Paper to be delivered at the ESSA conference 17 –19 September 2003 at Somerset West J Mostert12
1. Introduction Globalisation can be seen as one of the most important force impacting on the economy. According to Brittan (1998:2) globalisation is viewed “as a whirlwind of relentless and disruptive change which leaves governments helpless and leaves a trail of economic, social cultural and environmental problems in its wake.”
Globalisation is a term used as buzzword without showing the implication of globalisation. Walker en Fox (1999:2) states that the global integration of the financial markets can be seen as an example globalisation. Walker en Fox argues than the process of financial globalisation is the most important part of the process of globalisation. It is possible to gain insight into the general process of globalisation by studying the process of financial globalisation. It is accepted that the world economy has become more integrated due to the process of globalisation (Neuland en Hough, 1999:1). Despite the fact that globalisation is not a new phenomenon, the intensity of the process of globalisation has increased in die 1990’s. The increasing intensity in the process of globalisation is evident in the increase in financial transactions in the world markets.
Mr Mostert is the regional academic manager of Technikon SA in Bloemfontein. The comment and input of an anonymous referee is acknowledged. All errors and omissions are those of
Hak-Min (1999:1) indicated that the threefold increase in private capital transactions between 1980 and 1990 could be ascribed to the process of globalisation in the international financial markets.
Some of the issues that will be dealt with in the paper are the definition of globalization, the impact of globalisation on unemployment, the distribution of income and the sovereignty of developing countries. Before the impact of globalisation can be discussed it is also crucial to give a brief overview on the current situation of economic development in Africa. The impact of globalisation on economic policy in developing economies will also be covered. The paper will conclude with a few remarks on the impact of globalisation on the NEPAD initiative.
The process of globalisation is a reality. The increasingly integrated global economy provides and unprecedented opportunity for growth and higher living standards throughout the world, if the risk associated with the process of globalisation (IMF, 2000:1). It is important for Africa’s development and growth that policy makers in Africa understand the process of globalisation and knows how to deal with the impact of globalisation.
2. Definition of globalisation.
Globalisation is a term that has become very popular and used in many different contexts in the literature. Before the impact of globalisation on Africa can be evaluated it is
crucial that the meaning of globalisation should be clarified. The definition of globalisation should also be distinguished from terms like internationalization, regionalization and liberalization.
In most of the definition of globalisation that is found in the literature the process of globalisation is seen as the breakdown of borders between countries, governments, the economy and communities. In the financial markets it is also the blurring of borders between different markets.
O’ Brien (1992:5) also links the definition of globalisation to geographical borders. O’Brien distinguishes between national, international, offshore and global. National transactions take place between businesses in the same country.
International activities are activities that take place between different countries. It is inter-national. International also means trade that does not take place in a national country. Multinational describes activities that take place in more than one country.