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Democratizing in Globalization

In: Business and Management

Submitted By mnzurin3003
Words 3558
Pages 15
University of Technology Mara, Institute of Graduate Studies, Kota Bharu, Kelantan, Malaysia Abstract
Decision making in a country represents an involuntary constraint on the sovereignty of the country in the process of globalization. The democracy system of the country may appear to be negative effects to the sovereign will of the people. The weaknesses of the democratic institutions and dependent economies on external sources will be suffering and vulnerable to the pressures of globalization. The strength of their democratic institutions, capacity to structurally diversify their economies and knowledge advances of their people itself toward development of their country can coping this democratizing issue in globalization.
Keywords : Involuntary, globalization, democratizing

1.0 Introduction
Globalization has been given many meanings in different contexts. One frequently encountered meaning is that globalization is the homogenization of peoples’ tastes and demand patterns around the world due to increased access to international communication of information about products and services as well as increased access to transportation of products and people across the borders (Carol Hammond and Robert Grosse). Globalization means that events in one part of the world have ripple effects elsewhere, as ideas and knowledge, goods and services and capital and people move more easily across border. Communication tools which play a big role in the world development such like television at the first place had spread out almost throughout the entire world, the images shown in this medium have really permeated societies around the world. Globalization derives from conscious policy decision which may serve to enhance or even erode the capacity of a country to become part of the globalization process. It can of course be argued that many countries are left with little choice but to embrace globalization oriented policies.
Background of the issue
Globalization process itself contributed to the erosion of state sovereignty which has thereby weakened democratic institutions and compromised the legitimacy of elected government in most Third World Countries (TWC) and now in the so-called transitional economies (TE) of the former USSR (FSU) and Eastern Europe.
Globalization may be seen as the threat of loss national identity in response to homogenization of lifestyles around the world. The problem is not with globalization itself but the way of globalization has been managed. Democratization and globalization are the two most profoundly important developments of our age. Since 1975 there has a quadrupling in the number of democratic countries worldwide.

Meanwhile, global trade as a share of global GDP has more than doubled from 8 to 20 per cent, while the share of countries fully open to international capital flows, as measured by the International Monetary Fund, has risen by half, from 25 to 38 per cent. There are exceptions; North Korea remains a hermit kingdom, resisting both democracy and globalization. But such exceptions are increasing few. It is hard to think of a part of the globe that is untouched by these powerful trends. And it is hard to think of an aspect of our lives that are unaffected. But there are also signs that democracy and globalization are not always so compatible. In the United States, protectionist pressures are increasingly evident, reflecting fears that the country is being flooded with cheap foreign goods. In Europe, politicians complain that the continent is being flooded with cheap foreign labor. In Latin America there are complaints that the benefits of globalization are not being equitably shared between foreign energy companies and the host countries, leading Bolivia and Peru to declare their contracts with those companies null and void. Only China, where democracy has made no headway and the government still feels only mild popular pressure, is able to smoothly push ahead with economic opening. But elsewhere, in democratic countries, there are disquieting signs of a globalization backlash.
In the early 1990s, globalization was greeted with euphoria. Capital flows to developing countries had increased sixfold in six years, from 1990 to 1996. The establishment of World Trade Organization (WTO) in 1995 a goal that had been sought for half a century was to bring the semblance of a rule of law to international commerce. Everyone was supposed to be a winner those in the developed and developing world. Globalization was to bring unprecedented prosperity to all.
All this must come as a surprise to Bill Clinton and George Bush, who have repeatedly averred that democracy and economic opening go hand in hand and designed American foreign policy on this premise. In adopting this view, they are following in the footsteps of eminent philosophers like Immanuel Kant, who suggested that economic opening promotes the diffusion of democratic ideas, and influential thinkers like the Nobel Laureate Friedrich Hayek, who argued free trade and capital flows, by raising incomes and fostering economic development, create a demand for democracy.
The issue
Many countries are left with little choice but to embrace globalization oriented policies which available to countries on variable terms which governs their interface with globalization. Increasing exposure to the globalization can makes countries vulnerable not just to changes in the health of the global economy but the policy regimes of the more advanced countries. Policy changes in these countries may influence not just the aggregate level of trade but its direction. The current global trading system has hit the developing countries hard and caused massive disruptions in their economic, social and cultural fabric (Klein, 2008; Sikdar, 2003). Globalization hold promises for developing nation willing to respond to global opportunities through strategically designed global participation models and country level strategies. Reforming globalization is a matter of politics. Economic globalization outpacing political globalization and with economic consequences of globalization outpacing our ability to understand and shapes the globalization and to cope with these consequences through political processes.

Advanced industrial countries have set up the rules of the games and particularly by special interest and they have shaped the globalization journey to further their own interests and priority in business and security protection of economic vision. They let alone a set of rules that would promote the well-being of those in the poorest countries in the world. Political globalization has had an impact in the sense that global actors – primarily the IMF and the Bank – have insisted, as conditions for lending money, on the adoption of privatization and residualization strategies (Deacon et al., 1997).
Objectives of the paper
The objective of this paper is to explore issues regarding to the globalization vision to bring more benefits to the people throughout the world and to integrate the economy globally. The world will become like a single country and the wages of unskilled workers will be the same everywhere in the world no matter where they live. They are paid with the same rate without looking where they are whether in the developing countries or developed countries. To identify the growing of inequality and the treat of outsourcing. The developing countries could advance and enhance the destinies of millions of their population by participating in the global business chain through what may be called the twin advantage strategy of global participation.

2.0 Factors contributing to the democratic deficit in globalization.
2.1 Knowledge and thinking level not globally.
To make globalization work there will have to be a change of mind set. Developing countries must do their part for globalization work. Thinking and acting should be more globally. In the long run, the most important changes required to make globalization work are reforms to reduce the democratic deficit. There are two responses to the problem of deficit of democratic in the international institutions. The first is to reform the institutions arrangements and the second is to think more carefully about what decisions are made at the international level. The promising of the globalizations idea is that it will raise living standards throughout the world. Give poor countries access to overseas markets so that the can sell their goods, allows in foreign investment that will make new products at cheaper prices and open borders so that people can travel abroad to be educated, work and send home earnings to help their families and fund new business. Globalization was supposed to bring unprecedented benefit to all. The World Bank (1996) noted that while economic, legal and political reform had taken place in any countries to varying extents, shifts in social policy had been less evident everywhere and had lagged behind reform in other areas (Bob Deacon, University of Sheffield, UK)

2.2 Developing countries set rules of games and acting as a key player for their own interest.
The first phase of globalization began in the 1870s and continued up to the First World War. The second phase occurred during the three decades (1915-1945) following the First World War. The third phase started after Second World War and lasted up to 1980. The fourth one began in the early 1980s and still continues in our times. Each phase was created, dominated, and led by the Western countries that discovered quite early that economic doctrine holds the key to domestic expansion of the economy and that external integration of economy and globalized trade are the routes to faster national wealth. Western countries powered their economies using various political economy doctrines and engaged in international trade during each of these phases provide valuable strategic lessons for the developing countries desirous of designing country level economic growth strategies and global participation models for opening up their economies and participating in the globalization world order.

2.3 Capitalistic behaviour
Spread of private enterprises in a country and the opening up of the economy for foreign businesses to enter and domestic business to go global would lift the levels of capitalist activity and private wealth generation within society. If uncontrolled it can play havoc of variant form such as inflation, speculation, recession, depression, and even world wars as has happened during the history of capitalism in the west. It is important to note that these interpersonal skills are of little impact, unless they are brought actively into play. The selection of right people to open markets in China thus is critical for small multinationals. It must be emphasized that inter-personal relational skills are necessary, but not a sufficient condition for success in China. Indeed, a core competency based on individual traits alone has limitation if not combined with a visionary mindset.

2.4 Insufficient role of world institutions
The role played by the world institution such like IMF, World Bank and WTO that have prescribed global economic policies that act against the interests of impoverished developing countries. There is a community of economists who strongly believe that the developing countries suffer from capital drain due to MNCs operations in their domestic markets and pumping of profits out of these countries (Hoogevelt, 1997; Klein, 2008; Sikdar, 2003; Stigliz, 2002). These countries have become World Bank’s borrowers and are forced by the bank to cut social spending, privatize natural resources and agriculture, and allow free trade to aid MNCs to compete with local businesses. More money is being spent on imports than exports. Furthermore globalization is urban biased and has ignored the large multitudes of rural population in the developing countries. To quote examples, employment rates and wages, especially of the rural population, have been decreasing ever since globalization gained acceleration. Privatization of health care has led to inadequate health care for the masses. As demonstrated in the case of World Bank and its complex relationship with diplomacy, non-governmental actors’ involvement in international relations brings “new perspective” and broadens “the range of possible actions” in addressing international problems and issues (Staples, 2002).

2.5 Government and political factors
Economic globalization has until recently only impacted directly upon social welfare possibilities in those countries which have been subject to short-term currency speculation. It will, however, be argued that political globalization is having an impact upon the social policies of the region, not in the sense of economic competition forcing a certain course of action but rather of global actors (such as the World Bank) promulgating for ideological reasons a particular view of desirable social policy in the region. The government in Beijing is aware that economic opening is introducing foreign ideas of democracy. It is attempting to contain these by restricting the circulation of foreign newspapers and access to «subversive» Internet sites. But the more globalized China becomes, the more disruptive these restrictions will be to efforts to raise productivity, and the more difficult they will be to enforce. The Chinese authorities are also worried that globalization is aggravating inequalities within the country. It is seeking to address these, much as a democratic political system would, in order to subdue spontaneous protests and other challenges to the political status quo. But whether it will succeed indefinitely in suppressing the demand for political liberalization is doubtful. Ultimately, China will be the most important test of Hayek's thesis that economic opening, by raising incomes and fostering development, creates an irresistible demand for political freedom. Today no firm can truly claim to be international if it does not have some form of Chinese connection.

The econometric analysis shows that the respect of the democracy exerts a direct influence on the volume of trade, which is independent not only from the "natural" factors but also from the choice of trade policy (Jean-Marc Siroën 2003). These countries will only remain open, then, if the benefits of doing so are widely shared. And the benefits will be widely shared only if their political systems give the least fortunate enough power to make this happen. Morales is also committed to spending more on education, training and health care for the poor and to rewriting Bolivia's constitution to give more power to the indigenous peoples, offering hope that more citizens will acquire the wherewithal to capitalize on globalization. To be sure, Morales' own commitment to economic opening and liberalization remains uncertain. But he is under intense pressure from Bolivia's political system to make them work, and to make them work for the country has a whole. Peru has considerably reformed and strengthened its political system since the last time Garcia was president, some 20 years ago. So far, Garcia seems to be shunning his old populist ways. He is responding to well-defined political demands to direct more public spending toward education, training and other programs to enable more citizens to capitalize on the opportunities afforded by globalization. China is the most active country for new manufacturing projects. What receives less publicity is the shortage of just about all the resources that a manufacturing operation requires to covert raw materials to finished product. Companies tend to solve problems that exist in their markets. German car companies design cars for autobahns with no speed limits. Japanese car companies are very successful with high quality, high mileage smaller cars. Companies in high energy cost markets develop more efficient products. Firms operating in markets with strict legislation in areas such as recycling develop innovative products that address requirements. Extending operations to countries with different constraints than the US has also offers a multinational investor some less obvious upsides. Even China, which is today the largest exporter of goods and recipient of FDI in the developing world, remains much more sensitive to the workings of the globalization process than it was a decade ago. Exposure to globalization abridges the freedom of decision making by governments in both China as well as Bangladesh. China today has had to digest quite significant changes not just in its economic policies but its economic institutions in order to obtain membership of the WTO. This was accepted by China, because they deemed membership of the WTO as crucial to their future economic fortunes. Correspondingly, China has had to accommodate its voting behaviour in the UN and its external policies, to ensure that its access to its principal economic markets remains uninterrupted. In the same way, Bangladesh's external relations today are driven by its dominant concern for ensuring unrestricted access not just to the European market but to the US market, which accounts for 40% of its readymade garments (RMG) exports. Bangladesh desperately needs unrestricted access to the US market in order to retain its competitiveness vis a vis the more privileged beneficiaries of market access to the US under the USTDA.

2.6 Globalization and policy autonomy
Democratic institutions became a possible obstacle to the economic opening. Democratic regimes would leave free course to the pressure of the protectionist lobbies (Olson, 1982 ) rents-seekers. Free riding is under a better control inside small groups than inside the large ones. So, a concentrated and organized industry has more chance to be rent-seeker than consumers. What politicians can lose in voices can be regained by the financial support of the protectionist organized groups (Magee, Brock & Young, 1989; Grossman & Helpman, 1994), or by the satisfaction of the median elector. Even if Taveres & Wacziarg (2001) show a slightly negative relation between the level of democracy and the degree of openness in their econometric study, these pessimistic theorical approaches use very contestable assumptions and indicators. The general evolution towards free trade disqualifies the idea according to which the democratic countries are dominated by protectionist lobbies. Concentrated and organized industries are also present in the free-trading party. Export firms fear that protectionism drives to the closing of foreign markets and a lot of industries are interested by the import of low-priced inputs. The "political market" alternative in the democracies is a greater corruption in the authoritarian countries. However, this link is not completely obvious: on the one hand, oligarchies make more difficult the installation of anti-corruptive and counter-power institutions, but, conversely, they have a larger authority to fight it. However, the enlightened tyrants are undoubtedly less frequent than the predatory ones. The empirical study of Wei (2000) highlights a negative (and weak) relation between democracy and corruption and between "natural" openness and corruption. However he cannot highlight a relation between corruption and trade policy. The explanation may be explained by the Montesquieu’s intuition: the autocratic regimes do not prevent all kinds of imports but predict a trade oriented to sumptuary goods imports (including weapons). Democracies would prefer import "economic" goods contributing more positively to the national welfare.

Conclusion & Recommendation
Globalization is an inescapable global process. Sen(1999,2005) advocates the aspiring developing countries, therefore to get behind it and through smart public policies, tackle specific ills that arise from it, as well as invest in education, health care, micro credit, land reforms, women’s education, and infrastructure (like energy, communication, transportation). Globalization can be made more humane and just by building safety nets and well-conceived social welfare programs that do less harm than good. Development should be measured by real freedoms of people which they can enjoy and not measured by GDP. The history of globalization discussed provides valuable lessons about wealth generation within nation. First, adoption of pro private economic doctrine is paramount in energizing private initiative, competition and innovation within society and in cultivating entrepreneurial ventures that can act as wealth generators for the country (Hartwell, 1971; Osborne, 1970). Second, wealth generation can be accelerated, if countries open up and engage in international business (Sachs and Warner, 1995). Finally, globalization teaches a very important lesson. Unbridled or uncontrolled private initiative without adequate state supervision can be detrimental and even play havoc to the interests of society and the world at large, as has happened, for example, in the occurrence of the world wars. The econometric analysis shows that the respect of the democracy exerts a direct influence on the volume of trade, which is independent not only from the "natural" factors but also from the choice of trade policy.

The connections between globalization and democracy are contradictory. At the first glance, trade openness supports the installation of institutions based on free elections and civil rights. At the second glance, globalization reduces the scope of political choices. The influence of the globalization on the democratic choices constitutes a real danger, which is only partially covered by the actual system of international relations. If taxation has been taken as an example, the conclusions could be carried out as regards environment, labour, corruption and competition.

Carol Hammond and Robert Grosse (2003). Rich man, poor man: resources on globalization, Vol 31, No. 3, pp.285-295.
James Thomas Kunnanatt (2011). Global business chain and twin advantage, International business journal, Vol. 21, No.4, 2011, p.p352-368.
Jay Wang (2006). Public diplomacy and global business. Journal of business strategy, Vol.27, No.3, 2006, pp. 41-49.
Matt Jackson, France Houdard and Matt Highfield (2008). Room to grow: business location, global expansion and resource deficits. Journal of business strategy, Vol.29, No. 1, 2008, pp. 34-39.
Rehman Sobhan (2003).Globalization and the challenge to democracy, International Journal of Development Issues, Vol 2,No.2 (2003) 1-14.
Rolf D. Cremer (2009). Engaging China : Strategies for the small internationalizing firm, The Journal of business strategy, Vol 30, No.6,2009 p.p15-26.
Stigliz, J.E. (2006). Making Globalization Work. New York: W.W. Norton & Company.
Vittal S. Anantatmula (2010). Impact of cultural differences on knowledge management in global projects, The Journal of information and knowledge management systems, Vol 40. No.3/4, 2010 pp.239-253.

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