The phantasm of globalised africa: discerning the imagery - a south Africa perspective
| Author | Adewale R. Aregbeshola/Patrick N. Palmer |
| Position | Department of Business Management, College of Economics and Management Sciences, University of South Africa |
| Pages | 21-39 |
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Recent controversies over the relevance of globalisation to the world economies at large, and its incessant crucifixion by the antagonists, emanate from the felt and anticipated pains and gains from the conundrum. It should be noted that globalisation is not a new discovery or one of the recent 'magics' of science, rather, it has been catalysed by these supernatural discoveries (ICT and speedy but cheap transport system).
The first wave of the praxis of this concept began in 1870 and lasted till 1914, while the second wave (we are currently experiencing) took its course from the period of the Second World War (Mishkin, 2007). Considering the unprecedented level of recognition given to the concept, its diverse use and understanding, and the diverse microscope that scrutinises its anatomy, it is little surprise that it has transformed into an ideology (Aregbeshola, 2007). In essence, globalisation is seen through divergent lenses, felt by different people in different ways, at different levels of magnitude, and with varying causes and consequences.
Given the above background, the complexity of the term is outstanding, and as such, its definition. While some authors (Friedrichs and Friedrichs, 2002) see the application of the concept from criminology perspective, Mackenzie (2006:2) deluges its confusion and rides into academic folktales by conjuring
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grammatical incantation: "...do we need to argue for the inclusion within criminology, of some forms of currently noncriminal harm to conduct a criminological analysis of the global economy?"
It is no gainsaying that the current debate on globalisation is characterised by an acrimonious dispute between the advocates of moral justice and the protagonists of inequality (Lee and Vivarelli, 2006). While the protagonists of this ideology vulgarly postulate that the rapid increase in trade and the concomitant economic growth has reduced the level and prevalence of poverty, improved quality of life, and life expectancy, not to mention improved democratic nations and societies, its antagonists see it differently.
It has been argued that trade liberalisation have furthered income and wealth inequality between and among nations, have transferred the mantle of national governance to the capitalist, and have exacerbated environmental degradation and labour exploitation (MacEwan, 1990). The process has also been criticised for its tendencies to kill local vulnerable sectors through the aggressive stance of foreign MNCs, thereby furthering the crowd-out argument - which exacerbates unemployment, thereby worsening the prevalence and level of poverty (Henriot, 1998). While the positive effects of globalisation remain 'elusive' to Africa, its negative impacts are prominent on the continent (among the other least developed countries - LDCs).
To fully understand the dynamics of globalisation as a concept and the equivocation that surrounds its relevance, it is essential to establish a yardstick upon which its scope could be measured, thereby establishing a benchmark for its adjudication. In an attempt to do so, some definitions of this hydra-headed concept will be considered.
According to Johnson and Turner (2004:4), quoting the IMF's World Economic Outlook, these authors define globalisation as 'the growing interdependence of countries worldwide through the increasing volume and variety of cross-border transactions in goods and services and of international capital flows, and also through the more rapid and widespread diffusion of technology.' In line with this definition, globalisation is seen as a by-product of increase in:
- International trade in both goods and services, - Increase in international capital flow, and - Increase in technological advancement and its widespread diffusion.
This definition also highlights the fact that globalisation covers every instrument of trade and investment, as well as the mechanisms that support their realism. With the easy flow of goods and services, the proficient allocation of relatively scarce global resources is achievable. Consequently, this process allows global manufacturers to seek and exploit location specific advantages
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across the globe without any perceptible obstruction.
Accordingly, the standard of living of the people is raised as it offers good quality products at lower prices; just as the profit motives of the MNCs are fulfilled - thereby creating more investible capital (Ghauri & Buckley, 2002).
The concept is also seen as the modernity of global interdependency of nations that permeates every human endeavour with various magnitudes, in causes and consequences (Aregbeshola, 2007). This definition is informed by the impact of globalisation on different people at varying degrees. The concept/ideology is felt very greatly, at the global level on education, research, economics, culture, morality, communication, work productivity, and political democracy (Thapisa, 2000); amongst others.
As stated earlier, the World War 1 that broke out in 1914 disrupted the global capital flows and international trade between and among nations. The Great Reversal in global economy and the global depression of 1930s gave rise to fascism that culminated in the beginning of the Second World War (Mishkin, 2006; Kindleberger, 1989).
To avoid a repeat of the global economic depression and its associated shortcomings, a conference was held by the 'powerful' world leaders of the time in 1944 at Bretton Woods, New Hampshire, United States. It was at this conference that the formation of International Trade Organisation (ITO) was suggested (Anderson, 2005; Dormael, 1978). By 1948, an ITO Charter was drawn up along with the General Agreement on Tariffs and Trade (GATT). Unfortunately, ITO failed because the US congress voted against it, but GATT was passed along with UN and its antecedent financial institutions (the World Bank, and the International Monetary Fund) (Diebold, 1952) - GATT was considered to be more favourable to Washington's interest.
Before GATT was transformed into the World Trade Organisation (WTO) at the Uruguay Round in 1994, its 47-year history has been widely praised for a noticeable lower tariffs and improved global trade relations. While GATT employed a rule of negation and consensus, WTO advocated a 10-year gradual trade liberalisation among and between nations (developing nations were allowed a longer and more gradual liberalisation, albeit in principle).
The need for these International Financial Institutions (IFIs) was justified on the grounds of market volatility. The World Bank and the International Monetary Fund were borne out of the aspirations of the world leaders to establish a global financial stability, as an impetus for economic growth. Based on its economic windfall from the Second World War1, United States was able to negotiate and secure a veto vote (Dormael,
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1978). This may be observed as the architect of global inequality.
When evaluating the effects of globalisation, it is essential to examine the consequence of the actual increase in the measurable global indicators of this concept namely, trade openness and FDI, rather than the aim or policies that support the process (Lee and Vivarelli, 2006). This said, this presentation will focus on the effects of these variables on the developing world, with a special reference to (South) Africa.
Trade openness is one of the cardinal points of GATT, and more recently, the WTO. This is based on the principle that national economies will grow as much as these countries open up their economies to foreign investment and capital. The argument goes further to postulate the price autarky doctrine, in which the investing firm is seen to drive down host nation's commodity prices as a result of efficient allocation of resources and superior operational processes (Rivera- Batiz and Oliva, 2003).
The findings of a research project (Sachs and Warner, 1995) that covered more than 100 countries between 1970 and 1990 reveal that there is a strong relationship between a country's openness to trade and its economic growth. The research also finds a 'strong association' between an economy's openness and its growth, both within the group of developing and the group of developed countries. On the one hand, the findings indicate that the group of developing countries with open economies grew at 4.49 per cent per year while the closed economies grew at 0.69 per cent per year. On the other hand, the group of developed economies with open economies grew at 2.29 per cent per year while the closed economies grew at 0.74 per cent per year.
A more realistic situation is pertinent to India, which departed from the principle of Swadeshi2 in 1990 under the leadership of Narasimha Rao (the then Prime Minister), and recorded a rapid economic expansion at about 6.1% between 1994 and 2004. In 2004, India's export revenue from software services alone was at a record US$7 billion, from barely US$500 million in the mid- 1990s (Hill, 2007). The same could be said of China, South Korea, Malaysia and other newly industrialised countries (NICs). Evidence abounds on the positive impacts of trade liberalisation on economic growth, and poverty reduction across the globe, but mostly in the western world.
In South Africa, the economy has been growing at the annual rate of about 4-5% annually since 1994.3 South Africa's economy is...
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