Liberalization and Globalization in Third World Countries

Introduction

Recent trends in the economies of developing countries across the globe has reignited the debate about liberalization and globalization, a panacea or disaster. Liberalization means to minimize the state intervention in business activities, making norms and regulation more liberal and let market factors play more important roles in economy. Globalization is making local markets available to foreign companies by easing the norms for foreign investment.

Why Nations followed path of Liberalization and Globalization

In the late twentieth century, most of the developing countries opened their markets for global players and start making more liberal policies for local market players as well as for global market players. Liberalization and globalization was sought to be the answer for fast socio economic development, removing deep rooted corruption practices, eradicating mass poverty and unemployment and social upliftment. We have got the results as expected in many nations. Private firms and foreign multinational firms are providing quality employment to many citizens in their respective countries. High end technology for various fields is being employed in many countries. Traditional products which are specialty of some regions are easily available in other parts of world. Small and medium scale industries are continuously emerging globally and generating large employment along with the increase in GDP of the respective countries. So we can say that much has been achieved as desired and nations are in right path to build a better society in all aspects.

Liberalization in India

All around the world economy is either driven by market forces which is also known as capitalism or it is driven by state. In context of India, our country choose to follow mixed economy when we got independence. In a mixed economy nations try to include good points of market driven and state controlled economy. After independence private firms were allowed to do business in India. But there were very tight regulations and rules by the government. License was given by government for all the business and getting the license was in itself a difficult task. In other words environment was not conducible to do any business activity in the country. This has resulted in widespread corruption in all levels of government and huge revenue loss to the government of India. This leads to the crisis of 90s. After this Indian economy headed towards more market oriented way. License raj was reduced and norms were made more liberal and soothing for the private companies. This has resulted in growth, development and advancement of our country. There were negative impacts also associated with liberalization. Environment degradation being the most important one. Also with more financial powers in the hand of few private companies, government is not able to take care of the interest of poor and marginalized person. Recent examples of Land acquisition from farmers for benefit of private firms can be quoted in this reference.


Globalization in India

Developing countries in search of better technology and developed countries in search of more markets for their products engage with each other in various international platforms to promote globalization. Key point to note here is that globalization helps each nation to have access to any other nations. Globalization has helped in creating huge opportunities of employment in our countries. Multinational companies helped in creating direct and indirect employment to lot of people. Indirect employment is through the local ecosystem in which multinational companies depends. Foreign companies also help to improve the society by contributing through corporate social responsibility programme. However there are negative of globalization as well. Although interest of local players are taken care by various methods, like maintaining negative list of commodities which cannot be imported from other countries. Similarly other restriction are in place. However adverse effects are seen in very small to small scale industries with more globalization.


Are Nations heading in right direction?

Positive effects of liberalization and globalization are clearly visible in current scenario in third world countries. However recent slowdown in developing countries with the policies of developed world has raised the question of self-sustaining capability of nations. Experts are saying if economies of third world counties are still working under the indirect control of developed countries. Best way to solve a problem is not to uproot that process with a new one, mimicking the solution of some other nations.
History is evident that even the countries like Russia moved towards liberal economy to get away from the evils of Government controlled economy. Market driven economy has always produced better result in all part of the world. One reason of success of market driven economy is that it is motivated by profit making. While government controlled economy are driven by people welfare. But one of the biggest problem of market driven economy is increase in inequality in the society. Big players always has advantage in any game. This is observed in current scenario as well.
Third world countries with huge disparity in income level among their citizens face the problem of inequality very much. With rise in liberalization and globalization inequality is further increasing. Policy makers of every country must answer this problem to avoid future consequences, which may lead to civil disturbances or other problems.







Terms dictated by developed countries

With open market access to all, developed countries are always at an edge to dictate the terms in a transaction. Having better technology and skill, these countries are often accused of out sourcing that work which is of inferior quality to the developing countries. This prevents developing countries to fully unlock the potential available in their citizens. This can be observed in our country that BOP industry which is considered as low quality work is largely being outsourced here, while developed countries engage themselves in research and development type of work. Further influence of developed countries in forcing some legislative decision in their favor is also observed. This is clear interference in the sovereignty of a nation. Developed countries are often complained of taking raw material from the developing countries and supply finished products to them. This model is always likely to increase the cash deficit of developing countries.

Complex Web
We have already came so much ahead that a complex web of all nations have formed. And it seems inevitable to be get away from this network. Everyone depends upon everybody. This network is so complex that repercussion of any event at one place can be seen globally. Effect of larger economies are largely felt. Recent news of US federal bank thinking to reduce the economic stimulus has badly shaken the economy of almost every third world country. This has raised the important question that are we governed by some other forces which is not in our control? Are we in the mercy of developed countries to survive in these circumstances?

Way Ahead
Economy runs on sentiments and it is highly advisable to have optimistic view about the economy. By working in a proper direction, designing the policies judiciously and keeping future in mind and implementing them properly, every nation in the world has enough talent to prosper and become self-sustainable. The need of hour is to understand that over reliance on others will never pave the way. Nations have to make way for them by their own.

By Rajesh