Challenges
of Liberalization, Privatization, Globalization
Introduction
There is a famous quote by
Aristotle, “Man is by nature a social animal”. Interactions among people are
prerequisite for a society. Phenomenon when these interactions are liberated from
the dictates of state and spread across the boundaries all over the world is
also known as Liberalization, Privatization and Globalization. Although these
terns were initially associated with economy, they have impact in other areas
as well. Liberalization is to make the liberal policies and rules to allow
market forces to prevail. Privatization is to open different market segments
which were initially restricted for only public sector only to private sectors
also. Globalization is to allow flow of goods and services between two nations
with minimal restraint.
Genesis of Liberalization,
Privatization and Globalization
1.
World Bank Aid
Conditionality
In
the last decades of twentieth century most of the African and Asian colonies
were freed. For achieving the fast socio-economic development these countries
approached World Bank to get the aid for their development. Condition of
opening the market to private companies and other nations was attached to the
aid provided by World Bank. Although after 90’s, World Bank have done some
modifications in their policies and conditions to provide the financial aid.
But still there is tacit conditionality associated with the aid given. Hence
aid conditionality is considered one of the reason for prevalence of Liberalization,
Privatization and globalization. In India after the economic reforms of 1991,
these changes are introduced and they are termed as LPG.
2.
Emergence of
Welfare State
With
the emergence of welfare state concepts like transparency, accountability,
equity and efficiency started to embolden. Traditional Governments were
inefficient, incompetent and unable to deliver to the demand of peoples. Red-tape,
nepotism, corruption, favoritism and other irregularities crept in the public
sector and financial crisis looms in many countries. So countries are compelled
to open the market for different players and lose their monopolies in some
areas. This is one of the reasons that countries like Russia and others have to
follow the liberalization, Privatization and Globalization (LPG).
Impact of LPG on Economy
Economy is related to the
production and distribution of goods and services among different individuals, groups,
organization or nations. Economic activities are as old as the human existence
in the earth is. It works on the ideology of mutual exchange with consent. As
the civilization advanced people created their kingdoms and controlled various
economic activities in their territory. These kingdoms were the predecessor of
current states and nations.
Positive impacts of LPG on
the economy of current states are as follows:
1.
Higher Growth in
Financial Terms:
With
more private firms and flow of capital from developed countries to developing
countries, higher growth in terms of Gross Domestic Product and Per Capita
Income is observed in most of the countries.
2.
More employment
opportunities:
More people
were employed in various multinational firms and private companies. With
availability of cheap labor various firms from developed countries shifted
their working location to developing countries. This created more opportunities
of employment.
3.
Better
Infrastructure
Private
sector also started funding the infrastructure projects. National highways,
Airports and other such projects are contracted out to private firms. Better
infrastructure also invited more investment from other countries.
4.
More welfare
Schemes:
With higher
growth rate, states get more opportunity to invest in welfare schemes for
betterment of poor and ignored section of the society and work for alleviation
of poverty and inequality in the society.
Negative impact of LPG on
economy:
1.
Hegemony of
developed nations over developing nations:
Developed
nations have been criticized for being enforcing policies on developing
nations. Ideologies of developed nations are imposed on developing countries
without giving consideration of the existing conditions of developing countries.
2.
Exploitation of
Natural Resources:
Private
companies work with the motive of profit earning. In the absence of any proper
policies, private companies exploited the natural resources very badly. This
has done some of the irreparable damages to the developing countries and their
ecology.
3.
Increased
Inequality:
With
concentration of wealth in few private hands who have the motive of more profit
earning rather than society welfare, inequality has increased many folds in
both developing as well as developed nations. Private firms are also alleged of
influencing politicians for making favorable policies for them.
4.
Destructive
Competition:
Competition
is considered good and constructive for any economy till it increases the
efficiency in a controlled circumstance. But when it goes beyond certain limit,
it has many unintentional side effects. Examples of destructive competition
include cutting cost by polluting the environment, competing by reducing the
workers safety and protection measures and competing at socially irresponsible,
damaging financial speculation.
Impact of LPG on culture
According to Anthropologist
Edward B. Taylor, Culture is that complex whole which includes knowledge,
belief, art, law, morals, custom, and any other capabilities and habits
acquired by man as a member of society. With economic exchange, exchange of
culture also takes place, knowingly or unknowingly. This has taken place in earlier
times also as claimed by many historians.
Positive impacts of LPG on
Culture
1.
Exchange of
ideas
Globalization
cause cultures to cross the boundaries. Good practices are accepted from the
cultures of other countries. One such example is the women empowerment in
different countries after being influenced from western countries. Similarly
message of Shrimad Bhagwad Geeta is being spread from India to different
countries including western countries.
2.
Exchange of good
practices
Good
practices are accepted by one nation from culture of other nations. One of such
example is the practice of Yoga being spread in developing countries by Yog
Guru Baba Ramdev.
3.
More
availability of Opportunities
With
liberalization, privatization and globalization, more entertainment companies
come up in the society to bring out the talent from different ends of the
country. This gives the opportunity and platform to the artists to showcase
their talents. Increased numbers of reality shows are an example of this.
Negative Impacts of LPG on
Culture
1.
Exchange of Bad
practices:
Along with
good practices, bad practices are also assimilated by people. Alcoholism, drug
addiction and smoking among other things are some of the examples of bad
practices accepted. Similarly prevalence of junk food in India can also be
contributed towards LPG.
2.
Dissolution of
Culture
With the
acceptance of other culture people often forget their own culture. This is true
mostly in case of developing countries where young generation doesn’t found any
merit in accepting their age old culture and get attracted towards the culture
of developing countries.
Impact of LPG in Education and
Technology:
Education is a continuous process. It
does not end with graduation day. Similarly the education system also keeps on
changing as the nation grows reducing redundant things and adding recent
advancement. Technology has become one of the important parts of education in
recent times.
Positive Impacts of LPG on Education and
Technology:
1. Advanced
technology to developing countries :
Developed countries
have availability of advanced technology as they spend good amount of money in
Research and Development activities. New technologies are necessity for fast
development because old technologies become redundant and inefficient with the
rising population and decreasing resources.
2. Better
Education System :
With more number of
Schools and Colleges in the country level of education also improves.
Constructive competition and innovative ideas brings in better methods to
impart good education. Availability of various online portals and education
videos explaining various concepts of different subjects succinctly is one such
example of improvement in education.
3. Knowledge
sharing across the borders :
One nation may have
expertise in some subject and other nation may have in some other subject.
Exchange of knowledge between two nations may benefit both the countries.
Negative Impacts of LPG on Education and
Technology:
1. Developed
countries imposing new technologies :
Developed countries impose
new technologies on developing countries through various international organizations.
For eg. Chloro Fluoro Carbons were used earlier as refrigerant which produce
high amount of Ozone depleting gases. Hydro Chloro Fluoro Carbon (HCFC-22)
using refrigerants are introduced and developing countries are forced to switch
to cleaner refrigerant. Now America is pushing India for cleaner refrigerants,
made of Hydro Fluro Carbon (HFC). Such type of behavior benefits the corporates
of developed countries affecting the poor persons of developing countries.
2. Conversion
of Education into Business
Private firms start
using the opportunity of high number of young people and convert education into
a business. Hefty amount of fees is collected by them and low quality of education
is imparted. Presence of high number of Engineering colleeges in India without
good teachers and any future perspective for students is one such example.
Impact of LPG on Public Administration:
Public administration is the government
in execution. Traditionally public administration has been transformed into a
black box working in a secret manner with least priority to public welfare and
social improvement. Such behaviour has made public administration passive and
inefficient. Recently due to pressure from media, civil society and
international financing bodies, public administration is changing itself. With
the beginning of paradigm of New Public Management in public administration
more stress is now given on the management side of administration which
includes efficiency, effectiveness, transparency and output. Concept of less
government and more governance is more prevalent all across the globe. LPG can
be credited as one of the reasons of genesis of New Public Management.
Positive impacts of LPG on Public
Administration:
1. Changing
role of Administration
Role
of Administration has been changed from provider of services to the one
regulating services and empowering Citizens. It has also become Customer
oriented and result oriented branch of state from previous traditional, rigid
and complex bureaucracy.
2. Trend
of contracting out:
Administrations
across the world have started contracting out as much Work to private or public
agencies as possible. One of the reasons of contracting out is that authority
and accountability are easy to delegate and monitor. In India responsibility of
PAN card printing is given to UTI and NSDL.
3. Learning
good practices from private entities
Public
administration has learned to use better methods of private companies. Strict
rules, management by objective and use of detailed project reports are some
such techniques now used in public administration as well. Scientific and
statistical methods are used with recent technologies to increase the
efficiency and effectiveness. Remuneration has also increased for public
administration personnel.
Negative impacts of LPG on Public
Administration:
1. Increasing
complexities
LPG has caused
advancement in technology and increase in awareness of citizens. This has
resulted in more scrutiny of Administrative work. These improvements have
brought transparency and accountability in the administrative work. But they
have also increased the complexity of work and put lot of restrictions on daily
working of administrators. Public opinion is always desired as a feedback in
Administration. But it should not hinder the administrators in taking any
decision. Also as more players are coming out in the market task of regulating
and maintaining equal playing field for everyone becomes more difficult.
2. Emergence
of international and regional multinational platforms
Many
groups and organizations have emerged with the LPG. As a result of this,
decisions are now taken considering various circumstances globally instead of
just local problems. India's decision to implement food security bill recently
is objected by developed countries at WTO meet in Bali and India has to
convince all the nations to reach an intermediate Solution. Similarly groups at
the regional levels are also emerging which effect the decision by
Administration.
Conclusion:
Liberalisation, Globalisation and
Privatisation have affected all the countries economically, politically,
culturally, and in all other aspects. They have brought many improvements and
changes in the Society and citizens across the globe. However it is very
important to look down into the advancement of LPG both from positive point as
well as negative point. We need to critically scrutinize any shortcoming in the
approach of LPG, so that we can correct it in future. Problems like rise of
inequality, environment degradation, and hegemony of developed countries over
developed countries have to be considered and solved with commitment from all
the countries and sections of Society.
by Rajesh Garkoti
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