MANAGING VULNERABILITY AND RISKS FROM GLOBALIZATION AND TRADE LIBERALIZATION S.O. Akande, NISER, Ibadan Nigeria

CONCEPTUAL ISSUES Globalization Liberalization -Characteristics/Features of Globalization -Motive force behind globalization RISKS ASSOCIATED WITH GLOBALIZATION/LIBERALIZATION COPING MECHANISMS AGAINST NEGATIVE EFFECTS OF GLOBALIZATION CONCLUSION

CONCEPT OF GLOBALIZATION Globalization refers to the emerging interdependencies and linkages of the countries of the world, their markets and their peoples. Ohiorhenuan (1998): “The broadening and depending linkages of national economies into a world-wide market for goods, services and capital” Stevens(2000): “The act of expanding and implementing one’s vision, services and products into other markets, conducting and communicating business across boundaries, creating a network of business hubs around the world to foster growth”

CONCEPT OF GLOBALIZATION (cont.) Nayyar (1997): “The phenomenal interlinkages, interactions, integration and interdependence among nations that are manifested in unprecedented trading volumes, massive financial flows, concentration of corporate power in progressively fewer multinational players”

IMPORTANT ELEMENTS OF GLOBALIZATION Globalization Concerns: -expansion in international trade; -growing openness and the declining tendency of rigid nation state boundaries; -free flow of financial services; -growth of the multinationals; -movement of labour; -environmental standards -information flows across nations -respect for intellectual property rights.

The motive force driving globalization is Information Technology (IT), the skill, the knowledge base and communication expertise now available to economic agents (multinational companies in particular) .

ECONOMIC LIBERALIZATION May be perceived as a subset of globalization. It is a set of economic policies undertaken within a country, or a region, which leads to: free trade in goods and services; free flow of investment funds; free movement of persons Economic liberalization relies on market forces to determine allocation of productive resources. Privatization and commercialization's are important items in the economic liberalization policy menu.

RISKS ASSOCIATED WITH GLOBALIZATION Globalization is not without risks. Mule (2000) stated: “In theory globalization can have a positive impact on agricultural growth. In practice globalization benefits those with technology, resources, contacts, information and access to markets. It has negative impact on the poor”.

RISKS ASSOCIATED WITH GLOBALIZATION (cont.) Globalization is riddled with imperfections. There are winners and losers. Winners The purveyors of globalization The owners of technology The owners of skill The affluent, rich nations of the world. Losers Developing, poor countries of the world Recipients/Users of technology Nations relying on export of primary commodities (high concentration of export index) They are not the players but the spectators.

GLOBALIZATION PROBLEMS free trade is never so free (trade-distorting measures, e.g. subsidies, non-tariff barriers, etc are still being taken by rich and poor countries alike) free movement of people (especially those without skill) across national borders is still curtailed; investment funds flow very sluggishly, if at all.

MANAGING THE RISK OF GLOBALIZATION If globalization has come to stay, how do we live with it - especially poor nations? The opportunities offered by globalization: “There are opportunities to expand exports, attract foreign investment and acquire modern technology” (World Bank)

MANAGING THE RISK OF GLOBALIZATION (cont.) This perception assumes away the following problems/obstacles which developing countries face: relevant infrastructure and capacities are lacking political instability and internal upheavals - ethnic conflicts and the tyranny of local militia, indeed of even national governments in Third World countries (democracy is tearing this down gradually) hunger and poverty are endemic the fundamental economic structures in Africa are ill-equipped to cope with the challenges posed by globalization.

MANAGING THE RISK OF GLOBALIZATION (cont.) More purposeful national efforts and a more supportive international community can help make the gains of globalization more equitable.

Options available Promoting poverty alleviation programmes addressing unemployment problems development of skills mass education Promoting food security addressing poor farm productivity targeting self-sufficiency self-reliance and expansion of staple crops and livestock

Options Available (Cont.) Diversifying the economy - move away from depletable resources (like petroleum) engaging more in value-added activities expanding agro-industrial enterprises encourage growth of non-farm activities Provision of economic and social infrastructure - reliable financial system roads communication network and IT health, education, water, etc.

Options Available (Cont.) Re-ordering and re-engineering of development initiatives - strategy for rural development (WB) is timely.

CONCLUSION The new partnership in development and worldwide interdependence must involve the poor. The poor should not be further impoverished by globalization; neither should they be bypassed. The idea of providing adjustment assistance to compensate losers at least partially is not acceptable. Globalization should also have human face.