Explain why the phenomenon of globalisation tends to be regarded as an inevitable development, and comment on what you perceive to be the main outcomes of the globalised economy to the functioning of Government departments.
Table of Contents
Introduction……………………………………………………………………..2 The concept of globalisation ………………………………………..............3 – 4 The benefits and challenges of globalisation …………………..…………4 – 6 The importance of globalisation with regards to development.....……….6 How globalisation impact on governance ……………………….................7 – 8 Main outcomes of the globalised economy to the functioning of a government department ……………………………….................................8 – 9 Conclusion……………………………………………………………………12
Globalisation has become a commonly used word world-wide. It is no longer a new concept or phenomenon in the academic and business world as social scientists, journalists, business analysts, management theorists, writers and commentators generally have at various times used and will continue to use the word in particular contexts for declared and undeclared purposes, with more or less effectiveness in their attempt to explain or interpret issues in this changing and complex world. It implies the concept of making the world a global village through the use of high standard of technology, sharing ideas and ensuring dynamic and rapid change.
According to Edwards (1998:372)) the driving forces behind economic globalisation are a reduction in transport and communication costs in the private sector, reduced policy barriers to trade and investment by the public sector, an increase in the availability of and access to information and technology, and the speed with which information and technology can be transmitted across national boundaries.
The most important aspects of economic globalisation therefore include the breaking down of national economic boundaries, the liberalisation of international trade, finance and production activities and the growing power of transnational corporations (TNCs) and international financial institutions. Economic globalisation therefore manifests itself in various forms such as an increase in international trade, financial flows and foreign direct investment.
Thinking about the unification and re-shaping of the world into a global village and the description of the dynamics of political and economic relations within it constitute the essence and the development of the new phenomenon globalization.
This paper focuses on the importance of the phenomenon of globalisation. First, it discusses the concept of globalisation in general, which is characterised by the creation of borderless world in that distance and national borders no longer matter. Second, it analyses the benefits and challenges of globalisation. Third, it examines the importance and of globalisation with specific reference to development and the impact of globalisation on the governance. Fourth, it provides an analysis on the main outcomes of the globalised economy to the functioning of government department. Lastly it provides a conclusion with recommendations on key areas where improvements can be made and proposes a way forward to making those improvements.
1. THE CONCEPT OF GLOBALISATION
GLOBALISATION refers to the increasingly global relationships of culture, people, and economic activity. Globalization may contribute to economic growth in developed and developing countries through increased specialization and the principle of comparative advantage. Globalization can be thought of as a process which embodies a transformation in the spatial organisation of social relations and transactions - assessed in terms of their extensity, intensity, velocity and impact - generating transcontinental or interregional flows, and networks of activity, interaction, and the exercise of power (Held:1999) 1.2 AN OVERVIEW OF GLOBALISATION
Globalization is one of the most debated issues of our times eliciting both great enthusiasm and deep concern. It has engendered images of a peaceful borderless world characterized by prosperity for all or it has been depicted as the progressive advancement of frightening multinational corporations and their control over world-wide natural resources, manufacturing, finance and culture. The image of globalization as a promise or threat is, in fact, one of the most powerful and persuasive images of our times. Globalization has often been used as a rhetorical device to advance specific interests or agendas at the expense of others. Globalization has been invoked by different pressure groups as a concept justifying the ideas and actions of both its proponents and detractors (Veseth, 1998:16-18). It can therefore be concluded that globalisation is a continuous evolutionary process whereby functions and influences cross boundaries from one state to another. The question that arises from this is whether a country such as South Africa can ignore global influences after years of isolation and integrate positively with the international community as a global player. The South African government has initiated the debate on the possible benefits of globalisation, in both national and local government spheres. Globalisation can facilitate economic and social upliftment in the communities served by local government. 2. BENEFITS AND CHALLENGES OF GLOBALISATION
According to Thomas (2000:54-56), globalisation has beneficial elements which can be analysed in the following manner. 2.1.1 Increased competition: One of the most positive and visible effects of globalization is the improved quality of goods and services due to global competition. As domestic companies have to fight out foreign competition, they are forced to raise their standards and levels of concern about customer satisfaction issues in order to survive in the global market. 2.1.2 Employment: Employment is one of the positive and negative effects of globalization depending on the point of view of each nation. Globalization has given a lot of opportunities to invest in developing, under-developed, and emerging markets, and also brought out hidden talents and skills which are available globally. On the negative side developed countries have lost jobs due to the movement of jobs and investment opportunities to developing countries. 2.1.3. Investment and capital flows: One of the most visible effects of globalization is the flow of foreign trade and capital. India has been one of the most developing countries with more cash and investment flow than other countries. 4. Foreign trade: While trade originated in the times of early kingdoms, it has been developed and institutionalized due to globalization. People had to involve in wars and destroy other nations in order to get what they want, but today, it is done in a more human and civilized way through fair trade, Mutual Corporation, trade block agreements and multilateral organizations. 5. Spread of technical know-how: Without globalization the knowledge of new inventions and technical know-how would remain kept in the developed and rich countries which invented them and the rest of the world would not benefit. 6. Cultural integration: The world as we know it today is the result of several cultures coming together. Societies have become larger as they welcomed people from other backgrounds and civilizations to create a whole new culture of their own. 7. Spread of education: The spread of education is one of the most positive and powerful effects of globalization especially on women all over the world. 8. Legal and ethical effects: Due to globalization countries and security agencies of the world have developed understanding and commitment amongst themselves to prevent and fight global terrorism and other cross border crimes. 9. Foundation of organizations for environmental and social concerns: humans have done great amount of damage to themselves and to the environment around them through the industrial revolution and wars throughout the years. In view of the above a deduction can be made that the benefits of globalization are obvious: faster growth, higher living standards, new opportunities. Yet a backlash has begun, because these benefits are so unequally distributed, and because the global market is not yet underpinned by rules based on shared social objectives. The gross disparities of wealth in today's world, the miserable conditions in which well over a billion people live, the prevalence of endemic conflict in some regions, and the rapid degradation of the natural environment. 2.2 CHALLENGES
Even though globalisation has a positive effect as indicated though the discussion above, Thomas (2000:54-56) points out several challenges posed by globalisation: 1. Economic contagion: When the entire world becomes a global Village any kind of economic interruption in one nation will have a huge impact on several other nations, which are closely related to it in terms of trade and commerce. 2. Loss of cultural identities: Critics of Globalization say that it will restrict some age-old cultures which have been religiously practiced all over the world. There are many countries that won’t even think to adjust when it comes to religion and culture. 3. Unemployment: Some people feel that Globalization is promoting Employment, but the fact is that the opposite is happening. 4. Human insecurity (spread of diseases): Crimes and diseases are now more rampant than ever Globalization leads to many cross border crimes such as drugs, weapons, woman and children trafficking and also to modern day slavery. 5. Unbalanced distribution of benefits: Between Countries the benefits are not distributed equally. Wealth of developed countries continues to grow twice as much as those of the developing world. 6. Contagion of corruption: In addition to other cross border crimes, Globalization also allows Corruption or at least contributes to the growth of it in the developing Nations. 7. Affects local industries: When foreign goods enter the local market, and local consumers begin to buy them with excessive preference, it is usually at the expense of the local goods, precisely in loss of sales, and therefore loss of revenue to the local producers in the developing countries It is therefore clear that challenges of globalization necessitate that countries develop their information and communication infrastructure and create an enabling environment for information and knowledge sharing. Society development needs the full participation of all stakeholders at national, regional and international level. This can only be achieved through encouraging cooperation and partnership and the full and effective involvement of all stakeholders, and by clearly defining their roles, responsibilities and goals. 3. THE IMPORTANCE OF GLOBALISATION WITH REGARDS TO DEVELOPMENT 3.1 DEFINITION OF DEVELOPMENT
Development is a process of structural societal change and a process of historical change.The process of economic, social and political transformation, concepts about how to realise development have seen as progressive shift over the past five decades (Thomas, 6:2000) 3.2 THE RELATIONSHIP BETWEEN GLOBALISATION AND DEVELOPMENT
It is claimed that globalisation increase prosperity and opportunity in the developing world. The civil liberties are enhanced and there is a move efficient use of resources. AU countries involved in the free trade are at a profit is a result there are lower prices, more employment and better standard of life in these developing nations. It is feared that some developing regions progress at the expense of other developed regions. Globalisation is a positive–sum chance in which the skills and technologies enable to increase the living standards throughout the world. (Buzzle.com, 2003) 3.3 GLOBALISATION AS AN INEVITABLE DEVELOPMENT
According to Cable (1995:3), globalization is a complex phenomenon which encompasses a great variety of tendencies and trends in the economic, social and cultural spheres. It has a multidimensional character and does not lend itself to a unique definition. For purposes of simplicity, it may be described as increasing and intensified flows between countries of goods, services, capital, ideas, information and people, which produce cross border integration of a number of economic, social and cultural activities. There are four are main driving forces behind increased interdependence: (a) trade and investment liberalization;
(b) technological innovation and the reduction of communication costs; (c) entrepreneurship; and
(d) global social networks.
National governments have played a pivotal role in allowing greater interdependence and economic integration of specific activities through the elaboration and adoption of market-oriented policies and regulations, at both the international and local levels. (Cable, 1995:3) Globalisation is inevitable result of the development of productive forces and of science and technology. It promotes the gradual optimization of the economic factors on a global scale, thus enhancing economic efficiency. Globalisation made easier to communicate across the globe computer, cell phones and internet have brought about major changes in the world. Globalisation is seen as one of the most important force impacting on the economy (Calitz, 2000:5-7).
4. THE IMPACT OF GLOBALISATION ON GOVERNANCE
According to Zollinger (2007:4-5), Global governance is a political process, which is meant to identify and solve the above-mentioned problems that are beyond the capacities of single states, this, in the absence of a world government. 4.1 GENERAL CHARACTERISTICS AND CHALLENGES
Global governance has some general characteristics, which obstruct the immediate identification, understanding and solution of problems. Accordingly, global governance faces great challenges. Challenge 1: Decision-making processes have to be shortened. The public sector, compared to other sectors (private sector, civil society, media, and organized. Challenge 2: The effects of globalization on sustainability cannot be solved by individual actors of global governance, but require effective partnerships. The above-mentioned challenges cannot be solved by single actors alone, neither public nor private ones. Challenge 3: Domestic and foreign affairs must be coordinated and coherent in order to avoid making complex decision-making processes of the international community even more complex. Many domestic political topics these days have a global dimension: Economic, environmental, health or security policies are domestic as well as foreign policy topics. Challenge 4: In order to minimize delays in the ratification of international law because national governments fear losing sovereignty, they must be empowered to contribute to the global policy making process. Challenge 5: It takes long to ratify international agreements, but they are of no use if they are not implemented and if failure to do so is not sanctioned. Many good initiatives fail within the global governance, even when agreements were made. The Universal Human Rights Declaration is a classic example of an instrument to solve a global challenge. Challenge 6: Multilateral organizations as well as international conferences and agreements as central instruments of global governance have to be adapted to shifting powers over time. 5. THE MAIN OUTCOMES OF THE GLOBALISED ECONOMY TO THE FUNCTIONING OF GOVERNMENT DEPARTMENT
According to Rollinson (2008:34-41) the environment of an organisation consists of a host of issues, events and pressures that can affect the interior of the organisation and one way of examining these broad influences is to use the PEST Model shown above. Political: These refer to government policy such as the degree of intervention in the economy. Political decisions can impact on many vital areas for business such as the education of the workforce, the health of the nation and the quality of the infrastructure of the economy such as the road and rail system. Economic: These include interest rates, taxation changes, economic growth, inflation and exchange rates. Social: Changes in social trends can impact on the demand for a firm's products and the availability and willingness of individuals to work. Technological: New technologies create new products and new processes. MP3 players, computer games, online gambling and high definition TVs are all new markets created by technological advances. Online shopping, bar coding and computer aided design are all improvements to the way we do business as a result of better technology. Technology can reduce costs, improve quality and lead to innovation. These developments can benefit consumers as well as the organisations providing the products. Environmental: Environmental factors include the weather and climate change. Changes in temperature can impact on many industries including farming, tourism and insurance. With major climate changes occurring due to global warming and with greater environmental awareness this external factor is becoming a significant issue for firms to consider. The growing desire to protect the environment is having an impact on many industries such as the travel and transportation industries (for example, more taxes being placed on air travel and the success of hybrid cars) and the general move towards more environmentally friendly products and processes is affecting demand patterns and creating business opportunities. CONCLUSION
Whereas the world is rapidly growing and developing into a world single unit known as the Global Village, rapid movement at realizing the new and on-going process of Globalisation is a direct function of (national) development. It is obvious that the industrialised countries of the North will entirely benefit by taking the advantage of the opportunities offered in the spheres at wider markets for trade in that capital (economic fundamentals) will tend to move from relatively weak countries to those that are strong and developed. Third world countries, to which Africa and South Africa in particular belong, are weak in terms of development and economic viability; hence, the bargaining power in relations to their ability to influence prices of products at the world markets and the eventual ability to effect decisions at the global level is missing. Africa may in the nearest future begin to appear as one of the active participants in the new world economic order if the necessary conditions for rapid development are instituted. The impact of globalisation on the South African economy is more complex. South Africa re-entered the international economy from isolation at a time when the forces of globalisation, especially for developing countries, seemed to gain momentum. According to Edwards (1998:383), approximately 98% of the current growth performance in the country can be explained by the forces of globalisation. The regression results also indicate that the South African economy is benefiting from the gradual relaxation of exchange controls. The relative small impact of trade volume on economic growth is in line with the conclusions in international literature in this regard.
According to SA Economic Development Ministry MT Strategic Plan 2010/11 – 2012/13, South Africa’s broad strategic focus includes the goal of developing other African economies, not only as an act of solidarity, but as fundamental to meeting the country’s own national economic goals. This requires that policy should be directed to more economic opportunity, reciprocal investment and trade within Africa.
Therefore it can be concluded that the State remains the key actor in the domestic as well as international arenas despite many concerns about the loss of sovereignty. The popular assumption that the emergence of global civil society and increasing levels of cross-border trade, finance and investment flows weakens the nation-State is debatable. In the international arena, closer cooperation and concerted action among States represent an exercise of State sovereignty. Such concerted action does not necessarily weaken States; rather, it can strengthen them by creating a more stable international environment and by giving them greater scope to expand their exchanges in a variety of fields.
4.http://www.info.gov.za/Economic Development Medium Term Strategic Plan 2010/11 South African Economic Development Ministry MT Strategic Plan 2010/11 – 2012/13 accessed on 24 March 2012.
3.Edwards, S, 1998. Openness, productivity and growth: What do we really know? The Economic Journal, Vol 108, March.
5.Rollinson D. (2008). Organisational behaviour and Analysis: An Integrated Approach, Pearson Education Limited, England. 6.Thomas (2000)
8.Zollinger U. (2007) Paper on The Effects of Globalization on Sustainable Development and the Challenges to Global Governance, accessed on 22 March 2012.