HOW IS GLOBALIZATION AFFECTING OUR ECONOMY?
Feb 16 - 22, 2009
The abstract from a paper by Khalil Ur Rehman and Dr. Amanat Ali Jalbani reads:
"The International Monetary Fund (IMF), World Bank (WB) and US Treasury view globalization of economies as a mathematical and scientific problem and not as a socio-cultural phenomenon. To these institutions it is monetarist economics that should govern globalization.
Globalization is leading to growth in China but for South Asia, South East Asia and for Africa, it is perpetuation of poverty, hunger, disease and inequality. Revision of Millennium Development Goals (MDG) is a clear indication of that. Apart from successes in some areas, globalization has failed to bring positive change in the lives of millions of Pakistanis living below poverty line."
In an opinion poll conducted last year, majority of Muslim nations came up with a support for globalization. The nations polled included Egypt, Turkey, Indonesia, Nigeria, Azerbaijan, Iran and Palestine. Majority people in six of the seven nations polled said that it was mostly good for their countries. Approval was highest among Egyptian and Nigerian Muslims, 78-79 per cent of whom saw the globalization influence as mostly good. These two nations were followed by Azerbaijanis, Iranians, Indonesians and Palestinians who held a good view of the effects of globalization.
Turkey, with a split opinion, registered less than 40 per cent vote in favor of globalization. So, is it religion, region or what that determines the beneficence of globalization for a particular nation? To say that globalization had no socio-cultural implications is absurd. The globalization agenda was heavily biased in favour of the developed nations. Developing economies with low levels of technological advancement, captive financial and fiscal systems and interventionist monetary decision making had to suffer in consequence of the onslaught of globalization.
The liberal trade policies, open competition, unfavorable tariff structure played havoc with the developing economies whose markets were flooded with the cheaper goods dumped by the developed economies who benefited from the technological edge and economies of scale.
Although masses in developing economies enjoyed the availability of cheaper foreign goods, yet their industries were driven out of business giving rise to unemployment and poverty.
On the export side too, the abolition of quota rendered the products of developing economies uncompetitive on both price and quality accounts. Pakistan's textile sector got hit under the belly due partly to its own inherent deficiencies and partly due to the ruthless forces of globalization. Only those developing economies enjoyed the fruits of globalization that were at an advanced stage of development, had a stable political system and were capable of making swift policy changes to adjust to the changing economic scenario.
Unfortunately, we were never at an advanced level of development, had developed a habit of existing under political uncertainties brought about by uncalled for government changes, and also had a huge monetary as well as fiscal deficits owing to the inefficient and interventionist government structures. Till 2007, globalization appeared to have a beneficial influence on our economy when it used to grow at an average rate of seven per cent. Then came the 'long due' political intervention and the then burgeoning economy came down like a house of cards.
Globalization or no globalization, the weaker yet potential economies will have to focus on their national resources and develop them through value addition to ensure economic survival in the first place and then move ahead to the competitive international markets. Pakistan's national resources include among other things, the newly found coal, gas, river water, food rich sea, productive agriculture land, a predominantly young generation and a strategically important geographic location.
Our national drags are a very low literacy rate, technological backwardness, precarious law and order situation, growing terrorism and corrupt and inefficient political and administrative systems. Ideally, we can think of becoming surplus on food and energy by swiftly developing our coal, gas and hydro power resources thereby releasing pressure from our external accounts and foreign reserves.
Our corrupt political system run by the feudal and elitist forces is our Achilles' heal. Its presence can be traced everywhere. Be it the low literacy rate, the dam construction issue, the delayed Thar coal projects, the tax immunity to affluent and feudally dominated sectors of economy, the under-invested gas sector, the under-explored marine and maritime resources, all are found linked to the political expediencies of successive governments. Even under autocratic rules, the man at the top is an army General, while the government is jointly run by the members of political parties.
Coming back to the development of national resources, it will be observed that the gas-based power generation, after touching a high of 50% in 2004, has dropped back to 37% in 2007. The obvious reason is the depletion of known gas reserves resulting from the lack of investment on gas exploration side. We need to review our gas exploration policy to attract fresh investment in this all important sector of our economy.
The oil-based power generation, after dropping to 20% level in 2006, has again resumed its upward journey. This is a disturbing development as we can not afford high oil-based generation in the face of an uncertain international oil market. The coal-based generation has dropped during the last four years to an almost zero level. This is a travesty of resource utilization. We have ample coal reserves that need to be mined and utilized for gas and power generation purposes.
The sooner we replace the oil-based generation with the coal-based generation the better. The hydel power is the future power for our country which is endowed with sufficient water resources. We wasted almost 25 years toying with the idea of Kala Bagh Dam without opening up to other possibilities particularly the securing of consensus of all provinces on alternate dam projects.
Nevertheless, WAPDA continued its good work of identifying, launching and constructing various hydel power projects. Our agriculture and marine economy has great potential not only to solve our food problems but also to change it into exchange earning sectors. Programs are needed to induce change in food habits. We can produce plenty of fish and rice which if made available to the masses at reasonable prices, can advantageously transform our food economy. Free education up to the secondary level and affordably priced higher education can be a revolutionary step for transforming our predominantly younger generation into national asset of real value.