Lecture- 10: Globalization & Free Market Economy Presented by MD.MAHBUBUR RAHMAN Lecturer, GED Northern University Bangladesh E-mail: jillurmahbub@gmail.com

Introduction No matter who coined it first, ‘globalization’ as a concept, as a slogan, as a term is used more frequently than any other terms. After a hesitant start in the mid-1980s, Bangladesh moved decisively to embrace the wave of globalization in the 1990s. At the dawn of the 21st century, globalization is being designated as a hot topic. Globalization means making borderless market in the world to connect each and another country .

Some tend to see globalization a nonstop train crushing everything in its path and great challenge for developing countries like Bangladesh, others see benefit in getting on board the train towards economic growth and modernization. Since our concern is the economic aspect of globalization, we can equalize this concept with open or free market economy.

Globalization means different things to different people. Daniel T Globalization means different things to different people. Daniel T. Griswold defines globalization as "the growing liberalization of international trade and investment, and the resulting increase in the integration of national economies." [The Blessings and Challenges of Globalization, 2006, Internet] Through this process, the path of free market economy has been clear, no doubt. That is, both concepts involve

Individual ownership and management; the following aspects: Individual ownership and management; Open competition and survival of the fittest; Price determination through interaction between demand and supply; Free flow of capital and goods with limited state regulation. We can characterize them with some following elements as follows:

communication, Technology: Multi-lateral Agreement Elements Foreign Investment IDA, Non-GO Civil Society Organizations Information, communication, Technology: Access to information Policy Environment Environmental Conditions Economic Development Social Conditions and Organizations

Free Market Economy in Bangladesh The economic system of Bangladesh after liberation was neither capitalist nor socialist. Recently dramatic changes were made in the economic system of the country. Policies were made to liberalize the economy where 100% foreign direct investment and same treatment for both local and foreign investors were granted.

Merits of open market economy Entering international market: In this age of economic co-operation we have to enter the wider space of international market and expand the economic co-operation with others. It may facilitate us to find out new markets, earn more foreign exchange and to expand our economic base.

Export orientation in external trade: The liberalization policy under Open market economy may result into increase in export oriented industries. Presently, a positive trend is prevalent in our merchandise trade. According to some estimate, in 1995, the share of industrial goods in our external trade has been increased to 83%.

Making the investors fit to compete: Our investors are not capable of competing in international market. So, in spite of the possibility of some risks, the open competition within an open competitive market system may help our investors to develop their managerial skill and organizing power.

Proper use of domestic resources: We have a vast human resources as well as natural resources. But we have no ability to utilize these resources. So, foreign direct investment will contribute to utilize our resources. Providing employment: We have human resources which are considered by foreign investors a positive side for their investment. So, foreign direct investment will assist us to meet the problem of unemployment.

Helping the consumers: The free market economy ensures the freedom of consumers. It provides consumers with free choice to buy either local or foreign goods. So, consumers can buy the foreign goods in cheap rates and become benefited. Technological advancement: To survive in perfect competitive market local industries must adopt right kind of technologies. Besides, foreign investors also will bring advanced technologies which will result into technological advancement of the country.

Increasing foreign exchange: After we have taken the policy of free market economy, there is a positive trend in our foreign exchange reserve and trade gap.

Demerits of Free Market Economy: Destruction of local industries: In a competitive free market economy, the weak local industries may be destroyed because foreign multi-national companies are so strong that our domestic industries are not capable to compete with them. Decrease in the production of consumer goods: As the production of stationary goods is more profitable than consumer goods, the producers will be more interested in producing the stationary goods which will result into the sufferings of consumers.

Inequality in income: In an open market economy, income inequality may be broadened. Here the influential, the corrupt and the industrialists may become more wealthy and powerful. Economic instability: It is evident that there is no surety of economic stability in free market economy. Economic Insecurity: Under free market economy, Investors are more insecure.

Imprisoning the economy: Though today the foreign investment is felt important for our economic development, with the course of time Bangladesh will be the prisoner of foreign investment. It will result into giving the 'control of our economy to the foreign investors and multi-national companies. Utilizing free-market economy: Inspite of some negative effects, we can acquire the fruits of free market if we do the following:

Government regulation and patronage should be given in a limited way. Measures should be taken to protect the local industries. The local entrepreneurs should be encouraged to set up export oriented industries. Over regulation in the way of investment should be minimized. Hence government should reduce tariffs.

Conclusion Globalization and Free market economy has both positive and negative impacts on our economy. We should be careful of materializing the concept ‘free market economy’ so that our local industries are not hampered.