IMPACT OF GLOBALISATION IN DEVELOPING COUNTRIES
The impact of globalisation on public administration in developing countries is, on several fronts, posing serious challenges. The impact of market forces on public services is bringing about adverse repercussions. The privatisation of public enterprises, especially the loss making units are unable to get suitable buyers and are hence being sold at low prices. The situation prevails in India also, where the privatisation is being faced with a lot of resistance. As Self (2002) observes “Privatisation came at a cost in the form of increased unemployment (especially among older workers), that put pressure on the welfare budget, human effects (in loss of pride and purpose among workers made redundant), and increased economic inequality (with a rise in profit and fall in wage in the privatised industries)”.
The contracting out process is also open to corruption and mismanagement. The process becomes immensely complex and difficult to manage as the need for constant monitoring and supervision adds to the already heavy load of work and cost of the public agencies. While the cost for service provision could be reduced, the quality of service remains lower in some of the countries. These problems offset some of the financial gains achieved by marketisation for increased managerial responsibilities.
The introduction of user fees goes against the principles of equity and ability to pay. In developing countries, this approach is likely to lead to higher cost of essential services that a larger section of the impoverished population may be unable to afford. The consequence could be a deepening of the already existing inequities and intensified dissatisfaction and dissent among the citizens. Many developing countries including India are being pressurised by World Bank to increase tariffs and withdraw subsidies across a number of areas.
As Huque points out, the process of marketisation of the public sector in developing countries leads to several associated problems. Firstly, the highly publicised gains in efficiency and reduction in public expenditure is often surpassed by the extremely high indirect costs and artificial enhancement of productivity, small savings in terms of money and manpower are attained at the expense of some of the fundamental principles of public service as well as loss of confidence of the public in the competence of the government and its agencies. Secondly, there is an erosion in the power, credibility and legitimacy of the governments. Weak governments in developing countries have little bargaining power in their dealings with the resourceful, organised and highly competent service providers from the private sector as well as the influential international agencies and multinational corporations. Thirdly, consumers of public services are already in a weak position in developing countries due to inadequate protection from the government and the existence of regulations titled in favour of the service providers. As a consequence, the consumers emerge as the weakest party after the introduction of marketisation in public administration.
The developing countries are yet to arrive at a stage of development where the provision of public service can be handed over to private providers without the risk of major disruption or threat to the interest of the consumer plans. Privatisation will not appeal to the citizens unless the costs and benefits are carefully calculated and demonstrated to benefit them. The marketisation of public administration at the insistence of donor agencies has led to a host of undesired outcomes. Instead of making governments more economical and efficient and consumers more powerful and conscious, marketisation of public administration in developing countries has eroded the power of the consumers and the governments, while contributing to a stronger position for the private sector and international agencies.
Globalisation and associated changes are facilitated by the establishment of knowledge based societies and a certain level of sophistication in information technology, but most developing countries talk about the basic features necessary for performing public administration functions. In spite of promises and pressures towards marketisation, corporatisation, privatisation, customer-orientation and development of the third sector, the results are far from satisfactory in the developing world. At the same time, the methods and mechanisms for establishing a system of democratic governance, characterised by accountability and transparency are yet to be materialised.
However, it is not to be construed that market-oriented reforms are not suitable for improving public services in developing countries. There is, in fact, a need for initiating reforms in the basic social, political and economic activities that would prepare the grounds for the introduction of reforms to roll back the State, recover costs from users and expose public service providers to the market forces in order to bring out the best in them.
Globalisation has come to stay and as Tony Blair, the British Prime Minister, once commented, it is, irreversible and inevitable. Presently, one observes that globally the new managerial forms such as reinventing, reengineering, structurally adjusting etc, designed and propagated by the corporates are gaining prominence. At the same time, there are counter pressures generated by citizens who are demanding participation, transparency, efficiency, social justice and democratisation.
It is being felt that globalisation has benefited only a few, and the majority, especially in developing countries, continues to live in deteriorating levels of poverty. This is mainly due to the increasing powers being exercised by multilateral financial institutions in these countries, which is reflected in their economic and social policies. Hence, time and again, there have been anti-globalisation protests the world over voicing concern for the decreasing democratic norms. Joseph Stiglitz (2002) comments. “If globalisation continues to be conducted in the way that it has been in the past, if we continue to fail to learn from our mistakes, globalisation will not only succeed in promoting development, but will create poverty and instability”.
A three day Congress of political personalities from around the world in Sao Paulo, Brazil in October (27-29) 2003, passed a Declaration which called for “Reshaping globalisation, which favours rich countries and corporations to the detriment of the Planet’s poor”. The declaration decried attempts to dismantle all forms of global governance to: minimise the role of the Untied Nations, undermine multilaterial institutions, promote unilaterialism and the consecration of the market; and impose the will of the powerful to decide the future of the mankind.
The predominant viewpoint of the developing world is that the process of globalisation, needs to be active, orderly and cooperative to serve the common interests. It is being widely asserted that the concept of development needs to undergo transformation through effecting changes in policies and institutions. The Neo-liberal argument, which gave prominence to market forces, has been supplemented by renewed accent of the World Bank, IMF, and WTO on poverty reduction, equity, participation, human rights and partnership. This new trend is called the Pragmatic Neo-liberal Development Model. This Model favours market-oriented reform accompanied by investment in human capital, infrastructure, safety nets, democratisation and rule of law. The Pragmatic Neo-liberal Development Model can be diagrammatically presented as: Pragmatic Neo-liberal Development Model Investment in Human Capital and Infrastructure State Rehabilitation and Capacity Economic Prosperity Building + Safety Nets Democratisation and Rule of Law Source: Atul Kohli, Chung-in-Moon, George Sorensen, 2003, States, Markets and Just Growth, United Nations University Press, Tokyo.
This paradigm features a market-based strategy with the following features:
• It is holistic as it encompasses political and social in addition to conventional macro-economic dimensions
• It is synergistic as these dimensions are complementary and mutually reinforcing
• It is complex as efficient market systems are deemed to require the supportive action of effective Nation States.
Joseph Stiglitz (op.cit.) also advocates developing and using more policy instruments to pursue broader objectives of development, including sustainable, egalitarian and democratic development. He argues that the new paradigm for development should seek to explore ways to achieve an overall transformation of society effectively. He prescribes a crucial role to government to promote competition and act as a referee in the market economy, and encourage provision of public goods by the private sector.
Globalisation process has taught some lessons (positive as well as negative), especially to the developing countries. It has brought to the fore the need to appreciate the significance of indigenous local systems of administration and governance, as well as adapt them in accordance to the new trends in globalisation. The process of globalisation, in the context of developing countries, has to bring in political, economic and social empowerment to the local level so that they may achieve sustainable participatory development in an equitable and just environment. Any discussion on creating an adaptive environment to the new trends in globalisation has to give prominence to the concept of Good Governance about which we shall be discussing in Unit 17 of this Course. It is Good Governance that can foster democracy, fairplay, justice and equity. Good Governance must ensure sustained development opportunities for the poor and deprived people of the world. It entails, among many other things, new economic policies and institutions, as well as new life styles and preferences. Above all, as has been pointed out, it must be able to reconcile individual advantage nurtured by the market with a tolerant concern for all.
CONCERN FOR GLOBAL JUSTICE AND ACCOUNTABILITY
As the inexorable processes of globalisation proceed, there are bound to be major issues of global justice that need to be faced. Stiglitz (ibid.), for instance, talks of ‘more humane, effective and equitable globalisation’ and suggests five high-priority goals in this context: ‘honesty, fairness, social justice (including concern for the poor), externalities (protection of life and promotion of security), and responsibility (individual decision makers to take responsibility for their own actions and for the consequences of their actions). Similarly, special emphasis has been laid on ‘participation’ in the sense that the agencies responsible for global level decision-making must allow people to voice their views and opinions in respect of the decisions that affect their lives.
A direct appeal for value-based and justice-oriented approach has been made by John McMurtry (1998) in his Unequal Freedoms: The Global Market as an Ethical System. He has given a call for establishing and elaborating a moral framework for globalisation and a system of justification. McMurtry focuses on the underlying values that drive globalisation, including what he refers to as the value programme in which assertions such as “We must compete in the new global marketplace” are seen as given, natural, unalterable. As he argues, in a value programme:
‘All people enact its prescriptions and functions as presupposed norms of what they should do. All assume its value designations and value exclusions as givens. They seek only to climb its ladder of available positions to achieve their deserved reward as their due. Lives are valued, or not valued, in terms of the system’s differentials and measurements. All fulfil its specified roles without question and accept its costs, however widespread, as unavoidable manifestations of reality’.
The value programme, as McMurtry bluntly states, underlying the global market system consists of “Efficiency of factor allocation, comparative advantage, increased export earnings, rise in market share, increased Gross Domestic Product (GDP) performance and annual incomes, and, above all, vastly increased returns on investment in an area of chronic underinvestment”. The major assumption is that the global market system is superior to any other. The underlying premise is that the private sector is efficient and the government is inefficient. Thus, “Whatever the market does is good, and whatever government does is bad, unless it can be shown to serve the market”. So, what is clearly evident is that the value programme of globalisation is a closed system of choice; the acquisition of money drives society, and the impact on the civil commons is either ignored or discounted. But, as McMurtry asks, if the common interest is not protected and advanced by the State, then the State loses the justification for its existence.
Globalization involves decisions by a network of organizations whose coordination seems nobody’s business. Crucial decisions are being taken by a variety of international actors whose accountability remains an unanswered question. In this context, the insightful observation of Joseph Stiglitz (op.cit.) deserves to be quoted: “Unfortunately, we have no world government, accountable to the people of every country, to oversee the globalisation process in a fashion comparable to the way national governments guide the nationalization process. Instead, we have a system that might be called ‘global governance without global government’, one in which a few institutions -the World Bank, the IMF, the WTO – and a few players – the finance, commerce and trade ministries, closely linked to certain financial and commercial interests – dominate the scene, but in which many of those affected by their decisions are left almost voiceless.”
The United Nations Development Programme (UNDP) report on ‘Accountability in Global Governance’ has also reinforced this notion: globalisation poses a real problem, particularly for the Third World countries who are vitally affected by international decisions, which they are often unable to influence and in which they are not always participants. The UNDP points out that it: “It is easy to imagine that if all governments in the world were both democratically elected and equally represented in international organisations, there would be far less of a problem of accountability in global governance. However, it is worth noting immediately that even in such an ideal world, the capacity of people to hold international institutions to account would still be very limited.
In the first place, there is an unavoidable ‘democratic deficit’ in international organisations because people do not get directly to elect (nor to throw out) their representatives on the WTO, the IMF, the World Bank or the United Nations Security Council. Instead, those who live in democracies get to elect politicians some of who form a government, which appoints ministers who represent and choose delegations to represent a country. For this reason, even in an ideal, universally democratic world, international economic governance is removed from representative government. Even if they so wished, citizens could not use their votes effectively to influence, restrain or hold to account their government in its actions in an international organisation. And even less directly in countries with highly developed systems of parliamentary accountability such as the United Kingdom, the oversight by Parliament of international institutions is weak. In most developing countries it is yet weaker. Thus, globalization leaves the question of ‘accountability in global governance’ wide open.
Thank for reading.
