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Al-Ahram Weekly 4 -10 February 1999 Issue No. 415 
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Published in Cairo by AL-AHRAM established in 1875 |
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Al-Ahram Weekly 4 -10 February 1999 Issue No. 415
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| Published in Cairo by AL-AHRAM established in 1875 |
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Egypt Region International Book Fair Economy Opinion Culture Features Living Travel Sports People Time Out Chronicles Cartoons Letters The opportunity costs
By Taha Abdel-Alim *
of globalisationSince the early '90s, researchers and policy-makers have been trying to understand the reasons for the collapse of the world system that came into being in the aftermath of World War II, and the consequences of the post-Cold War world order. Globalisation, the most prominent phenomenon of the international economic system, and the very essence of its "newness", is a crucial element of these changes. Only by understanding globalisation can we gain strategic insight allowing for positive interaction with its repercussions. Globalisation must be analysed realistically, as an objective process. The failure to come up with practical policies addressing the challenges and threats it poses, as well as incompetence in calculating the costs and benefits of the restrictions and opportunities it offers, are the reason for the Arabs' inability to address changing circumstances adequately.
What, then, does globalisation mean in economic terms? Is it simply a new tool with which the US can dominate the international system, or the end product of objective processes and voluntary choices? Can it be decelerated, or can individual nation-states escape its stifling grip? Do developing countries have the opportunity, interest or ability to achieve the benefits promised by globalisation and reduce the restrictions and losses that accompany it?
Clearly, there are no ready-made, conclusive answers to these questions, especially since globalisation, even as a purely economic phenomenon, is highly complex. When speaking of globalisation, I am not referring to the processes by which world markets were formed, to great geographical discoveries, or to the rise of Western industrial capitalism and colonialism, although the historical roots of globalism do in fact stretch far back in time. Rather, I mean the processes that are both cause and effect of profound economic integration and the opening up of new markets. 'Global factories' or 'global villages' are not a fantasy; they are the concrete reality of today.
Globalisation is gradually encompassing all the members of the world community, although it is doing so at varying rates; their respective shares in the benefits and losses of globalisation, therefore, are disparate.
Integration in the global economy is manifested in the globalisation of manufacturing: each component of a given product can come from a different place. The production of components is distributed according to comparative advantage and international specialisation. The creation of the global village has meant, first and foremost, accelerated access to world markets, the liberalisation of international trade, currency exchange, financial and monetary flows and direct foreign investments.
The process of economic integration and liberalisation gained momentum as the division of world economies into "capitalist" and "socialist" blocs came to an end. The most prominent result of this change has been the diminishing role of the state and the restriction of its sovereignty in decision-making, specifically in matters pertaining to the allocation of inputs and the exchange of the outputs of economic operations. All these transformations have been aimed at increasing the profits of investors keen to optimise their gains or the interest on their investments, whether these investors are transnational or multinational corporations, private businessmen, or stock market speculators who run their business by a PC in their house or office.
The most potent impetus for economic globalisation, however, has not been a conspiracy, but the scientific and technological revolution, particularly in information and communications technology. International information and communications systems have made distance and time meaningless. Electronic trade operations in commodities, services, stocks, insurance and currencies are multiplying exponentially. The revolution in transport and communications has minimised the costs of component exchange in the 'global factory'. It has also maximised opportunities to optimise profits for the producers of high-tech components far beyond proportional rates.
Economic globalisation, however, is also the sum total of economic strategies, policies and measures, certain of which are interest-motivated, fostered by relative capability and stimulated by the urge to maximise gains. Others, however, are driven by hope, dictated by weakness and restricted by fear. Thus are economic and social systems globalised by reformulation to conform to the pattern of a market economy after the command-economy model has failed. Thus, too, are economic policies reformulated in accordance with the agreements of the World Trade Organisation. The process of globalisation, clearly, is played out in many different fields.
The scope of globalisation in the labour and technology markets is somewhat narrower, however. Today, exchanges are not limited to the export of surplus production, but are in fact essential for production to be sustained at current levels, or enhanced further in terms of both quality and quantity.
Globalisation has come a long way, and is going further still. It is somewhat curbed, however, by mechanisms of marginalisation or efforts to counter globalisation. Indeed, the lessons drawn from the marginalisation of the economies of the South, including the oil economies, as well as the Russian economic crisis and the Asian financial crisis, compel us to address certain controversial issues.
How is it possible, for instance, to reduce the consequences of vulnerability to external forces in a context of globalisation? How can we accelerate the optimisation of our competitiveness in business and social projects so as to multiply the benefits of globalisation? We must also determine the degree of competitiveness we may be compelled to sacrifice for the sake of other development goals which mean more for the progress of the country as a whole: the realisation of social justice, the consolidation of national security and the protection of our cultural specificity.
The ability to minimise the risks and losses incurred in a context of globalisation has become to a great extent contingent on a country's ability to increase its share of wealth. In other words, the adverse effects of globalisation are reduced to the extent to which a country is able to increase its stake in the global factory, to contribute its know-how to the global product, and to make its inputs essential to other parties.
Maximising the opportunities and benefits derived from globalisation is difficult for developing countries because, while the liberalisation of markets accelerates, the restrictions on the transfer of labour remain fixed, and the barriers to the transfer of sophisticated technology grow more rigid. The situation is aggravated further by the shrinking role of the state in the formulation of national economic policies related to levels of development, economic growth, employment and unemployment, income and social well-being, recovery or slumps in stock markets, and the levels of currency exchange rates.
Despite the opportunities, profits and capabilities made possible by globalisation, therefore, the integration of Arab economies into the global marketplace is fraught with risks. The stakes are extremely high, due to the ever-present possibility of exposure or vulnerability to the economic vagaries of the world economy. In addition, a country which integrates into the global economy becomes more vulnerable to external economic pressures caused by deep-rooted contradictions of a political or non-political nature.
The Arab economies would be unable to isolate themselves from the repercussions of globalisation, except by resigning themselves to marginalisation. Globalisation and other phenomena which represent the "newness" of the world order have made of progressive marginalisation the major threat to developing economies and communities. Marginalisation has compounded the long-standing dependency of such economies. On the basis of this assumption, we may infer that the Arab countries must choose -- ideologically and politically -- between two alternatives: either to adjust actively to the globalisation process, or to become passive targets of the threats posed by globalisation.
*The writer is deputy director of the Al-Ahram Centre for Political and Strategic Studies.
