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Unit-1-7 - Ygg

Delhi Through The Ages (University of Delhi)

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B.A. (Hons.) English Semester-II

Generic Elective (Political Science)

Politics of Globalization
Study Material : Unit I-VII

SCHOOL OF OPEN LEARNING

UNIVERSITY OF DELHI

Department of Political Science

Editor : Dr. Tapan Biswal

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Graduate Course

Generic Elective
Politics of Globalization
Contents
Pg. No.
Unit-I : The Concept of Globalization and its Debate Dr. Rukmani 01
Unit-II : Approaches to Understanding Globalization
Lesson-1 : Liberal Approach Anwita 16
Lesson-2 : Radical Approach Anwita 21
Unit-III : International Institutions/Regimes
Lesson-1 : The World Bank Dr. Gurdeep Kaur 34
Lesson-2 : International Monetary Fund (IMF) Inder Sekhar Yadav 50
Lesson-3 : The World Trade Organization (WTO) Inder Sekhar Yadav 65
Unit-IV : Issues in Globalization
: Alternative Perspectives on Globalization: Nature
and Character Inder Sekhar Yadav 79
Unit-V : Globalization and Democracy
: State Sovereignty and Civil Society Inder Sekhar Yadav 91
Unit-VI : Globalization and Politics in Developing Countries
Lesson-1 : Globalization and the Social Movements Dr. Abhishek Nath 102
Lesson-2 : Globalization and the Demise of Nation-State Nishant Yadav 107
Lesson-3 : Globalization and Human Migration Nishant Yadav 119
Unit-VII : The Inevitability of Globalization: Domestic and Deepika 131
Global Responses
Edited by:
Dr. Tapan Biswal

SCHOOL OF OPEN LEARNING

UNIVERSITY OF DELHI
5, Cavalry Lane, Delhi-110007

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Unit-I

The Concept of Globalization and its Debate

Outline

 Student Learning Outcomes

 Introduction
 Understanding of Globalization- Globalists, Sceptics, and Transformationalists
 Dimensions of Globalization – Economic, Political, Cultural
 The Globalization Debate – Argument in Favor and Against
 Conclusion
 Summary
 Probable Questions
 Suggested Readings

Student Learning Outcomes

 Student will be able to define the Concept of Globalization
 Student will be able to differentiate between the Globalist, Sceptics and
Transformationalist understanding of the notion of Globalization.
 Student will be able to comprehend the various aspects of globalization debate.
 Student will be able to analyze the challenges posed by the notion of globalization
Introduction
The word ‘Globalization’ has become the buzzword befitted to describe the growth of
modern economy and is often heard in the business world, corporate meetings, trade markets,
at international conferences, in schools, colleges and many other places. Many among us
refer to the current period that we live in as ‘The Era of Globalization’ and consider that the
process of globalization has started only recently. But the fact is that globalization is not a
new phenomenon. Though the public references to the term ‘globalization’ have become
increasingly common in the last two decades but the concept of globalization can be traced
back to much earlier period. According to scholars like Held and McGrew, the basis of the
concept lies in the work of various political thinkers of 19th and early 20th century such as
Saint Simon and Karl Marx to the scholars like Mackinder, who observed how world is
getting integrated due to modernity. Though the term ‘globalization’ was not actually used
until late 20th century but it became a buzz word due to the advancements in technology and
communication.
Harmonizing with the quick spread of the information revolution, the breakdown of state
socialism and the consolidation of capitalism worldwide affirmed the conviction that the
world was quickly turning into a space, which is shared both socially and economically.

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However, regardless of whether the thought of globalization in the long run underpins or
blocks the comprehension of contemporary human conditions and methodologies to improve
it, it involves discussion.
In order to understand the globalization debate and answer the questions such as what does
globalization symbolize? Is it a new concept or did it exist earlier? What are the various
dimensions of the concept of globalization? This essay is divided into four sections. The first
section tries to make sense of the concept of Globalization. It describes the understanding of
the notion by various scholars classified such as Globalists, Sceptics and
Transformationalists. The second section of the essay focuses on different dimensions of
globalization such as economic globalization, cultural globalization and political
globalization. The third section deals with the debate between the globalists and sceptics. It
focuses on four aspects – power, economy, culture and order. The fourth and the final section
of the essay deals with the challenges faced by the concept of globalization.
1.1 Understanding the Concept of Globalization
The term ‘Globalization’, though a buzzword of late twentieth and early twenty first century,
do not have a certain definition. It is a tricky term to explain due to its elusiveness,
however, Modelski believes that “globalization is a historical process which is characterized
by a growing engagement between peoples on all corners of the globe” (1972). It has been
comprehended as an activity resulting into a contracting world or a world in which inter-
regional power relations are restructured in such a way that interconnectedness among
regional powers have magnified like anything (Harvey: 1989, Giddens: 1990, Scholte: 1993,
Kofman and Youngs: 1996, Held et al: 1999). What differentiates these definitions is the
differential importance given to the physical, spatial-temporal and cognitive aspects of
globalization.
Globalization has a colossal physical perspective, which is effectively recognizable in flows
of trade, capital and individuals over the globe. These are empowered by various types of
framework – physical, (transport or banking framework), regulating, (exchange rules) or
representative, (English as a most widely used language) – which set up the preconditions for
regularized and moderate types of worldwide interconnectedness. The idea of globalization
implies considerably more than an enlarging of social relations and exercises across locales
and countries. It exemplifies a substantial shift in the spatial reach of social relations and
organization concerning the interregional scale. As an outcome, far off events and
advancement can come to have genuine local effects while local happenings can incite
critical worldwide repercussions. Globalization along these lines causes a subjective move
communicated both in a growing public awareness to the manners by which distant events
influence local fortunes and the other way around (Held and McGrew: 2003).
In short, globalization is defined in terms of escalating scale, rising extent, speeding up and
deepening influence of interregional flows and patterns of social interaction. It denotes to a

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transformation in the degree of human social organization that associates distant communities
and expands the reach of power relations across the world’s major region and continents.
There are three main viewpoints on Globalization, which are classified as Globalist, Sceptic
and Transformationalist.
The Globalists viewed globalization as a process, which is unavoidable and believed that
globalization as a process is taking place and local cultures is being affected by it due to the
increase of international capitalism. They regarded globalization as an action, which is
constructive in nature as it is characterized by economic uplift, high prosperity and the spread
of democracy. The set of scholars, for example, Thomas Friedman, Ohmae, Ritzer, Dicken,
Frank, Modelski and others who fall under this school of thought accepts that the capitalist
system has conquered all corners of the globe to spread its impact and therefore, created a
world without borders. Mass media platforms like the internet and television
gives individuals from one side of the world quick availability of substance from the opposite
side of the world, in this manner, certainly obscuring the lines between cultures and societies
spread over the world.
Thomas Friedman (2000) contends, “Globalization has occurred because of the global
adoption of neoliberal economic policies. Neoliberalism asserts that in order to develop, it is
necessary for governments in developing countries to remove obstacles to free trade and free
market capitalism”. Globalization is described by an expanding network of nation-states and
furthermore a move in the area of administrative capacity to transnational institutions like
World Trade Organization (WTO) and the International Monetary Fund (IMF). The widening
of social relations has additionally brought about an escalated trade between societies through
migration, tourism, and media and an expansion of flows of global cultural products and
practices, for instance, McDonalds, Disney, Woodland, Samsung, Ford, etc.
On the other hand, there is another school of thought known as Sceptics or traditionalists
comprises of scholars such as Paul Hirst, Thompson, Sterling, Perlmutter, Dore, Boyer and
others who accepted that Globalization is merely an escalation and magnification of historical
processes of internationalization as have occurred in the past during colonial and imperialist
periods. The sceptics question the very idea of globalization and ask, what is ‘global’ in
globalization in the event that it needs explicitness or cannot be deciphered as an all-inclusive
marvel. They argue that with no recognizable territorial referent how one will separate
between the international or transnational and global. They believe that a progressively
legitimate conceptualization of current trends is captured by the term ‘internationalization’,
which is developing connections between national economies or social orders. They consider
the interdependence as an impermanent and subjective condition. This is an argument for the
persistent importance of land, borders, habitation and national government in the present-day
world structure.
Lastly, are the scholars like Held, Castells, Randeria and others who are known as
Transformationalists. These scholars accept the fact that globalization represents a critical

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shift however questions the certainty of its effect. They assert that the national and local
institutions still play a substantial role. They believe that in this idea of globalization, though
the global institutions would be democratized and empowered but nation-states hold a
fundamental role as territorially specific, legitimate and accountable structure of approach or
policy. The transformationalists contend that globalization is creating new economic, political
and social circumstances which are serving to change state powers and the setting in which
state works.
In short, Globalization has implied various things to various individuals. The thoughts are
diverse, compatible and wide, to such an extent that it is anything but difficult to fall into a
definitional trap. For example, Globalists consider globalization as an advance step toward an
integrated world market; Sceptics defined it as an escalation of internationalization and
Transformationalists consider globalization to be a rise of supranational and worldwide
administering bodies under a new world order.
1.2 Dimensions of Globalization
Economic Globalization: At an individual level, economic matters and economic
differences help structure our identities and position in society, while at an international level,
trading strength and investment power are important in establishing political power. If
American or any other culture is seen to be dominating the world, it is partly because the
investments and products of McDonald’s, Microsoft, Disney, etc. are so visible and
significant in other parts of the globe.
Most of the scholars believe that globalization in its present form actually mean economic
globalization. It is defined as a process in which through trade, foreign direct investments,
worldwide exchange of workers and technology, the economies of nations get assimilated
with the international economy (Bhagwati:2007).
Economic globalists understand-globalization as a phenomenon concerning the growing
integration of the national economies of most states in the world, based on five interrelated
drivers of change: lower trade barriers, increasing financial flows, improved communications,
technological advances, and increased labor mobility (Held: 2004).In the conceptual
construction of economic globalization, ‘liberalization’ is a powerful component which is
mainly sought to bring down the tariff barriers. The other major constituent of economic
globalization is privatization, which is defined as “an act of reducing the role of government
or increasing the role of the private sector in an activity or in the ownership of assets” (Savas:
1987).
What is foremost in economic globalization is the changing role of the state, which, while
readjusting its policy priorities, tends to be receptive to the flow of trade and investments.
This is a unique development that had no parallel in the past. Being proactive, the state seems
to be welcoming the global agencies since their contribution is significant for development
and growth.

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Political Globalization: Political globalization is defined as reconfiguration of the political

order. It has been argued that politically, globalization has ushered in an era of “geo-centric
global politics” instead of “state-centric geopolitics” born at the treaty of Westphalia. The
globalists believed that in a globalized world, national governments are increasingly
becoming powerless and irrelevant. While they are too small to deal with the global problems
that affect their citizens—such as global warming or the illegal drugs trade—they are too big
to deal with local matters such as refuse recycling.
The scholars who believe in the process of political globalization argue that power is no
longer principally structured and implemented on a national scale but, gradually, has acquired
a transnational, regional or even global dimension. For them, it is about Global governance –
“a process of political co-ordination in which the tasks of making and implementing global or
transnational rules, or managing trans-border issues, are shared among governments and
international and transnational agencies (both public and private), with the object of realizing
a common purpose or collectively agreed goals” (Held: 2004).
Cultural Globalization: Cultural exchanges between individuals have taken place since time
immemorial but in the last few decades, it has taken place rapidly. With technological
innovations such as printing press, electricity and cinema during first and second industrial
revolutions, societies began to have access to machines, which allowed them to create
cultural products and export them across borders. These increased interconnections between
countries and cultures advances the possibility that local cultures can be shaped by other
more powerful cultures and form a more homogenous world (Ritzer: 2010; Liebes:2003).
This process of homogenization or convergence is reflected in several concepts and models
such as the Global culture, Americanization or McDonaldization.
Across different regions and countries in the world, people wish to listen to the same music,
wear the similar clothes or purchase the same brand products. These developments in cultural
practices are known as Global culture or cultural globalization.
In other words, globalization has contributed in the creation of a new and identifiable class of
individuals who belong to a homogenize culture.
1.3 The Great Globalization Debate: For and Against
In the times, when the country is witnessing a biggest debate about the citizenship, about the
politics of identity over the Citizenship Amendment Act 2019, National Register of Citizens,
it become interesting to study and know about the Great Globalization Debate. As mentioned
before, globalization is the most contested concept. There is no certain definition of the
concept. There are few scholars who believe in the existence of the concept and there are few
who disagree to the fact that there is any process known as globalization, which is taking
place/ has begun, who considered globalization as a myth. In this section, we will discuss this
great debate between the globalists and the sceptics under three heads- political power,
economy and culture.

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Arguments in favor of Globalization

The globalists who believe in the concept of globalization, defines it as a process of
extremely far-reaching, focused and speedy flows, movements and networks across regions.
Their argument in favor of globalization runs as follows:
Political Power: As a Global Politics
The globalists believe that Globalization as a procedure is dissolving the ability of nation-
states to perform autonomously in the expression and quest for local and global policy
objectives. They consider that the nation state’s power and role is declining and political
power is being reconfigured. The contemporary politics is Global politics.
The globalists contend that the development of international and transnational institutions
after the Second World War, the structure and elements of both state and civil society has
changed due to the establishment of international organizations like UN and its specialized
agencies to international pressure groups and social movements. They consider that the state
has become an uneven field of policymaking, imbued by transnational networks just as by
domestic agencies and forces. Multiple layers of governance have been seen among and
across the political boundaries.
The concept of sovereignty has been changed into the concept of shared power due to the
emergence of new international and transnational institutions. This change can be represented
by various advancements, including the rise of international organizations and regimes. In
1909, there were 37 Inter- Governmental Organizations (IGOs) and 176 International Non-
Governmental Organizations (INGOs), while in 2000 there were 6,743 IGOs and 47,098
INGOs. In addition, large number of international policymaking forum such as UN, G7, IMF,
EU, or WTO has been established.
Major changes have also taken place in the military orders. These days' global and regional
security institutions have become more vital. In order to enrich their security, most states in
contemporary times have decided to join to a large number of multilateral arrangements and
institutions. Be that as it may, it is not only the organizations of protection, which have gotten
global. The manner in which military equipment is fabricated has likewise changed. The time
of ‘national heroes’ has been supplanted by a sharp increment in licensing, co-production
arrangements, joint ventures, corporate alliances and subcontracting.
The development of transnational powers has diminished the control of individual
governments over the actions of their citizens and other people. The independence of states is
undermined as governments discover it progressively hard to seek after their domestic
agendas without cooperating with other agencies - political and economic. There is no
territorial referent for the pedophiles, terrorists or illegal immigrants, they do not distinguish
between territories, thus, neither can the policies for their effective administration and
resolution can be differentiated. Many of the traditional domains of state activity and

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responsibility (defense, economy, health, law and order) can never again be served without
standardizing multilateral forms of collaborations.
These contentions indicate that the modern state is increasingly rooted in the networks of
regional and global interconnectedness transformed by supranational, intergovernmental and
transnational powers. Such developments challenge both the sovereignty and legitimacy of
states. Sovereignty is challenged on the ground that the political authority of states is
displaced and undermined by regional and worldwide frameworks- political, economic and
cultural. State legitimacy is challenged because states cannot deliver fundamental goods and
services to their citizens on their own, without international cooperation.
Culture: Global / Popular Culture
As discussed earlier, Globalization is all about the growing worldwide interconnections
between societies, and Culture is in many senses the most direct, obvious and visible way in
which we experience these interconnections in our daily lives. It is a crucial component of
globalization because it is through culture that common understandings are developed. Our
everyday activities suggest that our cultural traits, practices and goods are increasingly
becoming global.
The scholars who believe in these phenomena of globalization known as Globalists fall into
two categories. On the one hand are those who argue that with new communication
technologies, we are moving towards a ‘global village1’ in which communication and
community can be freed from their physical or geographical constraints and a greater
diversity of voices can be heard. On the other hand, are those scholars who, while focusing
on structures, point to the profound and growing inequalities, which characterize patterns of
ownership of information and communication devices, infrastructure and flows. They point
also to the homogenizing consequences of global communication networks and cultural
flows.
The globalists claim that in contemporary times, the extent, concentration, promptness and
dimensions of global cultural communications is unmatched. In ongoing decades, there has
been a remarkable development in the worldwide flow of cultural goods like printed matter,
music, visual arts, cinema and photography, radio and television - in terms of both distance
and volume. For example, people everywhere are exposed to the values of other cultures as
never before. Indeed, even the way that we as a whole communicate in various dialects
cannot stop the progression of thoughts and societies. The English language is turning out to
be prevailing to the point that it gives a phonetic foundation as powerful as any technological
framework for transmitting ideas and cultures.

1
The ‘global village’ is a notion which was developed by the media theorist Marshall McLuhan in the 1960s. It
refers to the transcendence of constraints of physical place enabled by new communications technologies that
allow instant, inexpensive, global communication. It has been put forward vociferously by those who extol the
democratic and participatory possibilities afforded by the Internet.

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They also argue that beyond the scale of transcendence, the fascinating fact about the cultural
globalization is that it is driven by organizations rather than nations. The globalists express
that Corporations have supplanted the states and theocracies as the focal makers and
merchants of culture. Private international institutions are not new but their mass effect is.
For example, regardless of whether one is in India or in London or Canada, he/she look
forward for the brands like Woodland, Samsung, Marks and Spencer, McDonald and so forth.
For the globalists, the presence of new worldwide communication framework is changing
relations between physical areas and social conditions, and adjusting the ‘situational geology’
of political and social life (Meyrowitz:1985). New understandings, shared traits and edges of
significance are expounded without direct contact between individuals. The new global
communication system can serve to segregate, dissembled, identities from particular times,
places and traditions, and can have a ‘pluralizing impact’ on identity formation, creating a
range of hyphenated identities which are ‘less fixed or unified’ (Hall: 1992).
Economy: As a Global Economy
In today’s world, everyone is habituated of buying goods from other countries—electronics
from Taiwan, vegetables from Mexico, clothes from China, cars from Korea, and handicrafts
from India. Most modern shoppers take the “Made in [a foreign country]” stickers on their
products for granted. Long-distance commerce was not always this common, although
foreign trade—the movement of goods from one geographic region to another—has been a
key factor in human affairs since prehistoric times.
According to the globalist interpretation, the outcome of growing integration is that a single
worldwide economy is emerging and functioning. Globalists consider that in the single global
economy in the making, economic processes are increasingly ‘stretched’ so that events and
decisions taken in a particular state or region have a significant impact in other distant parts
of the world. It has been suggested, for instance, that the 1997/98 East Asian financial crisis,
which resulted in widespread bankruptcies in countries such as Thailand, Malaysia and
Korea, and consequent devaluation of shares in Europe and North America, was originally
caused by the decisions of a small number of financial traders in New York (DeLong: 1999).
Certainly, the threat of economic disruption in one continent can have an immediate impact
on share prices and economic transactions in others.
Associated with this, they argue, there has been an ‘intensification’ of flows and networks of
economic interaction, with communication systems spreading throughout the world and
negating the significance of physical distance. Developments in information technology are
seen as central here, enabling the co-ordination of operations of multinational corporations
(MNCs) and their subsidiaries and independent suppliers across international borders and
oceans. Individuals and enterprises can now use the Internet to buy products of their choice
without moving from their homes and offices, with the potential of avoiding the scrutiny,
restrictions, and perhaps even the tax-raising powers of the state.

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The scholars suggest that the current period of economic globalization is different from the
earlier phases by the presence of a single global economy surpassing and incorporating the
world’s major economic regions. In contrast with the period of significant levels of trade
protectionism and imperial economic zones, the present global economy is substantially more
open and its operations influence upon all countries, even those ostensibly ‘pariah’ states
such as Cuba and North Korea. In this global economy, no single place can direct the
standards of worldwide exchange and business; nonetheless, it stays an exceptionally
stratified order.
The scholars also suggest that the global economic expansion which is driven by ascension of
multinational corporations was advanced by the convergence of three more powerful forces:
(1) new software and increased public familiarity with the Internet, (2) the incorporation of
that knowledge into business and personal communication, and (3) the market influx of
billions of people from Asia and the former Soviet Union who want to become more
prosperous—fast. Converging, these factors generated their own critical mass. The benefits of
each event became greater as it merged with another event. Increased global collaboration by
talented people without regard to geographic boundaries, language, or time zones created
opportunity for billions of people.
Arguments against the Globalization
The scholars who do not believe in the concept of globalization and consider it as deep-
rooted procedure or an age-old process of social and economic transformation are known as
Sceptics. They characterize the idea of globalization as an augmentation of the phenomena of
regionalization and internationalization. They argue, if the ‘global’ cannot be construed truly,
as a universal phenomenon; at that point the idea of globalization needs explicitness. With no
identifiable territorial referents, it is not possible to differentiate between the international or
the transnational and the global.
Their argument against the concept of globalization runs as follows:
Political Power: Sovereignty and Territoriality
Surveying the political scene of the twenty-first century, the sceptics argue that though the
geopolitical roles of individual states may have changed yet these transformations have been
suited within the predominant structures of world order – the modern nation-state system. It
is true that decolonization did not create a world of equally free states. The influence of
western commerce, trade and political organization outlived direct rule. Powerful national
economic interests have often had the option to continue domineering situations over former
colonial territories through the substitution of ‘a visible presence of rule’ with the ‘invisible
government’ of corporations, banks, and international organizations. However, constrained
the genuine control most states have over their domains, they for the most part fiercely
protect their sovereignty and their autonomy. The choices, benefits and welfare policies of
states change drastically as per their area in the chain of importance of states, but in the age

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of nation-states, the independence granted by sovereignty, in principle, still matters

significantly to all states.
Against the set of globalist scholars who contend that state sovereignty is declining in the era
of globalization, there is another set of sceptic scholars led by Michael Mann, Paul Hirst,
Grahame Thompson, Peter Evans, Stephen Krasner and others who accept that state is
strengthening in the time of globalization. These scholars believe that the process of
globalization do not possess anything new.
According to the sceptics, national political traditions are quiet dynamic, distinctive political
bargains can still be struck between governments and electorates, and states continue to rule.
The business of national politics is as significant as it was during the period where present
day states were first framed. For states, in many places have progressively asserted a
monopoly of the legitimate use of force and judicial regulation, established permanent
military forces as a symbol of statehood just as a means of guaranteeing national security,
consolidated tax raising and redistributive mechanisms, established nation-wide
communication infrastructures, a national or official language etc.
Michael Mann (2008) argued that depending upon the socio-spatial networks of social
interaction there are four kinds of threats (global capitalism, environmental danger, identity
politics and post-nuclear geopolitics) which have various impact on nation states in different
regions. Further, he states that though global interaction networks are indeed strengthening
but the state institutions (both domestic and international) have causal efficacy as they
provide necessary conditions for social existence. Therefore, they cannot be the sheer result
of other sources of social power. For him, state is the independent source of power.
Similarly, Peter Evans (1995) argues that in contemporary economy the role or influence of a
nation state has expanded. He calls it embedded autonomy and suggests that the state gives a
hierarchical structure, unsurprising principles and collective goods or infrastructure and
promotes economic growth and capital accumulation in peripheral countries. He contends
that the involvement of state in economy in different roles becomes crucial for the
development of national economies. For him, the association between nation state and the
global context is a shared one, because a country's position in the international division of
labor is determined by the state policies.
In short, the sceptics believe that the role of state is strengthening in the era of globalization
in contrast to the globalist who states that the power of nation-state is declining.
Global Culture: A Fable
In contrast to the globalist thesis of global culture, the sceptics believe that national cultures
are not obsolete in the contemporary era, which is defined as an era of globalization. They
argue that despite globalization, one does not see the evidences of cultural assimilation, rather
stereotypes of national cultures are used for providing orientation. They state that it is not an
era of globalization but an era of localization and regionalization.

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The sceptic scholars while agree to the fact that the process of globalization emerged from
the Western cultures but they disagree to the idea that the phenomenon of globalization
comprises homogenization of world cultures ensuing from one way exchanges among the
latter. This set of scholars believe that globalization rather creates a state of heterogeneity
which refers to a network structure in which nodes tend to connect with each other in regard
to certain cultural dimensions (Matei: 2006). They argue that though the national cultures do
not remain unaffected by the global flows or rapid interconnectedness but the actual crux or
the soul of the national culture remain intact and unaffected, as has always been; only
peripheral surfaces gets directly impacted (Appadurai: 1996; Ritzer: 2010). Scholars like
Robertson (2001) and Wiley (2004) who are critical of the processes like Americanization
and McDonaldization advocates the notion of heterogeneity and argues that these global
flows do not eradicate local cultures; they only change some of their traits and reinforces
others. They contend that national cultures are fluid constructs, which have become part of a
heterogeneous transnational field of culture.
Scholars who belong to this school of thought believes that the rapid and deepened
interconnectedness has actually played a pivotal role in the creation of national cultures
instead of global cultures. For example, scholar like Benedict Anderson argues that the
development of print capitalism in the late eighteenth century has helped in the emergence of
nationalism as it led to different types of literature being disseminated throughout a country,
enabling people to ‘imagine’ themselves as a part of national community despite they were
never ever being likely to meet a larger number of people.
The sceptics propose that the global culture can never dissolve the idea of nationhood as the
struggle for national identity and nationhood has been so extensive. National cultures will
remain the formidable source of ethical and political direction, as they are concerned about
consolidating the linkages between political identity, self-determination and the powers of the
state.
Similarly, in the postmodern era, though the electronic dissemination and proliferation of
images and information are accepting more implications and national governments are no
longer able to monopolize the flow of information but they are able to control any outside
cultural influences.
In addition, the new electronic networks of communication and information technology aids
in rekindling the traditional methods and bases of national life, strengthening their impact and
effect. These networks “make possible a denser, more intense interaction between members
of communities who share common cultural characteristics, notably language”; and this gives
a restored driving force to the reappearance of “ethnic communities and their nationalisms”
(Smith: 1990).
Furthermore, the sceptics contend, while new communication systems can generate access to
distant others, they additionally produce a consciousness of distinction; that is, of the

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incredible diversity in lifestyles and value orientations (see Gilroy 1987; Robins 1991;
Massey and Jess 1995). In spite of the fact that this awareness may upgrade social
comprehension, it frequently prompts an emphasis of what is unmistakable and eccentric,
further dividing social life.
Global Economy: A Myth
The sceptics who suspects the very idea of globalization contends that the claim of the
uniqueness of the present level of economic interdependence is false, or, at the very least,
completely exaggerated. They express that an increasingly substantial conceptualization for
current patterns with respect to economy is caught by the terms ‘internationalization’- that is
developing associations among the fundamentally distinct national economies – and
‘regionalization’ or ‘triadization’- the geographical grouping of cross-border economic and
social exchanges (G. Thompson: 1998, Hirst and Thompson: 1999).
They argue that the present world economy is not closely integrated. According to them, the
evidences fail to confirm that there exists or is emerging a single global economy whether in
regards of finance, technology, labor or production (Hirst and Thompson 1999). In contrast to
the ‘belle époque’ of 1890-1914 the scale of flows of trade, capital and migrants are as of
now of a considerable lower order (Gordon1988; Weiss 1998; Hirst and Thompson 1999).
Although today gross flows of capital between the world's major economies are to a great
extent remarkable, the real net flows between them are not as impressive as they use to be at
the start of the twentieth century (Zevin1992). For example, even among the OECD states
(the most interconnected of any economies), the contemporary trends propose just a restricted
level of economic and financial integration (Feldstein and Horioka :1980; Neal: 1985; Zevin:
1992; Jones: 1995;Garrett: 1998).
In contrast to the globalists, the sceptics interpret current trends as evidence of a significant
internationalization of economic activity. They argue that the analysis of current trends
confirms to the ‘triadization’, instead of an integrated global economy. The economic
activities are contained among the three core blocs, each with its own center and periphery;
namely, Europe, Asia-Pacific and the Americas. This triadization of the world economy is
associated with a developing inclination towards economic and financial interdependence
among each of these three zones at the cost of integration between them (Lloyd: 1992; Hirst
and Thompson: 1999). This growing regionalization of economic activity become more
obvious with the emergence of the formal structures of APEC, NAFTA, MERCOSUR,
SAARC, ASEAN and the EU and in the regional production and marketing strategies of
multinational corporations and national firms (G. Thompson: 1998).
The sceptics are also critical of the suggestion that the contemporary time is characterized by
the presence of an emerging global capitalism. While not denying that capitalism is the ‘only
economic game in town’ succeeding the breakdown of state socialism, they contend that such
advancements ought not be considered as sign of another globalized (‘turbo’) capitalism,
rising above and subsuming national capitalisms (Callinicos et al.: 1994; Ruigrok and Tulder:

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1995; Boyerand Drache: 1996; Hirst and Thompson: 1999). These scholars despite what
might be expected accept that distinct capitalist social formations keep on prospering on the
prototypes of the European social-democratic mixed economy, the American neoliberal
project and the developmental state of East Asia(Wade: 1990).
For sceptics, discussions about the ‘end of geography’ is an overstatement about
globalization as place and space remain central determining factors of the global distribution
of wealth and economic power. In a world of almost real-time communication and corporate
capital, the destiny of firms - big or small - is still essentially dictated by local and national
competitive advantages and economic conditions (Porter: 1990; Ruigrok and Tulder: 1995;
G. Thompson: 1998). Therefore, one can state that, multinationals are little more than
‘national corporations with international operations’ since their command post or the home
base is such an essential element of their continued success and identity(Hu 1992).
As opposed to the globalists, the sceptics contend that however most states today depend, to
changing degrees, on universal progressions of exchange and finance to ensure national
economic growth be that as it may, national governments remain central to the governance of
the world economy, since only they have the formal political authority to regulate economic
activity. In this way, contemporary conditions represent no genuine risk to national
sovereignty or autonomy and calling the trends as ‘global’ is a myth.
Conclusion
To sum up this globalization debate one can say that this debate is all about the interpretation.
The same half -filled glass can be seen by two different people in two different ways – half
filled or half empty. Similarly, the process of rapid interconnectedness is also interpreted in
three different ways by scholars. The clash involves the conceptualization and interpretation
of the absolute most basic proofs. For instance, the sceptics put essential accentuation on the
organization of production and trade (focusing on the geographical rootedness of MNCs and
the minimal changes in trade-GDP ratios over the twentieth century), while globalists
emphasis on financial deregulation and the explosive growth of global financial markets in
the course of the last a quarter century. Sceptics focuses on the unending prevalence of the
national interest and the cultural traditions of national communities which upkeep their
distinct identity, while globalists emphasize on the growing importance of global political
problems - such as worldwide pollution, global warming and financial crises - which give rise
to a growing sense of the common fate of human kind. Before coming to a settled view, one
has to consider the various responses to the debate.
Summary
The Great Globalisation Debate: In Sum
Arguments in Favour of Globalization Arguments Against Globalization
(Globalists) (Sceptics)

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Concepts One world, shaped by highly Internationalization not Globalization

extensive, intensive, and rapid flows, It is regionalization.
movements and networks across
regions and continents.
Power Erosion of state sovereignty, The nation –state rules Inter-
autonomy and legitimacy. governmentalism
Decline of Nation-state.
Rise of multilateralism.
Culture Emergence of Global Popular Culture. Resurgence of nationalism and national
Erosion of Fixed political identities. identity
Hybridization.
Economy Global Informational Capitalism. Development of regional blocs.
The Transnational economy. Triadization.
A new global division of labour. New Imperialism
Order Multilayered global governance. International society of states.
Global civil society. Political conflicts between states
Global Polity. inevitably persists.

Cosmopolitan orientations. International Governance and

Geopolitics.
Source: Held and McGrew (2002)

Probable Questions:
1. What is the meaning of the term ‘Globalization’? What are its various perspectives?
2. Write an essay on the various dimensions of globalization.
3. Discuss the major debates on Globalization.
4. How does Globalization affect the sovereignty of the nation-state?
5. Write short notes on:
 Political Globalization
 Globalists views on Globalization
 Cultural Homogenization
 Global Economy
6. How the understanding of globalists is different from the understanding of sceptics of
the concept of globalization?

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References
 Bhagwati, J. (2007) In Defense of Globalization, Oxford University Press.
 Boyer, R and Drache, D, (eds) (1996) States against Markets, London: Routledge
 Friedman, T.L. (2005) “It’s a Flat World, After All,” New York Times Magazine,
April 3
 Garrett, G. (1998) Global markets and national politics. International Organization 52.
 Gordon, D. (1988) The global economy: new edifice or crumbling foundations? New
Left Review168.
 Hall, S. (1992) The Question of Cultural Identity. In S. Hall, D. Held and A. McGrew
(eds),
Modernity and its Futures, Cambridge: Polity Press.
 Held, D and A. McGrew (eds.), (2002) Global Transformations Reader: Politics,
Economics and Culture, Cambridge: Polity Press
 Held, D (ed) (2004) A Globalizing World? Culture, Economics, Politics, London:
Routledge.
 Hirst, P. and Thompson, G. (1999) Globalization in Question, 2nd edn. Cambridge:
Polity Press.
 Hu, W. (1992) Global corporations are national firms with international operations.
California Management Review 34.
 Kofman, E. and Youngs, G. (eds) (1996) Globalization: Theory and Practice. London:
Pinter
 Ritzer, G. (2010) Globalization: A Basic Text, Sussex: Wiley-Blackwell, pp. 33-62
 Scholte, J. A. (1993) International Relations of Social Change. Buckingham: Open
University Press.
 Smith, A.D. (1990), Towards a Global Culture, Theory, Culture and Society, Vol.7,
Pp.171-91.
 Thompson, G. (1998) Globalization versus Regionalism? Journal of North African
Studies.
Suggested Reading
 Bhagwati, J. (2007) In Defense of Globalization, Oxford University Press.
 Held, D and A. McGrew (eds.), (2002) Global Transformations Reader: Politics,
Economics and Culture, Cambridge: Polity Press
 Held, D (ed) (2004) A Globalizing World? Culture, Economics, Politics, London:
Routledge.
 Hirst, P. and Thompson, G. (1999) Globalization in Question, 2nd edn. Cambridge:
Polity Press.

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Unit-II : Approaches to Understanding Globalization

Lesson-1

Liberal Approach

Chapter outline
Introduction
Liberal approach of globalization
Early Thoughts of Liberals
Modern Thoughts of Liberals
Role of Politics in Liberal Approach

Introduction
Globalization is a word that comes from the term “globe” and means the world coming
together. It can be defined as the process where goods, services, businesses, technology,
culture and people have freedom and opportunity of movement across the countries. Today
we have access to so many amenities including advances in technology, mobile phones and
telecommunication, transportation, education, health and hospitality, innovation, research
development in the field of science and technology and internet which are the result of
globalization. But as it is said that where there is a light there is a shadow, therefore, there are
different approaches on globalization by the different academician, researcher, socialist,
economist, politicians and people of the society.
Different individuals have a different mindset about globalization, there some believe that
globalization is beneficial for all which will provide new job opportunities to the developing
and underdeveloped nations, on the other hand, some believe that globalization will have a
negative impact on developed nations by destroying their job opportunities. Primarily there
are two major approaches on globalization which we are going to discuss in this chapter as
given below:
As a business term globalization refers to the tendency of international trade, investments,
information technology exchange and outsources manufacturing to weave the economies of
diverse countries together. But in terms of political science, globalization refers to a situation
where two or more countries come together and join hands for the betterment and
development of each other by providing convenient trade opportunities and building strong
political relations at the global level.

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Liberal Approach of Globalization

The liberal approach of globalization has emerged from western countries which talk about
looking at global relations with a liberal approach or with an open-minded view. This
approach has several authors and thinkers such as Thomas Hobbes, John Locke, Adam Smith,
Bentham, J.S. Mill, T.H. Green, Laski, Barker, Maclver and Bernard Crick. The liberal
approach of globalization believes that there should be liberty at the global level to establish
relations and promote free trade without any hard rules or restrictions. From the economic
point of view, the phenomenon of globalization is itself liberal which provides free trade and
free movement of goods, services and labour.
The liberal approach of globalization can also be understood by understanding the concept
that it promotes a practice of cooperation between two or more nations to achieve mutually
beneficial outcomes for all. In contrast to the radical approach, the liberal approach more
focuses on absolute gains rather than relative gains. For liberals, international politics has
never been a zero-sum game and they believe in a win-win situation rather than establishing
an international reputation of the nation.
Early Thoughts of Liberals
The thinkers of the early liberal approaches had a belief that human is selfish and self-
interested being and has nothing to do with the others. If so many selfish and self-oriented
people will come together at a platform, then it will lead to a conflicting situation because of
the clash of interest. The thinkers of the early liberal approach took the human being as an
entity rather than a nation or society as a whole and they concluded that our society and
nation is run by such kind of individuals who are self-interested. Such kind of individual
comes together and form a society for their own benefit.
These individuals in future become the business persons and entrepreneurs who run the
society for their interest and provide other members of the society an opportunity to be
associated with them in the form of stakeholders. Authors like Thomas Hobbes, John Locke
and Adam Smith have taken individual human beings to form the political theory of
globalization.
The thinkers further believe that when everybody tries to promote interest, utility, wellbeing
and happiness of their own, then the whole is maximized and it will automatically increase
the happiness to all because everyone in that society is having the same mindset and habits.
Modern Thoughts of Liberals
In the 20th century of modernization or what today is known as globalization, the birth of the
Marxist approach had taken place. Marxism approach talked about the division of society on
the basis of class. This approach brought a phenomenal transformation in the views of earlier
liberal approaches and the modern thinkers claimed that the society is made not only with the

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self-interested and self-oriented individuals but it is made of self-interested groups also.

Thinkers like Bentley, Truman, GDH Cole, Laski and Maclver explored with their thoughts
that society is not just a composition of the self-interested human beings but also self-
interested groups. These self-interested groups can be in different forms such as social
groups, political groups, religious groups, communities etc.
This modern theory of liberalization concludes that similar mindset of people come together
and form their own group based on their need, thinking, ritual and future demand. The
emergence of racism, castes system and categorization of rich & poor are some example of
such thoughts. This theory is true and applicable in the present scenario of society as well
where the rich community has a mindset of earning more money and dominating the society,
whereas the poor have the thinking of earning bread and living a sustainable life. This
approach also explores that these groups also have a conflict because of competition, clash of
interest and struggles that they are going through.
Authors like Hobbes have termed these kinds of society as a “Sack of Corn”. He says that
individuals are the corn with different interest and society is the sack. All the corns are
sticking with the sack due to self-interest. These corns have formed a sack to get the
maximum benefit. Whereas Bentham called society as the creation of a social contract
between individuals. He believed that the individuals of the society have agreed on a contract
with each other to form a society of self-interest which will be beneficial for all.
Mac Perhson has considered the society as a free-market society where the self-interested
people with similar needs together to exchange the goods and services to fulfil their demands.
Inside the society with an open competition and wilful contract of working with and for each
other.
Authors like Green introduced a new term in liberalization approach that is cooperation. He
claimed that the natural behaviour of a human being has always been conflicting and
competitive since the beginning of civilization. And this conflict and competitive
environment will not be beneficial for any of the individual or society or nation in the long
run. And therefore he proposed the idea of cooperation the individuals and Society mutually
agreeing on understanding and exchanging the need and ideas for better action. Further, this
theory got strong support from others like Max Weber and Karl Manheim.
Role of Politics in Liberal Approach
After going through the above-mentioned theories and facts and then understanding the
concepts of running the society, these thinkers and philosophers claimed that a society
without the political process in the meeting place would be in an invertible situation and will
break down of law and order. In simple words, it states that a political process, proper
discipline, law and order and a justified process are necessary to govern the society
peacefully. Without a proper political process, the free marketplace will lead to a conflict
ground where everybody will be fighting for their rights. There will be no harmony in society
without a political process. Therefore, there is a strong need for institutions of politics which

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can maintain a balance and establish rules and regulations to govern and operate a society in
the long run.
Liberal approach believes that politics is the solution to this problem. Politics is a process to
manage and provide conciliation in conflict. The approach concludes that politics is the right
tool to tackle the problem of self-oriented society and individuals as well. It is also claimed
that the use of politics in this matter benefits all the stakeholders of the society and nations
only if the politics is applied in a disciplined and non-violent manner.
Let us understand it through an example, suppose few individuals are playing a game, but if
there are no rules and regulations to play that game, then everybody will be taking their steps
according to their need and their wish which will ultimately not allow anyone to win or even
sustain in the game. Therefore rules and regulations are necessary, whether it is a society or a
game.
Conflicts in Liberal Approach
There are primarily three kinds of conflicts in this liberal approach which are mentioned
below:

Conflict Explanation

Individual to Individual A situation where an individual has a conflict of idea or action

Conflict with another individual

Individual to Group A situation where an individual has a conflict of idea or action

Conflict with a particular group

Group to Group A situation where a group has a conflict of idea or action with
Conflict another group.

The liberal approach to globalisation make the states

Dependency
dependent on each other and reduce the practice of self-help

References
 Held, D., McGrew, A., Goldblatt, D., &Perraton, J. (1999). Globalization. Global
Governance,5(4), 483-496.
 J. Baylis, Smith and Owens, eds. (2017) The Globalization of World Politics: An
Introduction to International Relations, New York: Oxford University Press.
 Joseph E. Stiglitz (2018), Globalization and Its Discontents Revisited: Anti Globalization
in the Era of Trump, New York: W.W. Norton & Company.
 JagdishBhagwati (2007), In Defense of Globalization, Oxford, Oxford University Press.

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 Manfred B. Steger (2017) Globalization: A Very Short Introduction, New York: Oxford
University Press.
 Paul Hirst, G. Thompson and S. Bromley (2009), Globalization in Question, Malden,
Polity Press.
 John Clark (ed.), (2003) Globalizing Civic Engagement: Civil Society and Transnational
Action, London, Earthscan.
 Sanjeev Khagram, James Riker and Korthrxu Sikkink (ed.) (2002) Restructuring World
Politics: Transnational Social Movements, MN, University of Minnesota Press.
 Bernard Hoelkman and Michel Kostecki, the Political Economy of the World Trading
System: From GATT to WTO, New York, OUP
 Arjun Appadurai, (1996), Modernity at Large: Cultural Dimensions of Globalisation,
University of Minnesota Press.
 Deepak Nayyar (ed.) (2002), Governing Globalization: Issues and Institutions, Oxford
University Press.
 Held, David and Anthony Mc grew (ed.), (2003), The Global Transformation Reader: An
introduction to the Globalization Debate, 2nd Cambridge, Polity Press, Blackwell
Publishing.
 Joseph E Stiglitz, (2002), Globalisation and its Discontents, US, W.W. Norton and
Company.
 Noreena Hertz, (2000), The silent take over: Global Capitalism and the death of
Democracy, Praeger.
 Nye Joseph S and John D. Donanu (ed.) (2000) Governance in a Globalizing World,
Washington dc, Brooking Institution Press.
 Tyler Cowen, (2000) Creative Destruction: How Globalization is changing the world’s
culture, New Jersey, Princeton University Press.
Additional Resources:
 Classic Readings David Held and Anthony McGrew, et.al (1999) Global Transformation:
Politics, Economy and Culture, Stanford, Stanford University Press.
 David Held and Anthony McGrew (2003), eds., the Global Transformations Reader: An
Introduction to the Globalization Debate, Malden, Polity Press.
 Additional Readings 155 Keohane Robert and Joseph S. Nye Jr. (Spring 2002),
“Globalization: What is new, what is not”, Foreign Policy, No.118. pp. 104-119,
Washington.
 Newsweek Interactive, LLC. Marc Lindenberg and Coralie Bryant, Going Global:
Transforming Relief and Development NGOs, Bloomfield, Kumarian Press.
 Sen, A. (2006) Identity and Violence: Illusion and Destiny. London: Penguin/Allen Lane,
ch.7, pp.130-148.

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Lesson-2

Radical Approach

Introduction
Meaning of Radical Approach to Globalization
Beginning of anti-globalization
Why anti- globalization?
Debates on anti- globalization
Overall Anti-Globalization Governments and Regimes
Social Anti-Globalization Movements
Ethnical/Cultural Anti-Globalization Movements
Religious Anti-Globalization Networks
Environmentalist Anti-Globalization NGOs
Centre periphery debate
Radical and Liberalism Approach – A Comparative Study
Learning outcome
Questions
References

Introduction
As globalization affects each and every part of human life and it is a complex term, so if we
want to understand globalization in the twenty-first century, we have to go through the
various approach and theory of globalization. In the last chapter, you go through the liberal
approach of globalization, in this chapter, you will get introduced with a new approach of
understanding globalization which Known as Radical Approach. We can examine
globalization in a variety of perspectives along with a sliding scale, a continuum of failures,
accomplishment expectations, beliefs and aspirations touching fundamental political,
economic, sociological and cultural values.
Towards the end of the 20th century, a period of change began in the economic and political
sphere on the international level. The disintegration of the Soviet Union and the end of the
Cold War led to the arrival of a polar system in the world which pushed the world towards
new world order. Many changes were felt in the economy due to the new system. At that

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time, the demand of globalization, economic liberalization, open economy and privatization
started throughout the globe.
The term globalization remains a topic of discussion in the international and national markets
today and it extended to the developed - underdeveloped countries of the world. It mainly
internationalizes the activities related to business activities and especially marketing, due to
this phenomenon the whole world is seen as a single market. Because of globalization, the
whole world can be seen as a village, in which any person and nation, they can do free trade
with any country. Under globalization, interdependence arises between different markets of
the world and the trade of goods produced in any country is not limited to that country’s
border only.
According to Vimal Jalan, the world has become very small and any country can separate
itself from the rest of the world only by doing its own damage. The meaning of globalization
is reversed today, according to which it is seen as a change in policy for saving its own
interests.
Multinational banks and companies started their move and broke the state controls on capital
and raised the slogan of open trade, they believed that the main business would increase the
rate of growth, and it will reduce poverty. A decrease in poverty will lead to the development
of democracy and will strengthen it. The World Trade Organization was created, which was
an attempt to made change in the role of the IMF and the World Bank to promote a market-
oriented front economy.
Globalization is a multi-dimensional process, which involves dimensions like economics or
culture. It is also a chorological process which took place with the diffusion of science,
knowledge and technological applications and innovations over time throughout the world.
We could easily experience different social indicators of globalism: one might be based
primarily on values of individualism and competition, based on an economic system of
private property, while another might represent more communal and cooperative social
arrangements, including less capitalistic or socialist economic relations. These conceivable
alternatives point can be seen as the fundamentally indeterminate character of globalism.
On the other hand, the term globalization should be used to refer to a set of social processes
that are thought to transform our present social condition into one of globalism. Globalization
is about shifting forms of human contact toward the new condition of (postmodern). So we
can conceptualize globalization as an ongoing process rather than as a static condition. The
process of globalization is not the same all over the world, which means that people residing
in various parts of the world are affected very differently by this massive change of social
structures and cultural zones. Therefore, the social processes that make up globalization have
been analysed and explained by various authors in different, often contradictory ways.
Scholars who work within the field of globalisation, not only hold different views with regard
to proper definitions of globalization, they also disagree on its scale, causation, chronology,
impact, trajectories, and policy outcomes. Globalisation is define by the deferent thinkers as

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they observe and according to their own understanding. It characterizes the continuation and
extension of complex processes that began with the occurrence of modernity and the
capitalist world system some five centuries ago.
After the end of the Second World War, we can see a major shift in the world order. The fall
of the axis powers in 1945 and the process of decolonization slowly change global progress
and international exchanges. A new political order of nation-states anchored in the charter of
the United Nations established the prospect of global democratic governance. In the 1950s,
however, such cosmopolitan beliefs soon faded as the Cold War divided the world for four
long decades into two antagonistic spheres: a liberal capitalist camp dominated by the United
States, and an authoritarian-socialist realm controlled by the Soviet Union. For the first time
in human history, the spectre of a global conflict capable of destroying virtually all life on our
planet had been raised. Economic globalization introduces to the intensification and growing
of economic interrelations across the globe. Massive flows of capital and technology have
stimulated trade in goods and services. Markets have extended their reach around the world,
in the process of creating new linkages among national economies. Large transnational
organizations, powerful international economic systems, and large regional trading systems
have arisen as the major building blocs of the 21st century’s global economic order.
As a result of globalization, the world entered into a new phase of an international social,
political and economic system, due to that the development of means of communication and
transport resulted in reduced geographical distance. E-media established a global culture,
which given the facility to a person sitting in one corner of the world can enjoy the culture of
the other corner of the world sitting at home. The labour market expanded widely, causing 70
million people to move from one country to other countries for employment in 1965, the
number increased to 120 million in 1999 and has continued to expand since then. There has
been a significant increase in the exchange of education, technology and goods.
UN Secretary-General Kofi Annan said in his millennium report that if globalization is to
succeed, the public should feel that they are also involved in it.
If globalization is used to bridge the gap between the developed and the developing, the
results may be better, but developed countries are not willing to do that. Developing countries
constantly accuse developed countries that their interests have been neglected and due to
globalization poor and underdeveloped countries are becoming very poor and developed
countries are becoming more developed. There is also evidence that in the last decades,
globalization has created a deep gap between the income of people and the level of nations
and this inequality can go to every region. There is poverty in third world countries especially
Africa, Latin America and former socialist countries.

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Meaning of Radical Approach to Globalization

The radical approach of globalization is also known as realism approach and is opposite of
the liberal approach. Radical approach says that globalization is an irreversible process which
leaves no option to rectify the mistakes emerging out of globalization. It is a process where if
one mistake has been made and loss has occurred, then we cannot go back and rectify that
loss and therefore globalization is not good for all. Globalization gives birth to competition
rather than cooperation in the society because globalization promotes the race of development
between developed, developing and underdeveloped nations where rich become richer and
poor become a poorest.
Also, the globalization does not promote harmony and equality rather it promotes the politics
of power. Globalization makes the nation weak and dependent on other nations in exchange
of goods, services labours, technology, transportation, education, communication, healthcare
and many other. This approach believes that the state should focus more on self-dependency
and not depend on a global platform. Globalization creates differentiation and categorization
in the society and rich and poor, winner and loser, developed and underdeveloped are some
of the examples which have emerged due to globalization only because it is obvious as
someone’s profit is someone’s loss.
Also, globalization leads to openness which further compromises with the security of the
state. If we will open our economy and nation for the global countries and allowed them to
enter into our country in the name of doing business, then we are compromising with our
security and this might again lead to colonization. Poor nations will not be able to defend
themselves against the well-developed nations which may result in future dominance and
acquire their land and country as well.
This approach further claims that when everyone tries to promote his or her own interest,
utility and happiness, then the whole is maximized and the weaker section of the society will
suffer and will not be able to secure and safeguard their interests and rights against the one
who is in power.
Beginning of Anti-Globalization
Authors Robert keohane and joseph nyeobserved that globalization is not a unilineal process,
suggesting, rather, that just as globalization move forward linking many process together. It
can also stop and result in DE globalization.
Term Anti-globalization is referring to the international social movement network which
gained extensive media attention after protests against the World Trade Organization (WTO)
in Seattle, in late 1999. Varied communities organizing against the local and national
consequences of neoliberal policies, especially in the global South, connect their actions with
this wider effort. Movement constituents include trade unionists, environmentalists,
anarchists, land rights and indigenous rights activists, organizations promoting human rights
and sustainable development, opponents of privatization, and anti-sweatshop campaigners.

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These groups charge that the policies of corporate globalization have exacerbated global
poverty and increased inequality.
While mainstream media belief it start with the protests against the WTO’s Third Ministerial
Meeting in 1999, but other theorist see the anti-globalization movement as continuous with
the anti-Vietnam war mobilizations of the 1960s and 1970s, with worldwide uprisings in
1968, and with protests against structural adjustment in Africa, Asia, and Latin America in
the 1980s and 1990s.
Why Anti-Globalization?
The process of globalization expanded with the removal of restrictions on international
economic transactions but gradually reaction started against globalization. It was also clear
from the MDG report presented in 2000 by Kofi Annan. According to that report, the benefits
of globalization are very unevenly distributed. The global market was not even considered
subject to rules based on participatory social goals. The institutional structure of globalization
was based on discrimination. On the one hand, the borders of the nation were not considered
an obstacle in trade, on the other hand, they are hindering the flow of labour and technology.
Developing countries were expected to open up their markets to the rich and developed
countries and allow them to invest in capital, as well as they expect from developing
countries that in return they do not ask even for the flow of technology and smooth labour.
Today, developed countries can be seen adopting the attitude of discrimination towards
underdeveloped countries, this attitude is deeply rooted in their social and political thinking.
People of developed countries think that if the people of underdeveloped countries remain
their migrants, then they will infringe the rights of the native people there and will attack the
cultural and social unity of the place, as well as take away their employment opportunities.
Developed countries will have to suffer from this because they will have to share in the
welfare schemes there. The laws there are discriminatory for expatriates.
Most of the critics who critics globalization they target the economical form of globalization.
It is different from the other aspects of globalization like cultural, environmental and
communications and technology.
Here is a question that why the anti-globalization movement started around the world? What
is the concern which bother critics? There are two types of critics who critics globalization as
they understand the threat of the globalization and we will try to understand about them
thoroughly here. First, there is a number of hard-core protesters who have a deep-seated
aversion to globalization. They come from different intellectual and ideological backgrounds
and do not all share the same ideas and sentiments. But they all are into a linked trilogy of
dissatisfaction that takes the form successively of an ethos made of an anti-capitalist, anti-
globalization, and acute anti-corporation mind-set. All these views which advocate the radical
approach of globalization are interlinked because globalization is seen as the expansion of
capitalism all over the world, whereas multinational corporations are seen as the B-52s of
capitalism and its global influence.

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Second, there are the critics of globalization whose dissatisfactions are well defined within
the parameters of mainstream disagreement and discussion. In their nature, these
dissatisfactions interpret into the arguments that economic globalization is the agent of
several social evils today, such as poverty in poor and underdeveloped countries and
comprehensive Demolition of the environment. These critiques are of a very different from
the hard-core criticisms, which reflect inflexible enmity to globalization.
Due to fewer employment opportunities in the organized sector, workers are forced to work
in unorganized sectors, where they get lower wages, which has resulted in most countries
falling from poor to poorest. The income of the developed countries which was more than 20
times from the beginning is now more than 37 times. Special provisions have been made in
the GATT agreement for developed countries. Due to globalization, only a few nations and
people have benefited which was not imagined before. Small workers who did not take much
risk and took the help of rented technology, even they were not able to make any profit. Only
developed and rich countries could be in this competition. Along with this, highly educated
and who had technically knowledgeable also became rich and managed to go to different
countries. America, Japan, Western Europe, East-South Asia and East Asia benefited in this
period while Latin America, East and South Asia and Africa lagged behind in it. Financial
turmoil led to its results in East Asian countries and these countries posed more insecurity
and danger. The economy began to stagger due to the slight turmoil in the world capital
market. The economic downturn in September 2008 pushed the world towards non-
globalization, and at that time Barack Obama advised to not give any concession in tax to
those companies who outsourcing abroad. Many expatriates earning abroad returned to their
country due to lack of employment. Visa regulations were tightened by developed countries.
The WTO’s agenda results were also favorable to the developed countries and did not get any
appreciation and help to the underdeveloped state. These countries were looking at global
organizations with hopeful eyes, however, they did not get any appreciation and help.
Developed countries were disregarding the developing or third world countries by their strict
rules, they did not want to see any environmental damage in front of their development, nor
the problems of developing countries. Therefore, the rights countries were forced to adopt an
anti-globalization policy. Developed countries only focused on their development, even by
imposing high tariffs on the goods of developing countries, they destroyed their trade and
production.
Debates on Anti-Globalization
Overall Anti-Globalization Governments and Regimes
Within this category one may find some governments and regimes which more or less openly
admit their anti-globalization views informal or especially in informal manners. Governments
such as the Libyan, the North Korean, the Belarusian, the Syrian, the Nepalese, former
regimes in power like the ones in Zaire, in Ethiopia, in Mongolia or in Afghanistan
repeatedly declared themselves ‘preserving the borders against globalization’ and put into
action various measures of protection against the effects of that phenomenon. The common
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feature of these governments was or are the authoritarian nature of the regimes, whereas the
anti-globalization attitudes find their real justification in the protection of the undemocratic
status quo against national popular emancipation or international ‘smooth’ interventions. In
acting against globalization, these governments restricted the international participation of
their countries to the free trade areas, isolated their citizens by imposing limitations on their
free movement and generally made important efforts to impose overall autarchic regimes
from economic, cultural and political perspectives. The most ‘moderate’ among those states
was partially encouraged by the United Nations, which showed some willingness to
understand their concerns and which sometimes adopted a protective attitude towards them
(Stiglitz, 2002, pp. 140–144).
Social Anti-Globalization Movements
Labour unions, workers’ organizations within transnational corporations, international unions
of trade unions, socially-oriented non-governmental organizations are only a few examples of
structures and movements belonging to this category. Their fight against globalization is due
to the ‘devastating effects upon employment’ and the shaking effects of international
deregulation upon the stability of the social and economic future of the ‘poor’ (Korten, 2001,
p. 23). Impressive international congresses, massive demonstrations, concerted strikes, more
or less violent boycotts of the G7 summits are the means employed by the social anti-
globalization militants in their efforts to restrain the social influence of globalization. As the
social dimension of globalization has been perceived as being one of the less addressed issues
until the middle of the 1990s, one may appreciate that the social anti-globalization
movements earned a particular legitimacy within the international concert.
Ethnical/Cultural Anti-Globalization Movements
Resistance against globalization has been one of the main reasons of the existence of what
Mary Kaldor (1999) calls ‘the identity groups’, based upon the revival of the traditional
communities and the building of minority groups out of their traditional territories. The fight
against globalization was seen as being the only way of preserving their identities and, in an
important number of cases, of lasting in the future. This is the case of the Tamil rebels, of the
Sikh fighters, of the Nepalese Marxist rebels, of the Fijian nationalists, of the Zapatists from
Chiapas, if I am to give only some isolated examples. Mingling the anti-globalization
orientation with some more legitimate purposes, such as the achievement by self-
determination of their own nation statehood, was a strategy employed in order to justify the
use of violence and, in some cases, the terrorist activities.
Religious Anti-Globalization Networks
If globalization requirements could be interpreted as including the enforcement of lay public
societies, religious anti-globalization movements may pretend a strong legitimacy in their
The Helsinki Process 275 theory and practice. Since the middle of the 1980s, these
movements gathered in several networks, which progressively gained power until 11
September 2001. These networks are not specific to the Muslim world, albeit their presence
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in that area is the best known. Specific targets of globalization are the delocalization and dis-
entrenchment of the religious communities, as well as the moral deprivation effect upon
traditional beliefs (Defence Science Board Report, 2001). The loss of the international
legitimacy of the most radical religious movements by the recourse to terrorist activities was
compensated by the gain of the legitimacy of the ones that did not use terror as a mean for
achieving their goals.
Environmentalist Anti-Globalization NGOs
Greenpeace is the successful model of an anti-globalization non-governmental organization
with a high international profile. For this kind of NGO, globalization was the synonym of the
generalization of pollution and of the careless homogenization of the planet. Fighting for the
‘physical and psychical diversity’ was the main purpose of these emerging movements since
the beginning of the 1980s.5 The use of violence was sometimes accepted, especially when
the ‘establishment’ was deliberately ignoring their demands. An important degree of unity
around their objectives was the most prominent feature of the environmentalist movements,
as they could very clearly establish their goals worldwide. As the national civil societies were
involved in a process of increasing merger, constituting the global civil society, the
‘protesting and anti-stream governments’ were shaping coalitions with the so-called ‘rogue
states’ in order to counter the impact of globalization worldwide. The fivefold classification
was meant to illustrate the fact that, despite its heterogeneity concerning the nature, the
reasons, and the culture of its components, the anti-globalization movement was consistent
only with regard to its major goal: ending with the diffuse reality of globalization, perceived
as a result of the American capitalist-imperialist hegemony (Revel, 2003).
Centre Periphery Debate
If globalization is used to bridge the gap between the developed and the developing, the
results may be better, but developed countries are not willing to do that. Developing countries
constantly accuse developed countries that their interests have been neglected and due to
globalization poor and underdeveloped countries are becoming very poor and developed
countries are becoming more developed. There is also evidence that in the last decades,
globalization has created a deep gap between the income of people and the level of nations
and this inequality can go to every region. There is poverty in third world countries especially
Africa, Latin America and former socialist countries.
Radical and Liberalism Approach – A Comparative Study
The radical and liberal approaches are two major paradigms of global relation. When we
discuss radical and liberal approach, then again we are going to focus on the international
system level of analysis. So what’s really important is the external factor, focusing on what
happens outside of the nation. The below-mentioned diagram explains these theories in a
better way.

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Multinational International
Corporates Nations with Nations with
Governmental
More Power More Power Organization

International Terrorist
Governmental Nations with Nations with Groups
Organization Less Power Less Power

After going through the above figure, it appears that nations represented in the big blocks
have more power vs nations represented in smaller blocks with less power. And all-around
those blocks, there are other factors which play an influential role in the international system
of globalization. These external factors are international governmental organizations like the
United Nation, there are International NGOs like Amnesty International, there are terrorist
group, there are multinational corporations and there are international personalities &
individuals too. These are the factors that we are talking about in an international system.
So what we are focusing on globalization is that external factors do affect the globalization
whether there is the radical approach of command or liberal approach of freedom. We can
think of two major phenomena occurring that is conflict on one hand and corporation on the
other hand. These two things are indicative of the dominant theme of the radical and the
dominant theme of liberalism.
We see so many nations which are going through the cold war of technology, equipment,
weapons and arms. In a situation where a nation with more power starts building a missile for
the defence of its nation, at the same time it will stress the foreign nations too. In response to
this, the foreign nations will also start jumping into the arms and weapon development
because every nation’s primary objective is to stay safer and provide safety to its citizen.
Now, this situation leads to a security dilemma and this is occurring because the international
system is characterized by anarchy. So anarchy and the security dilemma are two key
concepts to get a hold of anarchy.
It is obvious that both the approaches have different laws and regulations to operate the
economy and run the nation, but what differs is that we need to understand that we are under
the rules and obligations of the laws governing our nation and what we as a citizen are
supposed to do and not do. But that doesn't exist at the international system level instead we
have anarchy that is it’s a self-help system.
Ultimately, nations have to rely upon themselves for security and so in order to feel secure
they arm themselves and this activity is going to lead other nations, particularly their

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traditional rivals to feel unsafe so they are also going to start building weapons as well. This
is the traditional arms race and the radicals look at the international system and say because
of anarchy and security dilemma, the conflict is inevitable and we have to protect our nation
and its national interest. Whereas liberals, on the other hand, argue that this security dilemma
can be overcome through cooperative activities, international organizations and international
institutions by providing an open platform of exchange of goods, services, labour, culture and
ideas.
Learning Outcomes
After reading this chapter reader will be able to understand about the globalization, how
globalization work and radical approach to understand globalization. He can define the
radical approach and will know about the origin and how it impact to the people around the
world. Reader will also come to know about the different debate of radical globalization and
why supporters of these debates raise their voice against the global phenomenon of business
and marketing which is in the center point of globalization. They can understand that how
globalization and anti-globalization work and its effect their life and living standard of the
people of any country. How developing country exploited by the developed country. They
will know the major concern of supporters of radical approach and weather it’s relevant or
not.
Questions for Practice
1. What do you understand by the radical approach to understand globalization?
2. Write a brief note on different debate of anti-globalization?
3. How globalization effect developing and under developing country?
4. What are the main reason to raise radical approach to globalization?
References
 Dollar, David. 2001. Globalization, Inequality and Poverty since 1980. Mimeo. World
Bank, Washington, DC.
 Dollar, David and Aart Kraay. 2000. Growth is Good for the Poor: The Importance of
Favouring the
 Growth-Enhancing Polices of Good Rule of Law, Fiscal Discipline, and Openness to
International Trade. Economic Growth Project. World Bank, Washington, DC.
 Easterly, William. 2002. Inequality Does Cause Underdevelopment: New Evidence.
Working Paper No. 1(revised June). Center for Global Development, Washington, DC.
 nternational Labour Organization (ILO). 2000. World Labour Report 2000: Income
Secuity and Social Protection in a Changing World. ILO, Geneva.

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 Knowles, Stephen. 2001. Inequality and Economic Growth: The Empirical Relationship
Reconsidered in the Light of Comparable Data. Discussion Paper 2001/128.
UNU/WIDER, Helsinki.
 Kuznets, Simon. 1955. “Economic growth and income inequality.” American Economic
Review, Vol. 65,No. 1, pp. 1–28.
 Lewis, W. Arthur. 1954. “Economic development with unlimited supplies of labour.”
Manchester School Vol. 22, May, pp. 139–192.
 Li, Hongyi, Lyn Squire and Heng-fu Zou. 1998. “Explaining international inequality
and intertemporal variations in income inequality.” Economic Journal, Vol. 108, pp.
26–43.
 Ohlin, B. 1933. International and Interregional Trade. Harvard University Press,
Cambridge, MA.
 O’Rourke, Kevin. 2002. “Globalization and inequality: Historical trends.” In World
Bank (ed.), Annual
 Bank Conference on Development Economics 2001/2002. Oxford University Press,
New York.
 Perotti, Roberto. 1996. “Growth, income distribution and democracy: What the data
say.” Journal of Economic Growth, Vol. 1, No. 2, pp. 149–187.
 Persson, Torsten and Guido Tabellini. 1994. “Is inequality harmful for growth?”
American Economic Review, Vol. 84, No. 3, pp. 600–621.
 Pritchett, Lance. 1997. “Divergence, big time.” Journal of Economic Perspectives, Vol.
11, No. 3, pp. 3–17.
 Ravallion, Martin. 2001. “Growth, inequality and poverty: Looking beyond averages.”
World
 Development, Vol. 29, No. 11, November, pp. 1803–1815.

 Held, D., McGrew, A., Goldblatt, D., & Perraton, J. (1999). Globalization. Global
Governance,5(4), 483-496.
 J. Baylis, Smith and Owens, eds. (2017) The Globalization of World Politics: An
Introduction to International Relations, New York: Oxford University Press.
 Joseph E. Stiglitz (2018), Globalization and Its Discontents Revisited: Anti
Globalization in the Era of Trump, New York: W.W. Norton & Company.
 Jagdish Bhagwati (2007), In Defense of Globalization, Oxford, Oxford University
Press.

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 Manfred B. Steger (2017) Globalization: A Very Short Introduction, New York: Oxford
University Press.
 Paul Hirst, G. Thompson and S. Bromley (2009), Globalization in Question, Malden,
Polity Press.
 John Clark (ed.), (2003) Globalizing Civic Engagement: Civil Society and
Transnational Action, London, Earthscan.
 Sanjeev Khagram, James Riker and Korthrxu Sikkink (ed.) (2002) Restructuring World
Politics: Transnational Social Movements, MN, University of Minnesota Press.
 Bernard Hoelkman and Michel Kostecki, the Political Economy of the World Trading
System: From GATT to WTO, New York, OUP
 Arjun Appadurai, (1996), Modernity at Large: Cultural Dimensions of Globalisation,
University of Minnesota Press.
 Deepak Nayyar (ed.) (2002), Governing Globalization: Issues and Institutions, Oxford
University Press.
 Held, David and Anthony Mc grew (ed.), (2003), The Global Transformation Reader:
An introduction to the Globalization Debate, 2nd Cambridge, Polity Press, Blackwell
Publishing.
 Joseph E Stiglitz, (2002), Globalisation and its Discontents, US, W.W. Norton and
Company.
 Noreena Hertz, (2000), The silent take over: Global Capitalism and the death of
Democracy, Praeger.
 Nye Joseph S and John D. Donanu (ed.) (2000) Governance in a Globalizing World,
Washington dc, Brooking Institution Press.
 Tyler Cowen, (2000) Creative Destruction: How Globalization is changing the world’s
culture, New Jersey, Princeton University Press.
Additional Resources:
 Classic Readings David Held and Anthony McGrew, et.al (1999) Global
Transformation: Politics, Economy and Culture, Stanford, Stanford University Press.
 David Held and Anthony McGrew (2003), eds., the Global Transformations Reader: An
Introduction to the Globalization Debate, Malden, Polity Press.
 Additional Readings 155 Keohane Robert and Joseph S. Nye Jr. (Spring 2002),
“Globalization: What is new, what is not”, Foreign Policy, No.118. pp. 104-119,
Washington.

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 Newsweek Interactive, LLC. Marc Lindenberg and Coralie Bryant, Going Global:
Transforming Relief and Development NGOs, Bloomfield, Kumarian Press.
 Sen, A. (2006) Identity and Violence: Illusion and Destiny. London: Penguin/Allen
Lane, ch.7, pp.130-148.

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Unit-III : International Institutions/Regimes

Lesson-1

The World Bank

1. Introduction
2. About the World Bank
3. Detailed Information About the World Bank Group – The Five Institutions.
3.1 The International Bank for Reconstruction and Development.
3.2 The International Development Association.
3.3 The International Finance Corporation
3.4 The Multilateral Investment Guarantee Agency
3.5 The International Centre for Settlement of Investment Disputes.
4. Membership to the World Bank.
5. The Organisational Structure of the World Bank.
5.1 The President.
5.2 The Board of Governors
5.3 The Board of Executive Directors.
5.4 The Committees.
5.5 The Assisting Staff.
6. Funding/Finances of the World Bank.
7. Voting Allocation Mechanism
8. Objectives of the World Bank.
9. Role and Functions of the World Bank.
10. Overview of the Lending Policies of the Bank
10.1 Nature and Kinds of Loans.
11. Criticism against the World Bank
12. Conclusion
13. Learning Outcome
14. Test Your Knowledge- Question -Answers
15. Reference List

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1. Introduction
Thinking of a bank what immediately strikes is a building wherein deposit/ withdrawal of
money takes place, has an ATM facility, where you have officers and clerks to acquaint you
of the various schemes that can earn you maximum interest on your money etc. Therefore,
the World Bank might be perceived to be doing the same tasks. But in actual practice it is a
specialised institutions of the United Nations system and not a bank in the traditional sense.
The World Bank came into inception in 1944 along with the International Monetary Fund
(IMF). Both the World Bank and the IMF were borne out of the conference held at Bretton
Woods, a remote village in New Hampshire, United States in 1944, the time when World
War II was nearing its end. The said twin institutions are collectively called as the Bretton
Woods Institutions (BWIs). The Bretton Woods Institutions are the brain child of John
Maynard Keynes and Henry Dexter White.
The massive devastation and destruction caused by World War II laid the foundation for the
conference. The central idea behind the conference was to work towards the reconstruction of
the European war torn and affected economies and also, to provide the foundation of a
peaceful and prosperous future for the world. With the unanimous decision of the 730
delegates of all the 44 allied nations, the World Bank and the International Monetary Fund
were established. Ever since their establishment the twin institutions have been playing a
crucial role in the global political economy and have been joined by a number of multilateral
institutions and bodies to dispense the role and responsibilities. Of the two Bretton Woods
Institution, the present chapter focuses on the World Bank for the readers to
understand. The following chapter will discuss the International Monetary Fund in
detail.
The World Bank was initially established to put the world’s economic and financial order in
place, it, however, since its inception has evolved and is taking up multifarious roles
especially in the less developed and underdeveloped parts of the world.
2. About the World Bank
The World Bank is one of the premier international institution founded under the Bretton
Woods Agreement to help serve the governments globally with aid and assistance for their
economic development. The International Bank for Reconstruction and Development was an
immediate outcome of the July 1944 conference and the institution aimed at re-building post
war II Europe. The International Bank for Reconstruction and Development was the original
arm of the World Bank. Through the years, however, the World Bank has expanded from a
single institution to five unique co-operative institutions collectively known as the World
Bank group. So, the World Bank group of institutions comprises of:
a. The International Bank for Reconstruction and Development (IBRD) founded in
1944, provides debt financing on the basis of sovereign guarantees;

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b. The International Financial Corporation (IFC), established in 1956, provides

various forms of financing without sovereign guarantees, primarily to the private
sector;
c. The International Development Association (IDA) founded in 1960, assists the
poorest countries by providing interest free credits with 35 to 40 years maturities. The
concessional financing done by the IDA is usually without the sovereign guarantees.
d. The Multilateral Investment Guarantee Agency (MIGA), established in 1988, this
institution provides insurance against certain types of risks including political risks to
the private sector and promote foreign direct investment to the developing countries to
fuel economic growth;
e. The International Centre for Settlement of Investment Disputes (ICSID),
established in 1966, the institution provides for facilities towards conciliation and
arbitration of investment disputes. It works with the governments of the developing
nations to reduce investment risks and facilitate the flow of foreign investment to
developing countries.
The twin development institutions – The International Bank for Reconstruction and
Development (IBRD) and The International Development Association, or IDA together
make for the World Bank. Thus the World bank is a part of the bigger World Bank Group,
that comprises of five interrelated institutions: the IBRD; the IDA; the International Finance
Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the
International Centre for Settlement of Investment Disputes (ICSID).
Based in Washington D.C, the World Bank group is committed to ensure harmonious growth
and economic prosperity globally. And also to play an important role of facilitator of growth
of the lesser developed parts of the world.
3. Detailed Information about the World Bank group – The Five Institutions
3.1 The International Bank for Reconstruction and Development (IBRD) that was
initially founded to assist the war devastated European economies to reconstruct and progress
now, works to eradicate poverty and make growth inclusive. Besides, providing low-interest
and no-interest loans to developing countries who cannot get financing elsewhere the IBRD
also provides technical and research assistance to developing countries. Examples of projects
funded by these loans include infrastructure projects, such as power plants, roads, railroads,
ports, telecommunication, and water systems. Loans have also been provided for health,
education, and debt relief. For economic development these projects are foundational and
essentially important for the well being of the population. The financing from the IBRD is
extended to the governments, government agencies or private enterprises for a period of 15-
20 years but not without the guarantee by the national governments.
The IBRD has about 189 members and every country has to pay a subscription to be a
member of the IBRD. Each member country gets 250 votes and can increase its share of

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votes by buying the shares of the IBRD at $ 100,000 per share. More share of votes means
more say and authority in the decision making. The largest shareholder can influence the
outcomes and the decisions.
3.2 Another constituent institution of the World Bank is the International Development
Institution (IDA). In contrast to the IBRD, the IDA is engaged in lesser complicated
functions. It lends to countries that do not qualify for IBRD’ s loans. It collects donations
from its member countries after every three years and lends that money to the world’ s
poorest and most needy nations at zero interest or may also give grants that need not be
repaid to the Bank. Although it does not charge interest but its credits/loans carry an annual
service charge of 0.75 percent and the maturity of its credit is 35-40 years excluding the grace
period of 10 years.
As far as the finances of the IDA are concerned the IDA is dependent on its member nations
as mentioned above who give grants every three years. However, income also emanates from
transfers of IBRD income from its retained profits, repayment of principal and special
additional contributions (donations) from the member states.
The governance structure of the IDA is the same as the IBRD and it is discussed in detail
below.
Although the membership to IDA is open for all IBRD members but all IBRD members have
not chosen to be a member of IDA.
3.3 The International Finance Corporation (IFC) also known as the private sector arm of
the World Bank group and is engaged in providing loans to the private sector companies from
its own resources without sovereign guarantees. The direct lending to businesses makes IFC
fundamentally different from IBRD and IDA. Under the Articles of Agreement both IBRD
and IDA can lend to governments of member countries. So, to address the limitation of this
IFC was established. It also mobilises financing from the other institutions to complement its
own loans. It provides venture capital for productive private enterprises in association with
local investors. Apart from mobilising capital in the international financial market, the IFC is
also helping developing countries to grow and prosper by providing advisory services to
businesses and governments. With the recognition that the private sector is an engine of
economic growth and creator of jobs and can effectively materialise the broader goals of the
WBG – ending poverty; shared prosperity for all, the IFC is solely involved in giving thrust
to the private sector through its global knowledge and reach; technical and advisory services.
The IFC helps the local companies make an optimal utilisation of their knowledge and
capabilities and avail the best of opportunities in the developing parts of the World and
alongside work towards the capacity building of the developing and less developed
economies to establish a sustainable business environment and be future ready.
The IFC is a legally separate entity from the Bank yet non members of the Bank cannot be
members of the IFC. The organisational structure of the IFC is same as the IBRD and IDA, it
functions through a 24 membered Executive board where in the five largest donors of the

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World Bank appoint a director each and the remaining 19 are elected from among the
members. Voting power over resolving issues and taking decisions is in accordance to the
share capital each director represents. The directors hold regular meetings at the World Bank
group headquarters in Washington D.C. to review the policies and decisions and to chalk out
future programme of action for the organisation. The corporation (IFC) has its own legal and
operating staff but is dependent on the World Bank for administrative tasks.
As far as the funds to carry out the lending operations, 80% is borrowed from the
international financial through public bond issues and the remaining 20% is borrowed from
the market.
3.4 The Multinational Investment Guarantee Agency, or MIGA, is the World Bank
group’s political insurance arm. This institution guarantees against the political risk in
developing countries in order to encourage foreign direct investment. The objective of MIGA
is to help developing countries create an environment that can ease foreign investment in to
their land and in various projects that would eventually help in fighting poverty, addressing
unemployment and bring about economic growth. Among the many services, MIGA offers
risk insurance against foreign exchange restrictions, an outbreak of conflicts or war, imposed
spending limits and other related restrictions on the company ‘s assests in order to promote
foreign direct investment. In addition to promote foreign direct investment, the institution
also provides technical and advisory services to the developing nations so that a favourable
environment for the investors is created and maintained.
The membership to the agency is open for all the member nations of the World Bank,
however, the countries are not under any obligation to join the agency. Currently,173 nations
are members of the agency. The agency fulfill its role and function through a three-tier
structure comprising of a Council of Governors; Board of Directors and President; staff.
3.5 Finally, the International Centre for Settlement of Investment Disputes, or ICSID,
extends its services to resolve international disputes between investors and state and also
between state and state pertaining to international investment treaties and in numerous
investment laws and contracts. It is an independent, depoliticised and effective dispute
settlement institution that resolves disputes through conciliation, arbitration or through fact
finding. Over the past many years the institution has settled hundreds of disputes to the
satisfaction of the contending parties through its uniquely designed process that takes into
account the special characteristics of the international investment disputes and the parties
involved. The institution also extends its outreach by publicising its activities and role
through publication of the cases resolved, its staff conducts events and seminars; and also
regularly participate in the seminars and conferences organised elsewhere, to spread
awareness about the investment rules and laws and about the international investment
treaties.
The ICSID conducts its functions through the Administrative Council, the Secretariat and
also has a Panel of Arbitrators and Panel of Conciliators. The Administrative Council is

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composed of one member from each state which is a party to the ICSID convention (By
2009, 144 countries were party to the ICSID convention). The Council’ s functions include
the adoption of administrative and financial rules, rules for conciliation and arbitration
proceedings, adoption of budget, election of Secretary General and Deputy Secretary General
and many other functions. The President of the World Bank is the ex-officio chairman of the
ICSID’ s Administrative Council and performs functions like nomination of the names of the
Secretary General and Deputy Secretary General for the elections by the Administrative
Council; constituting of ad-hoc committees; nominating ten persons each for the Panel of
Conciliators and Arbitrators etc.
The ICSID Secretariat comprises of the Secretary- General and the Deputy Secretary-
General as well as legal and non-legal staff that assists in carrying out the administrative
tasks and support services in the arbitral proceedings like maintaining minutes, drafting
orders etc.
The Panels of Arbitrators and Conciliators are designated by the member states and are
constituted separately for each case primarily by the parties in dispute. However, in addition,
the chairman of the Administrative Council may designate upto ten persons each for the
tribunal.
The ICSID meets its expenses by charging some amount of administrative fees from the
contending parties and the remaining expenditure of the ICSID is borne by the World Bank.
4. Membership to the World Bank
Nations willing to become a member of the World Bank have to become a member of the
IMF first. Moreover, a country willing to become a member of any of the four institutions of
the World Bank group, have to be a member of the IBRD. Thus membership to IBRD or for
that matter to any of the other four institutions is conditional. However, the countries are
under no compulsion to be a member of all the five organisations.
5. Organisational Structure of the World Bank
The World Bank group is a development institution owned by 189 member nations that
conducts its functions and responsibilities through its well organised governance and
management structure. With the President at the top followed by the Board of Governors,
Board of Executive Directors, various committees like the Advisory committee and with the
help of the other staff the role and functions are effectuated.
5.1 The President: The president of the World Bank comes from the largest shareholder
which is the United States. The President of the United States chooses a person to be the
President of the World Bank and is appointed by the Board of Executive Directors. He acts as
the Chairman of the Executive Board and exercises his vote in times of tie. The appointment
of the president is for five years, renewable term. The president chairs the meetings of the
Board of Directors and being the head of the operating staff, is responsible for the day to day
business and management of the Bank.

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5.2 The Board of Governors: All the other members are represented through the Board of
Governors. The Boards of Governors consist of one Governor and one Alternate Governor
appointed by each member country. The office is usually held by the country’s minister of
finance, governor of its central bank, or a senior official of similar rank. The Governors and
Alternates serve for terms of five years and can be reappointed.. Each Governor has its voting
power in relation to its financial contribution to the capital of the Bank. Normally, the Board
is required to meet at least once in a year so as to chalk out the general policy of the Bank.
Since the Board of Governors meet once annually that makes practically not possible to look
into the everyday business of the Bank, therefore, the Boards of Governors has delegated all
powers to the Executive Directors except those mentioned in the Articles of Agreement.
Hence discharge its responsibilities towards amending the Articles of Agreement, admitting
or suspending members; endorsing financial statements and budgets; make decision over the
appeal made by the Executive Directors regarding the interpretation of the Articles of
Agreement; decision concerning the allocation of funds.
5.3 The Board of Executive Directors
Every member government is represented by an Executive Director. The five largest
shareholders (France, Germany, Japan, the United Kingdom and the United States) appoint
an executive director each, while other member countries are represented by 19 elected
Executive Directors. However, Russia, China and Saudi Arabia have their individual
executive directors for the reason that these are big, influential economies, and that their
concerns might get diluted when represented in a group. Therefore, the remaining 16 elected
executive directors represent a grouping of countries usually selected on a regional basis with
some director representing the constituency comprising countries at different stages of
development. Ms. Aparna Subramani serves as the Executive Director at the World Bank
Group representing Bangladesh, Bhutan, India, Sri Lanka since September 1, 2017
The 24 Executive Directors make up our Board of Directors. They normally meet twice a
week to oversee business, including reviewing loans and guarantees; new policies; the
administrative budget; country support strategies; and borrowing and financial decision.
Each Executive Director is holding voting power in proportion to their share of capital. This
implies that major donor nations have a significant influence over the Bank’s decisions.
The governors delegate specific duties to 25 Executive Directors, who work on-site at the
Bank. The five largest shareholders appoint an executive director, while other member
countries are represented by elected executive directors.
The Executive Directors make up the Boards of Directors of the World Bank. They normally
meet at least twice a week to oversee the Bank’s business, including approval of loans and
guarantees, new policies, the administrative budget, country assistance strategies and
borrowing and financial decisions.

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5.4 Committees:
The Bank usually performs its functions with the help of two committees, i.e., Advisory
Committee and the Loan Committee. The Advisory Committee consists of seven experts
appointed by the Board of Governors. The members of the committee are the repository of
distinct knowledge, skills and capacity who can play an influential role in guiding the board
of directors. Besides, giving consultation and guidance they may also review a programme
for its specifications and efficacy; and also their support to strengthen organisation’ s public
standing. The Loan Committee is constituted by the Executive Directors and also consulted
by the Bank for extending any loan to the member countries to examine the appropriateness
of a loan.
5.5 The Assisting Staff
A staff of more than 10,000 people serve the World Bank of which nearly one fourth are
posted in the developing economies and in offices in about 70 countries across the globe. In
many countries the staff serves as policy advisors to the Ministry of Finance and other
Ministries.
6. Funding/ Finances of the World Bank
The Bank obtains its funds from the capital subscription of its member countries, bond
floatation on the world’s capital market and net earnings accrued from the interest payments
on the IBRD and IFC loans. An approximate of one-tenth of the subscribed capital is to be
paid to the bank directly and remainder is subject to call, if required to meet obligation. The
contribution of the member countries to their share of capital to the Bank is done in the
following manner:
1. 2% of the share in the form of Gold and US dollars which is utilised by Bank
freely to extend loans.
2. 18% of the share capital is made by the countries in their own respective
currencies, this is also used by the bank for giving loans.
3. And the remaining 80% of the share capital is at the request of the Bank and
the amount may be utilised by the Bank for the purpose of loans or for
discharging its other role and responsibilities.
IBRD also generates income by selling its triple A rated bonds and other debt securities to the
world’s financial market. The institution also charges rate of interest to the borrowers and a
major income is made through lending its own capital, the capital is the contribution of the
World Bank’ s shareholders that is built up/ accumulated over the years.
7. Vote Allocation Mechanism
Votes are allocated to the member countries at the time of membership and subsequently for
additional subscriptions to capital. Votes are allocated differently in each organization. Since
developed affluent nations have sizeable economies and contribute more so hold onto over 60

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per cent of voting power across the World Bank Group. Middle-income countries – including
global powers such as India, China and Brazil – are stuck on only around one third of the
votes. While the low-income countries cannot exceed beyond a meagre share of just 6 per
cent, averaged across the different arms of the World Bank. Simply explaining, the World
Bank has a weighted voting system. A country’s proportional vote is determined when the
country applies for membership and submits data on its economy, which is then compared to
data from member countries of a similar size. The country is then assigned a quota that will
determine the number of shares in the Bank allotted. New member countries are usually
given 250 votes plus one vote for every share.
8. Objectives of the World Bank
a. To aid and assist its member countries for their economic reconstruction and
development.
b. To assist the member nations to meet the deficit in the balance of Payments by
providing loans.
c. To work towards balance development of international trade.
d. To work towards creating a pro investment environment.
e. To work towards balanced economic growth and stability at a global level.
f. To encourage and promote infrastructural development in the developing and less
developed parts of the world.
g. To encourage the member nations to work towards good governance in their
respective countries.
h. To promote the idea of sustainable development.
9. Role and Functions of the World Bank
The World Bank has been engaged in multifarious roles since it was established. With the
core idea of working for humanity and upliftment of all it is continually making endeavours
to meet its objectives. A glimpse into the role and functions performed will give the readers a
better understanding about the World Bank.
a. The World Bank has assisted the war devastated economies to work for their
reconstruction and development. It gave its first loan to France followed by
Netherlands, Denmark and other European countries for their economic recovery and
re establishment. But soon the Marshall plan was rolled out in 1948 to aid Western
Europe in its recovery, the World Bank shifted its focus to the needs of its members in
Latin America, Africa, and Asia.
b. The World Bank strives to bridge the gap between the rich and the poor nations of
the world. To give momentum to economic growth the World Bank funded large
infrastructural projects like dams, roads, electric grids, irrigation system etc in many

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poor nations of Asia and Africa during the 1950s and 60s.Through such initiative the
World Bank sought to accelerate growth.
c. It is actively engaged in lifting the poor countries from the grip of poverty and
stagnation by diverting the resources from the rich countries to the poor countries,
especially Africa.
d. The World Bank extends its support through lending, advisory, monitoring and
supervisory services to governments across the globe so that they can reform their
economies, strengthen the banking system and improve infrastructure and create a
favourable environment for private investment.
e. The World Bank provides customised solutions to the middle-income countries to
come out of poverty and for fueling their economic growth.
f. It works towards the capacity building of the recipient nations. The World Bank
encourages the recipient developing nations to benefit itself through the policy advice,
research and analysis and also technical assistance and thus, regularly upgrade itself.
The developing and middle income countries are also encouraged to participate in
conferences and seminars and acquaint themselves with new innovative developments
that can boost the economic outcomes. For the purpose of providing technical service
and assistance, the Bank has established ” The Economic Development Institute” and
the Staff College in Washington.
g. Inorder to serve the global needs and to be an institution for providing cutting edge
knowledge and expertise, the World Bank is constantly engaged in seeking to
improve the way it gathers and shares knowledge and information and also upon its
engagement with the clients and people at large.
h. Besides, providing low interest or no interest loans and grants to the various
governments in support to improvise agriculture, health, education, sanitation, water
supply, the World Bank also encourages the development of the industries in the
developing and under developed nations by introducing economic reforms.
i. The World Bank promotes foreign investments by guaranteeing the loans.
j. The World Bank encourages all its members to work for the upgradation of the social
indicators like health, education, sanitation; undertake poverty eradication
programmes; address unemployment and inequalities; provide effective and good
governance based on transparency, accountability, democratic ideals. In a nutshell, the
well being and the overall development of all being of the globe is the concern of the
World Bank.
k. In conformity with its goal of addressing social and economic inequalities, the World
Bank not only gives loans and technical assistance for various developmental projects
but also regularly monitors and supervises those through an appraisal mechanism
followed by preparing reports.

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l. Apart from encouraging its member nations to devise and implement policies related
to sustainable development,an additional thrust on combating HIV/AIDS is laid by the
World Bank. In many parts of the world a key role is played by the Bank in various
support programmes.
m. The World Bank is also engaged in inter organisational cooperation. The World Bank
is a partner to a number of programmes designed and floated by various other UN
affiliated agencies and bodies like the FAO, UNESCO,the WHO,UNCTAD,UNDP
and others for the good of humanity and inclusive world order.
n. Through its Research Policy Council established in 1983, the Bank is engaged in the
economic and social research in coordination with the research institutes and
establishments across the globe and hence provides leadership in guidance.
10. Overview of the Lending Policies of the World Bank
As against the IMF that gives loans to developing countries for a period of 3 to 5 years, the
World Bank (IBRD) gives loan for a period of 15-20years. But the rate of interest of the Bank
is higher than that of the IMF as the Bank lends money to developing economies for a longer
period of time. However, the Bank follows certain guidelines before sanctioning loan to the
member nation. They are:
1. Verification of the country’s capacity to repay the loan.
2. Loan is to be sanctioned purely on economic considerations and for income generating
activities and for those that can bring about sustainable development.
3. Loan is sanctioned if the country seeking loan is unable to procure the capital required
from any other source on reasonable terms.
4. The Bank normally sanctions loan to cover the foreign exchange component of the
project.
5. Monitoring on a regular basis is done to assess the progress and the efficacy of the
project. The purpose of monitoring is to strengthen the economies of the developing
nations so that they can graduate from the reliance on Bank ‘s resources and are able to
meet the capital needs on terms more suitable and from conventional sources of capital.
Thus, keeping in consideration the scarcity of resources and to direct the resources in projects
and in countries where most needed, the Bank follows the above guidelines.
10.1 Nature of Loans Disbursed by the World Bank
The loan given by the World Bank range over:
a. Project Loan: This is the most conventional nature of loan disbursed for a particular
project.
b. Sectoral Loan: This type of loan is usually sector specific meant to upgrade a
particular sector like agriculture, education, etc. Most part of the loan in this category

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is to bring about a specific policy change and the remaining is utilised to meet the cost
of the sector specific project.
c. Structural Adjustment Loan: The borrowing country seeking this kind of loan has
to initiate policy reforms as prescribed by the World Bank. These usually include
privatisation, liberalising industry and trade, removal of trade barriers, promoting free
market to encourage competition and flexibility among others.
11. Criticism of the World Bank
Over the years the World Bank has overhauled its role and responsibilities to create a better
world, free of political corruption and malpractices; free of social and economic imbalances;
free of disease, hunger and malnutrition; free of environmental catastrophes and ecological
imbalances; free of unequal trade and economic imbalances and for many more such targeted
goals the institution has been extending its financial and other resources to countries in
Africa, South Asia, Central Asia, Europe Latin America and the Carribean. Despite the Bank’
s active efforts in scaling up initiatives to help bridge the gap between the rich and the poor
nations; help countries overcome their development challenges; create equality of opportunity
and create a conducive environment for inclusive and holistic growth for one and all, it is not
free of criticism. Unlike the corporate globalists who glorify the World Bank, the IMF and
the WTO as an essential and beneficial institutions engaged in the task of formulating new
trade and commerce rules to liberalise economies of the world and to give push to prosperity,
the critics condemn the institutions for their excesses and high handedness and accuse the
institutions for the lopsided development in the world. The criticism against the World Bank
range over large many issues, some are as follows:
a. The establishment of the World Bank was for the initial few years was propagated as
an apolitical effort to rebuild the war affected economies but the critics were of the
view that the World bank came into existence to expand the reach of Western
capitalist ideas to counter the spread of Soviet Union led socialist ideology.
b. The governance structure of the World bank is fundamentally flawed according to the
critics. The political power imbalance in the World bank relegates the poor and
developing nations to weak and marginalised status. Since the voting shares/ rights
are principally based on the size of the economy, the poor countries who are often at
the receiving ends (recipient of loans) are structurally under represented in the
decision making processes. The World Bank policies are designed by the rich but
directed for and implemented by the poor, highlighting the system’s undemocratic
nature. Thus the World Bank aggravates the already existing imbalance between the
world’s rich and the poor. The civil society has often raised concern over the under
representation of the low and middle income countries in the decision making and
have demanded the replacement of the opaque decision making system by a
transparent and accountable one.

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c. The critics accuse the bank jeopardising the sovereignty of the borrowing countries’.
The imposition of the western values in the garb of financing programmes and
projects often threaten the traditional and local values and characteristics of the debt
taking nations.
d. The critics have also condemned the Structural Adjustment Policies (SAP) that are a
set of macroeconomic policy prescriptions which have been imposed on the poor and
developing nations to ensure debt repayment. These structural economic reforms
restrict the poor and developing nations to spend money on the social sectors like
health, education and other social sectors. Moreover, complying by the
conditionalities the thrust on privatisation of the basic and essential services like
water, education, health, electricity etc is laid that burns a big hole in the pocket of the
consumers. In such a scenario the social welfare programmes of the state takes a back
seat and aggravates domestic challenges often manifested in the form of social
movements and uprising by different affected sections of the society within the
developing nations.
e. The concerns are raised over the dominance of the G-7 nations in the policy making.
Being the largest donors they have more votes that gives them weightage over the less
developed nations. The latter often argue that they are usually not consulted for
matters that are directly related to them.
f. The Bank and the IMF encourages the nations to promote exports in order to make
repayment of the debt within the stipulated time frame and since all the loan recipient
nations are made to do so, this eventually favours the consumers of the Western
countries. The stiff competition faced by the exporters in the foreign markets forces
them to lower their prices thus putting them at a losing end. The critics therefore
argue that the neo liberal policies have resulted in widening the income inequalities
between the rich and the poor nations.
g. The critics have sought to draw attention towards the ethical issues concerning the
World Bank funded projects. The large scale infrastructure projects like hydro electric
power plants in many of the developing countries have caused mass displacement and
dislocation of the indigeneous communities encouraging the civil society to raise
voice against the serious human rights violations in the name of development and
growth. The fate and the destiny of the tribal and the indigeaneous communities is at
stake who not only lose their homes and occupation but also their right to self
determination. However, the concern raised by the civil society over these issues is
falling on deaf ears.
h. The ecological imbalance and loss of natural resources due to World Bank promoted
policies have led to serious challenges in many of the poor and developing nations.
For the timely repayment of loans, the export is given primacy for which the over
exploitation and utilisation of natural resources takes place, forests are being cleared

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that produce a green house effect and cause abrupt climatic changes. Moreover, in
order to have a better produce of the export crops like coffee, tea, rice etc chemicals
are pumped for better produce that leads to the depletion of the soil quality in the long
run and the continuous it exposure of the farmers to chemicals has also proved life
threatening. It would not be an exaggeration to mention that the pace at which the
minerals are being ripped out of mines, are threatening for both the humans and the
environment.
i. The critics defy the argument that economic growth is the panacea of all evils and
challenges. The claim made by the International financial Institution including the
World Bank that promotes neo liberal policies saying that it would spur economic
growth and that the benefits would trickle down and benefit all, are countered by the
critics. The critics have opined that the beneficiaries never have the intent to benefit
the lower in the hierarchy thus the inequalities prevail. The supporters of the World
Bank policies say ” a rising tide floats all boats” while the critics countering say ” But
for those who don ‘t own boats or have leaky boats, a high tide means being caught in
an unfavorable and threatening situation.
j. The critics condemn the World Bank for not taking development in the real sense and
in all its earnestness rather accuse the Bank for pursuing the policy of controlling and
of intervening in the internal affairs of the poor and developing nations. The Bank is
accused to be following a neo colonial approach. According to the critics since the
direct colonial rule would no longer be tolerated,the northern elites have found a new
way to establish their control over the countries of the South.
k. The World Bank’s role as a crusader of addressing climate change has been seriously
taken up and debated by the civil society and the academicians. The Bank’ s role as a
central player in climate change mitigation and adaptation is in direct conflict with its
carbon intensive lending portfolio and its continuing financial support for heavily
polluting industries.
l. The critics have also raised finger to point the fact that besides the voting share and
the U.S’s share in the bank that gives the United States overriding authority, the
president of the Bank is always an American who needless to say works as directed. It
is also highlighted that the multilateral institutions including the World Bank is used
by the United States to meet its foreign policy goals.
12. Conclusion
There has been sharp criticism over the governance structure, voting system and the policies
of the World Bank from all quarters; from people both inside the Bank and outside the Bank;
those framing policies and those being affected by policies and from the Civil society and the
INGOs and academicians who have raised accusations on the World Bank for the neglect of
human and environmental rights. Yet, the Bank’s pioneering role in eradicating poverty;
ending hunger and starvation; creating economic opportunities for all; promoting health and

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well being; addressing gender inequality etc establishes it as an institution of pre-eminence.

For more than seven decades, the institution’s premier leadership and vision has brought
tremendous change in the social and economic life of people of many developing countries.
The World Bank and its affiliated bodies are continually in the process of meeting the new
challenges and coming upto the expectations of the global community not just to fulfill the
economic aspirations but to create a world where everyone breathes in “air of freedom and
hope”. And in line with meeting such goals and in setting new benchmarks, the institution is
working in tandem with the other institutions, government and non government bodies in
order to have a more realistic assessment of the problems at the grass root level that would
eventually help in delivering more practical and feasible solutions too. Change, growth and
renewal are central to the World Bank group’ s history and with these values and mission of
shared prosperity many of the countries have undergone transformation that is visible and
documented.
Undeniably, the development breakthroughs and giving opportunity to the citizens, offering
smart policies alternatives that have lifted millions out of poverty, creating new and
sustainable investment opportunities, infrastructure growth, improved social indicators is
credited to the World Bank. However, development and growth have no saturation point nor
do the challenges ever come to an end. Poised to be a leading global organisation, the World
Bank, is constantly making endeavours to improvise and provide excellent delivery models.
The Bank has assumed an important position in the economic growth and development of
developing and poor economies and is committed to reachout to the most needy till
development in their respective societies become self sustainable. However, the reforms
making it more transparent, democratic combined with efforts to make it an inclusive
multilateral body and bringing emerging developing nations in decision making are certainly
required.
It, nevertheless, is an eminent institution without which pulling out poor countries from the
grip of poverty seems impossible.
13. Learning Outcome
After reading and understanding this chapter learners would be able to:
1. Understand the basic difference between the World Bank and the World Bank group.
2. Explain the organisational structure of the World Bank
3. Acquaint themselves with the procedure pertaining to the loan disbursal by the Bank and
also the various different kinds of loans given by the World Bank.
5. Shed light on the role and responsibilities of the World Bank and also of the affiliated
institutions.
6. Make a critical assessment of the structure, functioning and the voting mechanism of the
World Bank.

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14. Test Your Knowledge

Q.1 Discuss the objectives of the World Bank.
Q.2 Explain in detail the organisational structure of the World Bank.
Q.3 Throw light on the functions performed by the World Bank.
Q.4 In the light of the role performed by the ICSID. Discuss its significance.
Q.5 Critically evaluate the role of the Bank
15. Reference List/Suggested Readings
1. Ranis, Gustav. Vreeland, J.R. Kosack, Stephen. (EDs) (2006) Globalization and the
Nation State The impact of the IMF and the World Bank. Routledge: London and
New York (2006).
2. Cavanagh, John. (2004) Alternatives to Globalisation: A Better World Is Possible
Berrett-Koehler Publishers.
3. Ariel, Buira (Ed) (2003) Challenges to the World Bank and the IMF: The Developing
Country Perspectives. Wimbledon Publishing Company, London, U.K
4. A Guide to the World Bank (Third Edition)(2011) published by the World Bank,
Washington D.C.
5. Kutting, Gabriela. (2009) Conventions, Treaties and Other Responses to the Global
Issues: Encyclopedia of Life Support Systems.Vol.2 EOLOSS publications, Oxford
U.K.
6. Dutta, Bholanath (2010) International Business Management: Text and Cases. Excel
Books, New Delhi.

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Lesson-2

International Monetary Fund (IMF)

1. Multilateral Agreements: A Brief History

A regional trade agreement is an economic trade agreement to reduce tariffs and restrictions
on trade between two or more nations within a certain region. There are currently 205
agreements in force as of July 2007. A total of 300 regional trade agreement have been
reported to the World Trade Organization (WTO). There are a variety of regional trade
agreement with some being quite complex such as European Union (EU), while others are far
less intensive like North American Free Trade Agreement (NAFTA). Regional trade
agreement are preferential trade agreements and are of different forms which are open for
preferential treatment of its member countries.
First, a regional trade agreement can be a Free Trade Association which is a group of two or
more customs territories have eliminated tariffs and other trade restrictions on substantially
all trade with non-member countries. Second, a regional trade agreement may be a Customs
Union where two or more customs territories have an free trade association which also apply
a common external tariff on goods from non-members. Third, a regional trade agreement can
be a regional economic integration agreement between the member countries which includes
the free movement of capital as well as goods and services, a common currency and a
common economic policy. Some of the examples of regional trade agreements are: The
European Union, European Free Trade Association, North American Free Trade Agreement,
Southern Common Market, Common Market of Eastern and Southern Africa, and ASEAN
Free Trade Area.
Regional Trade Agreements have become in recent years a very prominent feature of the
Multilateral Trading System. The surge in regional trade agreements has continued unabated
since the early 1990s. Some 421 regional trade agreement have been notified to the
GATT/WTO up to December 2008.
Multilateral trade agreements are between many nations at one time. For this reason, they are
very complicated to negotiate, but are very powerful once all parties sign the agreement. The
primary benefit of multilateral agreements is that all nations get treated equally, and so it
levels the playing field, especially for poorer nations that are less competitive by nature. The
Doha round of trade agreements is a multilateral trade agreement between all the members of
the World Trade Organization. While many such agreements exist, the main trade agreements
include:
1. The General Agreement on Tariffs and Trade (GATT)
2. The General Agreement on Trade and Services (GATS), which covers services including
health services, water and other utilities.

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3. The Agreement on Trade Related Aspects of Intellectual Property Rights (TRIPS),

which covers patent, copyright and trademarks on a wide assortment of products from
software to medicines.
4. The Agreement on Agriculture.
5. The Agreement on the Application of Sanitary and Phytosanitary Measures.
6. The Agreement on Technical Barriers to Trade.
7. The Agreement on Trade-Related Investment Measures (TRIMS), which covers the rules
and practices that countries must adhere to regarding the treatment of foreign investors,
including foreign investors in private health delivery and medicine production.
8. The Anti-dumping Agreement.
9. The Agreement on Customs Valuation.
2. Multilateral Institutions: Structure and Working
The International Monetary Fund (IMF)
The IMF was founded more than 60 years ago toward the end of World War II. The founders
aimed to build a framework for economic cooperation that would avoid a repetition of the
disastrous economic policies that had contributed to the Great Depression of the 1930s and
the global conflict that followed. Since then the world has changed dramatically, bringing
extensive prosperity and lifting millions out of poverty, especially in Asia. The IMF’s main
purpose is to provide the global public good of financial stability. More specifically, the Fund
continues to provide a forum for cooperation on international monetary problems and
facilitate the growth of international trade, thus promoting job creation, economic growth,
and poverty reduction. It also promotes exchange rate stability and an open system of
international payments; and lends countries foreign exchange when needed, on a temporary
basis and under adequate safeguards, to help them address balance of payments problems.
The International Monetary Fund (IMF) is an organization of 185 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.
Mainly, the IMF works to foster global growth and economic stability. It provides policy
advice and financing to members in economic difficulties and also works with developing
nations to help them achieve macroeconomic stability and reduce poverty. The IMF is
uniquely placed to help member governments take advantage of the opportunities and
manage the challenges posed by globalization. It also tracks global economic trends and
performance, alerts its member countries when it sees problems on the horizon, provides a
forum for policy dialogue, and passes on know-how to governments on how to tackle
economic difficulties.

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Important Actions of IMF

Marked by massive movements of capital and abrupt shifts in comparative advantage,
globalization affects countries’ policy choices in many areas, including labor, trade, and tax
policies. Helping a country to benefit from globalization while avoiding its downsides is one
of the important functions of the IMF. The following are some of the key actions provided by
the IMF to its member countries:
1. Policy advice to governments and central banks based on analysis of economic trends
and cross-country experiences.
2. Research, statistics, forecasts, and analysis based on tracking of global, regional, and
individual economies and markets.
3. Loans to help countries overcome economic difficulties.
4. Concessional loans to fight poverty in developing countries; and
5. Technical assistance and training to help countries improve the management of their
economies.
Some of the Recent Dynamic Functions of the IMF in the Globalized Global Economy
With cross-border financial flows increasing sharply in recent decades, the interdependence
of countries has deepened. The recent turbulence and financial crisis in advanced economies
credit markets has demonstrated that domestic and international financial stability cannot be
taken for granted, even in the world’s most wealthy countries. The spike in food and fuel
prices, which has hit import-dependent poor and middle-income countries particularly hard,
is another aspect of the globalized economy. For these very issues, the IMF’s response was
remarkable and has reframed some of its functions as follows:
1. Enhancing IMF lending facilities: The IMF is upgrading its lending facilities to enable
it to better its serve members. It has created a new Short-Term Liquidity Facility
designed to help emerging market countries with a track record of sound policies address
fallout from the current financial crisis. It has also revamped its Exogenous Shocks
Facility to facilitate the disbursement of aid to countries hit by the fuel and food crisis.
The institution has launched a review of its financing role in member countries, to make
sure it has the right instruments to meet countries’ needs in a world characterized by
growing and increasingly complex cross-border financial flows.
2. Strengthening the monitoring of global, regional, and country economies: The IMF
has taken several steps to improve economic surveillance, its framework for providing
advice to member countries on macroeconomic policies. It is emphasizing research into
the links between the financial sector and the real economy and the sharing of cross-
country experiences. It has published new guidance on how to analyze and advise on
exchange rates, and is paying more attention to the impact of the world’s most important
economies on other countries’ economies. And it is improving its ability to warn
member countries of risks and vulnerabilities in their economies.
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3. Helping resolve global economic imbalances: The IMF’s analysis of global economic
developments, contained in its World Economic Outlook, provide finance ministers and
central banks governors with a common framework for discussing the global economy.
The IMF now also has the ability to call for multilateral consultations to discuss specific
problems facing the global economy with a select group of countries an innovative way
of facilitating collective action among key players in the global economy.
4. Analyzing capital market developments: The IMF is devoting more resources to the
analysis of global financial markets and their linkages with macroeconomic policy.
Twice a year, it publishes the Global Financial Stability Report, which provides up-to-
date analysis of developments in global financial markets. IMF staff also work with
member countries to help them identify potential risks to financial stability, including
through the Financial Sector Assessment Program. The IMF also offers training to
country officials on how to manage their financial systems, monetary and exchange
regimes, and capital markets. The IMF is currently facilitating the drafting of voluntary
guidelines for Sovereign Wealth Funds and works closely with the Financial Stability
Forum to promote international financial stability.
5. Assessing financial sector vulnerabilities: Resilient, well-regulated financial systems
are essential for macroeconomic stability in a world of ever-growing capital flows. The
IMF and the World Bank jointly run the Financial Sector Assessment Program, aimed at
alerting countries to vulnerabilities and risks in their financial sectors. IMF and World
Bank staff also advises on how to strengthen oversight and supervision of banks and
other financial institutions.
6. Working to cut poverty: At present, more than a billion people are living on less than
$1 a day, and more than three-quarters of a billion people are malnourished. The IMF’s
role in low-income countries is changing as these countries grow and mature. But its
central goal remains the same: to help promote economic stability and growth, laying the
ground for deep and lasting poverty reduction. Its current main priority is to help low
and middle-income countries cope with the food and fuel price shock.
7. Improving IMF governance: In May 2008, the IMF’s membership approved a two-
year package of reforms to improve representation of members at the Fund. The IMF is
also becoming leaner and more efficient. It is trimming expenditure and reorganizing the
way it earns revenue to pay for its operations.
8. Greater accountability and transparency: The IMF publishes almost all of its annual
economic health checks of member countries.
Structure of the IMF
The IMF has a management team and 17 departments that carry out its country, policy,
analytical, and technical work. One department is charged with managing the IMF’s
resources. This section also explains where the IMF gets its resources and how they are used.

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Managing Director
The IMF is led by a Managing Director, who is head of the staff and Chairman of the
Executive Board. He is assisted by a First Deputy Managing Director and two other Deputy
Managing Directors. The Management team oversees the work of the staff, and maintain
high-level contacts with member governments, the media, non-governmental organizations,
think tanks, and other institutions. According to the IMF’s Articles of Agreement, the
Managing Director “shall be chief of the operating staff of the Fund and shall conduct, under
the direction of the Executive Board, the ordinary business of the Fund. Subject to the general
control of the Executive Board, he shall be responsible for the organization, appointment, and
dismissal of the staff of the Fund.” The IMF’s Executive Board is responsible for selecting
the Managing Director. Any Executive Director may submit a nomination for the position,
consistent with past practice. When more than one candidate is nominated, as has been the
case in recent years, the Executive Board aims to reach a decision by consensus.
Staff of International Civil Servants
The IMF currently employs about 2,600 staff, half of whom are economists. Most of them
work at the IMF’s Washington, D.C., headquarters but a few serve in member countries
around the world in small IMF overseas offices or as resident representatives. With its nearly
universal membership, the IMF strives to employ a staff that is as diverse and broadly based
geographically as possible. The IMF has eight functional departments that carry out its
policy, analytical, and technical work and manage its financial resources. They are as
follows:
Finance Department: It mobilizes, manages, and safeguards the IMF’s financial resources.
Fiscal Affairs Department: It provides policy and technical advice on public finance issues
to member countries.
Monetary and Capital Markets Department: It monitors financial sectors and capital
markets, and monetary and foreign exchange systems, arrangements, and operations. It also
prepares the Global Financial Stability Report.
Legal Department: It advises management, the Executive Board, and the staff on the
applicable rules of law. Prepares decisions and other legal instruments and provides technical
assistance to member countries.
Strategy, Policy, and Review Department: This department designs, implements, and
evaluates IMF policies on surveillance and the use of its financial resources.
Research Department: It monitors the global economy and the economies and policies of
member countries and undertakes research on issues relevant to the IMF. It also prepares the
World Economic Outlook.
Statistics Department: This department develops internationally accepted methodologies
and standards. It also provides technical assistance and training to promote best practices in
the dissemination of economic and financial statistics.
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IMF Institute: It provides training in macroeconomic analysis and policy for officials of
member countries and IMF staff.
Further, the IMF’s five area, or regional, departments are responsible for advising member
countries on macroeconomic polices and the financial sector, and for putting together, when
needed, financial arrangements to support economic reform programs. These are African
Department which covers 44 countries, Asia and Pacific Department covers over 33
countries, European Department covers 42 countries, Middle East and Central Asia
Department covers 32 countries and Western Hemisphere Department covers 34 countries.
The IMF also has four support departments. They are as follows: External Relations
Department which works to promote public understanding of and support for the IMF and its
policies, Technology and General Services Department which provides services to manage
information; facilitates communication, including across languages; and helps build an
effective work environment, Secretary’s Department which organizes and reports on the
activities of the IMF’s governing bodies and provides secretariat services to them. It also
assists management in preparing the work program of the Executive Board and other official
bodies. It is the creator and custodian of IMF records and finally Human Resources
Department which provides staff with a full range of information and personnel services.
Manages the system of compensation and benefits, oversees staff training, offers career and
education counseling, and provides legal services.
IMF also has offices around the world. The IMF has small offices in countries around the
world. These comprise resident representative posts; overseas offices (Brussels, Geneva, New
York, Paris, Tokyo); and regional technical assistance centers and training institutes.
The IMF currently has a near-global membership of 185 countries. To become a member, a
country must apply and then be accepted by a majority of the existing members. Upon
joining, each member of the IMF is assigned a quota, based broadly on its relative size in the
world economy which reflects the changing global economic realities, especially the
increased weight of major emerging markets in the global economy. A member’s quota
defines basic aspects of its financial and organizational relationship with the IMF, including
which includes the following:
1. Subscriptions: A member’s quota subscription determines the maximum amount of
financial resources the member is obliged to provide to the IMF. A member must pay its
subscription in full upon joining the IMF: up to 25 percent must be paid in the IMF’s
own currency, called Special Drawing Rights (SDRs) or widely accepted currencies
(such as the dollar, the euro, the yen, or pound sterling), while the rest is paid in the
member’s own currency.
2. Voting power: The quota largely determines a member’s voting power in IMF
decisions. Each IMF member has 250 basic votes plus one additional vote for each SDR
100,000 of quota. Accordingly, the United States has 371,743 votes (16.83 percent of the
total), and Palau has 281 votes (0.01 percent of the total). The newly agreed quota and

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voice reform will result in a significant shift in the representation of dynamic economies,
many of which are emerging market countries, through a quota increase for 54 member
countries. A tripling of the number of basic votes is also envisaged as a means to give
poorer countries a greater say in running the institution.
3. Access to financing: The amount of financing a member can obtain from the IMF (its
access limit) is based on its quota. Under Stand-By and Extended Arrangements, which
are types of loans, a member can borrow up to 100 percent of its quota annually and 300
percent cumulatively. However, access may be higher in exceptional circumstances.
4. SDR allocations: Allocations of SDRs, the IMF’s unit of account, is used as an
international reserve asset. A member’s share of general SDR allocations is established
in proportion to its quota.
Governance Structure
The IMF’s mandate and governance have evolved along with changes in the global economy,
allowing the organization to retain a central role within the international financial
architecture.
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.
While the Board of Governors has delegated most of its powers to the IMF’s Executive
Board, it retains the right to approve quota increases, special drawing right (SDR) allocations,
the admittance of new members, compulsory withdrawal of members, and amendments to the
Articles of Agreement and By-Laws.
The Board of Governors also elects or appoints executive directors and is the ultimate arbiter
on issues related to the interpretation of the IMF’s Articles of Agreement. Voting by the
Board of Governors usually takes place by mail-in ballot. The Boards of Governors of the
IMF and the World Bank Group normally meet once a year, during the IMF-World Bank
Spring and Annual Meetings, to discuss the work of their respective institutions. The
Meetings, which take place in September or October, have customarily been held in
Washington for two consecutive years and in another member country in the third year.
The Annual Meetings usually include two days of plenary sessions, during which Governors
consult with one another and present their countries’ views on current issues in international
economics and finance. During the Meetings, the Boards of Governors also make decisions
on how current international monetary issues should be addressed and approve corresponding
resolutions.
The Annual Meetings are chaired by a Governor of the World Bank and the IMF, with the
chairmanship rotating among the membership each year. Every two years, at the time of the

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Annual Meetings, the Governors of the Bank and the Fund elect Executive Directors to their
respective Executive Boards.
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 185 governors. Its structure mirrors that of the
Executive Board and its 24 constituencies. As such, the IMFC represents all the member
countries of the Fund. The IMFC meets twice a year, during the Spring and Annual Meetings.
The Committee discusses matters of common concern affecting the global economy and also
advises the IMF on the direction its work. At the end of the Meetings, the Committee issues a
joint communiqué summarizing its views. These communiqués provide guidance for the
IMF’s work program during the six months leading up to the next Spring or Annual
Meetings. There is no formal voting at the IMFC, which operates by consensus. The
Development Committee is a joint committee, tasked with advising the Boards of Governors
of the IMF and the World Bank on issues related to economic development in emerging and
developing countries. The committee has 24 members (usually ministers of finance or
development). It represents the full membership of the IMF and the World Bank and mainly
serves as a forum for building intergovernmental consensus on critical development issues.
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 185 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. The Board discusses everything from the IMF staff’s annual health checks of
member countries’ economies to economic policy issues germane to the global economy. The
board normally makes decisions based on consensus but sometimes formal votes are taken.
At the end of most formal discussions, the Board issues what is known as a summing up,
which summarizes its views. Informal discussions may be held to discuss complex policy
issues still at a preliminary stage.
Governance Reform
Important progress was made in the reform of the Fund’s governance in 2006-08, including
the initiation of a process to realign members’ voting power. However, enhancing the Fund’s
legitimacy and effectiveness must also deal with the question of whether the significant
changes since the establishment of the Fund require reform of the institutional framework
through which members’ voting power is actually exercised. Among other things, this
requires careful consideration of the respective roles and responsibilities of the Board of
Governors, the IMFC, the Executive Board, and IMF management.

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Internal Watchdog
The IMF’s work is reviewed on a regular basis by an internal watchdog, the Independent
Evaluation Office (IEO), established in 2001. The IEO is fully independent from IMF
management and operates at arm’s length from the Executive Board, although the Board
appoints its director. The IEO’s mission is to enhance the learning culture within the IMF,
strengthen its external credibility, promote greater understanding of the work of the Fund,
and support institutional governance and oversight.
The IEO establishes its own work program, selecting topics for review based on suggestions
from stakeholders inside and outside the IMF. Its recommendations strongly influence the
Fund’s work. It has recently reviewed the IMF’s engagement with sub-Saharan Africa, its
advice to member countries on exchange rate policy, and its governance.
Ethics Office and Whistleblower Hotline
The IMF also has its own Ethics Office. It was established as an independent arm of the Fund
in 2000, the Office provides advice and guidance to IMF staff, and undertakes investigations
into allegations of unethical behavior and misconduct. An Integrity Hotline a 24-hour whistle
blowing system was launched in 2008.
Engagement with Intergovernmental Groups
Official groups, such as the Group of Seven (known as the G7) and the Intergovernmental
Group of Twenty-Four on International Monetary Affairs and Development (known as the
G24), are also actively engaged in the work of the IMF. The G7 finance ministers and central
bank governors meet at least twice annually to monitor developments in the world economy
and assess economic policies. The Managing Director of the IMF is usually invited to
participate in those discussions. Russia has joined the group, thereby forming the Group of
Eight. The G8 functions as a forum for discussion of economic and financial issues among
the major industrial countries.
The G24 consists of 24 countries from Africa, Latin America and the Caribbean, and Asia.
The G24 seeks to coordinate the positions of developing and emerging market countries on
international monetary and development finance issues and to ensure that their interests are
adequately represented in negotiations on international monetary matters. Its meetings
usually take place twice a year, prior to the IMFC and Development Committee meetings, to
enable developing country members to discuss agenda items beforehand.
Working of the IMF
The IMF’s fundamental mission is to help ensure stability in the international system. It does
so in three ways: keeping track of the global economy and the economies of member
countries; lending to countries with balance of payments difficulties; and giving practical
help to members. The following are the thrust areas of IMF’s working:

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Economic surveillance
When a country joins the IMF, it agrees to subject its economic and financial policies to the
scrutiny of the international community. It also makes a commitment to pursue policies that
are conducive to orderly economic growth and reasonable price stability, to avoid
manipulating exchange rates for unfair competitive advantage, and to provide the IMF with
data about its economy. The IMF’s regular monitoring of economies and associated provision
of policy advice is intended to identify weaknesses that are causing or could lead to financial
or economic instability. This process is known as surveillance.
Country Surveillance
Country surveillance takes the form of regular (usually annual) comprehensive consultations
with individual member countries, with interim discussions as needed. The consultations are
referred to as “Article IV consultations” because they are required by Article IV of the IMF’s
Articles of Agreement. During an Article IV consultation, an IMF team of economists visits a
country to collect economic and financial data and to discuss the country’s economic policies
with government and central bank officials. IMF staff missions also often meet with
parliamentarians and representatives of business, labor unions, and civil society.
The team reports its findings to IMF management and then presents them for discussion to
the Executive Board, which represents all of the IMF’s member countries. A summary of the
Board’s views is subsequently transmitted to the country’s government. In this way, the
views of the global community and the lessons of international experience are brought to bear
on national policies. Summaries of most discussions are released in Public Information
Notices and are posted on the IMF’s web site, as are most of the country reports prepared by
the staff.
Regional Surveillance
Regional surveillance involves examination by the IMF of policies pursued under regional
arrangements such as currency union including, the euro area, the West African Economic
and Monetary Union, the Central African Economic and Monetary Community, and the
Eastern Caribbean Currency Union. Regional economic outlook reports are also prepared for
the five major regions, discussing economic developments and key policy issues in Asia
Pacific, Europe, Middle East and Centra Asia, Sub-Saharan Africa, and the Western
Hemisphere.
Global Surveillance
Global surveillance entails reviews by the IMF’s Executive Board of global economic trends
and developments. The main reviews are based on the World Economic Outlook reports and
the Global Financial Stability Report, which covers developments, prospects, and policy
issues in international financial markets. Both reports are published twice a year, with
updates being provided on a quarterly basis. In addition, the Executive Board holds more
frequent informal discussions on world economic and market developments. The IMF has

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also introduced the concept of multilateral consultations, involving specific countries, to

foster debate and develop policy actions designed to address problems of global or regional
importance.
Technical Assistance
The IMF shares its expertise with member countries by providing technical assistance and
training in a wide range of areas, such as central banking, monetary and exchange rate policy,
tax policy and administration, and official statistics. The objective is to help improve the
design and implementation of members’ economic policies, including by strengthening skills
in institutions such as finance ministries, central banks, and statistical agencies. The IMF has
also given advice to countries that have had to reestablish government institutions following
severe civil unrest or war.
There are different types of technical assistance provided by the IMF. The IMF’s technical
assistance takes different forms, according to needs, ranging from long-term hands-on
capacity building to short-notice policy support in a financial crisis. Technical assistance is
delivered in a variety of ways. IMF staff may visit member countries to advise government
and central bank officials on specific issues or the IMF may provide resident specialists on a
short- or a long-term basis. Technical assistance is integrated with country reform agendas as
well as the IMF’s surveillance and lending operations. The IMF is providing an increasing
part of its technical assistance through regional centers located in Gabon, Mali, and Tanzania
for Africa; in Barbados for the Caribbean; in Lebanon for the Middle East; and in Fiji for the
Pacific Islands, As part of its reform program, the IMF is planning to open four more regional
technical assistance centers in Africa, Latin America, and central Asia. The IMF also offers
training courses for government and central bank officials of member countries at its
headquarters in Washington, D.C., and at regional training centers in Austria, Brazil, China,
India, Singapore, Tunisia, and the United Arab Emirates.
Partnership with Donors
Contributions from bilateral and multilateral donors are playing an increasingly important
role in enabling the IMF to meet country needs in this area, now financing about two thirds of
the IMF’s field delivery of technical assistance. Strong partnerships between recipient
countries and donors enable IMF technical assistance to be developed on the basis of a more
inclusive dialogue and within the context of a coherent development framework. The benefits
of donor contributions thus go beyond the financial aspect.
The IMF is currently seeking to leverage the comparative advantages of its technical
assistance to expand donor financing to meet the needs of recipient countries. As part of this
effort, the Fund is strengthening its partnerships with donors by engaging them on a broader,
longer-term and more strategic basis.
The idea is to pool donor resources in multi-donor trust funds that would supplement the
IMF’s own resources for technical assistance while leveraging the Fund’s expertise and
experience. Expansion of the multi-donor trust fund model is envisaged on a regional and

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topical basis, offering donors different entry points according to their priorities. The IMF is
planning to establish a menu of seven topical trust funds over the next two years, covering
anti-money laundering/combating the financing of terrorism; fragile states; public financial
management; management of natural resource wealth, public debt sustainability and
management, statistics and data provision; and financial sector stability and development.
Lending by the IMF
A country in severe financial trouble, unable to pay its international bills, poses potential
problems for the international financial system, which the IMF was created to protect. Any
member country, whether rich, middle-income, or poor, can turn to the IMF for financing if it
has a balance of payments need—that is, if it cannot find sufficient financing on affordable
terms in the capital markets to make its international payments and maintain a safe level of
reserves.
IMF loans are meant to help member countries tackle balance of payments problems,
stabilize their economies, and restore sustainable economic growth. The IMF is not a
development bank and, unlike the World Bank and other development agencies, it does not
finance projects. The IMF lending serves three main purposes. First, it can smooth adjustment
to various shocks, helping a member country avoid disruptive economic adjustment or
sovereign default, something that would be extremely costly, both for the country itself and
possibly for other countries through economic and financial ripple effects (known as
contagion). Second, IMF programs can help unlock other financing, acting as a catalyst for
other lenders. This is because the program can serve as a signal that the country has adopted
sound policies, reinforcing policy credibility and increasing investors’ confidence. Third,
IMF lending can help prevent crisis. The experience is clear: capital account crises typically
inflict substantial costs on countries themselves and on other countries through contagion.
The best way to deal with capital account problems is to nip them in the bud before they
develop into a full-blown crisis.
However, the IMF imposes certain condition while lending to its member countries. For
example, when a member country approaches the IMF for financing, it may be in or near a
state of economic crisis, with its currency under attack in foreign exchange markets and its
international reserves depleted, economic activity stagnant or falling, and a large number of
firms and households going bankrupt. The IMF discusses with the country the economic
policies that may be expected to address the problems most effectively. The IMF and the
government agree on a program of policies aimed at achieving specific, quantified goals in
support of the overall objectives of the authorities’ economic program. For example, the
country may commit to fiscal or foreign exchange reserve targets.
Loans are typically disbursed in a number of installments over the life of the program, with
each installment conditional on targets being met. Programs typically last up to 3 years,
depending on the nature of the country’s problems, but can be followed by another program if
needed. The government outlines the details of its economic program in a “letter of intent” to

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the Managing Director of the IMF. Such letters may be revised if circumstances change. For
countries in crisis, IMF loans usually provide only a small portion of the resources needed to
finance their balance of payments. But IMF loans also signal that a country’s economic
policies are on the right track, which reassures investors and the official community, helping
countries find additional financing from other sources.
Main Lending Facilities
The Stand-By Arrangement (SBA) is a key lending facility established in 1952. Although its
use has been declining in recent years, it has remained the most popular facility for middle-
income countries that seek financial assistance. Under its structure, financing is provided in
support of adjustment to a balance of payments need and disbursed in tranches based on
conditions spelled out in the program. The IMF’s largest loans have traditionally been
provided under SBA’s. The Short-Term Liquidity Facility was created in October 2008 to
channel funds quickly to emerging markets that have a strong track record, but that need
rapid help during the current financial crisis to get them through temporary liquidity
problems. Financing is made available without the standard phasing and loan conditions of
more traditional IMF arrangements, but borrowers are expected to maintain their strong
macroeconomic policies. In 1997, the IMF introduced the Supplemental Reserve Facility,
under which it can quickly provide large loans with very short maturities to countries going
through a capital account crisis.
The Extended Fund Facility is used to help countries address balance of payments difficulties
related partly to structural problems that may take longer to correct than macroeconomic
imbalances. A program supported by an extended arrangement usually includes measures to
improve the way markets and institutions function, such as tax and financial sector reforms,
privatization of public enterprises, and steps to make labor markets more flexible.
The IMF also provides Emergency Assistance to countries coping with balance of payments
problems caused by natural disasters or military conflicts. The interest rates are subsidized for
low-income countries.
The Trade Integration Mechanism allows the IMF to provide loans under one of its facilities
to a developing country whose balance of payments is suffering because of multilateral trade
liberalization, either because its export earnings decline when it loses preferential access to
certain markets or because prices for food imports go up when agricultural subsidies are
eliminated.
The IMF lends to low-income countries with some special treatment. Low-income countries
can borrow from the IMF at a very low, or concessional, interest rate. They can use the
Poverty Reduction and Growth Facility, which is the main vehicle by which the IMF
provides financial support to countries’ poverty-reduction strategies. The facility’s core
objectives are to promote sustainable balance of payments positions and to foster sustainable
growth, leading to higher living standards and a reduction in poverty.

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Member countries can also access the Exogenous Shocks Facility, which helps deal with
economic shocks, such as food and fuel price hikes or a natural disaster, that are beyond the
control of a government but have a significant negative impacts on the economies.
Debt Relief
In addition to concessional loans, some low-income countries are also eligible for debts to be
written off under two key initiatives. The Heavily Indebted Poor Countries (HIPC) Initiative,
introduced in 1996 and enhanced in 1999, whereby creditors provide debt relief, in a
coordinated manner, with a view to restoring debt sustainability; and The Multilateral Debt
Relief Initiative (MDRI), under which the IMF, the International Development Association
(IDA) of the World Bank, and the African Development Fund (AFDF) canceled 100 percent
of their debt claims on certain countries to help them advance toward the Millennium
Development Goals.
Further, the IMF and the World Bank complement each other’s work. Countries must join the
IMF to be eligible for World Bank membership.
Given the World Bank’s focus on antipoverty issues, the IMF collaborates closely with the
Bank in the area of poverty reduction and helping countries draw up poverty reduction
strategies. Other areas of collaboration include assessments of member countries’ financial
sectors, development of standards and codes, and improvement of the quality, availability,
and coverage of data on external debt.
Cooperating with other International Organizations
The IMF is a member of the Switzerland-based Financial Stability Forum, which brings
together government officials responsible for financial stability in the major international
financial centers, international regulatory and supervisory bodies, committees of central bank
experts, and international financial institutions. It also works with standard-setting bodies
such as the Basel Committee on Banking Supervision and the International.
Association of Insurance Supervisors
The IMF collaborates with the World Trade Organization (WTO) both formally and
informally. The IMF has observer status at WTO meetings and IMF staff contributes to the
work of the WTO Working Group on Trade, Debt, and Finance. And the IMF is involved in
the WTO-led Integrated Framework for Trade-Related Technical Assistance to Least
Developed Countries, whose other members are the International Trade Commission,
UNCTAD, UNDP, and the World Bank. The IMF has a Special Representative to the United
Nations, located at the UN Headquarters in New York.
References
 Bhagwati, Jagdish, Trade, tariffs and growth: Essays in international economics,
London Weidenfeld and Nicolson, 1969.

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 Kindleberger, Charles P, International economics, Bombay, D B Taraporevala Sons,

1973.
 Krugman, Paul, R and Obstfeld, M, International Economics: Theory and Policy,
Pearson, 2003
 Morrison, JR, Ed, Financial organization and operations of the IMF, Washington,
International monetary fund, 1998.
 Sodersten, Bo, International economics, New York: Harper and Row, 1970.
 World Bank, World Bank operations: sectoral program and policies, Washington:
World Bank, 1972.

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Lesson-3

The World Trade Organization (WTO)

The GATT and formation of WTO

Following the end of second world-war, the winning side, the United States and its allies,
decided that a prosperous and lasting peace depended not only on the creation of a stable
international political order based on principles embedded in the United Nations (UN)
Charter, but also on the creation of a stable liberal international economic order. Therefore,
the victor nations sought to create institutions that would eliminate the causes of war. Their
principles were to resolve or prevent war through the United Nations and to eliminate the
economic causes of war by establishing three international economic institutions. The three
institutions were: The International Monetary Fund (IMF), The World Bank and The
International Trade Organization (ITO). The 3 were known as the Bretton Woods. The
economic philosophy of these Bretton Woods institutions was classical economic
neoliberalism.
Originally the ITO which was negotiated in Havana, Cuba was planned to be the formal trade
management global organization in the post second world-war era. The USA did not object to
the establishment of the World Bank and the IMF but refused to agree to the ITO on the
grounds that it would cede too much sovereignty to an international body. Thus, political
disagreements especially led by USA ultimately spelled the end of the ITO as a formal
organization, yet participants considered trade issues important enough to resurrect portions
of the ITO charter and transform them into a less formal, free standing trade agreement
known as the General Agreement on Tariffs and Trade. (GATT)
The General Agreement on Tariffs and Trade (GATT), which was signed in 1947, is a
multilateral agreement regulating trade among about 150 countries. According to its
preamble, the purpose of the GATT is the “substantial reduction of tariffs and other trade
barriers and the elimination of preferences, on a reciprocal and mutually advantageous basis.”
The GATT was established in 1948 as a body to govern the rules of the international trading
system. It mainly provided the international trading rules and regulations for the world trade
to the economies. GATT presided over periods saw unprecedented growth in international
trade and commerce.
During the first twenty odd years of its existence, members of GATT focused almost entirely
on negotiations aimed at reducing tariffs, taxes on imported goods. Several rounds of
negotiations, accomplished substantial tariff reductions in the manufacturing sector among

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the then most industrialized states, the United States, the member states of the European
Economic Community, the UK and Japan.
Over the years, GATT played effective and continued role in reducing tariffs and other trade
barriers. But all was not well. As time passed new problems arose. Mainly, combined with a
series of economic recessions in the 1970s and early 1980s, drove governments to devise
other forms of protection for sectors facing increased foreign competition. High rates of
unemployment and constant factory closures led governments in Western Europe and North
America to seek bilateral market-sharing arrangements with competitors and to embark on a
subsidies race to maintain their holds on agricultural trade.
By the 1970s, with tariffs on most goods substantially reduced, and the world falling into a
depression and inflation cycle due to the twin oil price shocks, states began implementing
other non-tariff policies as a way to protect their industries from import competition.
Government policies promoting industry subsidization, export credits and legislative codes
and standards as import obstructions, collectively came to be known as non-tariff barriers to
trade.
These changes undermined GATT’s credibility and effectiveness. The Tokyo Round in the
1970s was an attempt to tackle some of these but its achievements were limited. This was a
sign of difficult time and these changes undermined GATT’s credibility and effectiveness.
The problem was not just a deteriorating trade policy environment. By the early 1980s the
General Agreement was clearly no longer as relevant to the realities of world trade as it had
been in the 1940s. For a start, world trade had become far more complex and important than
40 years before: the globalization of the world economy was underway, trade in services not
covered by GATT rules was of major interest to more and more countries, and international
investment had expanded.
The expansion of services trade was also closely tied to further increases in world
merchandise trade. Even GATT’s institutional structure and its dispute settlement system
were causing concern. These and other factors convinced GATT members that a new effort to
reinforce and extend the multilateral system should be attempted. That effort resulted in the
Uruguay Round, the Marrakesh Declaration, and the creation of the WTO.
The momentum of trade liberalization helped ensure that trade growth consistently out-paced
production growth throughout the GATT era, a measure of countries’ increasing ability to
trade with each other and to reap the benefits of trade. The rush of new members during the
Uruguay Round demonstrated that the multilateral trading system was recognized as an
anchor for development and an instrument of economic and trade reform.
The last and largest GATT round, was the Uruguay Round which lasted from 1986 to 1994.
The seeds of the Uruguay Round were sown in November 1982 at a ministerial meeting of
GATT members in Geneva. Although the ministers intended to launch a major new
negotiation, the conference stalled on agriculture and was widely regarded as a failure. In

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fact, the work programme that the ministers agreed formed the basis for what was to become
the Uruguay Round negotiating agenda.
Nevertheless, it took four more years of exploring, clarifying issues and painstaking
consensus-building, before ministers agreed to launch the new round. They did so in
September 1986, in Punta del Este, Uruguay. They eventually accepted a negotiating agenda
that covered virtually every outstanding trade policy issue. The talks were going to extend the
trading system into several new areas, notably trade in services and intellectual property, and
to reform trade in the sensitive sectors of agriculture and textiles. All the original GATT
articles were up for review. It was the biggest negotiating mandate on trade ever agreed, and
the ministers gave themselves four years to complete it.
Two years later, in December 1988, ministers met again in Montreal, Canada, for what was
supposed to be an assessment of progress at the round’s half-way point. The purpose was to
clarify the agenda for the remaining two years, but the talks ended in a deadlock that was not
resolved until officials met more quietly in Geneva the following April.
Despite the difficulty, during the Montreal meeting, ministers did agree a package of early
results. These included some concessions on market access for tropical products mainly
aimed at assisting developing countries as well as a streamlined dispute settlement system,
and the Trade Policy Review Mechanism which provided for the first comprehensive,
systematic and regular reviews of national trade policies and practices of GATT members.
The round was supposed to end when ministers met once more in Brussels, in December
1990. But they disagreed on how to reform agricultural trade and decided to extend the talks.
The Uruguay Round entered its bleakest period.
Despite the poor political outlook, a considerable amount of technical work continued,
leading to the first draft of a final legal agreement. This draft “Final Act” was compiled by
the then GATT Director-General, Arthur Dunkel, who chaired the negotiations at officials’
level. It was put on the table in Geneva in December 1991. The text fulfilled every part of the
Punta del Este mandate, with one exception — it did not contain the participating countries’
lists of commitments for cutting import duties and opening their services markets. The draft
became the basis for the final agreement.
Over the following two years, the negotiations lurched between impending failure, to
predictions of imminent success. Several deadlines came and went. New points of major
conflict emerged to join agriculture: services, market access, anti-dumping rules, and the
proposed creation of a new institution. Differences between the United States and European
Union became central to hopes for a final, successful conclusion.
In November 1992, the US and EU settled most of their differences on agriculture in a deal
known informally as the “Blair House accord”. By July 1993, US, EU, Japan and Canada
announced significant progress in negotiations on tariffs and related subjects (market access).
It took until 15 December 1993 for every issue to be finally resolved and for negotiations on
market access for goods and services to be concluded. On 15 April 1994, the deal was signed

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by ministers from most of the 123 participating governments at a meeting in Marrakesh,

Morocco which finally led to the formation of WTO. The WTO came into existence on 1st
January 1995.
The World Trade Organization (WTO)
The World Trade Organization (WTO) which came into existence on 1st January, 1995
mainly deals with the rules of trade between nations at a global or near-global level. The
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.
More specifically, WTO is an organization for liberalizing trade where it provides a forum
for governments of different economies to negotiate trade agreements between them. Unlike,
GATT its agreements now cover trade in services, and in traded inventions, creations and
designs (intellectual property).
The WTO provides a forum for negotiating agreements aimed at reducing obstacles to
international trade and ensuring a level playing field for all, thus contributing to economic
growth and development. The WTO also provides a legal and institutional framework for the
implementation and monitoring of these agreements, as well as for settling disputes arising
from their interpretation and application. The current body of trade agreements comprising
the WTO consists of 16 different multilateral agreements (to which all WTO members are
parties) and two different plurilateral agreements (to which only some WTO members are
parties). The specific activities of the WTO are as follows:
1) Negotiating the reduction or elimination of obstacles to trade such as import tariffs,
other barriers to trade and agreeing on rules governing the conduct of international
trade viz., antidumping, subsidies, product standards.
2) Administering and monitoring the application of the WTO’s agreed rules for trade in
goods, trade in services, and trade-related intellectual property rights.
3) Monitoring and reviewing the trade policies of our members, as well as ensuring
transparency of regional and bilateral trade agreements.
4) Settling disputes among our members regarding the interpretation and application of
the agreements.
5) Building capacity of developing country government officials in international trade
matters.
6) Assisting the process of accession of some 30 countries who are not yet members of
the organization.
7) Conducting economic research and collecting and disseminating trade data in support
of the WTO’s other main activities.

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The WTO’s founding and guiding principles remain the pursuit of open borders, the
guarantee of most-favoured-nation principle and non-discriminatory treatment by and among
members, and a commitment to transparency in the conduct of its activities. The opening of
national markets to international trade, with justifiable exceptions or with adequate
flexibilities, will encourage and contribute to sustainable development, raise people’s
welfare, reduce poverty, and foster peace and stability. At the same time, such market
opening must be accompanied by sound domestic and international policies that contribute to
economic growth and development according to each member’s needs and aspirations.
Over the past 60 years, the WTO, which was established in 1995, and its predecessor
organization the GATT have helped to create a strong and prosperous international trading
system, thereby contributing to unprecedented global economic growth. The WTO currently
has 153 members, of which 117 are developing countries or separate customs territories.
WTO activities are supported by a Secretariat of some 700 staff, led by the WTO Director
General. The Secretariat is located in Geneva, Switzerland, and has an annual budget of
approximately $180 million. The three official languages of the WTO are English, French
and Spanish.
Decisions in the WTO are generally taken by consensus of the entire membership. The
highest institutional body is the Ministerial Conference, which meets roughly every two
years. A General Council conducts the organization’s business in the intervals between
Ministerial Conferences. Both of these bodies comprise all members. Specialized subsidiary
bodies such as Councils, Committees and Sub-committees also comprising all members
administer and monitor the implementation by members of the various WTO agreements.
WTO and the Principle of Trading System
The WTO agreements are lengthy and complex because they are legal texts covering a wide
range of activities. They deal with: agriculture, textiles and clothing, banking,
telecommunications, government purchases, industrial standards and product safety, food
sanitation regulations, and intellectual property. But a number of simple, fundamental
principles run throughout all of these documents. These principles are the foundation of the
multilateral trading system.
The following are the principles of the multilateral trading system governed by the WTO:
1) Most-favoured-nation (MFN): Under the WTO agreements, countries cannot
normally discriminate between their trading partners. Grant someone a special favour
such as a lower customs duty rate for one of their products and you have to do the
same for all other WTO members. This principle is known as most-favoured-nation
(MFN) treatment. However, some exceptions are allowed. For example, countries can
set up a free trade agreement that applies only to goods traded within the group
discriminating against goods from outside. Or they can give developing countries
special access to their markets. Or a country can raise barriers against products that
are considered to be traded unfairly from specific countries. And in services, countries

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are allowed, in limited circumstances, to discriminate. But the agreements only permit
these exceptions under strict conditions. In general, MFN means that every time a
country lowers a trade barrier or opens up a market, it has to do so for the same goods
or services from all its trading partners whether rich or poor, weak or strong.
2) National Treatment: Imported and locally-produced goods should be treated equally at
least after the foreign goods have entered the market. The same should apply to
foreign and domestic services, and to foreign and local trademarks, copyrights and
patents. This principle of “national treatment” that is giving others the same treatment
as one’s own nationals is found in all the three main WTO agreements (Article 3 of
GATT, Article 17 of GATS and Article 3 of TRIPS), although once again the
principle is handled slightly differently in each of these. National treatment only
applies once a product, service or item of intellectual property has entered the market.
Therefore, charging customs duty on an import is not a violation of national treatment
even if locally-produced products are not charged an equivalent tax.
3) Freer trade: Lowering trade barriers is one of the most obvious means of encouraging
trade. The barriers concerned include customs duties and or tariffs and measures such
as import bans or quotas that restrict quantities selectively.
4) Predictability: Sometimes, promising not to raise a trade barrier can be as important as
lowering one, because the promise gives businesses a clearer view of their future
opportunities. With stability and predictability, investment is encouraged, jobs are
created and consumers can fully enjoy the benefits of competition choice and lower
prices. The WTO’s multilateral trading system is an attempt by governments to make
the business environment stable and predictable. Many WTO agreements require
governments to disclose their policies and practices publicly within the country or by
notifying the WTO. The regular surveillance of national trade policies through the
Trade Policy Review Mechanism provides a further means of encouraging
transparency both domestically and at the multilateral level.
5) Promoting fair competition: The WTO is sometimes described as a “free trade”
institution, but that is not entirely accurate. The system does allow tariffs and, in
limited circumstances, other forms of protection. More accurately, it is a system of
rules dedicated to open, fair and undistorted competition. The rules on non-
discrimination, MFN and national treatment are designed to secure fair conditions of
trade. Many of the other WTO agreements aim to support fair competition: in
agriculture, intellectual property, services, for example.
6) Encouraging development and economic reform: The WTO system contributes to
development. On the other hand, developing countries need flexibility in the time they
take to implement the system’s agreements. And the agreements themselves inherit
the earlier provisions of GATT that allow for special assistance and trade concessions
for developing countries for higher growth and development.

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WTO: Organizational Structure and the Decision Making Process

The highest WTO authority is the Ministerial Conference which meets at least once every
two years and is composed of representatives from all WTO signatories. The day-to-day work
of the WTO, however, falls to a number of subsidiary bodies, principally the General
Council, which is required to report to the Ministerial Conference. The General Council
meets several times a year in the Geneva headquarters. Like the Ministerial Conference, the
General Council is composed of representatives from all member nations. As well as
conducting its regular work on behalf of the Ministerial Conference, the members of the
General Council also convene as the Dispute Settlement Body (DSB) and as the Trade Policy
Review Body. At the next level are the Goods Council, Services Council and Intellectual
Property (TRIPS) Council, which report to the General Council.
Five other bodies are established by the Ministerial Conference and report to the General
Council: the Committee on Trade and Development, the Committee on Trade and
Environment, the Committee on Regional Trade Agreements, the Committee on Balance of
Payments, and the Committee on Budget, Finance and Administration. A Trade Negotiations
Committee was also established in November 2001 as a result of the Doha Declaration. At
the second Ministerial Conference in Geneva in 1998, ministers decided that the WTO would
also study the area of electronic commerce, a task to be shared by existing councils and
committees.
Each of the pluri-lateral agreements of the WTO those on civil aircraft, government
procurement, dairy products and bovine meat have their own management bodies which
report to the General Council.
The DSB itself also establishes subsidiary bodies for the resolution of trade disputes. One
such set of bodies are called “panels.” These panels are set up on an ad-hoc basis and last
only long enough to hear the merits of a particular trade dispute between WTO members and
reach a decision as to whether unfair trade practices are involved. After the DSB approves the
formation of a panel, the WTO Secretariat will suggest the names of three potential panelists
to the parties to the dispute, drawing as necessary on a list of qualified persons. If there is real
difficulty in the choice, the Director-General can appoint the panelists. The panelists serve in
their individual capacities and are not subject to government instructions.
The DSB also has the responsibility of establishing an Appellate Body to review decisions
made by individual panels. The Appellate Body is modeled after the structure of the U.S.
Federal Appeals Courts: the Appellate Body is composed of seven persons, three of which
are assigned to each appeal from a panel’s judgment. The members of the Appellate Body
must be broadly representative of WTO membership, and are required to be persons of
recognized standing in the field of law and international trade, and not affiliated with any
government. Each member serves a four-year term.
The WTO Secretariat is located in Geneva. It has around 450 staff and is headed by its
Director-General, Mr. Renato Ruggiero, and four deputy directors-general. Its responsibilities

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include the servicing of WTO delegate bodies with respect to negotiations and the
implementation of agreements. It has a particular responsibility to provide technical support
to developing countries, and especially the least-developed countries. WTO economists and
statisticians provide trade performance and trade policy analyses while its legal staff assist in
the resolution of trade disputes involving the interpretation of WTO rules and precedents.
Much of the Secretariat’s work is concerned with accession negotiations for new members
and providing advice to governments considering membership.
Decision Making Process
The WTO is run by its member governments. All major decisions are made by the
membership as a whole, either by ministers who meet at least once every two years or by
their ambassadors or delegates who meet regularly in Geneva. Decisions are normally taken
by consensus. In this respect, the WTO is different from some other international
organizations such as the World Bank and International Monetary Fund. In the WTO, power
is not delegated to a board of directors or the organization’s head. When WTO rules impose
disciplines on countries’ policies, that is the outcome of negotiations among WTO members.
The rules are enforced by the members themselves under agreed procedures that they
negotiated, including the possibility of trade sanctions. But those sanctions are imposed by
member countries, and authorized by the membership as a whole. This is quite different from
other agencies whose bureaucracies can, for example, influence a country’s policy by
threatening to withhold credit.
Reaching decisions by consensus among all the members can be difficult. Its main advantage
is that decisions made this way are more acceptable to all members. And despite the
difficulty, some remarkable agreements have been reached. Nevertheless, proposals for the
creation of a smaller executive body perhaps like a board of directors each representing
different groups of countries are heard periodically. But for now, the WTO is a member-
driven, consensus-based organization. So, the WTO belongs to its members. The countries
make their decisions through various councils and committees, whose membership consists
of all WTO members.
Topmost is the ministerial conference which has to meet at least once every two years. The
Ministerial Conference can take decisions on all matters under any of the multilateral trade
agreements.
WTO Structure
All WTO members may participate in all councils, committees etc, except Appellate Body,
Dispute Settlement panels, and plurilateral committees.

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Source: WTO
The second level is the General Council which has three bodies. Day-to-day work in between
the ministerial conferences is handled by three bodies. They are The General Council, The
Dispute Settlement Body, and The Trade Policy Review Body. All three are in fact the same.
The agreement establishing the WTO states they are all the General Council, although they
meet under different terms of reference. Again, all three consist of all WTO members. They
report to the Ministerial Conference. The General Council acts on behalf of the Ministerial
Conference on all WTO affairs. It meets as the Dispute Settlement Body and the Trade Policy
Review Body to oversee procedures for settling disputes between members and to analyze
members’ trade policies.
The third level consists of three more councils for each broad area of trade. These three
councils, each handling a different broad area of trade, report to the General Council: The
Council for Trade in Goods (Goods Council), The Council for Trade in Services (Services
Council) and The Council for Trade-Related Aspects of Intellectual Property Rights (TRIPS
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Council). As their names indicate, the three are responsible for the workings of the WTO
agreements dealing with their respective areas of trade. Again they consist of all WTO
members. The three also have subsidiary bodies. Six other bodies report to the General
Council. The scope of their coverage is smaller, so they are “committees”. But they still
consist of all WTO members. They cover issues such as trade and development, the
environment, regional trading arrangements, and administrative issues. The Singapore
Ministerial Conference in December 1996 decided to create new working groups to look at
investment and competition policy, transparency in government procurement, and trade
facilitation. Two more subsidiary bodies dealing with the plurilateral agreements keep the
General Council informed of their activities regularly.
In the fourth level, each of the higher level councils has subsidiary bodies. The Goods
Council has 11 committees dealing with specific subjects (such as agriculture, market access,
subsidies, anti-dumping measures and so on). Again, these consist of all member countries.
Also reporting to the Goods Council is the Textiles Monitoring Body, which consists of a
chairman and 10 members acting in their personal capacities, and groups dealing with
notifications governments informing the WTO about current and new policies or measures
and state trading enterprises. The Services Council’s subsidiary bodies deal with financial
services, domestic regulations, GATS rules and specific commitments.
At the General Council level, the Dispute Settlement Body also has two subsidiaries: the
dispute settlement “panels” of experts appointed to adjudicate on unresolved disputes, and the
Appellate Body that deals with appeals.
Important breakthroughs are rarely made in formal meetings of these bodies, least of all in the
higher level councils. Since decisions are made by consensus, without voting, informal
consultations within the WTO play a vital role in bringing a vastly diverse membership round
to an agreement. One step away from the formal meetings is informal meetings that include
the full membership, such as those of the Heads of Delegations (HOD). A common recent
practice of the chairperson of a negotiating group is to attempt to forge a compromise by
holding consultations with delegations individually, in twos or threes, or in groups of 20-30
of the most interested delegations.
These smaller meetings of the WTO are handled sensitively. The key is to ensure that
everyone is kept informed about what is going on and the process is kept transparent even if
they are not in a particular consultation or meeting.
The way countries now negotiate has smoothened the decision making process in the WTO.
For example, in order to increase their bargaining power, countries have formed coalitions. In
some subjects such as agriculture almost all countries are members of at least one coalition
and in many cases, several coalitions. This ensures that all countries can be represented in the
process if the coordinators and other key players are present. The coordinators also take
responsibility for both transparency and inclusiveness by keeping their coalitions informed
and by taking the positions negotiated within their alliances. In the end, decisions have to be

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taken by all members and by consensus. The membership as a whole would resist attempts to
impose the will of a small group. No one has been able to find an alternative way of
achieving consensus on difficult issues, because it is nearly impossible for members to
change their positions voluntarily in meetings of the full membership.
Market access negotiations also involve small groups, but for a completely different reason.
The final outcome is a multilateral package of individual countries’ commitments, but those
commitments are the result of numerous bilateral, informal bargaining sessions, which
depend on individual countries’ interests. So, informal consultations in various forms play a
vital role in allowing consensus to be reached, but they do not appear in organization charts,
precisely because they are informal. They are necessary for making formal decisions in the
councils and committees. They are the forums for exchanging views, putting countries’
positions on the record, and ultimately for confirming decisions. The art of achieving
agreement among all WTO members is to strike an appropriate balance, so that a
breakthrough achieved among only a few countries can be acceptable to the rest of the
membership.
The work of the WTO is undertaken by representatives of member governments but its roots
lie in the everyday activity of industry and commerce. Trade policies and negotiating
positions are formulated in capitals, usually with a substantial advisory input from private
firms, business organizations, farmers as well as consumer and other interest groups. Most
countries have a diplomatic mission in Geneva, sometimes headed by a special Ambassador
to the WTO, whose officials attend meetings of the many negotiating and administrative
bodies at WTO headquarters. Sometimes expert representatives are sent directly from capitals
to put forward their governments’ views on specific questions.
As a result of regional economic integration in the form of customs unions and free trade
areas and looser political and geographic arrangements, some groups of countries act together
in the WTO with a single spokesperson in meetings and negotiations.
The largest and most comprehensive grouping is the European Union and its 15 member
states. The EU is a customs union with a single external trade policy and tariff. While the
member states coordinate their position in Brussels and Geneva, the European Commission
alone speaks for the EU at almost all WTO meetings. The EU is a WTO member in its own
right as are each of its member states.
A lesser degree of economic integration has so far been achieved by the countries which are
GATT members of the Association of South East Asian Nations (ASEAN) Malaysia,
Indonesia, Singapore, Philippines, Thailand and Brunei Darussalam.
Nevertheless, they have many common trade interests and are frequently able to coordinate
positions and to speak with a single voice.
Among other groupings which occasionally present unified statements are the Latin
American Economic System (SELA) and the African, Caribbean and Pacific Group (ACP).
More recent efforts at regional economic integration for instance, NAFTA (Canada, US and

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Mexico) and MERCOSUR (Brazil, Argentina, Paraguay and Uruguay) have not yet reached
the point where their constituents frequently have a single spokesperson on WTO issues.
A well-known alliance in the Uruguay Round bringing together a similarity of trade interests
rather than a regional identity was the Cairns Group which comprised, and still comprises,
agricultural exporting nations from developed, developing and East European countries.
The WTO continues a long tradition in GATT of seeking to make decisions not by voting but
by consensus. This procedure allows members to ensure their interests are properly
considered even though, on occasion, they may decide to join a consensus in the overall
interests of the multilateral trading system. Where consensus is not possible, the WTO
agreement allows for voting. In such circumstances, decisions are taken by a majority of the
votes cast and on the basis of “one country, one vote”.
There are four specific voting situations envisaged in the WTO Agreement. First, a majority
of three-quarters of WTO members can vote to adopt an interpretation of any of the
multilateral trade agreements. Second, and by the same majority, the Ministerial Conference,
may decide to waive an obligation imposed on a particular member by a multilateral
agreement. Third, decisions to amend provisions of the multilateral agreements can be
adopted through approval either by all members or by a two-thirds majority depending on the
nature of the provision concerned. However, such amendments only take effect for those
WTO members which accept them. Finally, a decision to admit a new member is taken by a
two-thirds majority in the Ministerial Conference.
Most WTO members are previously GATT members who have signed the Final Act of the
Uruguay Round and concluded their market access negotiations on goods and services by the
Marrakesh meeting in 1994. A few countries which joined the GATT later in 1994, signed
the Final Act and concluded negotiations on their goods and services schedules, also became
early WTO members. Other countries that had participated in the Uruguay Round
negotiations concluded their domestic ratification procedures only during the course of 1995,
and became members thereafter.
Aside from these arrangements which relate to original WTO membership, any other state or
customs territory having full autonomy in the conduct of its trade policies may accede to the
WTO on terms agreed with WTO members.
In the first stage of the accession procedures the applicant government is required to provide
the WTO with a memorandum covering all aspects of its trade and economic policies having
a bearing on WTO agreements. This memorandum becomes the basis for a detailed
examination of the accession request in a working party.
Alongside the working party’s efforts, the applicant government engages in bilateral
negotiations with interested member governments to establish its concessions and
commitments on goods and its commitments on services. This bilateral process, among other
things, determines the specific benefits for WTO members in permitting the applicant to

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accede. Once both the examination of the applicant’s trade regime and market access
negotiations are complete, the working party draws up basic terms of accession.
Finally, the results of the working party’s deliberations contained in its report, a draft
protocol of accession, and the agreed schedules resulting from the bilateral negotiations are
presented to the General Council or the Ministerial Conference for adoption. If a two-thirds
majority of WTO members vote in favour, the applicant is free to sign the protocol and to
accede to the Organization; when necessary, after ratification in its national parliament or
legislature.
WTO’s Evolving Role
WTO comprises of 147 member nations and accounts for approximately 97% of world trade
and is the only international organization dealing with the global rules of trade between
nations. As mentioned, the central objective of the WTO is to ensure that trade flows as
smoothly, predictably and freely as possible by encouraging the liberalization of
multinational trade in goods, services and intellectual property. The main functions
characterizing the WTO are designed to achieve the central objective of regulating
international trade. The strengths of the WTO, many of which are the very reasons for its
establishment, embrace the benefits of free trade and a rules-based organization.
The WTO assigns benefits to promoting a multilateral trading system many of which are
reasons for the WTO’s establishment. The benefits are listed below:
1. The WTO being a system of international governance contributes to international
peace.
2. WTO has the power to settle disputes and create agreements that bind members; an
underlying strength of the WTO is preventing trade disputes evolving into war.
3. WTO plays a very crucial role in reducing inequality, the product of a rules based
organization and non-discrimination. Given agreements are derived from consensus
both developed and developing countries have equal contribution in decision making
and settling of disputes.
4. Assisting developing and transition economies, where, the WTO Secretariat, alone or
in cooperation with other international organizations, conducts missions and seminars
and provides specific, practical technical cooperation for governments and their
officials dealing with accession negotiations, implementing WTO commitments or
seeking to participate effectively in multilateral negotiations.
5. The WTO Secretariat also provides training courses. These take place in Geneva
twice a year for officials of developing countries. Since their inception in 1955 and up
to the end of 1994, the courses have been attended by nearly 1400 trade officials from
125 countries and 10 regional organizations. Since 1991, special courses have been
held each year in Geneva for officials from the former centrally-planned economies in
transition to market economies.

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6. An important aspect of the WTO’s mandate is its role to cooperate with the
International Monetary Fund, the World Bank and other multilateral institutions to
achieve greater coherence in global economic policy-making.

References
 Chand, Ramesh, Trade liberalisation, WTO and Indian agriculture, New Delhi:
Mittal, 2002.
 Katrak, Homi and Strange, Roger, Ed, WTO and developing countries, Hampshire:
Palgrave, 2004
 Rao, M B, WTO and international trade, New Delhi: Vikas, 2001.
 World trade organization WTO dispute settlement procedures, Cambridge, 2001.
www.wto.org

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Unit-IV : Issues in Globalization

Alternative Perspectives on Globalization: Nature and Character

In the era of globalization, the imposition of free trade policies and the increasing
privatization of social services have facilitated the accumulation of tremendous wealth for the
owners of capital at the expense of working people and the environment worldwide.
Neoliberal globalization, the highest stage of capitalism, now dominates every major sector
of the world economy. Over the past decades, particularly, transnational corporations have
tightened their control over national governments and international institutions. The social
and environmental costs of neoliberal globalization are prohibitive. The global mega trends
of rising inequality and absolute poverty, political instability, and global climate change, all
compounded and accelerated by neoliberal globalization which are adversely affecting the
lives and threatening the future of every inhabitant of the nation and the world.
In view of these mega trends and the current global economic crisis, the conclusion that
neoliberal globalization does not serve the interests of the vast majority of the people on the
planet and is both economically and environmentally unsustainable, is self-evident.
Clearly an alternative perspective on globalization is sought for. In the line it is the socialist
alternative on globalization for the national and world agenda. The key to struggle on
globalization lies in the contest between the sovereignty of capitalism which is based on
privilege and domination versus socialist democracy based on the principles of liberty, unity,
and social justice. The socialist alternative offers a coherent strategy for action on both the
national and international levels.
Socialism refers to various forms of economic organization advocating public or direct
worker ownership and administration of the means of production and allocation of resources,
and a society characterized by equal access to resources for all individuals with a method of
compensation based on the amount of labor expended. Most socialists share the view that
capitalism unfairly concentrates power and wealth among a small segment of society that
controls capital and derives its wealth through exploitation, creates an unequal society, does
not provide equal opportunities for everyone to maximize their potentialities and does not
utilize technology and resources to their maximum potential nor in the interests of the public.
According to them, the aim of both developed and developing economies is to have
sustainable, equitable, democratic, diverse and genuinely free societies, based on largely self-
reliant regional and local economies, in harmony with their environment and each other. The
important point is to empower nations and communities to retake control over their local
economies and to make them as diverse as suits local needs. This moves from the present
situation in which all economies compete with each other to one in which goods and services
are supplied more locally. This is the socialist alternative to the free market and free trade

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policies which currently dominate economic and political thought. They do not share the
pessimistic acceptance that there is no alternative to globalization.
Some of the alternative perspectives on globalization according the socialist are:
1. The Local Economy: The aim of local and regional economies would be to produce as
much as they can of their own primary products, manufactured goods and services. What
they cannot provide should be obtained from neighboring economies. Long distance
trade should be the last resort. To this end controls such as tariff barriers and quotas
should be gradually introduced.
2. Capital and Investment: Access to capital at local and regional level should be the key to
funding investment by enterprises and communities to improve social and environmental
conditions and job opportunities. According to socialist, this is not achieved by the free
market, which encourages ever-larger and more distant institutions and capital flows. To
reverse this requires both encouragement of local activity and the assertion of democratic
control of larger capital flows. Encouragement must be given to organization of financial
institutions on mutual principles, including the re-mutualization of building societies.
The promotion of local and regional financial institutions is essential and should include
de-merger of larger institutions. Policies such as Bank here to sell here should be
encouraged. Community banks and credit unions can also play a major role in enabling
local people.
According to socialist, it will be necessary to reintroduce national controls of capital
movements and to re-regulate finance capital more broadly. The aim must be to encourage
productive investment and in particular community reinvestment. This will be best achieved
by the application of stakeholder principles at local and regional levels, supported by national
regulation of corporate investments in a manner which involves the wishes of the affected
communities.
3. Controlling the Speculators: According to Socialist, investment should be the focus, not
the gambling of speculation. Financial trading on the margin should be discouraged and
tightly regulated. Credit should not be made available to allow speculators to multiply
the size of their bets well beyond the cash required to cover them. Taxes should be used
to discourage short-term speculative transactions-in particular currency speculation.
4. Transnational Corporations: A consequence of extending the free market has been the
reverse, as enterprises in it seek to grow to influence and eventually dominate the
markets in which they trade. This process has passed the point where such enterprises
dominate local communities and regions. Many are now much larger than the countries
which nominally control them. According to them, this must be addressed in two ways.
In the short term, transnational institutions of similar size must be used to assert the
primacy of the common interest over those of the corporations. But the only lasting
remedy is to encourage the break-up of such organizations to more manageable units,
through trade regulation, anti-trust legislation and fiscal policy. The aim must be to

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encourage productive investment in goods and services. Market access should be

regulated by site here to sell here policies. For some sectors this would relate to a
community or region within a nation, for others to the whole country and for very large
industries to more than one country.
5. Limiting Market Access: A limit should be set for market share at regional and national
level by any one company. Where such a market is dominated by a particular company,
new firms should be encouraged through grants, loans and subsidies to enter it to
maintain the impetus for improved products, more efficient resource use and the
provision of choice. The transfer of information and technology would be encouraged to
improve the efficiency of local industry. The advantages enjoyed by very large
organizations must be countered. They must be rendered more accountable to their
stakeholders, through greater transparency, internal democracy and public regulation.
Company and accounting law should control transfer pricing and the diversion of
company profits and individual earnings off-shore. There should be a sustained effort to
curb corporate tax evasion. The use of offshore banking centers should be ended by bank
here to sell here policies.
6. Multinational Agreements: According to Socialist, this approach, while both sustainable
and equitable, runs very much contrary to existing and proposed international
arrangements such as the General Agreement on Tariffs and Trade (GATT), its
development the World Trade Organization (WTO) and the proposed Multilateral
Agreement on Investment. According to them, all these serve the interests of the large
transnational corporations and capitalists, at the expense of the rest of the world,
including regions and communities of the countries in which they are based. Such
arrangements must be replaced with ones that promote cooperation for self-reliance.
Financial aid policies and capital flows, technology transfer and residual international
trade should be on fair trade not free trade terms. These should be geared to the
promotion of sustainable local economies. The aim is to foster sustainable industry and
prosperity through local and regional self-reliance.
Critical Dimensions of Globalization
Globalization describes an ongoing process by which regional economies, societies, and
cultures have become integrated through a globe-spanning network of communication and
exchange. Globalization is sometimes used to refer specifically to economic globalization:
the integration of national economies into the international economy through trade, foreign
direct investment, capital flows, migration, and the spread of technology. However,
globalization is usually recognized as being driven by a combination of economic,
technological, sociocultural, political, and biological factors. The term can also refer to the
transnational circulation of ideas, languages, or popular culture.
Globalization has economic, political, cultural and ideological dimensions. Economic
globalization can be reflected in the idea that all economies are globally interconnected. A

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shift from a world of distinct national economies to a global economy in which production is
internationalized and financial capital flows freely and instantly between countries. Political
globalization is evident in the growing importance of international organizations. These
organizations are transnational and enable states to take concerted action without sacrificing
national sovereignty. Cultural globalization is the process whereby information, commodities
and images produced in one part of the world enter into a global flow that ‘flattens out’
cultural differences
In economic fields, economic globalization which is mentioned earlier affected all aspects of
humankind’s living, from production to consumption, going by distribution and exchange.
Economic globalization is not a new process, for in the past five centuries firms in the
economically advanced countries have increasingly extended their outreach through trade and
production activities to territories all over the world. Economic globalization appeared as an
extension of the world capitalist liberalization which seeks to enable strong capital to achieve
utmost benefits through liberalizing trade and establishing free competition in trade
exchanges. This is the system of free economy which is based on opening markets to capital
able to conquer them. In other words this is the market economy.
In the past two to three decades, economic globalization has accelerated as a result of various
factors, such as technological developments but especially the policies of liberalization that
have swept across the world. The most important aspects of economic globalization are the
breaking down of national economic barriers; the international spread of trade, financial and
production activities and the growing power of transnational corporations and international
financial institutions in these processes.
Economic globalization has become the defining process of the present age. While the
opportunities and benefits of this process have been stressed by its proponents and supporters,
recently there has been increasing disillusionment among many policy makers, analysts and
academics. The reasons for the changing perception of and attitude towards globalization are
many. Among the important factors are the lack of substantial benefits to most developing
countries from opening their economies, despite the well-publicized claims of export and
income gains; the economic losses and social dislocation that are being caused to many
developing countries by rapid financial and trade liberalization; the growing inequalities of
wealth and opportunities arising from globalization; and the perception that environmental,
social and cultural problems have been made worse by the workings of the global free market
economy.
While economic globalization is a very uneven process, with increased trade and investment
being focused in a few countries, almost all countries are greatly affected by this process. For
example, a low-income country may account for only a tiny part of world trade, but changes
in demand or prices of its export commodities or a policy of rapidly reducing its import duties
can have a major economic and social effect on that country. That country may have a

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marginal role in world trade, but world trade has a major effect on it, perhaps a far larger
effect than it has on some of the developed economies.
A major feature of globalization is the growing concentration and monopolization of
economic resources and power by transnational corporations and by global financial firms
and funds. This process has been termed “transnationalization”, in which fewer and fewer
transnational corporations are gaining a large and rapidly increasing proportion of world
economic resources, production and market shares. Where a multinational company used to
dominate the market of a single product, a big transnational company now typically produces
or trades in an increasing multitude of products, services and sectors. Through mergers and
acquisitions, fewer and fewer of these transnational corporations now control a larger and
larger share of the global market, whether in commodities, manufactures or services.
While it is true that globalization encourages free trade among countries, there are also
negative consequences because some countries try to save their national markets. The main
export of poorer countries is usually agricultural goods. Larger countries often subsidize their
farmers like the EU Common Agricultural Policy, which lowers the market price for the poor
farmer’s crops compared to what it would be under free trade.
The deterioration of protections for weaker nations by stronger industrialized powers has
resulted in the exploitation of the people in those nations to become cheap labour. Due to the
lack of protections, companies from powerful industrialized nations are able to offer workers
enough salary to attract them to endure extremely long hours and unsafe working conditions.
It is true that the workers are free to leave their jobs, but in many poorer countries, this would
mean starvation for the worker, and possible even his/her family if their previous jobs were
unavailable.
Also, the low cost of offshore workers have enticed corporations to buy goods and services
from foreign countries. The laid off manufacturing sector workers are forced into the service
sector where wages and benefits are low, but turnover is high. This has contributed to the
deterioration of the middle class which is a major factor in the increasing economic
inequality. Families that were once part of the middle class are forced into lower positions by
massive layoffs and outsourcing to another country. This also means that people in the lower
class have a much harder time climbing out of poverty because of the absence of the middle
class as a stepping stone.
The surplus in cheap labour coupled with an ever growing number of companies in transition
has caused a weakening of labour unions. Unions lose their effectiveness when their
membership begins to decline. As a result unions hold less power over corporations that are
able to easily replace workers, often for lower wages. Increase exploitation of child labour is
also often observed to grow with globalization. For example, a country that experiencing
increases in labour demand because of globalization and an increase the demand for goods
produced by children, will experience greater a demand for child labour. This can be

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dangerous, e.g., quarrying, salvage, cash cropping but also includes the trafficking of
children, children in bondage or forced labour.
Thus, critics of globalization say that it was planned in a rush. The main criticism regarding
globalization is in the dominance of developed countries in framing the world economic
policies. In this regard, is it justifiable to leave its handling to large capital and international
financial organizations, created to serve capitalism and provide conditions for its limitless
movement around the world ignoring the voice of developing countries and other third world
countries.
Traditionally politics has been undertaken within national political systems. National
governments have been ultimately responsible for maintaining the security and economic
welfare of their citizens, as well as the protection of human rights and the environment within
their borders. With global ecological changes, an ever more integrated global economy, and
other global trends, political activity increasingly takes place at the global level.
Under globalization, politics can take place above the state through political integration
schemes such as the European Union and through intergovernmental organizations such as
the International Monetary Fund, the World Bank and the World Trade Organization.
Political activity can also transcend national borders through global movements and NGOs.
Civil society organizations act globally by forming alliances with organizations in other
countries, using global communications systems, and lobbying international organizations
and other actors directly, instead of working through their national governments.
The political dimension started when the world adhered to the Western democratic system,
whose implementation became inevitable, leading to a globalization of the system of
government and of the ways of participation in government. The mechanisms leading to the
holding of sound popular elections were also globalized.
International organizations took care of globalizing international law, international legitimacy
and human rights, their charters globalized the rules of war and peace and the patterns of
international cooperation. Therefore, politics was globalized in the largest sense of the term,
including the systems of government and the conditions of international cooperation and of
international relations. The international community started to perfectly command the details
and the smallest components of this globalization up until the United Nations Organization
and its agencies and bodies, especially the Security Council.
Perhaps, the most important and unique feature of the current globalization process is the
globalization of national policies and policy-making mechanism. National policies including
in economic, social, cultural and technological areas that until recently were under the
jurisdiction of States and people within a country have increasingly come under the influence
of international agencies and processes or by big private corporations and economic and
financial players. This has led to the erosion of national sovereignty and narrowed the ability
of governments and people to make choices from options in economic, social and cultural
policies. Most developing countries have seen their independent policy-making capacity

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eroded, and have to adopt policies made by other entities, which may on balance be
detrimental to the countries concerned.
The developed countries, where the major economic players reside, and which also control
the processes and policies of international economic agencies, are better able to maintain
control over their own national policies as well as determine the policies and practices of
international institutions and the global system. It is also true that the large corporations have
taken over a large part of decision-making even in the developed countries, at the expense of
the power of the State or political and social leaders. Part of the erosion of national policy-
making capacity is due to the liberalization of markets and developments in technology. For
example, the free flow of capital, the large sums involved, and the unchecked power of big
players and speculators, have made it difficult for countries to control the level of their
currency and the flows of money in and out of the country. Transnational companies and
financial institutions control such huge resources, more than what many governments are able
to collect, and thus are able to have great policy influence in many countries. Certain
technological developments make it difficult or virtually impossible to formulate policy.
However, an even more important aspect is the recent process by which global institutions
have become major makers of an increasingly wide range of policies that are traditionally
under the jurisdiction of national governments. Governments now have to implement policies
that are in line with decisions and rules of these international institutions. The key institutions
concerned are the World Bank, the IMF and the WTO. These institutions exercise
tremendous authority in a majority of developing countries that depend on their loans. In
particular, countries requiring debt rescheduling have to adopt structural adjustment policies
(SAPS) that are mainly drawn up in the Washington institutions. SAPS cover macroeconomic
policies and recently they also cover social policies and structural issues such as privatization,
financial policy, corporate laws and governance. The mechanism of making loan
disbursement conditional on these policies has been the main instrument driving the policy
moves in the indebted developing countries towards liberalization, privatization, deregulation
and a withdrawal of the State from economic and social activities. Loan conditionalities have
thus been the major mechanism for the global dissemination of the macroeconomic policy
packages that are favoured by developed nations.
The Uruguay Round negotiations greatly expanded the powers of the GATT system, and the
Agreements under the WTO, have established disciplines in new areas beyond the old GATT,
including intellectual property rights, services, agriculture and trade-related investment
measures. According to experts, the Uruguay Round has been an unequal treaty, and the
WTO Agreements and system including the decision-making system are weighted against the
interests of the developing nations. The existing agreements now require domestic legislation
and policies of member States to be altered and brought into line with them. Non-compliance
can result in trade sanctions being taken against a country’s exports through the dispute
settlement system, thus giving the WTO a strong enforcement mechanism. Thus, national
governments have to comply with the disciplines and obligations in the already wide range of

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issues under WTO purview. Many domestic economic policies of developing countries are
thus being made in the WTO negotiations, rather than in Parliament, bureaucracy or Cabinet
at the national level. There are now attempts by developed nations to expand the jurisdiction
of the WTO to yet more areas, including rights to be granted to foreign investors, competition
policy, government procurement practices, labour standards and environmental standards.
There are also other influential international organizations, in particular the United Nations,
its agencies, treaties and conventions and world conferences.
In the cultural field, globalization started to affect culture in its general meaning, i.e.
humankind’s imagination, theories and practices and even their feelings, freedom of thinking,
of enjoying specificity and inner dialogue as well as dialogue with the other.
The process of globalization has helped the tremendous development of new information and
communication technology. Technology has created the possibility and even the likelihood of
a global culture. The internet, fax machines, satellites, and cable television are sweeping
away cultural boundaries. Global entertainment companies shape the perceptions and dreams
of ordinary citizens, wherever they live. This spread of values, norms, and culture tends to
promote Western ideals of capitalism. This progress facilitated in bringing the various parts
of the world closer and disseminates knowledge particularly through the internet which
created a new and open world, a world with unified feelings and with increasingly closer
cultures and interacting civilizations.
Modern states that have no ancient culture or civilization and they do not fear for their
identity or for their civilization or culture because they are new ones with no legacy, no
heritage and no prosperous history to be proud of and to build on to engage in the future.
Some countries are also aware of such threats, based on their attachment to the principles of
homeland, borders, nationalism, the flag, the national anthem, history and national
sovereignty. These countries’ fear is also nurtured by their pride of their nations’ role and
concern to see them swallowed by globalization, a globalization whereby the strong
dominates the weak.
Globalization might appear as premature for a majority of countries, particularly in countries
where the Nation-State still plays the leadership in societies and that are not up to the level of
societies for which globalization was specially made. The fear of globalization goes as far as
considering it as a system that sweeps all the principles known to the civilized world,
including the protection of the weak by a strong Nation-State from exclusion, unemployment
and poverty and the provision of social security to its weakest citizens.
Some opponents of globalization see in its system a mere reflection of the dominion of the
social aspects by the financial ones. They even consider it as a new form of occupation, not a
political or a military one, but rather a financial occupation that imposes a uniform type of
thinking and erases all national historical heritages.
This imbalance leads to polarization between the few countries and groups that gain, and the
many countries and groups in society that lose out or are marginalized. Globalization,

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polarization, wealth concentration and marginalization are therefore linked through the same
process. In this process, investment resources, growth and modern technology are focused on
a few countries (mainly in North America, Europe and Japan). A majority of developing
countries are excluded from the process, or are participating in it in marginal ways that are
often detrimental to their interests; for example, import liberalization may harm their
domestic producers and financial liberalization may cause instability. The uneven and
unequal nature of the present globalization is manifested in the fast growing gap between the
world’s rich and poor people and between developed and developing countries; and by the
large differences among nations in the distribution of gains and losses.
Questioning the Benefits of Economic Integration, Inequality and Instability in Global
Economy
Economic Integration
Economic integration is a term used to describe how different aspects between economies are
integrated. As economic integration increases, the barriers of trade between markets
diminishes. The most integrated economy today, between independent nations, is the
European Union and its euro zone. The degree of economic integration can be categorized
into following stages:
1. Preferential trading area: A Preferential trade area also known as preferential trade
agreement is a trading block which gives preferential access to certain products from the
participating countries. This is done by reducing tariffs, but not by abolishing them
completely. A preferential trade area can be established through a trade pact. It is the
first stage of economic integration.
2. Free trade area: Free trade area is a type of trade block, a designated group of countries
that have agreed to eliminate tariffs, quotas and preferences on most goods and services
traded between them. It can be considered the second stage of economic integration.
Countries choose this kind of economic integration form if their economical structures
are complementary. If they are competitive, they will choose customs union. This is the
second stage of economic integration.
3. Customs union: A customs union is a type of trade block which is composed of a free
trade area with a common external tariff. The participant countries set up common
external trade policy, but in some cases they use different import quotas. Common
competition policy is also helpful to avoid competition deficiency. Purposes for
establishing a customs union normally include increasing economic efficiency and
establishing closer political and cultural ties between the member countries. It is the third
stage of economic integration. Customs union is established through trade pact.
4. Common market: A common market is a type of trade block which is composed of a
customs union with common policies on product regulation, and freedom of movement
of the factors of production both capital and labour and of enterprise. The goal is that the
movement of capital, labour, goods, and services between the members is as easy as
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within them. This is the fourth stage of economic integration. Sometimes a single market
is differentiated as a more advanced form of common market. In comparison to a
common market a single market envisions more efforts geared towards removing the
physical borders, technical standards and fiscal taxes barriers among the member states.
These barriers obstruct the freedom of movement of the factors of production. This is the
fifth stage of economic integration.
5. Economic and monetary union: An economic and monetary union is a type of trade
block which is composed of a single market with a common currency. This is the fifth
stage of economic integration.
6. Complete economic integration: Complete economic integration is the final stage of
economic integration. After complete economic integration, the integrated units have no
or negligible control of economic policy, including full monetary union and complete or
near-complete fiscal policy harmonisation. Complete economic integration is most
common within countries.
Advantages of Economic Integration:
1. Trade Creation: Member countries have (a) wider selection of goods and services not
previously available; (b) acquire goods and services at a lower cost after trade barriers
due to lowered tariffs or removal of tariffs (c) encourage more trade between member
countries the balance of money spend from cheaper goods and services, can be used to
buy more products and services
2. Greater Consensus: Unlike WTO with high membership easier to gain consensus
amongst small memberships in regional integration
3. Political Cooperation: A group of nation can have significantly greater political
influence than each nation would have individually. This integration is an essential
strategy to address the effects of conflicts and political instability that may affect the
region. Useful tool to handle the social and economic challenges associated with
globalization
4. Employment Opportunities: As economic integration encourage trade liberation and lead
to market expansion, more investment into the country and greater diffusion of
technology, it create more employment opportunities for people to move from one
country to another to find jobs or to earn higher pay. For example, industries requiring
mostly unskilled labor tends to shift production to low wage countries within a regional
cooperation
Disadvantages of Economic Integration:
1. Creation of Trading Blocs: It can also increase trade barriers against non-member
countries.
2. Trade Diversion: Because of trade barriers, trade is diverted from a non-member country
to a member country despite the inefficiency in cost. For example, a country has to stop
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trading with a low cost manufacture in a non-member country and trade with a
manufacturer in a member country which has a higher cost.
3. National Sovereignty: Requires member countries to give up some degree of control over
key policies like trade, monetary and fiscal policies. The higher the level of integration,
the greater the degree of controls that needs to be given up particularly in the case of a
political union economic integration which requires nations to give up a high degree of
sovereignty.
Inequality and Instability in Global economy
The rise of the global economy has been accompanied by large increases in international
trade, investment, technological innovation and migration. These changes cannot be undone,
and they have created new opportunities for economic growth in industrialized countries. But
the global labour force has expanded fourfold since the 1980s, and supply of unskilled labour
exceeds demand. Uncertainty has been growing in Europe and the US over globalization.
Besides globalization opponents, established economists and politicians question whether
undisputed benefits of the global division of labour come at increasingly heavy costs,
especially social injustice. However, a closer look shows that a growing economic gap in
developed countries has more to do with evolving technology than with global
connectedness.
Income inequality has risen in the industrialized world with skilled workers’ incomes rising
faster than compensation for low-skilled labour. A major source of income inequality actually
is unemployment. In many countries, there exists a strong correlation between the increase in
unemployment, which mainly affects the low-skilled, and income inequality. While
unemployment often follow business cycles, the long-lasting distributional trends
nevertheless point to other more structural causes of growing wage differentials.
Supporters of the anti-globalization movement argue that globalization has dramatically
increased inequality between and within nations and in particular that it has marginalized the
poor in developing countries and left behind the poorest countries.
The socialists do not advocate the free market and free trade. According to them, global free
trade and the free market are the most effective means of capitalist exploitation of people and
planet. They oppress people, waste the planet’s limited resources and destroy the
environment on which every one depends. According to them, economic integration results in
global instability. Global instability may in the form of economic instability, political
instability or financial instability. Therefore, it is argued that the response to this sustained
onslaught must be to protect the local, globally.

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References
 Appadurai, Arjun, Modernity at large: Culture dimensions of globalization, New
Delhi, Oxford Univ Press, 1997.
 Baldwin, Robert E and Winters, L Alan, Challenges to globalization: Analyzing the
economics, Chicago: University of Chicago Press, 2004.
 Bhagwati, Jagdish, In defense of globalization, New Delhi: Oxford University Press,
2004.
 Bhattacharjea, Aditya and Marjit, Sugata, Ed, Globalization and the developing
economies: Theory and evidence New Delhi: Manohar, 2004.
 Held, David; McGrew, Anthony, Globalization/Anti-globalization, Cambridge, 2002.
 Robertson, Roland, Globalization: Social theory and global culture, London: Sage
Publications, 1992.
 Tomlinson, John, Globalization and Culture, Cambridge: Polity Press, 1999.

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Unit-V : Globalization and Democracy

State Sovereignty and Civil Society

Globalization and State Sovereignty

Globalization refers to the integration and interaction between different people, nation and
regional and international markets. It includes the exchange of goods, services, capital, and
labour between different nations for their mutual benefit.
Today, globalization is defined in a very wide notion, which includes the social, cultural, and
political interdependency of states. Further, it also refers to the absence of the walls that
every country had, between themselves based on suspicion, mutual distrust and ambition.
Globalization has primarily become an economic term but its impact is not limited to the
economy of the countries only, the term globalization actually refers to every aspect of life
like cultural, social, psychological and political. For example, in European Union all the
member states share the same democratic values and norms, or the convergence and
similarities of the constitutions of the member states, which could lead to a European law or
constitution.
It is true that the impact of globalization is visible and affects largely the politics and the
economy of the country but its effect on the mindset and the culture is noticeable gradually in
the way people think and react.
An essential link between globalization and the nation state is the concept of sovereignty.
Sovereignty is the central organizing principle of the system of states. Sovereignty is the
quality of having supreme, independent authority over a territory. It can be found in a power
to rule and make law that rests on a political consensus in a nation. The notion of state
sovereignty is laid down on the basic principles of territorial integrity, border inviolability,
and supremacy of the state. A sovereign is a supreme lawmaking authority. The notion
concept of state sovereignty refers to the three-fold capacity of a state, which is the “absolute
supremacy over internal affairs within its territory, absolute right to govern its people, and
freedom from any external interference in the above matters. So a state is sovereign if it has
the ability to make and implement laws within its territory, and can function without any
external power and assistance, and doesn’t acknowledges any higher authority above itself in
the world of independent states. From the above, one can draw the conclusion that either a
state can be sovereign or not, since sovereignty is defined as the absolute supremacy and right
of the government in a given state.
At its core, state sovereignty is typically taken to mean the possession of absolute authority
within a bounded territorial space. There is essentially an internal and external dimension of
sovereignty. Internally, a sovereign government is a fixed authority with a settled population
that possesses a monopoly on the use of force. It is the supreme authority within its territory.
Externally, sovereignty is the entry ticket into the society of states. Recognition on the part of

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other states helps to ensure territorial integrity and is the entree into participating in
diplomacy and international organizations on an equal footing with other states.
The question of sovereignty is a controversial issue mainly because in the era of globalization
the national sovereignty is under attack as there was a golden age when the states possessed
some kind of absolute control over the their territory, and the movement of resources, people,
and cultural influences across their borders. This sovereignty of a nation is believed to be no
more ever since the globalization process started. This is partly because the sovereignty of
any one nation has usually depended on recognition by other nations within the inter-state
system, and partly because the states have never been able to achieve, absolute control of
transnational movements of people and resources across the borders. Therefore, if a nation’s
sovereignty is not absolute and unconditional some attention is needed in assessing the
argument that the contemporary process of globalization undermines national sovereignty.
Today, globalization implies the worldwide, virtually instantaneous interdependence of a
growing number of aspects of economic and cultural life. Today, it not only refers to
economic interdependence of trade, finance, direct investment but also to the interdependence
of educational, technological, ideological, cultural, as well as ecological, environmental,
legal, military, strategic and political impulses that are rapidly propagated throughout the
world.
Since, globalization is the spread and intensification of economic, social and cultural relations
across international borders it has its effects on almost everything: politics, economics,
technology, society, communication etc. With such an all-pervasive nature of globalization,
how can the institution of the state remain unaffected? The most important effect of
globalization is being felt on the very basic characteristic of the state sovereignty. With an
increasingly dependent economy, issues that cross borders there is considerable interference
on the powers of the state. The newly imposed constraints on the sovereignty of the state has
seen emergence of the different forms of co-operation amongst states. Countries bargain
about influence on each other internal affairs.
Further, economic globalization has made it difficult for countries to control economic
developments within their own borders. Very often how the impact of globalization is felt
depends on the nature of the state. In an increasingly interdependent world, isolation is not
good for the country as seen in the case of North Korea. Advanced industrialized
democracies tend to benefit the most from globalization. It is the developing countries, where
the state faces considerable challenges to make globalization work in tandem with its welfare
goals. Weak states face the threat of being ‘colonized’ by the forces of globalization. This
state failure may translate into domestic disorder as seen in many African countries.
For example, globalization has forced the state in developing countries to get out of activities
in which the private sector can play a better role. These areas include tourism, hotels,
production of consumer durables. The state now has to concentrate only on building up of
economic and social capital, e.g. infrastructure, education etc. Globalization entails more

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open economies, which in turn involves exposure to risks of uncertainty of global markets.
The state, in this changed scenario, has to take proactive steps to provide security and safety
net to the labour and domestic industries.
The operation of states in an ever more complex international system both limits their both
autonomy and sovereignty. There is a huge debate in world order and politics, whether
globalization has led to the loss or weakening of sovereignty and autonomy of the nation
states in their international strategic and economic relations. According to some theorists
there is a constantly growing dependency and interconnectedness between the nation states,
and the governments have become weaker and less relevant then ever before. For example,
the sum total of the various elements of globalization has left the individual sovereign state
less and less a locus of policy and control as the WTO, the EU, NAFTA and other
supranational organizations become more significant players. Further, the economic policies
of economies is also tot a large extent influenced by the international financial institutions
such as IMF, World Bank and WTO, as evidence of a new international system with new
centers of power. These institutions tend to point the rise of global institutions of governance.
Indeed, it will be increasingly difficult for the future civil servant to draw meaningful
distinctions between national and international dimensions of problems.
In the process of globalization the nation state is not going to disappear. However, the nature
of the nation state sovereignty is changing dramatically due to globalisation. It is been
perceived by many that globalization is reducing the sovereignty of the nation with respect to
global events. Globalisation also has a push-down effect which promotes local autonomy and
local cultural difference. This has a double impact. On the one hand, it creates somewhat
noxious forms of local nationalism. On the other hand, it also opens new opportunities for
civic participation and it is not accidental that there is a renewal of participatory democracy
around the world, partly a result of globalisation itself but partly a result of new technologies,
which make it easier to have local interactions, or even, in some cases, national interactions
organised through electronic media.
Taking the increasing growth of interdependency between the states, the emergence of
transnational institutions, multinationals and benevolent organizations and the integration of
international laws under consideration, one can say that there is a declining process to
perceive in the sovereignty of the nation states. Nation states are also domestically under
attack of the high rate of criminal and terrorist events. Since nation states no longer can
grantee the security of their citizens and cannot independently act in order to solve their
domestic problems, there is a lack of sovereignty. Therefore, globalization may gradually
lead to the demise of nation state and its sovereignty if proper policy on state autonomy and
sovereignty is not maintained.

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Globalization and Global Civil Society

Globalization is broadly viewed as a contemporary process of increasing intense
interconnectedness, interactions, inter-dependence, integration across borders, state and
communities both local and national in different spheres of human life economic, financial,
technological, social, cultural, and political. This process, it is stated, is leading to the
emergence of one world, a global society.
The driving force of this is in the central nature of the capitalist world economy. The new
technology has been considered as the transformative factor that has promoted the
interdependence of local, national and international communities. Also, some consider the
logic of globalization as having interlocking ‘institutional dimensions’. The main elements
here are capitalism, the inter-state system, militarism and industrialism. Each one of these has
a separate role in the creation of the global-world. Moreover, all these dimensions have
interactions and intersections in the multi-causal process of globalization.
Generally, civil society has been referred to as a political association governing social
conflict through the imposition of rules that restrain citizens from harming one another. In the
classical period, the concept was used as a synonym for the good society, and seen as
indistinguishable from the state. For instance, Socrates taught that conflicts within society
should be resolved through public argument using ‘dialectic’, a form of rational dialogue to
uncover truth. According to Socrates, public argument through ‘dialectic’ was imperative to
ensure ‘civility’ in the ‘state’ and ‘good life’ of the people. For Plato, the ideal state was a
just society in which people dedicate themselves to the common good, practice civic virtues
of wisdom, courage, moderation and justice, and perform the occupational role to which they
were best suited.
The political discourse in the classical period, places importance on the idea of a ‘good
society’ in ensuring peace and order among the people. The philosophers in the classical
period did not make any distinction between the state and society. Rather they held that the
state represented the civil form of society and ‘civility’ represented the requirement of good
citizenship. Moreover, they held that human beings are inherently rational so that they can
collectively shape the nature of the society they belong to. In addition, human beings have the
capacity to voluntarily gather for the common cause and maintain peace in society.
As the forces of countries reconstituted themselves to re-affirm their global dominion in the
era of globalization, the forces of community found parallel expression through a series of
popular movements that drew inspiration from earlier national liberation movements. These
included the civil rights, women’s, peace, human rights, environment, and gay rights
movements among others and most recently the resistance against corporate globalization.
Each sought to transform the relationships of power from the dominator model of empire to
the partnership model of community.
These movements emerged in rapid succession in response to an awakening consciousness of
the possibility of creating truly democratic societies that honor life and recognize the worth

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and contribution of every person. Each sought deep change through non-violent means in the
tradition of Gandhi and Martin Luther King. They challenged the legitimacy of dominator
cultures and institutions, withdraw cooperation and support, and sought to live a new reality
into being through individual and collective action. Each contributed its piece to an emerging
mosaic that is converging into what we now know as global civil society.
Global civil society is a social expression of the awakening of an authentic planetary culture
grounded in the spiritual values and social experience of hundreds of millions of people. The
power of authentic culture gives civil society the ultimate advantage. Global civil society is a
manifestation of social energies released by an awakening of human consciousness to
possibilities for creating societies that nurture and rejoice in a love of all beings.
Like globalization, the emergence of global civil society is also a recent global phenomenon.
It is hypothesized that there is a mutual interaction between global civil society and
globalization and it is considered that global civil society is an aspect of globalization.
Moreover, global civil society contributes to globalization. Further, it has been proposed that
global civil society both feeds on and reacts to globalization. Globalization provides the
foundation for global civil society. This seems to be reflected in a ‘strong and positive
correlation’ between ‘clusters of globalization’ and ‘clusters of global civil society’.
The high concentration of global civil society is found in north-Western Europe which is also
high on globalization in terms of presence of Transnational Corp[orations (TNCs), Internet
usage, importance of trade and foreign investment. It is observed that global civil society also
reacts to globalization, especially to the negative consequences of the expansion of global
capitalism and interconnectedness. Globalization is not found to be an even process. It has
yielded benefits to some and caused deprivations and exclusion of others. The victims of
globalization have reacted in an increasingly organized manner which is reflected in the
growing strength and activities of global civil society. Global civil society comprises diverse
set of organizations, individuals, and ideologies. It does not take an unified or single stand on
globalization. Its responses are widely varied that have been classified into different
categories. For example, Anheier and others in 2001, placed global civil society position on
globalization into four main categories viz., Supporters, Rejectionists, Reformists and
Alternatives.
The supporters are those groups and individuals in global civil society, who advocate
globalization and are enthusiastic about it. They are in favour of the expansion of global
capitalism and interconnectedness or global rule of law and global consciousness. They are
allies of transnational business, and also of governments that want globalization to move
ahead. This category also includes the advocates of ‘just wars for human rights’ and the
enthusiasts for new technology.
Rejectionists those who reject globalization and want to return to a world of nation-states.
The rejectionists are of different types in terms of politico-ideological perspectives. It has the
‘new right’ who support global capitalism but oppose open border and a global rule of law.

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There are leftists here who are opposed to global capitalism, but do not oppose the spread of
global rule of law. Moreover, there are traditional leftist anti-colonial movements or
communists who oppose infringement of state sovereignty. This category of global civil
society also comprises nationalists and even religious fundamentalists. They consider
globalization harmful and hence oppose it with all their might.
Reformists are said to be the largest segment of global civil society. They welcome the spread
of global capitalism and global connectedness which is considered potentially beneficial to
all. But at the same time, they feel the need to ‘civilize’ the process of globalization and give
it a ‘human face’. So, they want reform of international and multilateral economic
institutions, and a global rule of law. They are in favour of greater social justice and a fair and
participatory procedure in case of new technologies. Two sub-groups are identified under this
category. These are ‘incrementalists’ who favour a slow and gradual reform, and ‘radicals’
who demand bigger and more substantive change.
Finally, ‘alternatives’ group does not oppose globalization, but does not support either.
Rather, it prefers to opt out and adopts its own course of action independent of government,
international institutions and TNCs. Their main aim is to develop their own way of life and
create their own space without any kind of outside interference. This is reflected, for instance,
in their preference for growing and eating organic food, opposition to brand names, efforts to
reclaim public space, capitalism in local money schemes, and non-military ‘civil society
interventions’ in conflicts.
The reality and significance of the emerging group began to come into focus at the
International NGO Forum at the Rio Earth Summit in 1992. This gathering engaged some
18,000 citizen of every nationality, class, religion and race in crafting citizen treaties
articulating positive agendas for cooperative voluntary action to create a world that works for
all. This was an initial step in forming the complex web of alliances committed to creating a
just, sustainable, and compassionate world we now know as global civil society.
In the late 1990s global civil society gained public visibility primarily as a popular resistance
movement challenging the institutions and policies of corporate globalization. Less visible
was the on going work of articulating and demonstrating positive alternatives. This more
positive and proactive face of the movement came to the fore in 2001 at the World Social
Forum in Porto Alegre Brazil nine years after Rio. It was the first major convocation of
global civil society in the third millennium and it reflected a new stage in the movement’s
self-confidence and sense of its historic role in light of the failing legitimacy and increasing
public awareness of the failures of the institutions of empire. The foundation of the change
ahead is the awakening of a cultural, social, scientific, and spiritual consciousness of the
interconnections that bond the whole of life including the human species into the living web
of an earth community.

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The World Social Forum

The World Social Forum is not an organization, not a united front platform, but it is an open
meeting place for reflective thinking, democratic debate of ideas, formulation of proposals,
free exchange of experiences and inter-linking for effective action, by groups and movements
of civil society that are opposed to neo-liberalism and to domination of the world by capital
and any form of imperialism, and are committed to building a society centered on the human
person. The World Social Forum brings together and interlinks organizations and movements
of civil society from all the countries in the world. However, it does not intend to be a body
representing world civil society.
The World Social Forum is an annual meeting, based in Brazil, that defines itself as an
opened space, plural, diverse, non-governmental and non-partisan that stimulates the
decentralized debate, reflection, proposals building, experiences exchange and alliances
among movements and organizations engaged in concrete actions towards a more solidary,
democratic and fair world. It is a permanent space and process to build alternatives to
neoliberalism. It is held by members of the alter-globalization movement also known to as
the global justice movement who come together to coordinate world campaigns, share and
refine organizing strategies, and inform each other about movements from around the world
and their issues. It tends to meet in January at the same time as its “great capitalist rival", the
World Economic Forum’s meeting in Davos, Switzerland.
Originated by Oded Grajew, the first World Social Forum was held from 25 January to 30
January 2001 in Porto Alegre, Brazil, organized by many groups including the French
Association for the Taxation of Financial Transactions for the Aid of Citizens. The World
Social Forum was sponsored, in part, by the Porto Alegre government, led by the Brazilian
Worker’s Party. The town was experimenting with an innovative model for local government
which combined the traditional representative institutions with the participation of open
assemblies of the people. About 12,000 people attended from around the world.
The second World Social Forum, also held in Porto Alegre from 31 January to 5 February
2002, had over 12,000 official delegates representing people from 123 countries, 60,000
attendees, 652 workshops, and 27 talks.
The third World Social Forum was again held in Porto Alegre, in January 2003. There were
many parallel workshops, including, for example the Life After Capitalism workshop, which
proposed focussed discussion on non-communist, non-capitalist, participative possibilities for
different aspects of social, political, economic, communication structures. Among the
speakers was American linguist and political activist Noam Chomsky.
The fourth World Social Forum was held in Mumbai, India, from 16 January to 21 January
2004. The attendance was expected to be 75,000 and it shot over by thousands. The cultural
diversity was one notable aspect of the forum. A notable decision that was taken was the
stand on Free Software. One of the key speakers at the World Social Forum 2004 was Joseph
Stiglitz.

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The fifth World Social Forum for 2005 was held in Porto Alegre, Brazil between 26 January
and 31 January. There were 155,000 registered participants at the Forum, with most coming
from Brazil, Argentina, the United States, Uruguay, and France. A number of participants in
the forum released the Porto Alegre Manifesto.
The sixth World Social Forum was “polycentric", held in January 2006 in Caracas
(Venezuela) and Bamako (Mali), and in March 2006, in Karachi (Pakistan). The Forum in
Pakistan was delayed to March because of the Kashmir earthquake that had recently occurred
in the area.
The seventh World Social Forum was held in Nairobi, Kenya in January 2007. There were
66,000 registered attendees, and 1,400 participating organizations from 110 countries,
making it the most globally representative World Social Forum so far. It was criticized as
being ‘an Non-Government Organizaton (NGO) fair’ and movements of the poor in Kenya
and South Africa mounted vigorous protests against some of the NGOs that attended and, in
their view, dominated the forum in the name of the African poor.
The eighth World Social Forum in 2008 was not organized at a particular place, but globally,
which means by thousands of autonomous local organizations, on or around January 26. They
are also known as the Global Call for Action.
The ninth World Social Forum took place in the Brazilian city of Belém, located in the
Amazon rainforest, between January 27 and February 1, 2009. More than 100,000 people
descended on the city of Belem at the mighty Amazon river to debate proposals and plan
strategies for making a new and better world.
Since 2001, the United Nations has had a presence at the World Social Forum through
UNESCO, showing the institutional credibility achieved by the forum, seen by UNESCO as a
prime opportunity for dialogue and a laboratory of ideas for the renewal of public policies
through critical reflection on the future of societies we want to create and for elaborating
proposals in search of solidarity, justice, peace and human rights.
The World Social Forum has prompted the organizing of many regional social forums,
including the Americas Social Forum, European Social Forum, the Asian Social Forum, the
Mediterranean Social Forum and the Southern Africa Social Forum. There are also many
local and national social forums, such as the Italian Social Forum, India Social Forum,
Liverpool Social Forum and the Boston Social Forum. The first-ever United States Social
Forum took place in Atlanta in June 2007. Regional forums have taken place in the
Southwest, Northwest, Northeast, Midwest and Southeastregions of the United States. Most,
though not all, social forums adhere to the World Social Forum Charter of Principles drawn
up by the World Social Forum.
Charter of Principles of World Social Forum
The committee of Brazilian organizations that conceived of and organized the first World
Social Forum, held in Porto Alegre from January 25th to 30th, 2001, after evaluating the

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results of that Forum and the expectations it raised, considered it necessary and legitimate to
draw up a Charter of Principles to guide the continued pursuit of that initiative. The principles
contained in the Charter are supposed to be respected by all those, who wished to take part in
the process and to organize new editions of the World Social Forum. The Charter of
Principles is a consolidation of the decisions that presided over the holding of the Porto
Alegre Forum. The Charter of Principles of World Social Forum were approved and adopted
in Sãƒo Paulo, on April 9, 2001, by the organizations that make up the World Social Forum
organizing committee, approved by the world social forum international council on June 10,
2001. The following are the Charter of Principles approved by the organizations of World
Social Forum on April 9, 2001.
1) The World Social Forum is an open meeting place for reflective thinking, democratic
debate of ideas, formulation of proposals, free exchange of experiences and
interlinking for effective action, by groups and movements of civil society that are
opposed to neo-liberalism and to domination of the world by capital and any form of
imperialism, and are committed to building a planetary society directed towards
fruitful relationships among Mankind and between it and the Earth.
2) The World Social Forum at Porto Alegre was an event localized in time and place.
From now on, in the certainty proclaimed at Porto Alegre that “Another World is
Possible", it becomes a permanent process of seeking and building alternatives, which
cannot be reduced to the events supporting it.
3) The World Social Forum is a world process. All the meetings that are held as part of
this process have an international dimension.
4) The alternatives proposed at the World Social Forum stand in opposition to a process
of globalization commanded by the large multinational corporations and by the
governments and international institutions at the service of those corporations’
interests, with the complicity of national governments. They are designed to ensure
that globalization in solidarity will prevail as a new stage in world history. This will
respect universal human rights, and those of all citizens - men and women - of all
nations and the environment and will rest on democratic international systems and
institutions at the service of social justice, equality and the sovereignty of peoples.
5) The World Social Forum brings together and interlinks only organizations and
movements of civil society from all the countries in the world, but intends neither to
be a body representing world civil society.
6) The meetings of the World Social Forum do not deliberate on behalf of the World
Social Forum as a body. No one, therefore, will be authorized, on behalf of any of the
editions of the Forum, to express positions claiming to be those of all its participants.
The participants in the Forum shall not be called on to take decisions as a body,
whether by vote or acclamation, on declarations or proposals for action that would
commit all, or the majority, of them and that propose to be taken as establishing

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positions of the Forum as a body. It thus does not constitute a locus of power to be
disputed by the participants in its meetings, nor does it intend to constitute the only
option for interrelation and action by the organizations and movements that
participate in it.
7) Nonetheless, organizations or groups of organizations that participate in the Forum’s
meetings must be assured the right, during such meetings, to deliberate on
declarations or actions they may decide on, whether singly or in coordination with
other participants. The World Social Forum undertakes to circulate such decisions
widely by the means at its disposal, without directing, hierarchizing, censuring or
restricting them, but as deliberations of the organizations or groups of organizations
that made the decisions.
8) The World Social Forum is a plural, diversified, non-confessional, non-governmental
and non-party context that, in a decentralized fashion, interrelates organizations and
movements engaged in concrete action at levels from the local to the international to
build another world.
9) The World Social Forum will always be a forum open to pluralism and to the
diversity of activities and ways of engaging of the organizations and movements that
decide to participate in it, as well as the diversity of genders, ethnicities, cultures,
generations and physical capacities, providing they abide by this Charter of
Principles. Neither party representations nor military organizations shall participate in
the Forum. Government leaders and members of legislatures who accept the
commitments of this Charter may be invited to participate in a personal capacity.
10) The World Social Forum is opposed to all totalitarian and reductionist views of
economy, development and history and to the use of violence as a means of social
control by the State. It upholds respect for Human Rights, the practices of real
democracy, participatory democracy, peaceful relations, in equality and solidarity,
among people, ethnicities, genders and peoples, and condemns all forms of
domination and all subjection of one person by another.
11) As a forum for debate the World Social Forum is a movement of ideas that prompts
reflection, and the transparent circulation of the results of that reflection, on the
mechanisms and instruments of domination by capital, on means and actions to resist
and overcome that domination, and on the alternatives proposed to solve the problems
of exclusion and social inequality that the process of capitalist globalization with its
racist, sexist and environmentally destructive dimensions is creating internationally
and within countries.
12) As a framework for the exchange of experiences, the World Social Forum encourages
understanding and mutual recognition amongst its participant organizations and
movements, and places special value on the exchange among them, particularly on all

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that society is building to centre economic activity and political action on meeting the
needs of people and respecting nature, in the present and for future generations.
13) As a context for interrelations, the World Social Forum seeks to strengthen and create
new national and international links among organizations and movements of society,
that, in both public and private life, will increase the capacity for non-violent social
resistance to the process of dehumanization the world is undergoing and to the
violence used by the State, and reinforce the humanizing measures being taken by the
action of these movements and organizations.
14) The World Social Forum is a process that encourages its participant organizations and
movements to situate their actions, from the local level to the national level and
seeking active participation in international contexts, as issues of planetary
citizenship, and to introduce onto the global agenda the change-inducing practices that
they are experimenting in building a new world in solidarity.
References
 Appadurai, Arjun, Modernity at large: Culture dimensions of globalization, New Delhi,
Oxford Univ Press, 1997.
 Jose Correa Leite, The World Social Forum: Strategies of Resistance, Haymarket
Books, 2005
 Featherstone, Mike, Ed, Global culture: Nationalism, globalization and modernity: A
theory, culture and Society special issue, London: Sage Publications, 1990.
 Robertson, Roland, Globalization: Social theory and global culture, London: Sage
Publications, 1992.
 Sen, Jai, Anita Anand, Arturo Escobar and Peter Waterman (eds), The World Social
Forum: Challenging Empires. New Delhi: The Viveka Foundation, 2004

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Unit-VI : Globalization and Politics in Developing Countries

Lesson-1

Globalization and the Social Movements

The discussion in the chapter shall be divided into following questions:

What is globalization?
What do we understand by social movements?
How globalization affects social movements?
How globalization gets affected by social movements?
I
We all know that globalization is all about interconnectedness of the world and the
intensification of this process. It has resulted in the world turning into a global village. It
means now any place of the world is no longer unaffected by the happenings in the other part
of the word. Globalization has been greatly supported by the information technology and the
communication revolution. Now movement of money, goods and labour has been so
intensified that these movements look like moving within a small village. Consequently, such
intensified information and movement have unforeseen effect on the people and processes
around the world. We should also keep in mind that despite the arguments and counter
arguments by the globalization supporters (also known as Globalists) and the opponents (also
known as Skeptics), no one denies its effect on people, society, economy, culture and nation
state.
Differentiating the process of globalization from the interdependence of the nation-states
Anthony Mcgrew notes following uniqueness of the globalization:
a) a stretching of social, political and economic activities across political frontiers so
that events, decisions and activities in one region of the world come to have
significance for individuals and communities in distant region of the globe. For
example: Civil wars and conflicts in the poorest regions increase the flow of asylum
seekers and illegal migrants into the world’s affluent countries;
b) the intensification, or the growing magnitude of interconnectedness, in almost every
sphere of social existence from the economic to the ecological, from the spread of
pandemic like Covid-19 to the Islamic fundamentalism; from the intensification of
world trade to the spread of weapon of mass destruction;
c) the accelerating pace of global interaction and the transport and communication that
increases the rapidity with which ideas, news, goods, information, capitals and
technology move around the world.

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d) The growing extensity, intensity and velocity of global interactions is associated with a
deepening enmeshment of the local and global in so far as local events may come to
have global consequences and global events can have serious local consequence,
creating growing collective awareness or consciousness of the world as a shared
social space, that is globality or globalism. (McGrew 2008: 18)
It is also worth reminding that the advocates of globalization pushed the idea of a more equal
world, especially in terms of economic development. However, the experience of three
decades of this process (since the demise of USSR) for the global south has not been as
promised. It has resulted in people gathering around the world questioning the very principle
of globalization. These mass agitations, though is not a new process but certainly have new
dimensions that has affected the process of globalization and vice-versa. Let us now consider
first these mass movements popularly known as social movements.
II
A social movement is the collective efforts of people to seek changes within a system. They
do not want to overthrow the socio-political system and change the power distribution in
society but want redressal for their concerns. If a movement seeks complete transformation of
socio-political structure then it is better characterized as revolution. The history of social
movements dates back to French revolution of 1789 when the slogans of ‘liberty, equality
and fraternity’ was raised. It has effect on the movements around the world when people
demanded equal liberties to all human beings. In First World such movements tried to
establish liberal democratic societies. In Second World it was establishment of socialist order
and in Third World the colonized came together to establish their nationalist governments.
All such movements comprised a class structure, organized leadership, clear objective and
strategy to attain their aspired goal. These are better known as ‘old social movements’. Such
movements established nation-states at the forefront of the world actors, having sovereign
power over their population. Nation- states were designated as solution to all problems of
their people. However, this expectation soon faded and nation states are seen as the problem
to many aspirations sought by people. The old movements compartmentalized the people into
monolithic class identity and nation state as panacea to all problems. It resulted into the lost
of many aspiring identities, biased developmental models and monopoly of power to states.
The advent of globalization only radicalized this process and the people around the world
started uniting against these global developments and to recover their lost identities. Since the
1980’s such movements are better known as ‘new social movements’. Contrary to the old
social movements the new social movements are unorganized, leaderless, without concrete
strategy, intermittent and dispersed movements drawing the voluntary support from a wide
range of supporters and sympathizers not necessarily directly affected with the issues raised
by the movement. These movements are not for material development but for securing the
quality of life by voicing the concerns for environment protection, lost socio-cultural
identities, questioning the development paradigms, opposing the global market forces and so

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on. Now let us consider how globalization provided a momentum for the emergence of such
movements.
III
The claims of the forces of globalization driven by liberal – capitalist market model was
always under suspicion as it was the product of the consensus of the developed West minus
the Rest. The capitalist forces have unable to secure a satisfactory equitable justice at home
for their dispossessed masses. Therefore a similar claim for the whole world was always
doubtful and it is not unknown to the students of political science that how the LPG model
(liberalization, Privatization and Globalization) was forcefully introduced in the rest of the
world after the demise of the communist challenge in USSR. Their claim of an economically
strong nation-state and an equitable world order soon proved a misnomer and the forces of
globalization turned the globe into brutal market managed by the global economic
organizations like IMF, World Bank and WTO. It makes the strong nations more stronger and
weak nations weaker, opposite to what was promised. Its impacts are manifold on the social,
economic, cultural and political arena.
At the social level it created fissures in the society as the difference between the propertied
and the dispossessed grown even at a faster pace. Around the world it has created social
unrest in societies.
In the economic sphere the multinational companies and the global policies are deciding the
fate of a nation. From industrialization to monopoly capitalism to finance capitalism has
changed the world in to bourgeoisie West and the proletariat Rest. The exploitation of the
global South has been still apace as during the colonization. Development models are
enduring the core-periphery relations at the global and the local level as well.
The impact of globalization is not limited to the socio-economic sphere only. It has severely
challenged the local culture by exporting the western products and habits. No doubt the local
cultures are under serious constrain with such forces.
Politically, the nation states have lost their sovereignty to the global forces. The fates of the
nations are decided at the platform of global institutions and nations are unable to counter it.
The multinational companies are beyond the control of any nations and the global stock
markets are deciding the economic health of a state. An unjust and undemocratic global
world can’t aspire for a more just and democratic local affair.
The above discussion logically supports a mass movement at the local and global level for a
just and democratic home and world. Around the world people are against the unjust rule and
the global forces. In the economic sphere the ‘world social forum’ is one such movement that
provides the platform to the people and activists around the world to fight against the global
economic challenges for the poor and dispossessed. Arab spring, Occupy Wall Street and
Global Queer movement are few such movements that question the global and local
governments and demand a more just and democratic society. The rise of Right wing politics,

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global religious movements, fundamentalism and even the global terrorism are somehow a
reaction to the cultural challenges posed by the forces of globalization.
In India also we have seen scores of movement from Narmada Bachao to anti-nuclear plant,
from farmers to the tribal, from the LGBT to the anti-Valentine’s day; all are challenging the
socio-economic-cultural and identity issues related to the local and the global.
IV
The above discussion should not give impression that the globalization only has impacted the
people, nation and social movements around the globe. Even the social movements have also
largely affected the nature and working of globalization and global forces. The social
movements have provided platform that a school girl Greta Thunberg questioned the global
leaders on their lackluster approach towards the problem of climate change. The mass
agitation against growing economic disparities has helped the socialist sympathizer to sworn
in and block the advancements of globalization. The cultural assault has strengthened the
Rightist governments around the world that are trying to morph the forces of globalization by
obstructing the free flow of people and goods. The global fundamentalism and global
terrorism has roots in the unequal world created by the global forces that force them to
ponder upon these challenges. The movements by women, peasants, tribal, and queer
community has questioned the homogenized and undemocratic order created by the forces of
globalization.
The challenges posed by and to the globalization have been discussed normatively by
William Scheuerman (2018) in Stanford Encyclopedia of Philosophy that provides a lucid
understanding of the philosophical and normative discourses of the globalization process. Let
us discuss the challenges posed by globalization to the normative political theory. Such
discourse revolves around three basic questions of differentiating between foreign and
domestic; the democratization of global institutions; and the securing of normative goals like
distributive justice. Such debates include mostly three strands of scholars namely, the
Liberals, the Realists and the Cosmopolitans.
It has been argued that globalization has nothing to do with the domestic affairs and
management of the states and the values like liberty, equality and justice are the internal
matters of sovereign. However, states are facing challenges in realizing these values because
of the deterritorialisation and constrains from the global forces. One can question that if the
global forces are constraining the effective pursuance of such values does the responsibility
not lie on these forces to further these causes. Since the fate of the globe is intertwined how
can the global forces be leave the people to seek the help within their sovereign borders only?
Similarly, though we emphasize the democracy for the institutions of nation state why can’t
we think in the same way for global institutions. Actually, the extreme inequality at global
institutions can’t further a democratic cause within territories. The structures of the global
institutions like IMF, World Bank, WTO and even United Nations and their responses to the
social movements like World Social Movement are hardly democratic. It only questions the

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faith of liberals in such international institutions and emphasizes the realist assumption that at
last nation states are the real actors and an anarchic global order can’t expect democratic
states.
No doubt that cosmopolitanism is a distant dream and the distributive justice can only
possible within territorial authorities. Hence putting such responsibilities on global
institutions and on affluent countries are only moral claims. We can understand this with the
example of the free and welcomed movement of goods and finance but not for labour. In
reality global forces are not global but the global arms or platforms of narrow national
interests. In case of globalizations the capitalist market interests are painted and presented as
the global interests. The lack of consensus on environmental concerns, competition for arms
market and the current outbreak of Covid-19 and a rush for getting patent of its vaccine only
shows the real character of the global forces run by the capitalist logic.
Conclusion
Concluding the chapter we can say that it is not the question of either-or with the
globalization but to make way in between and the social movements provide a way to seek
such grounds of intersection so that the ills of globalization can be minimized and benefits
could be maximized. These movements are not aberrations but the critics that need to be
taken seriously to found a just, equitable and democratic global order. Ignoring or
suppressing such movements can be short-sighted and may lay the ground for a more strong
protest against the system.
References
Baylis, John, Smith, Steve and Owens, Patricia. (2008). The Globalization of World Politics.
NewYork: OUP.
Held, David, McGrew, Anthony, Goldblatt, David, and Perraton, Jonathan. (1999), Global
Transformations: Politics, Economics and Culture, Stanford: Stanford University Press.
Mukherjee, Subrata and Ramaswamy, Sushila. (2017). ‘New Social Movement’ in
Theoretical Foundations of Comparative Politics. Hyderabad: Orient BlackSwan. 192-202.
Stiglitz, Joseph E., (2018), Globalization and Its Discontents Revisited: Anti-Globalization in
the Era of Trump, New York: Norton & Co.
Scheuerman, William. (2018) “Globalization”, The Stanford Encyclopedia of Philosophy. in
Edward N. Zalta(ed.), (Winter 2018 Edition), URL =
<https://plato.stanford.edu/archives/win2018/entries/globalization/>. Accessed on 6 March
2020.

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Lesson-2

Globalization and the Demise of Nation-State

Outline of Chapter
Introduction
Nation-State-Some Definitions
Rise and development of modern nation state
Modern Nation States
 Territory
 Population
 Sovereignty
 Government
Globalization
Theoretical Discussion
 Ultra-globalist
 Skeptical
 Transformationalist
Conclusion
Learning Outcome
Questions
Bibliography

Introduction
Globalization has limited the role of the nation-state in many ways. Globalization can
generally be recognized as a fading system of economic, social and cultural boundaries
between nation-states. Some scholars even believe that nation-states, which are naturally
divided by political and geographical boundaries, are becoming less relevant in a global
world. Harsman and Marshall criticize globalization, saying that the autonomy of the nation-
state has changed due to the international economic system. Traditional nation-states are in
danger because economic internationalization has weakened national sovereignty and
weakened the economic decision-making power of the nation-state. In this process, the
national security of economic activities is more directly related to the internationalization of
the market than the so-called old nation-states. The changes that have taken place due to
interrelationships between national boundaries have rendered political communities and
national sovereignty redundant. This changing concept has created a tension between

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traditional forms of social and political participation and the interdependence of the
contemporary world.
The relentless race to rapidly reduce barriers in relation to international commerce and
communication is seen as a potential threat to nation-states. Air and sea transport made it
possible for same-day travel to other continents due to which trade between countries located
in any corner of the world was greatly expanded, which did not end the sovereignty of nation-
states. Instead, globalization has emerged as a force that has transformed the way nation-
states deal with each other in the international commerce, giving them immense mobility.
On the other hand, in this era of globalization, if we talk relative to the third world, then the
market has become a central concept in the context that global economic flows have spread to
every corner without any hindrance by which every nation-state without its necessary demand
The reason seems to be becoming borderless somewhere. The already established autonomy
of the nation-state in the context of the Third World is declining. Pre-national political
institutions are moving to replace the traditional institutions of nation-states. The legislature,
the executive as well as other institutions of representation are coming under the influence of
pre-national political institutions like IMF, World Bank and WTO. In addition, global
thinkers argue that the amount of daily trade on foreign exchange throughout the world has
made the nation-state unable to control its own currency. The pace and intensity with which
business is taking place in the world capital market, the national governments are not able to
control the exchange rates and inefficient leaders have become dependent on the grace of the
people and institutions making continuous economic choices on which their There is no
control. The chapter presented is an attempt to present a critical analysis of these above
discussions.
Nation-State-Some Definitions
Before understanding globalization and nation-state, we have to understand the arrival or
creation of the state. What we address as the state is interpreted as the nation-state after the
Treaty of Westphalia, so in this chapter where the word state will be mentioned, it will
actually refer to the nation-state itself. States are the organized units which are under one
government. States are sovereign. The nation-state is an essential unit of the modern world.
Most of the world’s people are citizens of some nation-state. For those who are not citizens of
any nation-state, it is very difficult to maintain their existence in the current world order.
According to Aristotle, the state is a community of families and villages whose aim is the
attainment of a full and self-reliant life. Kautilya has described the seven parts of the
kingdom and this is called his “weekend principle” king, spirit or minister, pur or fort,
treasure, punishment, friend. The area of the state is large. That is, an area surrounded by
large terrain. According to Jean Bodin, the state is a union of families, governed by some
supreme power and reasoning intelligence.
According to Garner, the state of political science and the notion of public law, is a
community of more or less individuals of number who permanently reside on a certain

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territory and are wholly under external control, or Be almost independent and have an
organized government, whose orders are naturally followed by a large community of
residents. Max Weber considered the state to be a community that claimed a monopoly of the
lawful use of physical force in specified territories.
Rise and development of modern nation state
It took a long time to transform the modern nation-state into a political organization. In
ancient times humans lived in communities. Naturally, man is a social animal who cannot
live alone. He is an integral part of the society, so in his life human has to follow certain rules
and this community life gradually leads to the establishment of political communities and
states. In its initial form the structure of the state was simple. That simple structure has now
developed into an esoteric structure. Over time, its form has changed and it has become a
universal organization. In fact, the development of a modern nation-state is the result of a
very long history of human civilization:
 Clan states
 Oriental empire
 Greek city
 The Roman Empire
 Feudal state
Modern Nation States
Nationalism arose in Europe from the 15th and 16th centuries when the power of the
zamindars and religious authorities under the feudal state was eroded and the Treaty of
Westphalia which was signed between May and October 1648 in the Westphalian cities of
Osnabruck and Munster Was a series of which largely ended the European Wars of Religion.
The Treaty of Westphalia came to a close with a quiet period of European history, which saw
the deaths of about eight million people. Scholars have identified Westphalia as the beginning
of the modern international system, based on the concept of Westphalian sovereignty. The
peace of Westphalia set the example of peace established by the Diplomatic Congress. Based
on the concept of co-existing sovereign states, a new system of political system emerged in
Central Europe. Inter-state aggression had to be kept in check by the balance of power and a
standard was set against interference in the domestic affairs of another state. As European
influence spread around the world, these Westphalian doctrines became central to the concept
of sovereign states, international law, and the existing world order in particular.
Apart from the new economic relations, people were joined as a temporary group with the
idea of unity of national language and culture and natural boundaries of the country etc. In
this way the nation-state first developed in France, Spain, England, Switzerland, Netherlands
Russia, Italy and Germany. The early states were dominated by monarchy, in which all power
was in the hands of a king, but in the 18th century, constitutional rule emerged in Europe,

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firstly in England, under the Gaurav Revolution, it was peacefully acquired in the hands of
Parliament. The French Revolution had to resort to violence during the 18th and 19th
centuries with the support of colonialism In this period, Britain, France, Belgium and Land
Portugal, Spain, etc., spread their colonization net on the regions of Asia, Africa and Latin
America and exploited them to the fullest. After the Second World War, colonialism began to
decline and on the horizon of the world. New nation states emerged. In this way, the nation-
state of the present form emerges after the Treaty of Westphalia, which mainly states the four
basic elements–
 Population:
Population is the first essential element of the state, because the state is a human community
and a state cannot be imagined without humans.
 Territory:
The second essential element of the state is the fixed terrain (territory). A human community
cannot be called a state until it resides permanently on a certain land.
 Government:
The third essential element for the state is government. The state is a political community of
human beings and community life is necessary to have a political organization like
government, because government is the instrument that gives practical purpose to the
objectives and goals for which the state has emerged.
 Sovereignty:
Sovereignty means ‘supreme authority'. Sovereignty is the commanding power of the state.
Since sovereignty resides in the state itself, both external and internal forms have supreme
and omnipotent values. Sovereignty gives the state supremacy and independence in both
internal and external matters. Sovereignty is the most important element. Even a government-
endowed human community living in a certain territory cannot be called a state unless
sovereignty is under their authority, that is, as long as that human community is able to
resolve its internal and external problems and to determine policy don’t be free. Therefore,
sovereignty is the element that gives the state superiority over other human communities.
Globalization
Globalization is the free movement of goods, services, currency. The development of
information and technology and the most modern means of transport gave wide scope to
globalization. A system based on free trade and non-interference gives rise to globalization.
The process of connecting all the countries of the world on the basis of social, economic,
cultural etc. also defines globalization. David Held defines globalization as interdependence,
as social and economic relations bind the world. At the same time, most globalist thinkers
like K.Ohmi believe that multinational corporations and international markets have become
powerful and impersonal forces control the world. There are many approaches to
globalization at present, which elaborate on its form, result and impact.

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A different view of the origins and nature of globalization is offered by neo-Marxists; who
believe that globalization is a new form of imperialism and an extension of liberal narrow
policies. They also believe that developed western countries are using it to protect their
economy from future crises. Only unilateral benefits will be available to the developed
countries. Liberal economic institutions like World Bank, IMF etc. give loans to a country
only if it agrees to its conditions. The best example of this is the Indian economic reform
adopted in 1991. Mexico had to undergo the same experience in 1982. Indian economist
AmartyaSen considers globalization as a historical process, saying that it is not necessarily
Western. They also emphasize the need for its improvement. While JagdishBhagwati is a
supporter of free trade, he believes that free trade has widely helped in the development of
the economy. While many developing countries like China and India have benefited from
globalization, the underdeveloped countries of Africa have also suffered. The chapter
presents a critical analysis of these approaches.
Theoretical Discussion
One common effect of globalization is that it supports Westernization, which means that
there is no harm in other nation-states when dealing with the US and Europe. This is
especially true in the agricultural industry, in which second- and third-world nations face
internal competition from Western companies. Another possible effect is that nation-states
have to examine their economic policies in light of the many challenges and opportunities It
is forced that multinational corporations and other institutions of international commerce
exist. Multinational corporations, in particular, challenge nation-states to confront the unique
issue of foreign direct investment, forcing nation-states to determine how much international
influence they exert in their economies. Globalization has also led to a feeling of
interdependence between nations, which can lead to an imbalance of power among nations of
different economic powers. Broadly speaking, in the above perspective of the nation-state,
there are three main approaches to understanding globalization:
 Ultra-globalist,
 Skeptical and
 Transformationalist.
Ultra-Globalist Outlook
The ultra-ultra-globalist approach emphasizes the progressive level of interactions of growing
relations between states which has given rise to a complex network of political, social and
economic relations in the present world. National boundaries can no longer play the role of a
deterrent in the production process. Today, very few activities are left which are oriented
towards local or national markets and it is now very difficult to address the actual origin of
human products due to the continuing complex conditions of production organized beyond
those confined within national boundaries. In the economic field, it is argued that two trends
are evident as a result of this. According to ultra-globalist thinkers like Ohmi, multinational

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corporations and international markets have become powerful and impersonal forces control
the world.
First, the volume of international finance, trade and production has increased to the extent
that these activities have also crossed the boundaries of the nation, leading to the emergence
of a unified economy. Importantly, the production process has now changed production-
driven commodity categories such as - automobiles in industries, computers, aircraft,
electrical machinery and buyer-driven goods categories - such as textiles, footwear, toys,
household goods in contrast to the world All production sites have been united. The main
thing in this lattice industrial structure is that it is spread across the world regionally and
geometry is undergoing changes. From the standpoint of ultra-globalist theory, there has been
a complete change in the local configuration of production processes.
Gone are the days when production was made keeping in mind the local needs of the
population. The contemporary world is now based on a large production chain and network
of geographical scale from local to global level. These networks are structures through which
different parts of the world are connected by the flow of physical and non-material substances
in the system of different power relations. Secondly, it is argued that this has widely affected
the autonomy of the state. This has reduced the controlling power of the state in economic
flows. The ultra-globalists have pointed to the increasing economic means of enterprises as
compared to the overall economic activities taking place within the state.
Skeptical view
But skeptics consider globalization a myth. They say that in the 19th century, there was a
relatively greater increase in trade, the number of workers increased rapidly and the
integration of states as an international system increased economic interdependence at a
relatively high level. At the same time, the theory of comparative advantage of Adam Smith
was propagated, what we are experiencing today is the increasing level of these processes. In
contrast to the ultra-globalists, skeptics give more importance to political power than
economic power. They believe that the market does not govern, rather the state regulates all
economic activities.
Believers of the skeptical approach contradict the views of ultra-globalists. They present an
alternative view of the world in which they describe the levels of old-time international trade,
production and finance as compatible with today’s integrated levels. In particular, they also
challenge the idea of ultra-globalists’ relative free trade across the border and their claim that
today’s multinationals are fictitious and set up production facilities where their operating
costs are low.. If so, he argues that we should also experience convergence in the price and
pay levels of production. He argues that this is not directly the case because if so, how would
we explain that German workers are earning nearly twice as much in the south or eleven
times in Thailand? Why is there such a wide gap in national economies not only in terms of
remuneration of workers but also their dividends? Apart from this, they also point to the fact
that there is a wide difference in the value of goods worldwide. If a truly free trade is taking

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place, local companies will be forced to compete with their international counterparts.
Therefore, we would expect a greater concentration of values between states than in the
present situation.
Presenting this alternative analysis, skeptics doubt the notion of ultra-globalists that the
power of the state is declining. If it is to be believed that the present corporations are actually
more effective than the states which are free to operate from one state to another, then
political fatalism can result. Hurst and Thompson believe that ‘a consequence of the concept
of globalization can distort radical reforms in national strategies that appear unlikely in the
time of international markets’ decision and acceptance. Globalization is a myth suitable for a
world without illusion, but now it is taking away our expectations as well. Skeptics argue that
on the world stage, states will always remain an important doer, which will remain a means
of controlling the actions within and across state boundaries.
Apart from this, they argue that the original industrialized states have always been active
partners and major producers of economic globalization. For example, the Comprehensive
Code of Liberalization of Capital Movement has been a major means of promoting the free
flow of investment between states. Skeptics also point to the importance of state involvement
in the management of financial and currency systems. It would not be wrong to say that they
do not recognize the changing nature of such systems.
Transformationalist view
The third approach which takes its place among the ultra-globalists and skeptics is called
transformationalism. The most balanced approach has been given by the changeists, who
believe that globalization is bringing change in the world, that is, it is a major force in
bringing social, economic and political changes. However, he does not believe that we are
currently living in a globalized world. They believe that this world is a more integrated place
and economic type relations between various entities like state, corporation, multilateral
organizations etc. are unprecedented. The world economic process is much more relative than
the domestic based process. And today it directly or indirectly encroaches on a larger
proportion of national economic activities than before.
In the changing phase of globalization, today the question arises simply that in which
direction the multilateral form of trade is going? Purely globalization represents a form of
trade in which workers, along with goods and capital, are allowed free freedom in other
countries. It can be divided into the following two major categories–
 Beyond the borders of countries, greater economic freedom than before
 Free movement of capital and goods rather than labor
Economic historians believe that the first round of globalization took place during the First
World War. It has been undergoing a second round for the last four decades. The situation in
China and India was very bad in the first round. Both countries were not counted in the top
45 countries. But in the second round, both countries have lifted their place. In 2016, China

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was second and America’s seventh after America. India’s gross domestic product during this
period was above that of Italy and Canada and was slightly behind that of Britain and France.
At that time, China and India have accepted globalization completely but now western
countries are seen opposing it. US President Donald Trump has taken a tough stance towards
the policy of ‘America, for Americans'. They have also started withdrawing from the World
Trade Organization, opposing globalization. At the same time, he has also adopted a policy of
encouraging American companies to increase investment in the US itself. Apart from
America, Germany, Britain, France and Italy have also started retreating in Europe. The
reason for the retreat of these countries from globalization is not only economic, but new
political entities have started taking such steps in their own interest. For almost four decades,
economic policies have indirectly controlled political activities. But now the situation has
reversed, which is a matter of concern for liberals. With the best phase of globalization in
1990, there were two types of discussions which need to be mentioned here.
In 1998, Jagdish Bhagwati opposed the free movement of capital, supporting the free trade of
goods. They believed that capital-market often had more volatility than goods-market. In
1996, it was also seen in some countries of Asia, Malaysia, Thailand, Philippines etc. The
arrival of capital in these countries was 93 billion dollars, but the outflow was only 12 billion
dollars. This created an economic crisis in East Asia. In the merchandise trade, never comes
so high. The noted economist of Turkey, Denny Rodrik, said in relation to free trade that the
losers will be drowned forever due to economic liberalism. Both these fears failed to stop
globalization.
Currently, two types of political trends are emerging, which are affecting the direction of
globalization. It is being claimed that there is a huge imbalance in the global nature of
markets and the sovereignty of a country. For example, if the salary was to be paid more in
America, then obviously the company there would want to go to a country with cheap labor.
Accordingly, there is a loss of capital, which is considered necessary to stop. Although the
free movement of labor was less than that of goods and capital, the international migration
has increased more than ever before. The policy of protest for migrants can be attributed to
the changing political-democratic system. This anti-policy has taken the form of abominable
racism at some places. While there is anger against Muslims in America, there is in North
America against Muslims in France. The same is for migrants from Middle-Eastern countries
in Germany.
Where will the end of all these trends go? It is having a very bad effect on labor-immigration.
Ethnicity is becoming a new topic of concern for modern nations. There will be no significant
impact on capital. Large supply chains and other international networks will also remain
unchanged. The effects on business will also remain the same. Nothing can be said about the
impact on business. But now it is up to the heads of state that how they can protect their
domestic trade without increasing the duty on imports without any commercial war.

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Conclusion
Globalization is a process where state-centric agencies and service conditions disintegrate in
favor of the linkages of different actors operating in a global context. The implications are
that in globalization the subject of sovereignty becomes narrow and the process of
coordination of various state actors is not controlled by any state actors. But for the last few
years, the emphasis of protection countries on protectionism has posed a threat to
globalization, we see globalization in opposition to protectionism (commercialism). The
Industrial Revolution took place in Europe, resulting in the need for excess production to
market. Countries with industrial revolution had to conserve their goods. Therefore, the
bourgeoisie of these countries turned to those countries where there was a huge market
potential. Due to this need of the market, the world also had to bear the brunt of colonialism
and imperialism. By grabbing the resources of underdeveloped countries, taking advantage of
their labor force and capturing their market, these imperial countries came forward in the race
for development. Now the market crisis arose when these colonizing countries became
independent.
Colonialism reached its final stage by the 50s, but these imperialist countries still needed a
market. Due to the creation of the United Nations, it was no longer possible to directly
capture the market of another country. Now the demand of the market could have been met in
the same way, if the whole world had been transformed into a single market. Therefore,
developed countries began to expand globalization in the name of foreign direct investment
based on free trade and non-interventionist policy to control the markets of developing and
underdeveloped countries (Third World). On the other hand, the newly developing countries
could not even stand up to the economic hit of colonialism, so how would they open their
markets to the companies of the developed country? To avoid this globalization, developing
countries adopted protectionist policy. License-permit-quota gave protection to their nascent
industries, traders and farmers etc. India followed the same policy, but soon the external and
internal pressure on these countries to open their markets started increasing. On the one hand,
these western countries were counting the benefits of globalization to capitalize on the
growing demand for capital in developing countries; on the other hand their own economies
were collapsing.
As a result, developing countries had to open their markets and a wave of globalization raged
all over the world. However, the developed countries were in favor of globalization because it
gave them maximum profit and minimum loss. No developing country could match them in
science and technology. The quality of their products was so good that there was no threat to
their market from the products of developing countries. The policies and standards of the
world market were preparing the same. And it was not as if developing countries were the
only losers in opening up their markets. Globalization gave rise to competition, inspired to
grow. Provided quality living standards to the people developed in all fields like agriculture,
industry, science-technology etc. Provide employment opportunities to workers in their
country as well as other countries. Developing countries were learning to follow the path of

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developed countries through globalization. Countries like India, China, Brazil and Mexico
became the bright stars of the world economy. This was the time when the wave of
globalization spread rapidly throughout the world. Developing countries came to a stage in
negotiations with developed countries.
Globalization was about to come to its zenith by agreements such as the Trans-Pacific
Partnership, the Trans-Atlantic Partnership, the Trade Facilitation Agreement of the World
Trade Organization, and many such bilateral and regional free trade agreements. But time
changed, and now the world is facing some unexpected and disappointing events. Today, the
nationalist political ideology is becoming popular among the pioneers of globalization in the
world, which has been preferred to country first instead of global village. Germany’s
Chancellor Angela Merkel due to her soft refugee policy, the fierce right-wing party A.F.D.
Lost from The right-wing party National Front came to power in the election of French states.
The right-wing party also came to power in Poland last year. The Nationalist Party has also
won elections in Switzerland. Even in America, Donald Trump with nationalist views has
won the presidential election. It was due to this right-wing approach that Britain decided to
secede from the European Union. One after the other, Western world is adopting state
governance under the primary concept of nationalism.
In the first world countries, this changing landscape, ie those who give rise to the concept of
globalization, are themselves adopting protectionist policies today. Today, in a capitalist
country like America, slogans like ‘By American Higher American’ are being heard instead
of ‘Global Village'. The reason for this is that now these countries have started seeing the
dark side of the golden picture they have produced. But the dark side of it is that in the era of
globalization, the sovereignty of the nation-state has started to weaken. International treaties
on issues like environment, trade have weakened the sovereignty of countries. In recent years
there has been a huge increase in the interdependence of various nations, the situation is that
no country can claim to be completely self-sufficient today. For regulation of international
trade, all countries have to follow the rules of the World Trade Organization. The
International Monetary Fund, the World Bank and multinational companies influence the
economic policies of nations. Economic organizations such as the European Union have been
formed, the countries involved have to delegate the right to determine the economic policies
of their country to the Union (European Union). This has caused extensive damage to the
economic sovereignty of countries. The same damage has also reached some political
sovereignty. Even though the United Nations has not been as strong as the formation of a
global government, all countries use this platform to establish and follow certain rules and
traditions.
Today there is a wide spread of transportation, communication in the world. People from
different countries are connected through social media. Information spreads in the country
and the world within a few moments. People have been in contact with the cultures of other
countries. This cultural reconciliation is being seen as a threat to our culture. Cultural
sovereignty of the third world has also been weakened by globalization. Huntington explains

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these conflicts in his book ‘Clash of Civilizations'. Not only political and cultural
sovereignty, but there are other reasons that find globalization contrary to the sovereignty of
the nation-state. If economies are interlinked, then their dependence is also increasing. Today,
the economic recession of any one country engulfs the whole world. Which seems to
completely destroy the sovereignty of economic regulatory power of nation-states.
In conclusion, we can say that every society and nation has no permanent ideology. Change is
the law of nature and also an indicator of development. If there is any change in the world
ideology, then we can hope that this too will be for the good of mankind. And as far as the
future of nation-state is concerned in the context of globalization, today all the countries of
the world have become so interdependent among themselves that it is no longer possible to be
completely self-sufficient. Just as rivers found in the sea cannot be separated, in the same
way countries cannot be separated from the world now; Rather, there are some issues like
environment, terrorism, in which the whole world needs to be united for resolution. Even
though western countries are assimilating themselves from globalization, now the second
generation is moving forward to take advantage of globalization in which the developing
countries like China, India, Brazil and Mexico will play a major role. Now Asia will be the
center of globalization and the new chapter of development will be written in the name of the
countries of the East instead of the West. But with the sovereignty of the nation-state, the
dream of a healthy world village will be fulfilled only when the new policy of globalization is
balanced and takes everyone along. It will have to be based on the all-inclusive concept of
Vasudhaiva Kutumbakam, not as inequality-based as the First World and Third World.
Learning Outcome–
After reading this chapter, an understanding of the following aspects of globalization and
decay of the nation-state will be clear:
 An understanding of nation-state; meaning, definition and dimensions of modern
nation-states.
 Sovereignty of State in the context of the modern nation-state.
 The relationship between globalization and the modern nation-state.
 To critically analyze if globalization affects the sovereignty of the nation-state.
 Information including examples of the effects of globalization on the sovereignty of
third world countries.
 Study of various approaches to globalization
 Knowledge of the facts of the ultra-globalist approach of globalization in relation to
the decay of the nation-state.
Questions–
1. What do you understand by nation-state? Explain the modern nation-state.
2. Explain sovereignty in the context of the modern nation-state.
3. Critically evaluate the relationship between globalization and the modern nation-state.
4. Does globalization affect the sovereignty of the nation-state? Do a critical evaluation.

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5. Critically examine the effects of globalization on the sovereignty of third world

countries.
6. Explain the globalist approach of globalization in relation to the decay of the nation-
state.
7. Explain the skeptical and transformationalist approaches of Globalization.
Bibliography
● James, Paul (2006). Globalism, Nationalism, Tribalism. London: Sage Publications.
● Jonathan; Rosaldo, Renato (2002). “Introduction: A World in Motion”. The
Anthropology of Globalization. Wiley-Blackwell.
● Albrow, Martin and Elizabeth King (eds.) (1990). Globalization, Knowledge and
Society London: Sage.
● Frank, Andre Gunder. (1998). ReOrient: Global economy in the Asian age. Berkeley:
University of California Press.
● Giddens, Anthony. (1991). The Consequences of Modernity Cambridge: Polity Press
● Held, David; Goldblatt, David; McGrew, Anthony; Perraton, Jonathan (1999). Global
Transformations Cambridge: Polity Press.
● Larsson, Thomas. (2001). The Race to the Top: The Real Story of Globalization
Washington, DC: Cato Institute.
● Steger, Manfred (2009). Globalization: A Very Short Introduction. New York: Oxford
University Press
● Sorrells, Kathryn. (2012). Intercultural Communication Globalization and Social
Justice. Thousand Oaks: Sage.
● Wolf, Martin (2001). “Will the nation-state survive globalization?”.Foreign Affairs.
80 (1): 178–190. doi:10.2307/20050051. JSTOR 20050051.
● Clayton, Thomas. 2004. “Competing Conceptions of Globalization” Revisited:
Relocating the Tension between World-Systems Analysis and Globalization Analysis.
In: Comparative Education Review, vol. 48, no. 3, pp. 274–94.
● Ghosh, Biswajit (2011). “Cultural Changes and Challenges in the Era of
Globalisation.” Journal of Developing Societies, SAGE Publications, 27(2): 153–75.

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Lesson-3

Globalization and Human Migration

Outline of Chapter
Introduction
Major Factors Responsible for Human Migration
 War and other disasters
 Religious/ ethnic conflicts
 Demographic factors
 Economic factors
 Cold War and aftermath
 Sociological factors
Globalization Encourages Human Migration
Human migration in the global world
Contemporary Debate
Conclusion
Learning Outcome
Questions
Bibliography

Introduction
Globalization, defined as cross-border flows and diffusion of transit networks, has changed
the context of migration. New technologies of communication and transportation allow a
continuous and multi-directional flow of individuals, ideas, and cultural symbols. The World
Economic Forum has defined globalization as “the process by which individuals and goods
can easily move across the boundaries of the nation-state.” According to this definition, the
concept of globalization cannot be functional without human migration. Individuals cross
borders to offer their labor, their investment, and their ideas in markets that are not available
in their home countries. Globalization has now become increasingly rapid with technologies
from container shipping to modern air travel and the internet, however it is as old as human
migration. People and goods have been found to travel along major trade routes such as the
Silk Road since the millennium. Traders began to travel in the Indian Ocean and other modes
of water transport before the so-called “Age of Discovery", but after the 16th century the

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transition from feudalism to capitalism led to trade and migration links between the old and
new worlds has given a wide range of momentum.
Some thinkers say that global “open-border” policy for migration may allow labor to function
far more efficiently than a massive increase in global GDP. There is some doubt on the
suggestion of other accreditors that no country actually operates according to free trade, and
that migration control and trade laws are needed to protect the individual economies of
countries. In the twenty-first century, international migration is affecting the lives of more
people than ever before. With over 160 million people estimated to be living outside their
homeland, almost no country is currently untouched by international migration. The struggle
with poverty, political repression, human rights abuses forces more and more people to
migrate out of their home countries for migration. On the contrary, economic opportunities,
political freedom, physical protection and security for both highly skilled and unskilled
motivate workers to work in a new place. Due to these circumstances it is believed that the
possibility of slowing the pace of international migration in the future is almost negligible.
Human history is marked with the ‘Age of Migration'. From the Greek colonies, the Roman
military conquests, through the Byzantine and Ottoman empires, and from the European
colonies to the great emigrants of the nineteenth and twentieth centuries, migration has
resulted in great social events as a result of civilizations. (Spencer, Sarah; 2011) In the
present time there are very few countries which have remained untouched by human
migration. The United States has attracted the largest number of international migrants so far,
but in addition Germany, France, Canada, Saudi Arabia and Iran have also inspired migrants
to live and settle in their countries. Evidence of both immigration and migration is found in
some countries such as Mexico, that is, it also sends human migrants to other countries and
migrants from other countries also come to their country. Therefore, migration of people to
countries is seen through history, due to which it is not visible as a new phenomenon.
In this globalized world where everything seems global, migration is also changing its nature
and forms which gives it a new look. Like tide, globalization has absorbed in itself many
social and economic dynamics which are now defined in terms of the trend of globalization.
International human migration is also a trend. International migration has now become
globalized due to globalization, which lies in the sense of globalization that greater spread of
goods, people and capital and greater mobility in world politics. Globalization has changed
the nature of international migration not only quantitatively, but also qualitatively. The
diversity of workplaces in globalization and the increased mobility by the people involved in
the process of migration make this a qualitative change.
The erosion of nation-state sovereignty and autonomy weakens systems of border-control and
migrant assimilation. The result is a change of material and cultural practices associated with
migration and community formation and a blurring of boundaries between different
categories of migrants. (Castell, Stefan, 2002) Migration can be seen as a continuum under
the systemic role in modern society, but its character and form varies in terms of economic
and social changes and developments in technology and culture.

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Hence, the current circumstances of globalization have changed the key features of migration.
Globalization is not just an economic phenomenon. It cannot happen without parallel flow of
capital, goods and services, ideas, cultural products and people. And most of all this flows
through a variety of international networks from corporations, intergovernmental
organizations and international corporations and international criminal syndicates. (Held,
1999)
Globalization underlines several key features of the nation-state. Castel says that the
definition of international migrants always lies in crossing national boundaries. But there has
been a belief from earlier times that they would either permanently move from one nation-
state to another (permanent migration), or return home after a period (temporary labor
migration). But the sovereignty or power of the nation-state was not questioned in any case.
Such expectations lose their legitimacy under the conditions of globalization. Castel gives
some facts related to human migration in the era of globalization which are as follows:
Migration increases and migrants become more diverse in social and cultural characteristics.
States do their best to encourage some skilled and entrepreneurial migration and to prevent
other unskilled labor migration and asylum seekers, but they find themselves difficult to
make clear distinctions and enforce rules. New developments in information and
transportation technology increase the amount of temporary, repetitive and communication
migration. An increasing number of migrants orient their lives to two or more societies and
develop transit communities and consciousness. Such trends are linked to the increasing
power of informal networks as a mode of communication and organization that cross national
boundaries. This can weaken state control policies and reduce the efficacy of traditional
methods of migrant incorporation into society. (Castel, 2000)
Major factors responsible for human migration

 War and other disasters:

War and large-scale disasters (whether natural or man-made) are important factors of direct
migration as people migrate to protect their lives. In addition, the roots of international
migration can be traced by individuals searching for other countries to protect themselves and
their families from constant physical danger and to avoid the problem of lack of economic
opportunities. This second cause of migration is qualitatively different from the pursuit of
economic reform, which is a constant feature of migration. (Spencer, Sarah)
According to Spencer, the two elements are likely to remain important factors over the next
two decades within these two broad causes. The first is political, social and cultural
intolerance over extreme and group-based violations of human rights. The second is the
systematic failure of governments to address issues of cumulative disadvantage: economic
exclusion and various forms of ethno-racial, religious or linguistic discrimination that
systematically harm certain areas of the population. Both of these are the most important
factors responsible for human migration all the time in different countries.

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 Religious/ ethnic conflicts:

Spencer also talks about three additional reasons that require separate mention here because
these reasons have recently received both significance and criticism. The first is clearly racial
ethnicity and / or religious conflict in which forcing the target group not to contest the
election is not merely a cause of conflict but a major policy objective. The second involves
the degradation of ecosystems to the point of making life unstable leading examples of which
include water security and widespread degradation of water quality, contamination of basic
food and the consequences of desertification. The third concern is related to the increase in
various forms of natural and man-made disasters.
 Demographic factors:
There are various factors affecting migration such as demographic factors, economic factors
etc. Human migration has already been a large demographic force, due to a decrease in the
rate of basic population growth in the advanced industrial world. Between 1985 and 1990, the
number of international migrants accounted for nearly a quarter of the developed world’s
population growth. This figure increased to 45 percent in the period 1990–1995 due to
increased immigration and steadily decreasing fertility in the First World countries. (Spencer,
Sarah)
While fertility rates are falling in First World countries, there is a continuous population
growth in Third World countries. In most industrialized countries, fertility rates are well
below replacement rates. In Europe, the average age of children born per woman is 1.4; Italy
has a fertility rate of 1.2. Countries with declining fertility are facing the possibility of a
decline in the overall population, leading some demographics to see an estimate of an aging
population. Such nations are motivating people from other countries to work in their own
country for working people younger than an aging population. Although immigration will not
solve the problem, it will help to reduce labor shortage and also to reduce the increasing age
of the society (Martin, F. Susan). Demographic trends where fertility rates are high help to
understand emigration pressures in Africa, Latin America, and parts of Asia. Rapidly
growing societies often do not create enough jobs to keep pace with new entries in the labor
force. Development can also be a cause of environmental degradation, especially when land
use policies do not protect fragile ecosystems. Natural disasters wreak havoc on densely
populated areas in poor countries (Martin, F. Sussan).
 Economic factors:
Economic factors also affect the human migration trend. Susan explains that economic trends
affect human migration trends in many ways. Multinational corporations, for example, exert
pressure on governance to reduce the movements of officers, managers and other key
personnel from one country to another. But when they see a labor shortage, whether it is in
the Department of Information Technology or in seasonal agriculture, companies also want to
import foreign workers to fill jobs. According to Susan, sources of growth in global trade and
investment also affects human migration to countries. Economic development can be

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regarded as the best and long-term solution to emigration pressures arising from lack of
economic opportunities in developing countries for a long time. However, almost equally,
experts caution that emigration pressure is likely to persist over a long period of time and
possibly increase further before long-term gains increase.
Wayne Cornelius and Philip Martin said that leaving home begins to increase with the
opportunity for income increases in developing countries. This emigration continues to
increase. The decrease comes when the gap in the value of labor between the two countries of
immigration and migration ends. This principle is credited as responsible for migration to
countries such as Italy and Korea.
 Cold War and aftermath:
Geopolitical change from the Cold War era offers both opportunities and challenges for the
management of international migration, particularly refugee movements. During the Cold
War, the United States and other Western countries saw refugee policy as an instrument of
foreign policy, and in this context, the Cold War made it impossible to address the core
problem of refugee movements, resulting in Southeast Asia., Often represented conflicts in
Central America, Afghanistan, and Africa. Some refugees were willing to return to their lands
dominated by conflict or communism. With the end of the Cold War, new opportunities arose
for the end of decades-old conflicts. In countries of Eastern Europe (where earlier communist
regimes existed) respect for human rights increased and millions of refugees displaced over
the years were repatriated (repatriated). (Martin, F. Susan)
 Sociological factors:
The sociological explanation of migration focuses on the importance of cultural and social
capital. Cultural capital refers to the knowledge of other societies and the opportunities they
provide, as well as information about actually going elsewhere and looking for work. Clearly,
globalization helps to provide images of Western lifestyles in the world’s remotest villages
under this cultural capital. Better literacy and basic education also contribute to migration
potential. Social capital refers to the connections needed to perform migration safely and
cost-effectively. It is well known that most expatriates follow previously discovered paths
and go where their compatriots are already established, making it easier for them to deal with
bureaucratic hurdles and find work and housing.
Older migration scholars spoke of the migration chain, whereas in recent years there has been
a great emphasis on the ‘migration trap’ and in which it develops as a link between
communities in both the home and destination areas. This network has been greatly facilitated
by the advanced communication and transport technologies of globalization, due to which
human migration power and flow are increasing. Network is another factor that helps to
maintain and replace sustainable migration even though the root cause of migration as labor
is removed. For example, in 1973, when the German Government stopped the migration of
workers from Turkey, the flow continued and the size of family reunions, asylum seekers and

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illegal migrants continued to increase, and they also established transit in the previous period.
They used the path and community infrastructure only. (Martin, 1991)
Therefore, most theorists and scholars have agreed on some common factors known for
migration. The most obvious and popular reason is the high wages of work in labor-intensive
countries. So the motivating source of human migration, in this case, are the high levels of
unemployment and poverty in countries that move from their country of origin to decide to
favor the natives to migrate to countries with labor opportunities with higher wages. Also in
some cases networks of friends and relatives already working in destination countries serve
as sources of information and communities of initial temporary stagnation for newcomers. So
the temptation given by friends, relatives and migration by social network may also be
possible.
Also, it is not only a factor that causes labor migration, but it is in the interest of both
countries to promote migration. Labor sending countries promote migration because they
have some vested objectives. The first is large-scale domestic unemployment and the second
is foreign exchange earnings. Labor sending countries promote migration, as this provides
some relief in terms of employment and these countries are particularly developing countries
with high unemployment and poverty problems. The aspirations of educated workers for
higher salaries take them to other countries as well. Sometimes it is the students who go
abroad for the purpose of study and settle there, because the work opportunities and high
labor value attract them. Second, migration also serves as a source of foreign earnings. The
contribution of labor migration to foreign exchange income is notable which is received by
labor sending countries. Therefore, migration is not a new phenomenon and its factors are
also not new. What is new in migration in today’s global world is merely its nature and form.
Globalization encourages human migration:
Globalization is a major driving force of international labor migration. In Stalker’s words, “In
the world of winners and losers, losers simply do not disappear; they want to go somewhere
else.” (Stalker, 2000) The reason for this is that globalization coupled with liberalization
policies resulted in a huge increase in the mobility of labor across borders, as in the case of
capital and technology. Manuel Castel (1999) writes that globalization weakens the
sovereignty and autonomy of the nation-state and international migration is an integral part of
globalization. Globalization has made migration easier through better communication,
dissemination of information through mass media and better transport among others. It is a
growing trade and investment flow in many areas, leading to increased interest and awareness
in migration.
The recent expansion of global communication networks; telephone connections, continental
cuisine and rental video shops, etc. have already had a profound impact on the consciousness
of the world’s less affluent societies. It has broadened the horizons of human migration,
raising expectations.” And cultural differences have diminished. The images communicated

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by such media may be largely false. Nevertheless, they remain in developed states.
Delivering a powerful message about the experience people benefits. (UNHCR, 1995)
The causal forces of globalization have strengthened the dynamics of skilled labor moving
forward with foreign exchange investment flows and multinational investment. Professional
managers, highly skilled individuals and technicians are welcomed by many countries to
attract foreign investment.
Globalization has also increased economic disparities between countries. Stalker argues that
the flow of goods and capital between rich and poor countries will not be sufficient to meet
employment needs in poor countries. For example, “social disruption caused by economic
restructuring is likely to encourage more people to move out of their communities and
encourage them to work abroad.” (Stalker, 2000) On the ‘dark side of globalization’, some
have argued that globalization contributes to the high human trafficking and purchasing of
individuals across borders with the proliferation of transnational crime syndicates. (Linard,
1998)
Some theorists and scholars have argued that globalization also reduces migration. Growth in
trade may reduce migration through the creation of additional employment and higher growth
in labor-sending countries. Investments made by multinationals in labor-sending countries
can generate employment and income in a country that reduces indigenous pressures.
Another possibility opened by globalization forces is trade in services. The growing tradition
of skill- and in-depth knowledge services opens up new opportunities for high-paying jobs in
migrant sending countries and can be seen as a ray of hope to inspire skilled workers to stay
in their country (Lineard, 1998). But despite some differences, analyzing the trends of
globalization, all the leading theorists have concluded almost the same, that human migration
is increasing in today’s global world and it is likely to increase in the near future.
Human migration in the global world:
In the late twentieth century two major models of migration and incorporation dominated
academic and policy approaches. First is the settler model, according to which immigrants
gradually integrated into economic and social relations, then united or formed families and
eventually assimilated into host society (sometimes in two or three generations). The second
temporary migration model, according to which migrant workers stayed in the host country
for a limited period and maintained their affiliation with their country of origin.
For the last half-century, three types of primary migration have been the most important:
permanent settlement migration, temporary labor migration and refugee movement. Highly
skilled migration is the high type of migration that is currently most popular with
governments of migration countries. Since the 1980s, the United States, Canada, and
Australia have established privileged entry systems to attract entrepreneurs, executives,
scientists, professionals, and technical experts. Recently, Western European and some East
Asian countries have also started following this trend. (Findlay, 1995) Under this we see that

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attracting Indian IT professionals has become a global competition, while health services in
countries such as the UK cannot operate without doctors and nurses from Africa and Asia.
This type of migration may refer to a ‘brain drain’ which is the transfer of human capital
from poor to rich countries, but can also bring technology transfer and cultural innovation to
the core areas. As poor countries give more preference to hiring graduates than employment,
while rich countries continue to reduce their education budgets, migration is sure to increase.
(Findlay, 1995)
Low-skilled migration was important in most post-1945 industrial development in most
wealthy countries but is now rejected on the grounds that it is economically unnecessary and
socially harmful. NIC often continues to import unskilled labor for construction work or
plantation industries. However, this mostly takes the form of systematic use of irregular
migrants or asylum seekers and their lack of rights makes them easy to exploit (Castells,
Stephen; 2000).
In the circumstances of globalization, some new types of migration are emerging and some
old types are becoming more important which are as follows:
● A new type of phenomena, in which entire families migrate to countries such as
Australia and Canada for safety or lifestyle reasons, while the breadwinners return
home long distances for their original work. This type of human migration is prominent
in relation to Hong Kong in the period before reintegration into populist China, but even
today this type of migration affects a growing number of countries. (Pe-Pua, 1998)
● Migration return, although apparently not new. Its volume is increasing as a result of
the trend towards temporary or communication migration. Migration return plays an
important factor in economic, social and cultural change and their potential role in
development processes is currently being given special attention. (Castel, 2000)
● Retirement migration is an emerging global mobility closely associated with
improvements in transportation and communication. An increasing number of people
from wealthy countries with relatively high living costs and unattractive climates want
to spend the last years of their lives in a more public-facing environment. The best
example of this can be seen in the migration of Western Europeans from southern
Europe (King et al, 2000) to Japan and Australia and New Zealand, and northern
Americans to Latin America and the Philippines. It also has immense cultural
implications and provides the basis for new service industries (Castel, 2002).
● Posthumous migration which is a phenomenon that reflects the cultural and
psychological complexity of the migrant experience. Many migrants planned to return
to their native lands to bury their bodies. (Tribalat, 1995) Even though the dream of a
return to old age proves to be a myth, the bonds with the motherland can become vocal
again after death.

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Contemporary Debate:
Castel identifies three main approaches to include migrants in society: assimilation, inter-
exclusion, and multiculturalism. In the old understanding of long distance migration,
newcomers were expected to move permanently and relinquish contact with their place of
origin, so that they and their descendants eventually assimilated completely into the new
society. As a mode of incorporation, assimilation means encouraging immigrants to learn the
national language and fully adopt the social and cultural practices of the receiving
community. This includes loyalty from the place of birth to the new country and the adoption
of a new national identity.
However, not all immigrants have been seen as assimilating. Even the United States has
temporary migration plans such as the Brezzero program for Mexican farm workers. Also,
not all immigration countries have tried to assimilate immigrants. Even before the industrial
revolutions in Europe, the practice of hiring temporary migrant workers was common (Möch,
1992, 1995). Such schemes became institutionalized in France, Germany and Switzerland in
the late nineteenth century. In which state and employers’ organizations had a high degree of
control. In post-1945 Europe, ‘guestworker’ or temporary labor recruitment systems played a
major role in labor market policies. ‘Guestworkers’ meant relatively proximate countries,
particularly from the European periphery, and had no right to family reunion or permanent
migration. Recently, similar approaches have been used in Gulf oil rich countries and newly-
industrialized Asian countries. This mode of incorporation is referred to as differential
exclusion which means that migrants are temporarily integrated into certain social
subsystems such as the labor market and limited welfare rights, but other areas such as
political participation and national culture is excluded from. (Castel, 2002)
However, both assimilation and differential exclusion share an important general principle
that immigration should not bring about significant changes in the receiving society. Such
beliefs in the regulation of ethnic differences may persist in the past, but from the 1970s
onwards it began to be questioned in Western immigration countries. Temporary migrants in
‘guest worker’ countries are turning into permanent settlers. Democratic states have found
themselves unable to deport large numbers of unwanted workers. And in such a situation,
immigrants cannot be denied social rights completely, as this can lead to serious conflicts and
divisions. This resulted in family reunification, community formation, and the emergence of
new ethnic minorities. Expectations of long-term cultural identity in classical immigrant
countries proved to be misleading, with ethnic communities retaining their languages and
cultures in the second and third generations. Migrants began establishing cultural
associations, places of worship and ethnic businesses that soon became important throughout
Western Europe as well. (Castel, 2000)
As a result, official policies of multiculturalism were initially introduced in Canada (1971)
and Australia (1973). Multiculturalism in the United States has a somewhat different meaning
that is virtually linked to interpretations of the role of minorities in culture and history (Gitlin,
1995; Steinberg, 1995). Here pluralism was used to accept cultural and religious diversity in

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the private sector rather than government policy on immigrants. Similar policies with
different labels (such as the policy of minorities in the Netherlands) were soon followed in
European immigration countries. In some cases they were introduced only in certain areas
such as welfare or education, or in the provincial or municipal rather than national level
(Hale, 1999). There is widespread recognition that cultural and social changes brought about
through migration are facts of life that must be recognized in various fields. This can be seen
as one of the major effects of immigration: within a few generations, old myths of national
uniqueness and homogeneity have been underestimated.
Conclusion
Globalization causes major changes in the character of international migration. The context
of migrant incorporation has already changed fundamentally and will continue to change. The
rise of multiculturalism is a sign in itself. But all this is not beyond the context of a new form
of identity and multiculturalism. In the early twenty-first century, globalization is reducing all
methods of controlling difference based on regionalism. Increasing mobility; Growth of
temporary, cyclic and recurrent migration; Travel cheap and easy; continuous communication
through new information technologies: All questions the idea of a person who belongs to just
one nation-state (whether temporarily or permanently). These changes have triggered debate
on the importance of parochialism and nationalist communities as new ways of migrants.
Cross-national communities are groups whose identity is not primarily based on attachment
to a particular region. They therefore present a powerful challenge to traditional views of the
nation-state. (Bowman, 1998)
Currently the international community is advancing rapidly. This trend can perhaps be best
understood as part of the processes of global integration and time-space compression. This is
partly a technical issue, better transportation and accessible real-time electronic
communication is the physical basis of globalization. But above all, it is a social and cultural
issue: globalization is closely associated with changes in social structures and relations and
changes in place, mobility and related cultural values. This is likely to have important
consequences, which we are only beginning to understand (Bowman, 1998; Held et al, 1999).
It is possible that in the future the associated migrant and consciousness migrant will become
the dominant forms of human migration and will have far-reaching consequences.
International migration has always assisted in cultural exchanges and individuals, groups and
communities from different cultures, ethnic groups and religions have faced challenges while
living together, so it is reasonable to expect that it will create multicultural spaces and Human
migration will continue to spread ideas and values.
The right to migrate is an option for all those with minimal human capital, who cannot fulfill
their aspirations because of social mobility in their countries of origin, except for the right to
live in economic and social restrictions on the exercise of rights cease. Thus, something is
discovered in international movements of individuals and families that their own countries
only offer them symbolically. It is based on increasingly informed decisions, with the
assumption that such steps involve risk and cost reduction. This is now the current attitude of
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migration, for which the objectives are now relatively independent of economic
considerations. One of the cultural manifestations of globalization is the transition from
regional-based national identities to others that are perhaps less widespread but of a cross-
regional nature. Migration has led to the emergence of new actors who organize into
communities and connect with each other through networks and maintain close relationships
with their areas of origin in which they send and transmit information and represent collective
references to identity in regions of destination. (Ports, 1997)
These international communities are a clear example of the interactive role of international
migration and globalization in the context of an identity explosion that marked the
fragmentation of today’s societies. (Castells, 1999, Volume II) Social networks and
communities form part of a positive strategy of migrants (as opposed to their cultural
characteristics, expression of their demands for citizenship, and protection from practices of
immigration and social rejection from restrictive viewpoints). Is exemplary in many
migrants’ working conditions and anti-immigration sentiments). To a large extent, they act as
feedback factors promoting migration flow and further diversification of human dynamics.
Learning Outcome:
After reading this chapter, the following aspects related to globalization and human migration
will be clear:
 What is globalization?
 What is human migration? Meaning and Definition.
 Factors responsible for human migration.
 Nature of human migration: positive and negative.
 Does globalization affect human migration? Influencing Factors.
 Human migration, human rights and multiculturalism.
 A critical conclusion on contemporary debates in the context of globalization and
human migration.
Questions:
1. What is human migration? Explain the factors responsible for human migration.
2. What do you understand by human migration? Explain the forms of human migration
in the context of globalization.
3. What do you mean by globalization? Does globalization affect human migration?
4. Critically explain the factors affecting human migration through globalization.
5. Explain human rights in the context of human migration in the era of globalization.
6. Does human migration promote multiculturalism? Critically evaluate.
7. Write a critical essay on contemporary debates in the context of globalization and
human migration.

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Bibliography
 Bauman, Zygmunt (1998), Globalization: The Human Consequences, UK: Polity
Press
 Castles, Stephen and Alastair Davidson (2000), Citizenship and Migration:
Globalization and the Politics of Belonging, New York: Routledge
 Castles, Stephen and Mark J. Miller (2003),The Age of Migration, UK: Guilford Press
 Held, David (1999), Global Transformations: Politics, Economics and Culture,
California: Stanford University Press
 Martin, F. Susan (2011), A Nation of Immigrants, New York: Cambridge University
Press
 Martin, P.L (1991), The Unfinished Story: Turkish Labour Migration to Western
Europe, Geneva: International Labour Office
 Stalker, Peter (2000),Workers Without Frontiers: The Impact of Globalization on
International Migrants, USA: Lynne Rienner Publishers
 Spencer, Sarah (2011),The Migration Debate, Great Britain: The Policy Press

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Unit-VII
The Inevitability of Globalization: Domestic and Global Responses

It is indeed impossible, and perhaps improper to provide a fixed definition of globalization

because the term is used in economic, social, political, cultural and many other areas.
Globalization is the trend of increasing interaction between people on worldwide scale due to
advances in information communication technology. It is a multi-dimensional phenomenon
which is irreversible in character. It is a process characterized by stretching the political,
economic, socio-cultural and technology activities across political frontiers so that events,
decisions, and activities in one region of the world have significance for individuals and
societies. It has also been conceived as a process of shrinking world, global integration, the
reordering of interregional power relations, consciousness of the global condition and the
intensification of interregional; interconnectedness.
In most general sense, Globalization today mainly refers to expansion of economics activities
like trade, and movement of capital and goods and labour, beyond borders facilitating higher
levels of interconnectedness in the world. The socio-political impact of such economic
activities can hardly be ignored. The process of globalization may affect domestic as well as
international economy, and may have spill-over repercussions on national and international
politics.
Liberals and neoliberals believe that globalization is inevitable, involving a fundamental
transformation of global politics away from state control moving towards market control of
global economic life, partly due to technological changes.i The free flow of information and
ideas around the world widens opportunities for personal self-development and creates more
dynamic and vigorous societies. It is a good sign that the consumers have more options
before them while buying or using a product and due to cut-throat competition, the
maintenance of quality of goods is ensured on lower price.
It could be seen that in the 1950s, exports accounted for only 8 per cent of the world wide
Gross Domestic Product (GDP) and half a century later they have simply tripled due to
globalization.ii Besides, it can be noted that the pace of trade integration has been higher in
the global south than in the global north, which implies the less developed countries of the
global south increasing contribution to the world trade. This is a positive trend and is also
expected to rise. While many features of globalization have been beneficial, others have
resulted in problems for certain economies and countries. On the one hand, that may have led
to the rapid economic growth. On the other hand, globalization has led to dramatic shifts in
the quality of life around the world, including climate change and growing socio-economic
inequality.

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Some argued that economic globalization as such is a dynamic process that transforms the
structure of domestic economy and once it has gained a certain momentum it continuously
accelerates and become unstoppable and development of domestic economy increasingly
depends on international trade and capital markets. At times it can be seen that the state loses
its control on some of its national polices and to make and implement decision on a host of
issues that matters to their citizens for being a part of inter- governmental organisations and
become a spectator to all the events. Rosenau rightly terms it as widening and withering of
the state’s competence. iiiGlobalization is reshaping political life by reducing the readability
of states to make and implement economic policy and to perform their traditional functions.
Although international regulatory institutions and agencies, such as the WTO, World Bank
and the International Monetary Fund (IMF), play a critical role in this respect, set up
international rules, principles, regulations and agenda for each member states.
Environmental issues are quintessential global problems. While it is true that some countries
contribute more than others to most environmental problems, no one country is responsible
for global warming or any of the other major ecological concerns. None of them can be
solved by national governments acting on their own. The Environment includes everything
that lies outside the formal political system. Damaged caused by one state can draw the entire
world into a state of suffering. Therefore it is extremely important for all countries to adopt
the policy of sustainable development.ivAs if they were primarily national problems for which
international cooperation is the exception rather than the rule. But no doubt, globalization is
the prime accused in the case of environmental degradation. At cultural level, it has led to a
similarity of culture and at the same time it has brought about strong differences also. It is the
dominant western culture that has been very overwhelming and prominent all over the globe.
Moreover, the ‘cultural capital’ is being lost as the result of an incipient homogenization of
tastes, beliefs and cultural markets.v
Domestically, states of all types face increasing pressures from below on almost every
imaginable issue. However, as social changes such as rapid urbanisation, increased levels of
education, and the spread of the mass media suggest, new social and political movements
create new demands, which are making it harder for governments to do their jobs effectively.
But a more critical view might be that as neo- liberalism has spread around the world as an
integral part of economic and political globalization, functions once handled by the nation-
state have been scaled back or eliminated. Many INGOs can be seen as coming into existence
to fill various voids left by the withdrawal of the nation- state. Thus, the role of civil society
has got intensified with the advent of globalization.vi
Today globalization has generated massive transformation in all the existing social
institutions, as well as the economic, political and the cultural spheres. It transformed the pre-
modern forms of practices and thus created a new infrastructure that transformed the
character of earlier structures. This has created a need for yet another newer discourse. Thus
we have to analyzed the present scenario through a new perspective.

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Different Views

With increasing popularity and importance of globalization, the term globalization drew
different and contradictory views from different scholars around the world.
One view that supports globalization and mainly comes from the rich industrial North, holds
that globalization has benefited the world immensely. The supporters of globalization mainly
glorify the phenomenon and boast its achievements. According to them The idea of the
integrated global market helps the rich and the poor at the same time. They argued that in the
foreseeable future, all nations across the globe would reap the benefits of globalization and
the world economy would steadily move towards equitable growth, efficiency with spread
and adoption of western liberal values, standers and way of life.
According to this view, if the rich get cheap labour from the global market, the poor would
have continuous access to capital and goods. The growing access to markets worldwide
would help, the rich and the poor alike. They believe that globalization has ultimately brought
the fruits of liberal economy to people all over the world. Free and competitive trade would
break the shackles of state – controlled, subsidized, idle economy that is not growth –
oriented. A free, growth – centered, liberal economy would help the poor state to move on the
path of unprecedented economic development, thereby narrowing the gap between the rich
and the poor.
Commenting on the argument of the opponents that the said phenomenon has exploitive and
is responsible for the economic inequalities, they (supporters) have come up with the
argument that deterioration of people of developing countries is temporary and exist only in
relative terms. Their position has improved in absolute terms and will continue to improve
further that would become visible in improved standards of living, better health facilities,
improved technology and access to facilities and establishment of democracy.
The benefits of globalization according to its supporters, can be best observed through the
revolution in information technology (IT) in recent years. Media has not only facilitated
quick, easy and cost effective interaction with the people but actually has empowered people
with ideas, innovations and information empowering them to relieve themselves from
oppression and exploitation.
A second view, which mainly comes from the underdeveloped South, criticizes globalization
and its ways for the economic woes of the world. The opponents highlight the irreparable
impact caused by this phenomenon and accuse globalization for rising inequalities, poverty,
environmental damage and increased incidences of human rights violations. They advocate to
replace the neo-liberal market principles by economic protectionism and stood for reverting
back to localism.
According to these critics, the fruits of globalization are not enjoyed universally, but mainly
by the rich states, due to their superior control over the flow of capital and the
communication system. The North – South divide has not been obliterated; on the contrary, it

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is very much pronounced and visible in today’s world. Millions of people are still excluded
from the purview of globalization, and they suffer in silence. Therefore, Globalization,
according to them, has not generated an unbiased, integrated, free world market; it has rather
created antagonistic, rival, regional economic blocs in Europe, America and Asia.
A third view comes from a group of scholars who believe that the problem lies not with
globalization itself, but with how it has been managed. These scholars believe that
globalization, if managed properly, can be immensely beneficial for the people, boost
democracy, civil society and sustainable development. The notion of globalization only as an
economic activity must be changed to make it more humane. As Joseph Stiglitz, argued that:
One of the reasons globalization is being attached is that it seems to undermine traditional
values…Economic growth – induced by globalization – will result in urbanization,
undermining traditional rural societies. Unfortunately, so far, those responsible for managing
globalization, while praising these positive benefits, all too often have shown an insufficient
appreciation of this adverse side, the threat to cultural identity and values.vii
Stiglitz therefore recommends ‘globalization with a more human face’ to reap its benefits.
The changes that he suggests for reshaping the current form of globalization are:
(1) Reforming the international financial system with drastic changes in the work of the
global financial institutions like the IMF, WTO and World Bank; because the polices framed
by the global institutions are biased. (2) Adopting policies for sustainable, equitable and
democratic growth; and (3) Altering the capitalist view of ‘development’ where the
industrially advanced countries ‘guide’ the process of development of the weaker nations.
The less-advanced countries must assume responsibility for their own development. This
view assumes that the state still has, and must retain, enough control over the national
economy in the third world to move it towards people’s benefit. A profit – oriented global
market can never think of the welfare of all people in the world; only a state – guided national
economy can think of the benefit of the indigenous people.
Domestic and Global Responses to Challenges
The globalization phenomenon has been instrumental in encouraging heated debates in the
contemporary world. Many argued that the imposition of free trade policies and the
increasing privatization of social services have facilitated the accumulation of tremendous
wealth for the owners of capital at the expense of working people. However, the neoliberal
globalization agenda does not serve the interest of the vast majority of the people. The key to
struggle on globalization lies in the contest between the sovereignty of capitalism which is
based on privilege and domination versus socialist democracy based on the principles of
liberty, unity and social justice. According to them, capitalism unfairly concentrates power
and wealth among a small segment of society that controls capital and derives its wealth
through exploitation, creates an unequal society, does not provide equal opportunities for
everyone to maximize their potentialities and does not utilize technology and resources to
their maximum potential.viiiFor years the critics of globalization repeatedly evoked the need

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to create alternative. And some of the practical alternatives that can counter the onslaught of
globalization are:
1. Promote Local Economy: The aim of the local and regional economies would be to
produce as much goods and services as they own primary consumption. Long distance
trade should be the last resort. To this end controls such as tariff barriers and quotas
should be gradually introduced.
2. Foster Capital and Investment: Access to capital at local and regional level should
be the key to funding investment by enterprises and communities to improve social
and environmental conditions and job opportunities. This is not only achieved by the
free market which encourages even larger and more distant institutions and capital
flows. The promotion of local and regional financial institutions is essential and
should include de-merger of larger institutions. It will be necessary to reintroduce
national controls of capital movements and to regulate finance capital more broadly.
The aim must be to encourage productive investment, particularly community
reinvestment.ix
3. Transnational Institution: creating a new production and exchange complex that
includes community co-operatives and private enterprise. Transnational institutions of
similar size must be used to assert the primacy of the common interest over those of
the corporations. They should encourage the breakup of such organization to more
manageable units, through regulations, anti-trust legislation and fiscal policies. The
aim must be to encourage productive investments in goods and services.
4. Regulating Market Access: some economists believe that free trade is only possible
if industries in developing countries are allowed to grow under a certain level of
economic protection. A limit should be set for market at regional and national level
for any company. Where such a market is dominated by a particular company, new
firms should be encouraged through grants, loans and subsidies to enter it to maintain
the impetus for improved products, more efficient use of resources and the provisions
of choice. The transfer of information and technology would be encouraged to
improve the efficiency of local industry. The advantage enjoyed by very large
organizations must be countered. They must be rendered more accountable to their
stakeholders through greater transparency, internal democracy and public regulation.x
5. Multinational Agreements: Existing and proposed international arrangements and
Organization mainly serve the interests of the large transnational corporations and
capitalism, at the expense of the rest of the world, including regions and communities
of the countries in which they are based. Such arrangements must be replaced with
ones that promote cooperation for self-reliance. Financial aid policies and capital
flows, technology transfer and residual international trade should be on fair trade.
These should be geared to the promotion of sustainable local economies.xi

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6. Self-Reliance: The economy may be viewed at various levels from village to the state
to the nation. At each level, there has to be relative self-reliance. The cooperative
efforts of members and participatory decision-making are very significant. Similarly,
at the village level whatever is required by the people should be produced as far as
possible within its geographic terrain.
7. Avoid bad Consumerism and Rebuild Community: globalization is a process that
has unified people of the world into a single society and has drastically affected the
lives and living of people of developed, developing and under developed nations
alike. In other words, it has created in the present time new patterns of livelihood,
governance, leisure and identities. For example-The TNCs and MNCs are the main
beneficiaries of globalization. Through various ways they domesticate the potential
consumer in order to maintain their market. Most of the products of TNCs may not be
necessary for ordinary people but due to consumerism they are forced to buy all these
and this can lead inequality.
8. Decentralized Planning: properly steered decentralized politics and planning can be
potential weapon to fight globalization. Grassroots social and economic institutions
like the Self-Help Groups, Micro-Financing, etc. can empower people enabling them
to avert globalization.xiiAs Sen points out that it would be difficult to achieve
economic prosperity without making use of the opportunities offered by the market.
The market does not work itself. It depends upon certain enabling conditions’, which
includes economic, social and political institutions that shape a globalized economic
and social relation.xiii
9. Developing Cooperative Behavior: Developed and developing countries have to act
co-operatively, so that the gap between poor and rich does not widen more, but it has
to start narrowing. However, there are no institutions, particularly democratic
institutions to do that effectively. In order to make globalization more manageable
and seek to base it on principles of solidarity, it is important to reform and strengthen
the role of major international organisations. Moreover, Global economy needs global
ethics, reflecting respect for human rights and recognition of personal and social
responsibility.xivExpanding ties of international organisations with non-governmental
organisations might be one of the examples for the reform.xv
10. Creating Awareness about Global Challenges: People around the world are not
being helped to recognize that most important issues- overcrowded cities, quick
spread of new infections, global warming, growth of worldwide disparity, destruction
of the environment-are all part of the same global process called globalization. People
should be aware that these issues do not just happen, but they all are related. States
must be more local oriented and solve national problems first, but at the same time
they should be able to react promptly to global issues.

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Conclusion
Globalization is a source of both hope and of apprehension. Further, the controversy over the
merits and demerits of globalization is very livid in international politics. For The optimists,
globalization could be one of the most positive features of modern life. More, pessimistic
analysts, focus on globalization social economic short comings. In a last decade of the
twentieth century, the term “globalization” became one of the most frequently used in the
analysis of contemporary international relations, and continues to be actively used to
characterize global political, economic and social processes. However, the current
globalization is mostly influenced by the interests and guidelines of economically developed
countries and their ideological preferences. These factors leave their imprints on the
development of globalization, accelerating or slowing it down, and give specific nature to
certain aspects of this phenomenon. Main requirements of an alternative globalization are the
equality for all nations and people as well as regulation of specific areas of the world’s
development with the help of strong democratic international institutions.
Keywords

Civil Society: Civil society can be understood to be a political space where voluntary or non-
governmental associations deliberately seek to shape the rules that govern aspects of social
life. It is a process through which individuals negotiate, argue, struggle against or agree with
each other and with those in authority. Civil society is particularly lauded for its role to hold
governments accountable for their policy decisions and implementation. Strengthening of
civil society was to be achieved by identifying potential civic advocacy groups such as labour
unions, professional bodies and environment groups.
Democracy: Democracy is a kind of political system, which simply defined, refers to ‘rule by
the people’. In the developed countries, democracy and the concomitant system of rights that
it makes available to the citizens has been intrinsically linked to the functioning of a market
economy. However, democracy must be realised not only as a formal political system based
on consent of the people but also substantively in the manner of social and economic
democracy.
International Non- Governmental Organisations (INGOs): International not for profit
organisations performing public functions but not established or run by nation-states.
Development: While the term ‘development’ defies any singular definition, it can broadly be
understood in two ways- quantitatively, namely, as economic growth which is most
conveniently measured in terms of increase in Gross Domestic Product (GDP) and per capita
income of any given country, and qualitatively, namely, by mapping fulfilment of basic needs
of the people, access to essential resources, availability of opportunities and enhancement of
human capabilities. The latter definition hinges on viewing development as a versatile and
dynamic concept which factors in local and particular perspectives and requirements.

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Ecological Balance: It is the off balance or equilibrium between all organisms so that the
diversity of the ecosystem is ensured.
Sustainable Development: Sustainable development is development that meets the needs of
the present without compromising the ability of future generations to meet their own needs. It
recognizes that growth must be both inclusive and environmentally sound to reduce poverty
and build shared prosperity for today’s population, and to continue to meet the needs of
future generations.
Review questions
1. Is globalization inevitable? Comment.
2. Critically analyse the domestic and global compulsions for the inevitability of
globalization?
3. Is globalization unavoidable? Explain in the context of “anti-globalization”
movements?
4. Explain the domestic and global responses to the challenges posed by Contemporary
globalization?
5. What do you think about globalization? Can we avoid it? Is it a good thing? Where
does it lead?
6. Is globalization inevitable and desirable? Explain.
7. Will globalization inevitably bring about the inequality of wealth?
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