So tired!! But only four more days....

So before I go to bed, I shall post my IR essay, as promised :)

have fun!

Globalisation in the Developing World
Globalisation is a worldwide phenomenon that has set its roots firmly in developed nations around the globe, yet both scholars and the public tend to question the impact globalisation has had on the developing world, and answers to this question tend to take on a variety of forms. In this essay, by analysing the impacts of globalisation on growth and poverty within Thailand, I will argue that globalisation can have both positive and negative impacts for developing countries but overall, the benefits are shown to be superficial and the negative implications are more indicative of the issues that permeate developing societies.
Defining globalisation can be difficult due to its all-encompassing nature, and consequently it can mean different things to different people. A more common conception of globalisation comes from Friedman, who defined it as: “the process of global integration, giving states better access to the rest of the world.” Others use the same model but focus on different aspects, Drucker for example, places significance on the importance of global competitiveness, as states must compete with one another in order to make a profit, and Abudllah notes that globalisation gives individuals the chance to maintain a national identity while being a member of the wider global society. Yet the common model, most obvious in Friedman’s definition, underpins the essence of people’s ideas about globalisation, and thus for the purpose of this essay, globalisation will be defined as: the growing interdependence of the world’s population, as a number of aspects of daily life such as economy, culture, technology and government become increasingly intertwined.
Similarly, it is very difficult to give the term ‘developing country’ a definition, and as Hoeschele pointed out, such a label perpetuates the cultural values upon which it was conceptualised. Nonetheless, it is still a commonly used term and generally refers to countries that are undergoing economic, social, political and cultural development. More specifically however, developing countries tend to be defined in terms of their socioeconomic status, particularly concerning poverty levels. Thailand is a low to middle income country in South East Asia with a population of around 64 million and a United Nations (UN) human development index (HDI) rating of 0.768. This figure shows that although Thailand has undergone significant progress in the last quarter of the 21st century, its life expectancy, standard of living and education are not yet high enough for it to be considered ‘developed’ by the UN. Additionally, around 10 per cent of the population are still living in poverty. Paralleling its development, Thailand has been gradually absorbed by globalisation. Initially the Cold War gave Thailand increased links to America due to the demand for military goods but as it ended, ideas about socialism were eliminated and regional tensions reduced, and from here on globalisation become increasingly ingrained into most aspects of social life. Thailand has thus become a member of the international community not as a direct result of a sudden change, but through a gradual process. This has had an influence on the overall impacts of globalisation on the country.
Globalisation is extensively regarded as being beneficial for developing countries because it promotes growth, most specifically on an economic level. Globalisation involves the integration of a country’s economy and trade into the world market, a process which encourages competition between different states and companies and consequently causes efficiency and significant technological progress, because countries must strive to keep up with the demands of the international market. Perhaps most significantly, globalisation offers developing country’s more opportunities to accumulate a profit. Generally speaking, among other South East Asian countries, Thailand too has seen this kind of development, particularly in terms of exports and the strengthening of the country’s economic situation. These changes can be analysed in terms of Thailand’s rice market. In the past, Thailand’s rice market was primarily domestic – government regulations like export taxes made it difficult for farmers to make a profit from the international market. Thailand’s increased involvement in the global market, including membership to the World Trade Organisation (WTO), has helped its domestic rice market become global, as emphasis is put on policy which makes trade more viable, such as the reduction of import tariffs, which fell to 52 per cent in 2004. Rice from Thailand has gradually become a bigger player in the international rice industry as exports increased from 6.2 million tons in 1995 to 7.35 million tons in 2003. Additionally, Thailand intends to keep up with the global market by integrating new technology into the Thai economy with the IT 2010 plan and the establishment of a Ministry of Information Technology and Communication. Thailand’s Gross Domestic Product (GDP) has also grown steadily from $32 billion (US dollars) in 1980, to $272.5 billion in 2008. Similarly, Thailand’s GDP per capita has increased from just under $700 (US dollars) in 1980 to around $4000 in 2008. In the case of Thailand, it is clear that increased participation in the global economy has encouraged general economic growth in markets viable to the geography of Thailand, as well as technological advances for the purpose of efficiency. This shows us that generally speaking, globalisation has benefits for developing countries as a means of accelerating growth, and indeed in the 1990s, the globalising developing countries grew at a rate of 5 per cent per capita, while non-globalising developing countries only grew at a rate of 1.4 per cent. This idea can be explained by the hyperglobalist theory, which theorises that globalism is a positive force that will inevitably lead to the world’s states and markets being intertwined.
Yet surface indicators such as GDP seem superficial upon deeper analysis of Thailand’s situation, revealing that growth is limited to certain areas. Recent studies have shown that due to lower margins and product quality, as well as higher material costs among other things, Thailand’s competitiveness is at risk. The market share of Thai rice has actually decreased in some countries including Japan and areas of Europe, and while rice exports have been increasing, profit from these exports has actually been decreasing, going from $1,900 million (US dollars) in 1995 to $1,800 million in 2003. In fact, one major criticism of the impact of globalisation on developing countries is that increased integration into the world economy renders the government unable to appropriately cope with change. This is because the state becomes susceptible to factors out of government reach, such as spontaneous changes in the market. The financial crisis of 1997 which hit much of South East Asia including Thailand, stands as potential evidence to illustrate this point. Between 1997 and 1998, the Thai currency devalued by 36 per cent and the stock market index fell by 27 per cent. Furthermore, a number of banks and finance companies were pressured into closure by debt. The global network tends to offer opportunity to advanced countries; for example, the English language is a somewhat detrimental asset to have, and consequently Thailand is put in a disadvantaged position as other South East Asian countries with a strong English background such as Singapore, are favoured by other countries in expansion. This shows that globalisation is not without fault for developing countries. While competition creates efficiency it also comes with risks, particularly of vulnerability and insecurity. Furthermore, it can be argued that economic integration induced by globalisation is not the only factor behind economic growth in a country – perhaps the process happens in reverse, whereby growth promotes economic integration. This aspect of globalisation can be explained by the sceptic school, which summarises that globalisation is overwhelmingly a negative force. In line with scepticism, globalisation, as in the case of Thailand, can be seen as having limited benefits for a country. However, were these surface benefits supplemented by preventative measures, at least initially, perhaps they would be more effective in establishing a strong financial base; particularly in the case of developing countries, whose economic weaknesses put them at a disadvantage. Furthermore, involvement in the global market at least gives developing states the opportunity to expand, because without this involvement, they would be unlikely to progress much at all.
If analysed as a method of attaining economic growth, globalisation can also be argued to dramatically reduce poverty in developing countries. Generally speaking poverty reduction is normal, and the number of poverty-stricken people has decreased by 200 million world-wide since the 1980s – a number coming largely from countries like China, India and Brazil whose globalisation policies have seen extensive economic growth. Thailand too has seen progress; as incomes rise, poverty is falling: in 1990 27 per cent of people were living in poverty compared with only 9.8 per cent in 2002. The number of university students has also grown dramatically, from 15,000 in the 1960s to 600,000 in the 1990s, showing that Thailand is actively up-skilling its workers in order to achieve the high quality levels required to succeed in the competitive global market. By offering opportunities to access wealth, globalisation offers states the chance to alleviate poverty and also encourages education, as different career paths become both more viable and profitable. The theory of hyperglobalisation helps to explain these benefits as it emphasises the role of globalisation in human progress.
Although globalisation is shown to have an overall positive impact on poverty levels, the impact on poverty at rural or local levels is not as significant as statistics would suggest. While some scholars suggest that economic growth and poverty reduction are directly proportional to one another, others emphasise the intrinsic relationship between development and inequality. In the case of Thailand, the latter statement holds some truth, as inequalities are chiefly caused by rural to urban migration, a process heightened by the declining importance of rural occupations and seen clearly in the expansion of Bangkok, a city which went from only two high-rise buildings in 1975, to the bustling centre it is today.Urbanisation is also shown in the changing structure of the economy. As a percentage of the country’s GDP, the agriculture industry has fallen from 44 per cent in the 1960s to 10 per cent in recent years. Consequently, benefits of globalisation have been unequal in their distribution, specifically favouring jobs linked to the economy and more generally favouring urban areas. Technological change is also limited to cities and the role of women in society still needs to be addressed. These kinds of consequences in developing countries undergoing globalisation arise because decisions tend to be made with more consideration for the national outcomes and as a result a large number of people are overlooked. In this way, globalisation is seen to be unsuccessful in redistribution of wealth, as it tends to favour the wealthy. Urbanisation also creates losers and winners and an innate sense of success or failure, and in terms of Thailand the losers are those in rural areas (like farmers) who are still faced with poverty, as well as the decline of the agriculture industry. This idea is explained by the sceptic school, advocates of which see globalisation as further exploitation of the poor by the rich. Overall, it can thus be said that the competitive nature of globalisation creates both winners and losers; however the losers are not necessarily the poor, an idea supported by overall falling poverty rates. Yet globalisation can cause a deepening of the rift between the rural and urban spheres, and Dollar and Kraay propose that in order to balance this problem, states ought to implement social protection measures. It has been suggested that although the Thai government have undergone a number of changes, corruption is still present, and they are more interested in short term profit than long term change. This could be a limiting factor on the positive impact of globalisation in Thailand, however overall evidence shows that globalisation isn’t necessarily good for developing countries because it doesn’t change or eliminate the real problems facing a society.
In 1993, a Thai scholar said, “there has never been a time when Thai society was not globalising”, and other academics have made the same point. However, it is difficult to give substance to the argument that globalisation is beneficial to developing countries in light of such statements. If Thailand has been constantly globalising, and globalisation is good, then we must pose the question: Why is Thailand still considered a developing country? Globalisation is by no means a perfect system and its flaws are a reflection of the imperfect world in which it was made. Furthermore, the impacts globalisation can have are often dependent on the historical and contextual situations of a country, thus it is difficult to pick a general trend that globalisation is likely to follow. The transformationalist theory of globalisation seeks to explain this phenomenon, relating outcomes of globalisation to decisions made by the state as well as power distribution.
As definitions of globalisation and developing nations are often difficult to pinpoint, it is also difficult to isolate a single outcome of globalisation on developing countries. Through the analysis of Thailand, I have shown that globalisation can have both positive and negative impacts for developing countries, but that the negative impacts often outweigh the positive ones. Perhaps globalisation would have more of a positive influence on developing countries if more emphasis was put on protection of the state as well as internal support for minorities, or the establishment of a system of government that suited both the culture of the country and the demands of globalisation, rather than suiting the Western ideal. Every country is different, and as such, conceivably the best thing we can do is to accept that westernisation may not be the only path a developing country can take, an idea becoming increasingly feasible with the recent strides China has been taking in the world market.





Love Erin