7.4 Economic Consequences of Globalisation

While not everything is known about the economic facets of globalisation, this dimension shapes a large part of the content and direction of contemporary debate. The mention of economic globalisation draws our attention immediately to the role of international institutions like the IMF and the WTO and the role they play in determining economic policies across the world. Yet, NCERT cautions, globalisation must not be viewed in such narrow terms. Economic globalisation involves many actors other than these international institutions. A much broader way of understanding economic globalisation is to look at the distribution of economic gains — who gets the most from globalisation, who gets less, and who actually loses from it.

What is often called economic globalisation usually involves greater economic flows among different countries. Some of this is voluntary, and some is forced by international institutions and powerful countries. As we saw at the start of this chapter, this exchange takes various forms — commodities, capital, people and ideas. Globalisation has involved greater trade in commodities across the globe; restrictions on imports between countries have been reduced. Restrictions on the movement of capital across countries have also been reduced — investors in rich countries can now invest their money in developing countries, where they might get better returns. Globalisation has also led to the flow of ideas across national boundaries — the spread of internet and computer-related services is a clear example.

However, NCERT carefully points out that globalisation has not led to the same degree of increase in the movement of people across the globe. Developed countries have carefully guarded their borders with strict visa policies to ensure that citizens of other countries cannot take away the jobs of their own citizens. Capital and goods flow easily; people flow with much greater difficulty.

7.4.1 The Four Economic Flows in Detail

7.4.2 Same Policies, Different Outcomes — Avoid Generalisations

In thinking about the consequences of globalisation, it is necessary to keep in mind that the same set of policies do not lead to the same results everywhere. While globalisation has led to similar economic policies adopted by governments in different parts of the world, this has generated vastly different outcomes. South Korea grew rich; many sub-Saharan African economies stagnated. India saw a software boom; Argentina suffered a currency collapse. It is again crucial to pay attention to specific contexts rather than make simple generalisations.

7.4.3 Winners and Losers — The Sharp Division of Opinion

Economic globalisation has created an intense division of opinion all over the world. Those who are concerned about social justice are worried about the extent of state withdrawal caused by economic globalisation. They argue that it is likely to benefit only a small section of the population while impoverishing those who were dependent on the government for jobs and welfare — education, health, sanitation. They have emphasised the need to ensure institutional safeguards or to create "social safety nets"^? to minimise the negative effects of globalisation on those who are economically weak. Many movements have called these safety nets insufficient, and some economists have described economic globalisation as a "re-colonisation of the world".

The advocates of economic globalisation argue the opposite. Greater trade among countries allows each economy to do what it does best — comparative advantage at work — which would benefit the whole world. They also argue that economic globalisation is inevitable, and it is not wise to resist the march of history. More moderate supporters say that globalisation provides a challenge that can be responded to intelligently without accepting it uncritically. What cannot be denied, NCERT concludes, is the increased momentum towards inter-dependence and integration between governments, businesses, and ordinary people in different parts of the world.

7.4.4 The 1991 Indian Story — From License Raj to Liberalisation

India's journey into contemporary globalisation begins in 1991. Faced with a severe foreign-exchange crisis (reserves enough for only two weeks of imports), Prime Minister P.V. Narasimha Rao and Finance Minister Manmohan Singh launched the now-famous LPG reforms — Liberalisation, Privatisation, Globalisation. The reforms devalued the rupee, opened the economy to foreign direct investment, dismantled much of the License Raj^?, reduced industrial licensing, lowered import tariffs, allowed private banks, and started the gradual privatisation of public-sector firms. India joined the WTO in 1995 as a founding member.

Within a generation, India had moved from a closed, slow-growth, scarcity economy to one of the world's fastest-growing major economies. While it is too early to make a full assessment, NCERT reminds us that the ultimate test of liberalisation is not just high growth rates but whether the benefits of growth are shared, so that everyone is better off.

7.5 Cultural Consequences of Globalisation

The consequences of globalisation are not confined to politics and economy. Globalisation affects us in our home — in what we eat, drink, wear, and indeed in what we think. It shapes what we consider our preferences. The cultural effect of globalisation has led to the fear that this process poses a threat to cultures in the world.

7.5.1 Cultural Homogenisation — The McDonaldisation Thesis

One charge against globalisation is that it leads to the rise of a uniform culture — what NCERT calls cultural homogenisation^?. The rise of a uniform culture is not the emergence of a genuinely global culture. What we have in the name of "global culture", critics argue, is the imposition of Western culture — particularly American — on the rest of the world. This phenomenon is known as the soft power of US hegemony. The popularity of a burger or blue jeans, some argue, has a lot to do with the powerful influence of the American way of life.

The culture of the politically and economically dominant society leaves its imprint on a less powerful society, and the world begins to look more like the dominant power wishes it to be. Those who make this argument often draw attention to the McDonaldisation^? of the world — cultures seeking to buy into the dominant American dream. This is dangerous not only for poor countries but for the whole of humanity, for it leads to the shrinking of the rich cultural heritage of the entire globe.

7.5.2 Cultural Heterogenisation — Cultures Are Not Static

At the same time, NCERT points out, it would be a mistake to assume that the cultural consequences of globalisation are only negative. Cultures are not static things. All cultures accept outside influences all the time. Some external influences are negative because they reduce our choices. But sometimes external influences simply enlarge our choices, and sometimes they modify our culture without overwhelming the traditional. The burger is no substitute for a masala dosa and, therefore, does not pose any real challenge — it is simply added on to our food choices.

Blue jeans, on the other hand, can go well with a homespun khadi kurta. Here, the outcome of outside influence is a new combination that is unique — a khadi kurta worn over jeans. Interestingly, this clothing combination has been exported back to the country that gave us blue jeans — so it is now possible to see young Americans wearing a kurta and jeans!

While cultural homogenisation is one aspect of globalisation, the same process also generates precisely the opposite effect. It leads to each culture becoming more different and distinctive. This phenomenon is called cultural heterogenisation^?. This is not to deny that there remain differences in power when cultures interact — but to suggest that cultural exchange is rarely one-way.

7.5.3 Glocalisation — The Khadi-Kurta-and-Jeans Solution

The most useful concept for capturing this dual movement is glocalisation^? — the blending of the global with the local. Glocalisation is what happens when global products and ideas are adapted to local conditions. Some everyday Indian examples:

7.5.4 The Cultural Imperialism Debate

Critics of globalisation describe what is happening to non-Western cultures as cultural imperialism — the imposition of dominant Western cultural products, language (English), entertainment (Hollywood), food (McDonald's, KFC, Pizza Hut), and consumer values on less powerful societies. They worry about the loss of regional languages, traditional crafts and local cuisines.

Defenders argue, with NCERT, that cultures are alive; they accept, modify and resist external influences all the time. The disappearance of certain traditions is sad, but new combinations and revivals also occur. Yoga, Bollywood, Indian classical music, Korean cinema, Latin telenovelas and African Afrobeats are now powerful global cultural exports — proof that the cultural traffic is not all one-way.