The other scenario is that of cultural fragmentation and intercultural

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conflict (encapsulated in Huntingtons Clash of civilizations and most recently "confirmed" by
the ethnocides in Jugoslavia). Here the contrast occurs. The local cultures fail to encounter the
tides of global culture. Resistance and revolts take place to save the local culture and creates the
ugly scenario of cultural clash.
13.4 The Three H syndrome

There are three viewpoints on the impact of globalization of Western culture: (a) it is having a
homogenizing effect, (b) it is leading to the development of new hybrid cultural forms, and (c) it
results in both homogeneity and hybridization. This is popularly known as the three H syndrome
relating to cultural globalisation. Globalisation results in cultural harmonisation. The
compression of time and space, development of technologies, mass migration resulting from
globalisation poses a threat to cultural diversity. They bring the cultures of different communities
hither to segregated and isolated in proximity to each other. As cultures are ever evolving;
changing and developing, they are open enough to receive the influence of the alien cultures
when they come across each other. The close interaction of groups has its utmost influence on
each other’s culture. This results in cultural harmonisation or what is termed as cultural
integration.
Cultural harmonisation results in cultural hybridisation and homogenisation. Contact with a
culture valued better and higher gives birth to cultural hybridisation. Cultural hybridisation and
homogenisation are the terms that describe negative cultural change through loss of diversity.
Homogenisation is a clear consequence of globalisation. It describes the tendency of cultures to
tend towards a uniformed way of life by adopting sameness. It reduces culture divides.
According to Richard Barnett and John Cavanagh, "the impact of this homogenisation on the rich
cultural diversity of communities all around the world is immense". Homogenisation reduces
diversity in general. The differences in culture are over shadowed by cultural uniformity. When
the dominant culture prevails over the non dominant weak culture, the scenario gives birth to
what is called cultural hegemonisation. In the era of globalisation, the culture of the west is
gripping the cultures of the entire world. This process of westernisation which is occurring in the
world today is hegemonisation. The cultural trend is towards homogenising with Western
culture. The western, capitalist way of life imposes itself upon cultures the world over. The
supporters of the cultural homogenization thesis maintain that the spread of globalization through
global media, information systems and multinational dispensations has led to the erosion of local
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cultures and traditions. According to Beck, “In the villages of Lower Bavaria, just as in Calcutta,
Singapore or the ‘favelas’ of Rio de Janeiro, people watch Dallas on TV, wear blue jeans and
smoke Marlboro.” Since the images of American popular culture are everywhere, it may not be
wrong to claim that ultimately all cultural differences will vanish and some sort of cultural
sameness, promoted by immensely powerful, transnational media establishments, will get
superimposed.
Cultural homogenisation is noted through westernisation. Westernisation is a danger to cultural
diversity. Professor Ali Mazrui of Binghampton University uses the term "hegemonisation" to
describe the same phenomenon; the meaning is the same, as it is the Western world that has
become the powerful influence: By the twenty-first century people dress more alike all over the
world than they did at the end of the nineteenth century. This will lead to cultural
homogenization. But the dress code which is getting globalized is overwhelmingly the western
dress code giving birth to the process of hegemonization.
Fukuyama rejects the view that globalization is leading to cultural homogeneity. There may be
homogenization of certain aspects of the economy and the society, but, at the same time, there
will be an affirmation of distinctive cultural identities. If the process of cultural homogenization
takes place, it will be too slow to discern. “Many people think that because we have advanced
communications technology, and are able to project global television culture worldwide, this will
lead to homogenization on a deeper cultural level. I think that, in a way, it’s done just the
opposite. “For example, there is probably less mutual liking, more distrust and greater emphasis
on the difference between the cultures of the United States and Asia today than there was 40
years ago. In the 1950s and ’60s, Asia looked up to the United States as a model of
modernization. Now, Asians look at American urban decay and the decline of the family and
they feel that America is not a very attractive model. Communications technology has allowed
both Asians and Americans to see each other more clearly, and it turns out they have very
different value systems.”
13.5 The Particular Impacts of Globalisation on Culture

David Held and Anthony McGrew’s definition of globalization denotes “the expanding scale,
growing magnitude, speeding up and deepening impact of transcontinental flows and patterns on
social interactions”. It clearly testifies the depth, dimensions and speed of the process of
globalisation. Arjun Appadurai argued that globalization has produced complex interactions
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between different cultures. He discusses about five ‘scapes’ resulting out of globalisation which
influence culture and argued that these factors ensure cultural diversity and not cultural
homogeneity or domination. The fives scapes are about the types of movements in the form of
ethnoscapes, mediascapes, technoscapes, financescapes and ideoscapes. Ethnoscape refer to
flows of people such as tourists and immigrants. Technoscape include technology that crosses
boundaries. Financescapes refer to flows of currency markets. Mediascapes refer to mass media
technology and images reaching different countries and culture. Ideoscapes also refer to images
but specifically to the political and ideological aspects changing due to the impact of
globalisation. These are the five important dimensions of culture of a society including material
and non material culture.
Appadurai argues that the act of consumption style and content is an important part of the culture
of a society. Today consumption pattern represents a convergence of global cultural processes.
To him, globalisation has introduced the world with a consumer revolution. The late industrial
society has joined this consumer revolution to maximise its profit. Today almost all kinds of
goods and services are available in any part of the world with respect to literature, cinema,
music, food, clothing, accessories etc. Western culture has diffused to all parts of the world to a
considerable degree. Anyhow the cultural transmission is not a one way process. The popularity
of Islam and cuisines of Asian, Latin American and African in western countries is an example
of two way process. Today the global culture is brought to the local level and the local culture is
carried to the global level. Glocalisation is the common outcome of the process of globalisation.
Cultural dimensions of globalisation results in clash of civilizations arising out of cultural
struggle. The political scientist Samuel P Huntingtonin his book ‘The Clash of Civilizations and
Remaking of the World Order’ suggests that soon the world is going to witness a cultural
struggle. According to him, the fundamental conflict in the world will not be ideological or
political. But the great divisions among humankind will be cultural. He also argued that nation
states will remain the most powerful actors in world affairs. The principal conflicts of global
politics will occur not between nations and groups, but between different civilizations. The clash
of civilizations will dominate global politics. This is again a corollary from the cultural impact
and hegemonisation of certain cultures pushing the weaker culture to its doom.
Cultural globalization is closely associated with the role of media and communication. Media
and communication are the vehicles of cultural dissemination. Globalization and communication

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are deeply tangled. There is a common agreement among the scholars that practically, there
would be no globalization without media and communication. Media have a central place in
globalization for the following reasons.
 Media corporations have increasingly globalized their operations.
 Global communication infrastructure facilitates global information flows.

Global media play a key role in providing a view of events occurring across the world and in
developing shared system of meaning among the people of the planet. The breaking up of space
and time as a result of electronic media has heightened the global interaction regardless of the
disparities. The contemporary method of communication was altered by the new phenomena
such as participatory journalism, online communities and transnational activism organized
through online networks. Globalization has resulted in a rapid growth of social relations and
social organizations on the internet. The emergence of new communication through online has
been influencing the minds and brains of people through social networks, movies, blogs, online
open debate forum etc. Thus mass media plays a larger role in cultural diversity than in cultural
standardization. This is no doubt an important dimension of cultural globalisation. The
emergence of an Americanized World is the outcome of the growth of globalization. A
converging consumer behaviour and tastes with the American model is not only a blueprint for
global culture, but also a major impact of globalization on culture. The emergence of English as
the dominant language in business and academic works is another example of how culture gets
drifted towards the homogenising influence of globalisation.
Ulf Hannerz used the term ‘creolization’ to symbolize the process of western cultures being
transformed and reconceptualised outside the Western world. There are positive aspects for
cultural globalization. It fosters diversity. When there is an interaction between boundaries,
mixing of culture takes place. This results in pluralisation. There is condensation and
differentiation on ideas which brought many unique aspects of certain culture into lime light. The
concept of glocalization has gained popularity which would help in improving standards of life,
without hampering the local tradition. Diversity itself has become a global value now. It is
promoted by international organizations and movements. Thus, Globalization has got huge
impacts on cultural sphere. There is no question on the forms of ubiquitous, homogenous and
hegemonic forms that spread through everyday life. However, there are also important forms of
reproduction, interconnection and time-space aspect of these cultures and associated cultural
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practices. Arnett suggests in his article “The psychology of globalization”, people have to face
the challenge of adapting not only to their local culture but also to the global society. He argued
that, as a consequence of globalization, most people in the world, and adolescents in particular,
now develop a bicultural identity: one rooted in their local culture, and another part is attributed
to the global situation.
Globalization is thus an ongoing syndrome. Globalization is not only about interplays between
local, regional, national and global scales, but also about the interconnectedness, flows and
uneven development in the world. The strategic keys that accelerated the growth of globalization
were transnational corporations, technical change, governments etc. Globalization has brought
not only advantages to the globe by providing large range of imported products or by raising the
basic standard of living of people, but also has major impacts on the socio-politicaleconomic and
cultural realms of life by diminishing the role of state, challenging the unique culture of every
society, attacking the social structures, diversity in the global society etc. Thus the cultural
impacts of globalisation have both risks and opportunities.
During the on-going globalization two processes are seen at work. They are migration and
cosmopolitanism. There is a big rush of both skilled and unskilled people from less developed
countries to more developed ones in search of employment opportunities. On the other hand, the
cosmopolitans trot the globe in search of more profitable conditions and opportunities for
locating their production facilities and marketing their wares. Both are homeless. “The migrant
cannot go home, whereas the cosmopolitan has no home to go.” Globalisation thus gives birth to
multiculturalism and cosmopolitanism.
The impact of globalization on the culture is immense and diverse. It has affected the cultural
aspect of people in different ways. For instance, the loud echoing advertisement rhythms of the
famous Coca-Cola drinks can be heard across the boundaries in towns, cities and even in remote
rural areas. With globalisation, people have changed their living ways. Since globalization
involves the opening up, the economies and knowledge moves freely and widely to every corner
of the globe. A common set of culture is on rise. Language is considered to be endangered under
globalisation. When some local languages are no longer spoken by children, they are left to
extinct. Half of the world languages are struggling to survive. Particularly, local languages are in
a state of erosion. The importance of English as global language has been rapidly increasing, as it
has become the most important medium of telecommunication. All over the world, people will

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have to learn English to use computer software. It is not British but American English that is in
the ascendancy. Many computers have only American English software and it is the main
transnational language used in various fields of scientific, cultural, economic and business
activities.
Globalization has made English language a predator language. English language is a “killer”
language. It has become certainly the most successful lingua franca throughout the world. Today,
the world is moving towards the extinction of a rich and varied cultural and symbolic life and
emerging in the global language. Preference for western hair style, shoes and dressing are on
rise. Young people of the Third World countries are the largest consumers of global culture.
With MTV, Eurostar global entertainment is signalling absolute dominance of the music of
western culture.
Television has become the agent of the new global corporate vision. All over the world, people
of all ages are exposed to the same music, the same sporting events, the same news, soap-opera
and the same glamorous life style. `It is observed that the culture of U.S. is available everywhere
satellite T.V. has made T.V. programmes to be available for 24 hours. Most of the T.V. screens
are dominated by U.S. films, music and life style. The struggle now is for survival. Globalisation
has created a culture of poverty. This has contributed towards cultural degeneration. Culturally
tabooed activities like robbery, violence and female prostitution are on rise. Extreme
monetisation, consumerism are the outcomes of globalisation. Globalization has made the
working class run into the habit of borrowing their salaries even before they receive them.
Bribery and corruption are encouraged so as to make ends meet.
Global culture promotes competition, but not cooperation. Most of the traditional cultures taught
the value of cooperation which is fast getting converted to fossil. Cultural imperialism emanates
from the cultural impacts of globalisation. Weckert and Adeney have defined it as “the use of
political and economic power to exalt and spread the values and habits of a foreign culture at the
expense of native culture” Herbert I. Schiller thinks cultural imperialism arises in the world
economic system, with the terms and nature of production settled at one location and nurtured
elsewhere. “Cultural imperialism is used to (1) increase demand for foreign goods; (2) depress
growth within local industry; and, (3) foster a consumerist mentality where the need to save is
overcome by the desire to emulate the foreign rich. Once such a desire is instilled in this market,
corporations (4) widen and consolidate their market by investing in merchandising facilities and

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sales promotion. Their goal of establishing of preference for their goods in the local economy
means that they are involved in the international transmission of values.”
The new global culture signifies deterritorialisation and the emergence of a borderless world.
Globalization has greatly increased the means through which nationals of one country actively
take part in another country’s cultural life. With increasing mobility, the consumption habits
have undergone a process of change. There is no unanimity on the emergence of a homogeneous
global culture; only of the fusion of global and local cultures as the main outcome of
globalization. John Tomlinson has approached the relationship between globalization and culture
from a different angle. To him, the relationship between the two is not unilinear. Both of them
influence each other. According to him, “Globalization lies at the heart of modern culture;
culture practices lie at the heart of globalization. This is the reciprocal relationship.” We must
remember that globalization alone does not determine the shape and character of culture nor is
culture the only influence on globalization.
13.6 Summary

The impact of globalization on the culture is immense and diverse. It has affected the cultural
aspect of people in different ways. For instance, the loud echoing advertisement rhythms of the
famous Coca-Cola drinks can be heard across the boundaries in towns, cities and even in remote
rural areas. With globalisation, people have changed their living ways. Since globalization
involves the opening up, the economies and knowledge moves freely and widely to every corner
of the globe. A common set of culture is on rise. Language is considered to be endangered under
globalisation. When some local languages are no longer spoken by children, they are left to
extinct.
13.7 Self Assessment Questions
1. What is the impact of globalization?
2. Discuss how globalization affects indigenous culture.
13.8 Key Words

Homogenisation- It describes the tendency of cultures to tend towards a uniformed way of life
by adopting sameness.

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13.9 Study Guide
1. Yusuf, Abdulraheem Impact of Globalization on Culture,
www.musero.org.ng/publications
2. Jean T. (2002). The hidden dimension of globalization: What is at stake geo culturally?
Global Policy Forum, New York.
3. Tomlinson, John (1999) Globalization and Culture. Chicago University Press.
4. Hopper, Paul (2007). Understanding Cultural Globalization. Polity.
5. Bardhan, Pranab The Impact of Globalization on the Poor http://eml.berkeley.edu/
6. Harrison, Annedt. (2007) Globalization and Poverty: An Introduction, Chicago
University Press.
7. Chhibber, Bharti (2009) Globalisation and its Impact on Women: A Critical Assessment,
Mainstream, Vol XLVII No 21.
8. Bhattacharya, Malini (2005) Women and Globalisation, The Hindu.

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 UNIT-14 THE ETHOS OF GLOBALISATION (INDIVIDUALISM, FREEDOM AND
CONSUMERISM)

Structure
14.1 Learning Objectives
14.2 Introduction/ Assessment of Prior Knowledge
14.3 Increasing Individualism
14.4 Growing Sense of Freedom
14.5 Rising Consumerism
14.6 Summary
14.7 Self Assessment Questions
14.8 Key Words
14.9 Study Guide

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14.1 Learning Objectives

After going through this unit you will be able-

1. To understand individualism.
2. To describe sense of freedom in the era of globalization.
14.2 Introduction/ Assessment of Prior Knowledge

Globalisation as a social process has altered the environment of the societies and communities
across cultures and countries. Particularly, the cultural impacts of globalisation has created new
ethos. Increasing individualism, growing sense of freedom and rising consumerism signalise the
new ethos generated by the cultural transformation initiated by globalisation.
14.3 Increasing Individualism

Increasing individualism is a facet of the ethos created by cultural globalisation. Individualism is

a social value. It is a sense of feeling as well as a practice. When the cultural values change due
to globalisation, the sense of individualism rises and dominates. It is opposed to the concept of
collectivism which the sociologists like Durkheim describe as the foundation of a society. There
are sizable cross-cultural differences between personal and interpersonal social values such as
individualism/collectivism among the people. Independence brings a sense of individualism
while interdependence brings a sense of collectivism. With the wake of cultural globalisation
collectivism is giving way to individualism. Theories and evidence have repeatedly suggested
that individualism or independence is more frequently observed in European American cultural
contexts whereas collectivism or interdependence is more frequently observed in East Asian
cultural contexts. However, globalization is a powerful and unstoppable force in recent decades.
It is a process by which cultures influence one another. Due to the cultural influence of this
process cross-national or cross-cultural distinctions are getting smaller. Globalization enables
greater mobility of people, objects, money, and information across countries. Especially since the
1980s, international trade by transnational companies and enterprises has been expanding, and
the ongoing developments in improved transportation and information technologies have created
a globalized world.
Globalization is not only making societies more international, but also more Westernized or
European-Americanized. Indeed, globalization is sometimes called Americanization or

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Westernization as people perceive globalization to be related to the Western cultural values. This
means that European American culture is one of the most potent cultures in the world that has a
strong influence on other cultures. There have been many cultural changes due to globalisation,
especially in East Asian cultures, that have been affected by the spread of westernized cultural
values, ideas, practices, and systems. The spread of individualism is a visible emblem of this
process of change.
According to Triandis individualism is “a social pattern that consists of loosely linked
individuals who view themselves as independent of collectives”. It is one of the most influential
“global values”. Importantly, individualism has long been fostered by the European American
cultural contexts. For instance, Weber noted individualism ingrained in the Protestant ethics. The
decreased control of the social norms and collective spirit give rise to individualism.
Individualism has its positive influences on individuals as well as on the society. Individualistic
systems enable individuals to act autonomously and choose freely, with high social mobility such
as being able to choose desirable persons to interact with, which tends to increase happiness.
Furthermore, people in individualistic cultures can have strong sense of self-efficacy. They feel
themselves not only self reliant, but empowered too.
However, such individualistic systems or environments can also have potentially negative
effects. In particular, individualistic systems urge people to pursue personal achievement, which
creates competition between individuals. These systems can also result in high social mobility,
self dependence which sometimes leads to high social anxiety. In addition, the focused attention
on personal achievements can bear a significant cost on interpersonal relationships. Globalisation
of culture is rooting this individualism in the culture heavily affecting collectivism. Sociologists
sometimes visualise that this has the propensity for economic progress on the one hand and on
the other for social destruction. Man becomes self cantered and the altruistic feeling soon
declines which leads the society to decline. This weakens social relationship which Mc Iver
describes as the binding character of a society. Due to rising individualism, individual choice
ascends over collective interest. This leads to the collapse of the social bonding. Individualism
becomes detrimental for social solidarity and integration. The control of the society over the
individuals starts losing its force.
Individualism gives birth to a new identity. In many situations, globalization and modernity
means the collapse of a sense of belongingness to a certain community. The loss of the secure

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feeling of belongingness leads to a fear from which is born the new identity. The emphasis on
individualism, on self-development and self-choice in the globalized society has resulted in a
transformation of individual identity. It makes it more difficult for individuals to consolidate and
construct their identity and to find their place in society. Unlike traditional societies where
identity formation was given, now the identity is a process which depends mostly on the
individual only. To cite some glaring cases a reference can be made to the Japanese culture.
Through globalization, Japanese society has been influenced by European American cultures.
This is especially true for the aspects of Japanese society that are adopting the individualistic
systems imported from European American cultures. For example, the number of companies
introducing pay-per-performance systems in Japan has increased. Moreover, it has been argued
that education that fosters children’s autonomy has recently been emphasized in schools. With
the increase of individualistic environments in Japan, people have also become more
individualistic in certain respects. For instance, the average family size has decreased, the
divorce rate has increased, and independence in child socialization has been increasingly
prioritized. This affects the traditional social processes like accommodation, cooperation, social
institutions like marriage, family, education, religion, social values of cooperation, tolerance,
sympathy, empathy etc.
All over the world, due to the cultural influence of globalisation, this rising individualism is
distancing people from interdependent relationships. Interpersonal relations are an important
source of happiness in many pre globalised societies. Selfishness is growing with the rise of
individualism and feeling of isolation and loneliness is on rise. Families are shedding their care
giving roles and so also the men and women. Social interaction is declining in depth and
dimensions. Alienation is a growing societal syndrome. Thus becoming more individualistic
decreases happiness in the traditional cultural set ups. Thus growing individualism has a negative
effect in many East Asian cultural contexts like Japan, China and South Korea. A number of
studies on culture have established that East Asian countries have traditionally interdependent or
collectivistic cultural norms. Individualism creates a new cultural environment for the people.
This affects their psychological tendencies and values. This reduces what Parson calls as value
consensus or shared values. In this context, it becomes worth mentioning here that due to
individualism when self efficacy of the individuals grow, religious ideas lose their control over
humanity. Therefore, it remains difficult for the non western cultures to buffer the negative

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effects of individualism on environment.
Individualism no doubt has its positive consequences. It makes individuals self reliant,
enterprising and risk taking. It makes them innovative and progressive. But because it is alien to
the non western cultures, sometimes it creates mal adaptation. The symbiosis between man and
his environment is lost. This leads to social deviations. So, many countries and cultures have
started fighting against this cultural impact in the form of growing individualism in the age of
globalisation. To them, development should be less market centric, but more human oriented.
For this, they have started valuing interpersonal relationship, collective sentiments and
institutions like families, neighbourhood, communities, schools and religious organisations are
tuned and strengthened to develop the collective feelings to subside the rising effects of
individualism. Human happiness is made the national targets to provide a better quality of life to
the people through self fulfilment and close social integration. Globalisation is a necessary evil
today. The cultural impacts cannot be avoided. But alternatives are to be discovered to balance
rising individualism with a high degree of interconnectedness and altruism to reduce the ill
impacts.
14.4 Growing Sense of Freedom

Globalisation creates a new cultural environment where individual freedom is not only protected,
but is being promoted. Globalisation improves the markets and opens it for competition from
different competitors. This expands the range of choice, improves product quality, and reduces
the prices. It delivers an immediate gain to workers by raising the real value of their wages. It
transfers wealth from formerly protected producers to newly liberated consumers. Domestic
producers gain access to a wider range and better quality of intermediate inputs at lower prices.
On the export side, domestic industries can enjoy a quantum leap in economies of scale by
serving global markets rather than only a confined and underdeveloped domestic market.
Corporations restrict consumers’ choices and freedoms. As people become acclimatized to
television, they are gripped by media-produced images and symbols and they start hankering
after brand names. Consumerism establishes a hold over them and they do not bother to verify
the properties of goods demanded. They do not care to see whether the goods they are going to
buy really satisfy a genuine need. People tend to believe that their being is shaped by what they
consume. An important feature of present-day globalization is the advent of consumer credit
society. Till the arrival of credit cards, the cash at his disposal or his ability to raise loans limited
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a person’s consumption.
14.5 Rising Consumerism

The ongoing globalization aims at bringing in cultural uniformity throughout the world without
leaving any scope for diversities. It wants to impose American culture and way of life
everywhere. The American culture which is out and out consumerist is fast spreading to the other
nations and there is the scenario of rising consumerism as an aftermath effect of globalisation.
Globalisation promotes a capitalist culture. Capitalism thrives under extreme commercialisation.
Under capitalism, the aim is to sell as much as possible to maximize profit. Availability and
quality of products increase the consumer’s choice. In order to do this, advertisement becomes
necessary not in order to disseminate knowledge about the produce but to create a demand by
underlying the fact that its consumption will enhance the status of the consumer in the eyes of
the society. An attempt is made to create product differentiation, in many cases, imaginary.
Fashion shows, selection of beauty queens, employment of well-known models, sportsmen,
actors and actresses etc. are the ways to attract potential consumers. With the increasing reach of
newspapers, films, radios and cable television, the power of advertisement to lure the potential
consumers has increased manifold. The easy availability of loans, attractive hire-purchase
schemes, and credit card facilities enable people to translate their desires into demand.
Under consumer culture, consumption is regarded as the principal form of self-expression and
the major source of demonstrating one’s identity. When consumerism dominates as the
expression of a culture, both material and non-material items, including kinship, affection, art,
and intellect become commodified. Everything is measured in terms of exchange value. Minute
differences between products or minute improvements in them can determine variations in
demand. Under the influence of globalisation ‘brand names’ determine the consumption and the
class differentiation is made on the basis of the pattern of consumption. In simple language,
‘taste’, ‘fashion’ and ‘lifestyle’ become key sources of social differentiation, displacing class.
There are, broadly speaking, two views about the way consumer culture goes global and is able
to influence and dominate an individual. First, individual identity is linked to culture. Capitalism
transforms people into consumers by altering their self-images, their structure of wants so that
they serve capitalist accumulation. Second, the phenomenon, known as ‘McDonaldization’,
constitutes the other view. This is the process by which the principles of fast food restaurant
chain McDonald’s are fast bringing the entire world into their fold. They include efficiency
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(expressed in the declining gap between placing the order and its execution); calculability
(indicated by the calculation by a consumer of costs in terms of money, time and effort rather
than quality of the product); predictability (standardizing the products so that the trust of the
consumer is won); and control of human beings through the application of material technology.
This results in the growing tendency towards the unification of lifestyles, cultural symbols and
the modes of behaviour.
However, it should be kept in mind that even if consumerism is on rise, the sovereign powers of
the consumers are withdrawn and they are made docile conformists. Standardization in dress,
diet is responsible for this. The fixed menu at Mc Donalds and Pizza huts and the standardised
production and sell at Adidas, Puma often disregard the choices of the consumers and put them
at fixed menus and fixed styles.
In the sphere of consumption, two developments stand out. They are, namely, the mobilization of
fashion in mass (as opposed to elite) markets, which helps to accelerate the pace of consumption
not only in dress, adornment, and decoration but also across a wide spectrum of life-styles and
recreational activities (leisure and sporting habits, pop music styles, video and children’s games,
and the like). And secondly, in the consumption basket of an individual the importance of
services vis-àvis goods continuously increases. These services have a wide variety, ranging from
personal, business, educational, and health services to entertainment. The life span of goods and
services is shortened so that the volume of demand does not fall much below that of production.
The use and throw culture dominates over life time purchase culture.
Under a globalised world, the producer of goods or services tends to master the art and science of
manipulating the tastes, fashions and attitudes of the potential consumers of his wares. An
important feature of present-day globalization is the advent of consumer credit society. Till the
arrival of credit cards, the cash at his disposal or his ability to raise loans limited a person’s
consumption. Credit cards have played a very vital role in tremendously extending this limit. A
person can now buy goods and services even if he does not have cash at his disposal or the
prospect of immediately securing a loan. Credit cards have given a tremendous boost to
consumerism and pushed households into debt.
The new era of globalsation is variously referred to as ‘information society’, ‘consumer society’,
‘post-modernity’, ‘post-modernism’, ‘postindustrial society’, ‘post-capitalism’, and so on. All
these types of societies are dominated by American culture, namely, music, film, fashion, food,

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and life styles have been establishing their sway all over the globe and are responsible for
germinating rigorous consumerism. They have been promoted with the help of high voltage
advertisements. Now goods are not produced to cater to needs. But, needs are created to sell
goods. This symbolises the high degree of consumerism. Technology and goods and services,
promoted by the present era of globalization, have deep consumerist implications. Beverages like
Coke or Pepsi become a substitute for tea or coffee. Religion has taken recourse to
Consumerism. The vendors of spiritualism in India have conceded its power and sweep by
seeking new followers and keeping the old ones together through television channels.
Consumerism has entered into the agenda of socialization.A number of channels, most prominent
among them Cartoon Network, are devoted to attracting children and grooming them as devoted
consumers of the products regularly advertised every fifteen minutes or so during “short
commercial breaks”. Habits formed early in life are difficult to shed later on.
Tele-marketing or tele-shopping, e marketing is being vigorously promoted. Buyers can place
orders for desired goods, after looking at the relevant details, via telephone or Internet and have
them delivered. This sustains the practice of consumerism. Post globalisation world is a high
consumption world. Consumerism has become a part of individual’s life and an integral part of
world culture today. But, this has aggravated poverty. The poverty is not only material, but
emotional, relational poverty. Commercialization, corporatization, technological innovations
have given a boost to consumerism at the cost of cooperation and collectivism. The world is
getting impoverished spiritually. Consumerism provokes sensual pleasure. People also indulge in
violence, corruption to fulfil their consumerist instinct.
Human tastes and fashions are made conducive to the consumption of the western products. By
this the western countries capture and expand the market for them. Consumerism is an important
feature of ongoing globalization. “Lifestyle choices lie at the heart of consumerism as dreams are
marketed over genuine needs. The potency of Reebok or Nike, Camel or Marlboro, McDonald’s
or Kentucky Fried Chicken, Coca Cola or Sprite, Levi-Strauss Or Wrangler’s advertising
imagery has made it easy to sell these products everywhere on the planet. These products use the
global media that play a central economic role. Today, the products of everyday needs and the
global media are working together to occupy or to colonize new consumers.
14.6 Summary

Post globalisation world is a high consumption world. Consumerism has become a part of
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individual’s life and an integral part of world culture today. But, this has aggravated poverty. The
poverty is not only material, but emotional, relational poverty. Commercialization,
corporatization, technological innovations have given a boost to consumerism at the cost of
cooperation and collectivism. The world is getting impoverished spiritually. Consumerism
provokes sensual pleasure. People also indulge in violence, corruption to fulfil their consumerist
instinct.
14.7 Self Assessment Questions
1. What is individualism?
2. What is the sense of freedom?
14.8 Key Words

Individualism : Individualism is the moral stance, political philosophy, ideology and social
outlook that emphasizes the intrinsic worth of the individual.
14.9 Study Guide
1. Yusuf, Abdulraheem Impact of Globalization on Culture, www.musero.org.ng/publications
2. Jean T. (2002). The hidden dimension of globalization: What is at stake geo culturally?
Global Policy Forum, New York.
3. Tomlinson, John (1999) Globalization and Culture. Chicago University Press.
4. Hopper, Paul (2007). Understanding Cultural Globalization. Polity.
5. Bardhan, Pranab The Impact of Globalization on the Poor http://eml.berkeley.edu/
6. Harrison, Annedt. (2007) Globalization and Poverty: An Introduction, Chicago University
Press.
7. Chhibber, Bharti (2009) Globalisation and its Impact on Women: A Critical Assessment,
Mainstream, Vol XLVII No 21.
8. Bhattacharya, Malini (2005) Women and Globalisation, The Hindu.

178
 UNIT-15 IMPACTS OF GLOBALIZATION ON WOMEN

Structure
15.1 Learning Objectives
15.2 Introduction/ Assessment of Prior Knowledge
15.3 Globalization and Women
15.4 Summary
15.5 Self Assessment Questions
15.6 Key Words
15.7 Study Guide

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15.1 Learning Objectives

After going through this unit you will be able-

1. To discuss the impact of globalization on the life of women.
15.2 Introduction/ Assessment of Prior Knowledge

Globalisation has brought about numerous changes that dramatically affect the lives of women. It
has proved to be a double edged process for the women. On the one hand, it has heightened the
risks and insecurities for women and on the other it has created avenues for greater autonomy
and opportunities for women. Globalisation affects different groups of women in different places
in different ways. Particularly, within the past two decades, globalization has created a
tremendous impact on the lives of women in developing nations. It has created new standards for
the treatment of women, and helps women's groups to mobilize. In situations where women have
been historically repressed or discriminated under a patriarchal division of labour, some features
of globalization have proved to be having liberating consequences.
15.3 Globalization and Women

Globalisation has indeed promoted ideas and norms of equality for women that have brought
about awareness and acted as a catalyst in their struggle for equitable rights and opportunities.
On the other hand it has exacerbated gender inequality in a patriarchal society, especially in the
developing world. In the economic realm it has led to further marginalisation of women in the
informal labour sector or impoverishment through loss of traditional sources of income.
The positive effect of globalization is that it has opened up broader communication lines and
attracted more companies as well as different organizations into the developing countries. This
provides opportunities for not only working men, but also women, who are becoming a larger
part of the workforce. With new jobs for women, there are opportunities for higher pay, which
raises self–confidence and brings about independence. This, in turn, promotes equality between
the sexes. Globalization has the power to uproot the traditional treatment towards women.
Despite the positive effects of globalization through increased employment opportunities for
women, globalization has a darker, more sinister side. It has pushed female into the unorganized
sector. Accordingly, although more women are now seeking paid employment, a vast majority of
them obtain only poorly paid, unskilled jobs in the informal sector, without any job security or

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social security.
Within the past two decades, due to globalization gender differentiation has assumed new
dimensions in the economic arena. Multinational Corporations have realised that the cheap
labour of Asian women is the most lucrative way to enhance profits. Women in developing
countries are a ‘flexible' labour force. The shift from a stable/organised labour force to a flexible
workforce has been a feature of globalisation. Sub-contracting, home-based production, the
family labour system, all have become the emerging norms to get cheap labour force. But, they
prove to be detrimental to the position of women in work. They devalue, undervalue women’s
capacity and reduce their job certainty and security. For the same amount of work women are
underpaid, deferred paid and sometimes unpaid. There is no doubt that the economic
empowerment of women due to globalization. This feminization of work brings about an array of
opportunities and a sense of independence for educated and tech savvy women who are
increasingly taking on more responsibilities in the corporate scenario. However, the glass ceiling
continues to exist for a sizeable majority of women in both the formal and informal sector.
According to Vandana Shivea, and Indian economist and scholar, globalization along with the
support of organizations such as the World Bank and the International Monetary Fund, have
created slave wages. These wages are not necessarily the result of “unjust” societies, but of the
fact that global trade devalues the worth of people’s lives and work. While globalization has
brought jobs to rural, developing areas such as India where there was previously no employment,
these jobs seem to be wolves in sheep’s clothing. The work available to women is almost always
poorly paid, mentally and physically unhealthy, demeaning, or insecure.
The number of girls working in the informal/unorganised sector for precarious wages has also
increased. National and multinational corporations operating in Free Trade Zones, Special
Economic Zones and Export Processing Zones in developing countries employ girls in
production units or hire them on a piece-rate basis for home-based work. Using girl-child
labourers is the cheapest way to increase the profit margin. Globalisation has introduced changes
in agricultural technology. This has led to marginalization of women. Women become the worst
victims of labour displacement due to the lack of training, technological knowledge and skill.
The free entry of foreign corporations, and the lift of import controls on agricultural products
have resulted in further marginalisation of rural and indigenous women. Globalisation has also
increased women’s unpaid work as social services are privatised.

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Women are increasingly facing a consumer culture due to globalisation. This reduces them to
commodities and women are exposed to work exploitation and occupational hazards. As
producers also women have to suffer exploitation in terms of low wages, poor working
environment, instability of employment, and denial of right to representation.
The United Nations Educational Scientific and Cultural Organisation underscores, globalisation
has a mixed impact on women’s rights. On the one hand, due to the withering away of the
welfare state, feminisation of poverty is taking an ugly turn. Gender inequality is on rise due to
the rising gender gap created in work. Globalisation also means that a new international division
of labour has emerged. Economic globalisation, deep economic restructuring across countries
and neo-liberal economic policies have led to informalised and decentralised processes of
production that have transformed labour markets and the world of work in industrialised and
developing countries. In the process, social security and statutory protection to workers have
been dismantled. The women workers have become the worst victim of this. For example in
India the SAP has forced working women into the unorganised sector and deprived them of their
rights. The women fall outside protective labour laws such as the Maternity Benefits Act (1961),
Employees State Insurance Scheme, Factories Act (1948), Equal Remuneration Act (1976),
Bombay Shops and Establishment Act (1984), Plantation Labour Act, and Child Labour
(Prohibition and Regulation) Act, 1976.
Globalisation has resulted in the retreat of the state from social responsibility and it impacts
women’s health and livelihood. Under the neoliberal philosophy, the burden of childcare and
housework falls on the individual woman. The long-standing demand for family work to be
supported by the State is also negated. The women’s double burden continues to exist which puts
heavy impact on women’s health. Studies have shown that the burden of poverty falls more
heavily on women than on men under globalisation. So, feminization of poverty is on rise. The
inequality in income and consumption levels between women and men has widened. Households
are increasingly being supported solely by women's income. In other words, “female-headed
households” (FHH) -- households run by widows, single women, deserted or divorced women
are escalating in number. Children of FHHs suffer more due to nutritional deficiency, inadequate
primary healthcare facilities, and cuts in expenditure for the education sector.
Globalization has created labour demand patterns which is inherently short-term, temporary
employment. As a result, a short-term contracted labour migration appears to be on the rise with

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distinct gender differentiated consequences. Migrant women from developing countries are
increasingly victims of trafficking, for the purpose of sexual exploitation. Due to the lack of
effective international mechanisms that regulate and protect the rights of labour moving across
national borders both legal and illegal migrants are vulnerable to human rights abuses.
Regarding the impact of globalization on democracy and governance, feminist philosophers
argue that neo liberalism has not resulted in increased political influence of women on the whole,
rather at policy level; the impact of globalization on women and gender relations continues to be
neglected nationally and internationally. The dilemmas confronting feminist activists who
participate in the global feminist movement, which where mass-based revolutionary movements
have been largely replaced by Non-Governmental organizations (NGOs) funded by some
countries of the Global North. As a result, the women depending on NGO-led projects run the
danger of pushing the agenda of the NGOs instead of promoting global gender justice.
One of the common hazards faced by the working class in the era of globalization is the
increasing threat to job security, which in turn negatively impacts the health of female workers.
They are often unskilled workers who receive low wages. Availability of work is irregular; and
when work is available, women are compelled to work for long hours. It is not only in the
unorganized sector or in small enterprises, but also in the modern sectors like the Information
Technology and the automobile sectors where working women are forced to work for 12 hours
while the local governments ignore this open flouting of the labour laws. The uncertainties of
obtaining work and the dire need to retain a position in the midst of intense competition, cause
mental tension, strained social relationships, psychological problems and chronic fatigue among
women. The advent of assembly line jobs and the increased use of machinery has resulted in a
degradation of working conditions for women in the period following globalisation. For
example, piece rated work, where assembly line workers are paid per piece produced, contributes
significantly to the level of fatigue felt by the women workers. The wages of piece rated workers
depend on the speed with which they work. When a person’s compensation is tied to increased
physical output, negative health consequences will almost inevitably ensue. While women
working in piece meal industries have seen machines negatively impact their health, women in
other sectors have lost their jobs as a result of technological advances. Unemployment,
underemployment and temporary work are more common among women than among men.
Furthermore, longterm unemployment constitutes a serious risk for the women worker’s

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emotional stability, because it leads to poverty and deteriorates selfimage and self-esteem.
The stereotypical attitude towards women and their perceived role in the familial hierarchy has
not undergone much change in the age of globalisation. Women continue to be perceived as
weak, inferior, second-class citizens. For working women, this discrimination is extended to the
workplace also. The improper and insufficient dietary intake along with the heavy workload
results in nutritional disorders. And the role conflict faced by working women results in
emotional disorders.
Women are suffering two fold. As women in developing countries move into the work force,
their domestic responsibilities are not alleviated. Women work two full time jobs. One in a
factory, where they are paid next to nothing, the second is in the home where they are paid
nothing. According to Merlin A. Taber and Sushma Batra, editors of the book Social Strains of
Globalization in India, development for poor women has meant the migration of men to cities,
higher prices for commodities, poorer job opportunities. “The mixture of corporate capitalism
and Western culture models is dissolving family and community social controls as witnessed by
higher rates of family violence, rape, divorce, and family breakdown.”
In the era of globalization, the number of women working the night shift is increasing with call
centres and export oriented companies located in the Export Processing Zone employing women
in large numbers during the night shift, without providing proper protection or transport facilities
to them. Unfavourable working hours, lack of training and skill upgradation opportunities and
lesser career mobility in the formal sector of economy still prevail in almost every country.
Globalisation has also got its yields in the field of education for women. It has exposed the elitist
women to better education, but privatisation of technical and higher education has debarred the
marginalised women to access higher education. The costs involved in education bring gender
considerations and the girls are deprived of quality education catered by private institutions. The
gender disparities in education, training is in a process of decline for the higher stratum of the
society, but becomes a mirage for the economically impoverished women. Globalisation no
doubt has provided women access to information and knowledge. This is collapsing the
knowledge gender based knowledge divides.
Globalization has opened up broader communication lines and brought more companies as well
as different worldwide organizations into India. This provides opportunities for not only
workingmen, but also women, who are becoming a larger part of the workforce. With new jobs

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for women, there are opportunities for higher pay, which raises selfconfidence and brings about
independence. This, in turn, promotes equality between the sexes. Women in the urban settings
have become more independent and self-sufficient. They are making a move from the care
economy to the service economy. This gives recognition to their positive role in production. Due
to economic self sufficiency women are creating a space for themselves. They are now getting
the advantages of technology which eases their domestic burden and ensures them a life of
comfort. Their quality of life is increasing and they are having a higher standard of living.
Cultural restrictions however are changing, and women are freer to participate in the formal
economy. More and more women find themselves in positions of respect and prestige; more and
more workplaces are now populated with women who work on equal terms as men. Working is
no longer an adjustment, a mere necessity; but a means to self worth and growth.
Globalization has given women a stronger voice. People are more accepting of women’s rights.
Women are more visible and vocal than before. Women’s liberation movements have become
more mass oriented. Women are becoming progressively conscious of their rights and they are
trying to assert this. In the rural sectors, women have been independent and strong-headed. They
have been the primary breadwinners in several cases. Development programmes for women are
designed to take a right based approach. Women’s movements are on rise all throughout the
globe taking up a global character. Women’s consciousness about their rights has become a
global phenomenon. It has led to the growth of women participation, representation and women
leadership from local to the national level political bodies. Voting behaviour among women is
becoming more articulated and matured which becomes conducive for women development.
The women in rural settings have been influenced by globalization through media and through
numerous intervention programs launched by the non-profit organizations These NGOs are
creating awareness and proposing ways of change. The women are increasingly empowered and
stronger than before.
15.4 Summary

Thus, it can be concluded that globalisation has got its mixed effect on women. From certain
perspectives it has given a twist and turn to women’s lives and from some other perspectives it
has brought more vulnerabilities, insecurities to them. The impacts of globalisation on women
are class specific, location specific in character. But, the growing detection of the evil impacts,
conscious efforts on the part of the women, concerted efforts on the part of the Government and
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the civil society organisations can soon enable women to overcome these negative repercussions
and help them to get the best dividends of globalisation.
15.5 Self Assessment Questions
1. Discuss the impact of globalization on women.
2. Describe how women are becoming self-sufficient?
15.6 Key Words

Self-sufficient- Women in their life have become more independent.

15.7 Study Guide
1. Stiglitz, Joseph E. Making Globalisation Work, Penguin,U.K.
2. Stiglitz, Joseph E. Globalization and its Discontents, W.W. Norton & Company
3. Bhagwati, Jagdish, In Defense of Globalisation, Oxford University Press
4. Appadurai, Arjun, Modernity At Large: Cultural Dimensions of Globalization.
Minneapolis: University of Minnesota Press
5. Avasthi, D. M., Fundamentals Of Globalization And Indian Economy, Duke University
Press.

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 UNIT-16 IMPACTS OF GLOBALIZATION ON POOR

Structure
16.1 Learning Objectives
16.2 Introduction/ Assessment of Prior Knowledge
16.3 Defining Poverty
16.4 Debates Relating to Globalisation and Poverty
16.5 Resolving the Controversy between the Optimists and Pessimists
16.6 The Reality
16.7 Summary
16.8 Self Assessment Questions
16.9 Key Words
16.10 Study Guide

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16.1 Learning Objectives

After going through this unit you will be able-

1. To define poverty.
2. To understand the debate relating to globalisation and poverty
16.2 Introduction/ Assessment of Prior Knowledge

Globalization has got development implications across the globe. The ultimate goal of
development is poverty reduction. The violent street demonstrations surrounding the ministerial
meeting of the World Trade Organization (WTO) and similar protests at World Bank and
International Monetary Fund meetings suggest that this debate is still going strong. This is a clear
symbol that with the unprecedented entry of developing and low-income countries into the
global economic integration, the discussion on globalization and poverty has been heightened.
Scholars debate on the issue whether globalization is the cause or cure for poverty.
16.3 Defining Poverty

The World Bank defines poverty as a deprivation in well-being of which many dimensions are
considered. These include low incomes and the inability to acquire basic goods and services
deemed necessary for survival with dignity. Other dimensions include, poor access to clean
water and sanitation, low levels of health and education, inadequate physical security, lack of
voice, and inadequate capacity and opportunity to better one’s life. Poverty is usually measured
as either absolute or relative. The United Nations defines poverty as the inability of getting
choices and opportunities. This is explained in different scenarios as not having enough to feed
and clothe a family, not having access to education and a school to go to, not having access to
medical facilities or a clinic to go to, not having the land to grow food for personal consumption
and/or not having the opportunity to hold a job to earn one’s living. As per the United Nations
poverty is a violation of human rights as the lack of basic capacity to participate effectively in
society results in insecurity, powerlessness and exclusion of individuals, households and
communities into the mainstream of the society.
Thus poverty is a situation of scarcity which brings vulnerability, deprivations and disadvantages
of myriad forms to the individual disallowing him to have a descent standard of living in the
society.

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16.4 Debates Relating to Globalisation and Poverty

There are two extreme views relating to globalisation and poverty. Debates on globalization and
poverty generate extreme views. One view suggests that the process of globalization is a crucial
engine of growth resulting in unprecedented gains in human welfare while the other view
propagates that globalisation intensifies poverty. Particularly, the IMF and World Bank
literatures support the opinion that globalization has boosted incomes and living standards in
many parts of the world. On the other hand, many government, non government and independent
researches indicate that the benefits of globalisation are not equally shared by the world’s poor.
The people who support the view that globalisation has brought positive dividends to the world’s
milieu are called the optimist or pro globalisation group and the group who oppose the role of
globalisation on the ground that it promotes poverty, are called the stewards of the anti
globalisation movement or the pessimists.
Pro-Globalization or Optimist views
Globalization proponents advocate that poverty is on the decline in the period following
globalisation to them, globalisation is an engine of growth and fights against poverty. To them
globalisation is a means to prosperity and ends poverty by providing new opportunities, new life
styles to the people. To them globalization and growth are interrelated. Opening of the borders,
trade liberalization, flow of capital, technology, information and ideas lead to faster integration
and thus growth. This growth has a beneficial effect on world poverty. Practical experiences
show that the more liberalized an economy is, the quicker becomes the rate of progress. Thus,
Dollar and Kraay (2001) concluded that liberalization of economic policies had been responsible
for the vast improvement in the alleviation of world poverty through growth. The World Bank
adopts an identical view holding that globalization, through its effect on growth, has played a
significant catalytic role in global prosperity and in lifting more people out of poverty in the last
century, than in all of human history.
The World Bank’s (2001) figures show that between 1987 and 1998 the share of the population
in developing and transition economies living on less than $1 a day fell from 28 percent to 24
percent. In addition, it is estimated that the number of the people who suffered poverty in the
world were 200 million fewer in 1998 than in 1980 (World Bank, 2002). The millennium
development goals (MDGs) reported that the world reached the poverty reduction target five
years ahead of plan. In developing regions, the percentage of people living on less than $1.25 a
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day fell from 47 per cent in 1990 to 22 per cent in 2010. About 700 million less people lived in
conditions of extreme poverty in 2010 than in 1990 (United Nation Statistic Division, 2014).
Chen and Ravallion (2004, p.1) estimate that there were almost 400 million fewer people living
in poverty in 2001 than 20 years earlier, adding that if the trends over 1981to 2001 continue then
the collective $1 per day poverty rate for 1990 will be almost halved by 2015.
Thus, globalization’s proponents claim China’s and Taiwan’s growth in recent decades as the
result of liberalization of their economies, while globalization’s critics allege that these same
countries have been able to capitalize on the opportunities afforded by globalization because of
broad government involvement both in the past and in the present.Similarly, globalization’s
proponents claim that many of Africa’s economic problems are due to lack of openness as well
as inappropriate government intervention.
On the same grounds, in a conference on humanizing the global economy, Kohler (2002) posits
that the spread of knowledge, better division of labor, increased productivity, and access to
foreign direct investment, as a result of globalization, is a pertinent drive behind growth and has
contributed to unmatched gains in human welfare over the past 50 years.
In a sample of 92 countries spanning the past four decades, Dollar and Kraay (2001) found that
several causes of growth—such as openness to international trade, good rule of law, and
developed financial markets— have little systematic outcome on the share of income that amass
to the lower quintile. Consequently, these aspects benefit the poorest fifth of society as much as
everyone else. There is little weak evidence that stabilization from high inflation and reductions
in the overall size of government not only increase growth but also increase the income share of
the poorest fifth in society.
Collier and Dollar (2002) attempted to address the concerns raised about globalization. In an
extensive examination of issues surrounding globalization, they seek to identify the benefits of
globalization and chart a course ensuring that the benefits of globalization are widely shared.
Collier and Dollar ascertained that globalization helped to reduce poverty, but also postulated
that supporting policies could help better to harness these benefits.
Anti-Globalization (Pessimist)
The pessimist group perceive globalisation as detrimental to the conditions of poverty. To them
poverty heightens because of globalisation. This group is often called the pro poor group or the
anti globalisation group. To this group, the conditions created by globalisation do not lead to

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poverty reduction, but poverty aggravation. The United Nations (2005) stated that though some
parts of the world have experienced unprecedented growth and improvement in living standards
in recent years, poverty remains unshakable and much of the world is trapped in an inequality
situation. This report also focuses on the chasm between the widening gap between skilled and
unskilled workers, the formal and informal economies, the growing disparities in education,
health and opportunities for economic, social as well as political participation.
The United Nations Conference on Trade and Development (UNCTAD, 2006) suggests that the
incidence of poverty did not decline in the 1990s in the least developed countries (LDCs) as a
group and has remained at 50 percent of the total population. If this trend persists, the number of
people living in poverty in the LDCs will increase from 334 million in 2000 to 471 million in
2010. The Human Development Report 2005 (UNDP, 2005) offers a more sombre picture stating
that about 2.5 billion people live on less than $2 a day (40 percent of the world’s population),
10.7 million children each year do not survive to their fifth birthday, while in 2003 the
HIV/AIDS pandemic claimed three million lives and left five million more people infected with
the virus, and the MDG target of universal primary education is not achievable on current trends.
World Health Organization (WHO, 2006, p. 16) estimates that some diseases associated with a
lack of access to safe drinking-water and inadequate sanitation results almost 1.7 million deaths
each year.
Many view globalization sceptically. To these authors, globalization is a process through which
power is concentrated upward and this keeps the process away from the poor. To them under
globalisation, the supremacy of the multinational and transnational farms is established. These
farms not only concentrate power, but run after profit. Profit seeking craze of these production
units aggravate poverty. To determine the impact of globalization on poverty over the period
1980 to 2005, Salvatore and Campano (2012) examined the income distributions of the people
living in developing countries, as one group, and the people living in the developed countries as
another group. They also further subdivided the developing countries into two groups: those that
globalized and those that did not globalize. Their study found that real personal incomes grew
and flourished in both developed and developing countries, but more rapidly in the developing
countries, such as in China and India. But with the high growth rate, there was a rapid rise in
poverty rates. So, they concluded that globalisation brings prosperity for a few, adversity for
many. This adversity is nothing, but poverty. Akoum (2008) from his study also concluded that

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higher economic growth rates are not necessarily translated into lower poverty rates.
The risks and costs brought about by globalisation can be significant for fragile developing
economies and the world’s poor. The downside of globalisation is most vividly epitomised at
times of periodical global financial and economic crises. The costs of the repeated crises
associated with economic and financial globalisation appear to have been borne overwhelmingly
by the developing world, and often disproportionately so by the poor who are the most
vulnerable. On the other hand, benefits from globalisation in booming times are not necessarily
shared widely and equally in the global community. The fear that the poor have been by-passed
or actually hurt by globalisation was highlighted by the finding from a number of studies,
emerging recently, which explicitly examined the extent of, and changes in inequality of the
world income distribution as it evolved during the heyday of the globalisation era.
16.5 Resolving the Controversy between the Optimists and Pessimists

Bergh and Nilsson (2011) used data from more than 100 countries around the world starting
from 1988 through 2007, to examine the relationship between economic and social globalization
and absolute income poverty .They found that there is no evidence that globalization is
associated with higher poverty levels in developing countries. They established that less trade
restrictions and larger information flows are robustly associated with lower poverty levels. They
concluded that under globalization, poverty reduction can be achieved by means of closer
economic integration and higher levels of globalization.
Many of these studies point towards poverty, as measured by the headcount ratio have fallen
world-wide except in Sub Saharan Africa where it continues to rise. Technological innovations
under globalisation have resulted in labour displacement making the poor labour class poorer.
The rise of single headed households has increased the burden of poverty. In the name of profit,
people are exploited and are made more impoverished. Competition from foreign companies has
pushed the local companies into doom for which the livelihood options of many people are
closed, brining abject poverty among them. Cornia (2000) argues, for example, that growing
polarisation among countries has been accompanied by a surge in inequality within most nations,
where growth and poverty alleviation have suffered substantially. Further, under the neoliberal
set ups the state intervention in poverty reduction has been tremendously affected leading to
abject poverty among the poor. Further, the rsing prices limits the affordability capacity of the
people and when their purchasing power becomes limited and the parity is lost, the gap between
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groups widens and poverty scenario is aggravated. These concerns have generated a passionate
debate worldwide as well as a powerful anti-globalisation movement.
But sometimes, the above said arguments are dismissed by the optimists. They argue due to the
globalization the situation of agriculture has improved to some extent in many agrarian
economies which has helped to reduce the poverty problems among the masses. Over the years,
with the advent of more technology, there has been a significant change in the process of
agriculture in these countries. Earlier farmers used traditional farming techniques for growing
crops. As such, they suffered a lot and the output was affected by a number of factors like pest
problems, weather situations and lots more. Due to the globalization and introduction of better
equipments, there has been a stark improvement in the techniques of agriculture. Today, farmers
are using gadgets like rowers, tractors, electric pipelines and lots more for the cultivation of
crops. This has increased the produce in terms of quantity as well as quality. As such, farmers
have started earning more and have improved their per capita income and the standard of living.
There are authors who perceive both the positive and negative impact of globalisation on
poverty. To them, it is the nature of the population, the policies of the government which have
potential power to aggravate or subside the situation of poverty. To quote a study, in
Globalization and Poverty (NBER Working Paper No. 12347), AnnHarrison concludes that the
poor will indeed benefit from globalization if the appropriate complementary policies and
institutions are in place. She observes as developing countries have become increasingly
integrated into the world trading system over the past 20 years, world poverty rates have steadily
fallen. Many of the studies in Globalization and Poverty in fact suggest that globalization has
been associated with rising inequality, and that the poor do not always share in the gains from
trade. To the author, the countries with an abundance of unskilled labour do not always gain
from trade reform. The poor are more likely to share in the gains from globalization when
workers enjoy maximum mobility, especially from contracting economic sectors into expanding
sectors (India and Colombia). Gains likewise arise when poor farmers have access to credit and
technical know-how (Zambia), when poor farmers have such social safety nets as income support
(as it happened in Mexico) and when food aid is well targeted (as it happened in Ethiopia).
The evidence strongly suggests that export growth and incoming foreign investment have
reduced poverty everywhere from Mexico to India to Poland. Yet at the same time currency
crises can cripple the poor. In Indonesia, poverty rates increased by at least 50 percent after the

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1997 currency crisis in that country, and the poor in Mexico took time to recover from the
pummelling of the peso in 1995. Without doubt, Harrison asserts, globalization produces both
winners and losers among the poor. In some countries, poor workers in exporting sectors or in
sectors with foreign investment gained from trade and investment reforms, while poverty rates
increased in previously protected areas that were exposed to import competition. Even within a
country, a trade reform hurts rural agricultural producers and benefit rural or urban consumers of
those farmers' products. Harrison acknowledges the relationship between globalization and
poverty is complex. The impact of globalization on poverty depends not just on trade or financial
globalization but on the interaction of globalization with the rest of the economic environment:
investments in human capital and infrastructure, promotion of credit and technical assistance to
farmers, worthy institutions and governance, and macroeconomic stability, including flexible
exchange rates. Harrison next notes that while many economists predicted that developing
countries with great numbers of unskilled workers would benefit from globalization through
increased demand for their unskilled-intensive goods, this view is too simple and often
inconsistent with the facts. Cross-country studies document that globalization has been
accompanied by increasing inequality within developing countries, suggesting an offset of some
of the reductions in poverty.
Globalization and Poverty yields several implications. First, impediments to exports from
developing countries worsen poverty in those countries. Second, careful targeting is necessary to
address the poor in different countries who are likely to be hurt by globalization. Finally, the
evidence suggests that relying on trade or foreign investment alone is not enough to alleviate
poverty. The poor need education, improved infrastructure, access to credit and the ability to
relocate out of contracting sectors into expanding ones to take advantage of trade reforms and to
change the scenario of poverty.
16.6 The Reality

The impact of globalization on poverty eradication has increasingly become the focus of
attention of governments and international organizations. The economic arguments in favour of
globalization stress the positive relationships between increasing international trade and
investment flows and faster economic growth, higher living standards, accelerated innovation,
diffusion of technological and management skills, and new economic opportunities. Reality has
proven not to be so rosy. First, the benefits of globalization are not equally distributed and tend
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to be concentrated among a relatively small number of countries, particularly the more advanced
ones. The poorest countries such as the least developed countries in Africa have not been able to
sufficiently harvest the benefits of globalization. Second, most efforts have been placed in
facilitating free trade flows, particularly in products which are of importance to the developed
countries, as part of the globalization process. Other dimensions of globalization like labour
market standards, the environment, sustainable development and poverty alleviation have
received much less attention. Third, globalization has also led to an increased vulnerability
among many countries to international economic conditions, as clearly demonstrated by the
Asian financial crisis of 1997- 1998.
Recent estimates by the International Fund for Agricultural Development (IFAD) indicate that 75
percent of the poor work and live in rural areas. Rural poor have restricted access to and control
over assets - land, water, credit, information, technology, health, education and skills - and to
markets. As such their lives have limited links to the macro-economic environment in which
globalization takes place.
Developing countries have been given the main responsibility to harness the potential benefits of
globalization for the rural poor and to counter possible negative effects. They are urged to adopt
appropriate structural and social measures that promote stability essential for economic growth
and poverty alleviation. High-income countries are urged to support these initiatives through
increased aid, debt relief, experience exchanges e.g. on policy making and good governance,
liberalized market access for products of importance to low-income countries, and increased
resources for the fight against communicable diseases. However, many low-income countries
already face tremendous and often contradicting challenges in achieving poverty-alleviation
goals e.g. implementation of education for all programmes with reduced government
expenditure, or ensuring sufficient income-generating and employment prospects for the rural
poor without intervention in agricultural output prices or in investment allocation policies.
16.7 Summary

Globalization seems to be irreversible. It produces both winners and losers among the poor.
Thus, the question that needs to be addressed is how we can better govern this process to make it
more inclusive and fairer than the current conditions. That is, it is not globalization ought to be
abandoned, but rather it is the poor governance of globalization what needs to be challenged. If
managed correctly and fairly for the benefit of all, globalization could be a positive force.
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International community should act together in an effort to make available the resources
necessary to wage a war against poverty and inequality. Naturally, this requires fundamental
adjustment of the global status quo, starting with a true political pledge of the developing and
developed countries to conceive an enhanced global financial and economic landscape.
16.8 Self Assessment Questions
1. What is poverty?
2. How globalization increases poverty cycle among different sections?
3. What anti-globalists’ view?

16.9 Key Words

Poverty- living under the scarcity of basic needs.

16.10 Study Guide

1. Stiglitz, Joseph E. Making Globalisation Work, Penguin,U.K.
2. Stiglitz, Joseph E. Globalization and its Discontents, W.W. Norton & Company
3. Bhagwati, Jagdish, In Defense of Globalisation, Oxford University Press
4. Appadurai, Arjun, Modernity At Large: Cultural Dimensions of Globalization.
Minneapolis: University of Minnesota Press
5. Avasthi, D. M., Fundamentals Of Globalization And Indian Economy, Duke University
Press.

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