THE ETHICAL DIMENSSIONS OF GLOBALISATION: The Problem … 12.pdf · 2017-03-25 · XIII Annual International Conference on Global Turbulence: Challenges & Opportunities May 5-6, 2012

XIII Annual International Conference on Global Turbulence: Challenges & Opportunities

May 5-6, 2012 at Bangkok, Thailand ISBN: 978-81-923211-3-4

Dr. Assad Abdallah Kipanga Delhi School of Professional studies and Research

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THE ETHICAL DIMENSSIONS OF GLOBALISATION: The Problem of Mindset

Dr. Assad Abdallah Kipanga Senior Lecturer & Dean

Faculty of Commerce and Business Studies,

St. John‘s University of Tanzania, Dodoma, Tanzania

Abstract

Globalisation offers an opportunity for a win-win situation for all the players regardless of their economic

prowess. The World Trade Organisation (WTO) is presumed regulating a global framework that ensures a

fair playing field. It is expected that through this arrangement, failing corporations in the developing and

transitional economies that are mainly associated with elements of mismanagement and corruption are

transformed into better performing entities capable of sustaining global competitiveness. In this spirit, the

whole global economy acts as one sole body with common goals, aspiration and values capable of

addressing global vices of poverty and underdevelopment with mutual commitment and without any member

taking advantage of the other no matter how weak she may be in total support of the spirit of belonging to

“one village”. The paper tries to show that despite this publicized fun fare, the world economic order still

operates on the basis of perfect competition of survival of the fittest down playing all the optimism of the

poor in underdeveloped societies who banked on globalisation to break through. This study, which is mainly

a library search, shows that unless the mind set of the people in the developed world is sensitized to have a

feeling of ownership and responsibility on the eradication of global sufferings, the situation will always

deteriorate from the worst to the worst. In that sense, the benefits of globalisation will continue to benefit the

economic heavy weights and simply remain a necessary evil to the majority poor.

KEY WORDS: Globalisation, Liberalisation, Privatisation, Inequality, Marginalised




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INTRODUCTION

"Today, it is possible to produce product anywhere, using resources from anywhere, by a company

located anywhere, to be sold anywhere." . . . With the birth of modern technology and communications,

we have experienced the death of distance. A necessary condition for businesses to survive — and thrive

- in the global arena is to embrace the world's cultural differences.1

Lane (2005) feels that globalisation is inevitable as it affects people the world over. Referring to a World

Bank report, he states that countries that opened their economies to trade experienced an increase in per

capita GDP relative to non-globalisers. While half of US productivity is said to be the result of globalization,

China‘s fast growing economy is also attributed to its participation in global trade. China, a country where

two thirds of its people are engaged in agriculture and that only recently represented only four percent of the

world economy in terms of gross domestic product (compared to 30 per cent by the U.S. and the European

Union) is expected to perform better than the US by 2050; for a period of over 13 years now, China's GDP

growth rate has consistently been about nine percent.

Nevertheless, the perception over financial globalisation is creating an environment and a culture in which

individual self-interest takes priority over social good where a transactional view of the world dominates

economic thinking; personal relationships and the creation of a stable society are largely ignored in the

maximisation of profits. There is, therefore, pessimism over economic globalisation that is insensitive to a

globalisation of compassion for the common good. Yet, another major shortcoming of economic

globalisation is its slavish adherence to market forces, which is seen to remove human beings from the

equation.2 There is thus growing concern on the path that globalization is heading to in relation

to the aspects of justice pertaining to North-South relations globally. Based on ethical

foundations, people question the need for a global European-inspired “Social Market

Economy.” (Streeten, 1980; Huq (Primanik), 1997; Hasan, 2003; Mofid, 2006).

Jarow (1995) shows even more concerns by narrating that "mass-production" economy threatens

skilled craft-persons and artisans and that contemporary information technology, which is seen to support the

1 Statement from Nobel Prize-winning economist Milton Friedman.

2 It is argued that if everything is done according to market forces, then the place for humanity, for love and compassion loses its

relevance




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ongoing "downsizing" and "reengineering" in the corporate world, happens to create an even greater transfer

of wealth from regional communities and from skilled workers to the owners of capital assets. There is also

inevitable resentment over increased corporate productivity without a measurable increase in employee living

standards, creating lack of personal commitment from workers, a chronic imbalance bred by mistrust,

uncertain market fluctuations and the unconscious utilisation of materials and resources. In this regard,

Collins (2006) points out that fraudulent activities and business mismanagement are not identified with poor

developing economies alone thus putting the conscience of the international business world to test. Citing

the case of corporate scandals that led to the fall of Enron and WorldCom, he demands a shift in the

corporate environment to put a spiritual balance into business that underscores a need for international

businesses to create a caring, values-based business relationship.

A number of researchers agree that globalisation has brought significant achievements in areas such

as science, technology, medicine, transportation and communication, but also realise that these achievements

have been outweighed by major catastrophic socio-economic, political, cultural and environmental crises,

thus causing major problems of inequality, injustice, poverty, greed, marginalisation, exclusion, intolerance,

fear, mistrust, xenophobia, terrorism, sleaze and corruption. The creation of a stable society in the world is

largely ignored in favour of economic considerations of minimising costs and maximising profits, while

other equally important values are put aside and ignored (Khan, 1994; Hasan, 1995, 1997, 2003; Huq

(Primanik), 1997), Motem, 1997; Mofid, 2006).

In describing the global magnitude of malnutrition, Lin (2003) reports that more than 800 million

people, mainly young children, women and the elderly go hungry; more than 170 million children below

school going age are undernourished; the death rate due to nutrition-related illnesses reaches five million

people each year; lack of vitamin A causes more than 500,000 children to go blind yearly and that iron

deficiency causes anemia to millions of women and children. Such sufferings happen at the time when

advancement in technology has raised global food output at a level that is enough to feed everyone on earth,

while medical innovations, better diets and improvements in sanitation have reduced morbidity and raised

life expectancy in developed societies.

Moreover, despite handsome levels of economic growth during the post World II era, absolute

poverty still prevails in alarming proportions as a quarter of the world population, mainly in developing




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countries, is under abject/absolute poverty without adequate food, access to clean water, sanitation, and

essential health care or basic education services.3 It is reported that 2.4 billion people in the world live

without improved sanitation, while over one billion people lack access to clean water; the number of the

people living without improved sanitation is expected to rise to 5 billion by 2025. When water related

diseases are reported to kill 3.5 million people each day, such a projected increase will definitely aggravate

the current position. This figure of water related diseases does not take into account deaths due to the impact

of climate variability such as droughts, floods or storms.4 World Bank president Robert McNamara is

concerned that those in absolute can neither contribute nor benefit from the entire development effort in their

own societies.5

Discoveries of new technology have rendered many people in poor countries to lose their livelihood in

the process with no courtesy shown to those affected.6 When increased food output due to advancement in

technology fails to wipe out hunger and malnutrition in both developed and developing countries,7 and when

there has been no dramatic improvement in the quality of life for the vulnerable and the poor in the world

although the developed societies benefit from medical innovations, better diets, improvements in sanitation,

reduced morbidity and raised life expectancy8, then there is every reason to question the sincerity of

globalisation.

Accordingly, lack of will by prospective donors in agriculture is also noticed. While public support

for agriculture in developing countries has decreased, the support on agriculture from developed countries

and the international financial institutions between 1990 and 2000 dropped by 50% affecting the livelihood

for 70% of the world‘s poor. This shortfall also undermines the target set in 1996 by the World Food Summit

comprising of 185 nations to reduce by half the global figure of more than 800 million people experiencing

hunger by 2015; the target may now be met 45 years behind schedule because the number of undernourished

3Amer Al Roubaie, The global dimension of poverty in the Muslim world: a numerical assessment, (Malaysia: IIMU, 2004), 339.

4 Source: West Africa, 16

th-22

nd June 2003 issue and also United Nations Document E/CN.17/2000/13.

5 Robert S. McNamara, Introduction in Poverty and basic needs. (Washington, World Bank (1980).

6 Mohammad Akram Khan, An introduction to Islamic economics, (Islamabad, Pakistan, 1994), 19.

7 According to the United Nations Report on the World Social Situation 2001, 800 million people in the developing countries and

24 million people in the developed world and transition economies suffer from hunger and malnutrition. 8 Paul R. Ehorlich, “Population and environment destruction.” (World Bank 1995).




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only falls by 6 million per year instead of the targeted 22 million.9 Further assessment conducted five years

later reveals that the progress was 60% behind schedule after which, the conditions have even worsened.10

Sources from the Organisation for Economic Cooperation and Development (OECD) show that the

average person born between 1975 and 1979 in Sub-Saharan Africa has only 5-4 years of schooling as

compared to 6.3 years in South Asia and 13.4 years in OECD countries.11

Statistics profiles regarding

education reveal that by the year 2002, 900 million adults remained functionally illiterate while 130 million

children of school going age, two-thirds of which being girls, had not had access to schooling (Kim (2003)).

While more than 72 per cent of urban dwellers in Africa live in slums, United Nations sources show that an

over 100 million people in the world have no shelter at all.12

Lower and middle-income households in

Europe and North America are also included.13

The economic and business world today does not adequately and appropriately address the needs of

the global collective and the powerless, marginalised and excluded. There are accusations that the current

world of prosperity for the few, falls short of the definition of John Maynard Keynes, ―to control the material

basis of a civilised society, enabling its citizens to explore the higher dimensions of human existence, to

discover their own full potential”. Accordingly, Mofid (2006) feels that economic inequality, environmental

degradation and social injustice exacerbate because the current economic globalisation has no respect for

human value.

On another note, Estes (2004) is of the view that the crises in North Korea, Sudan, Afghanistan and

Iraq are also matters of global concern because they create instability not only for themselves and their

neighbours but for the world as a whole. He believes that war, civil unrest, intolerance, hatred, inter-group

and intra-regional conflicts are caused by failure in political and economic systems, and once they occur in

one area their consequences are also felt everywhere in the world, resulting in global social unrest, religious

fundamentalism and terrorism. He further opines that when the rich countries ignore the desperate plight of

the world‘s poorest nations, they are doing it at their own risk.

9 Also refer to Abdel-Aziz El-Sherbini, Alleviating Rural Poverty in Sub-Saharan Africa,(Food Policy, 1986).

10 Rosset , World Food Summit: What went wrong, (South Review, July, 2002), 20.

11 World Development Report 2006, p.7.

12 United Nations document HS/488/974 accessed at http://www.unchs.org/unchs/english/shelter/contents.htm, section 11.c.

13 Human Settlements 1996 (Oxford University Press, 1996) table 6.3.

http://www.unchs.org/unchs/english/shelter/contents.htm,%20section




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In this paper, inspiration is given on the ethical implications of the present global

economy in which affluence in one part of the world does not seem to be conscious of the

sufferings of less fortunate in some other parts of the globe. In this perspective, globalisation is

translated not in terms of the resultant material over production and achievements for the few

but in terms of the mutual benefits of all members in the so called „small village‟ inspired under

globalisation; it is to do with the sense of sharing for the enjoyment of the quality of life for all.

The death of distance explained by Milton Friedman through the elimination of barriers and

restrictions should be reflected in the sense of love and care as a moral obligatio n.

2.0 THE IMPACT OF GLOBALISATION

During its period of almost twenty five years of existence, globalisation has painted a very gloomy picture as

pointed out by Estes (2004), among the many. He observes that while a handful of nations are doing very

well, many are struggling just to meet basic needs as evidenced by a sharp deterioration in overall life quality

for vast segments of the world‘s population mainly living in Africa and Asia where 21 African and Asian

countries are at the bed of social collapse due to concentrated poverty.

Even big economies like the US are reported to be equally affected due to cuts in social services.

US‘s global ranking in chronic poverty moved from 18th

position to 27th

, lagging behind nearly all of Europe

and several other countries; she is grouped at the same level like Poland and Slovenia. Accordingly, chronic

poverty becomes the greatest threat to social progress in the United States where more than 36 million

Americans - almost 13 million of them children - are reported poor. The total numbers of the nation‘s poor

have increased by nearly 4.3 million since 2000 and by 1.3 million people since just 2002. Unless the US

starts to adopt enhanced education and health systems and employers begin offering living rather than

minimum wages, the US will continue to lose ground.

The United States is also facing a declining percentage of labourers from the farming and steel

industries due to stiff competition from Japan (for steel), China (for clothes), and Mexico (for food); many

communication and information-processing jobs are also outsourced. This manifests the way labour has

generally lost its respect the world over. And it is instead treated more as a commodity to be valued and

distributed at a cost, or to be replaced or supplemented with robots and computers to reduce costs if need be.




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The emoluments of many who work do not appear to keep pace with increasing poverty and hence continue

to widen the gap between rich and poor (Skillen, 2002).

Globalisation is also seen to cause turmoil in Nicaragua and the Dominican Republic as indicated by

Rusu (2006). The Central America-Dominican Republic Free Trade Agreement (DR- CAFTA) requires

Central American countries to open their markets to the dumping of US rice and other commodities. This is

feared to spell economic disaster for the millions of people in the region who depend on agriculture because

they cannot compete with highly subsidized US producers. By lifting tariffs on imports from the United

States and forbidding measures to safeguard food security and promote rural development, it will cause a

flood of cheap imports, drive their farmers out of business, and destabilize the economy. Obviously, such

agreement harms the very people it is meant to be helping.

The commitment of the international community to address the destiny of the under privileged in the

world has come under attack. Action Aid (UK) of 8 July, 2002, reports that the summit of the G8 leaders

failed to provide a comprehensive package on aid, trade and debt. The steps they have taken fall far short of

what is needed to wipe out poverty, address the complaints against forced liberalisation, debt servicing, and

insufficient and unreliable aid assistance. First, the US and the UE do not seem to be serious on ending

export subsidies.14

. Further, there are no commitments to help the developing world to increase access to

markets, to protect their farmers, and no undertaking to make multinationals legally accountable for their

social and environmental impact. Lack of progress on trade agreements, is a disaster for a continent like

Africa where 60% of employment comes from small scale farming.

Second, the debt cancellation awarded to 18 out of the needy 60 countries, addresses only 10% of the

problem, leaving many to spend more on debt repayments than on education or healthcare. While harmful

strings attached to debt relief have not been relaxed, the offer of $50 billion more in aid by 2010 ($25 billion

for Africa), is regarded too little and comes too late for the 50 million children who will die before 2010.

There is also no certainty on the actual amount to be paid. The G8 have offered warm words on other aspects

of aid quality, but have failed to make any concrete commitments. For example, there is funding gap for HIV

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For example, the US’s offer to axe subsidies by 2010 reduces US cotton exports by just 1.7%, dashing the hopes of 10 million cotton farmers in West Africa

http://uk.oneworld.net/external/?url=http://www.actionaid.org.uk#_blank




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and AIDS of $18 billion. While there is very little hope to improve the effectiveness of the aid expected from

the G8 countries, even the aid announced is insufficient to meet their AIDS treatment target.

In the course of time, evidence reveals that globalisation is yet to solve the global prevailing poverty.

The Human Development Report, 1999, documents that the top fifth of the world‘s people in the richest

countries enjoy 82% of the expanding export trade and 68% of foreign direct investment while the bottom

fifth enjoy barely more than 1%. Regarding growth, only 33 countries in the world managed to sustain 3%

annual growth during 1980-96, while 59 countries had a declining GNP per capita. Economic integration has

thus become a dividing factor between a few who are benefiting from global opportunities and many who are

not.

Records from the UN Conference on Trade and Development (UNTAD): Trade and Development

Report 1999, claim that rapid trade liberalisation only leads to a sharp increase in imports while exports fail

to keep pace. Developing countries (excluding China) are reported to have had average trade deficits in the

1990s that are higher than in the 1970s by three percentage points of GDP while the average growth is lower

by 2 percent points, showing no correlation between trade liberalisation and growth

3.0 GLOBALISATION AND ETHICAL CONSIDERATIONS

Nyerere (1967) supports the view that development plans can only make sense if they centre on man‘s

development. That is, for development to be meaningful it must first give priority to the eradication of

absolute deprivation and improve the conditions of life.15

Streeten (1980) concludes by stating that the

effectiveness of policies should be judged mainly on the way they reduce the suffering to the people. Huq

(Primanik) (1997) adds economic success should be measured in terms of the rate it reduces hard core

poverty rather than by annual growth of total or per capita GNP. In the same notion, this is how the aftermath

of the almost 25 years of the globalisation era needs to be evaluated.

Rosset (2002) fears that the liberalisation policies adopted by governments both in the North and

South because threaten the livelihood of peasants, small and family farmers and farm cooperatives by pitting

them against the subsidised corporate farms in the North. Further, Third World countries are forced to

eliminate price supports and subsidies for food producers, to privatise credit, to promote vigorously the

15

Also refer to Frances Stewart, Poverty and basic needs, (Washington: World Bank, 1980), 9.




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export of other items at the expense of food crops, to support the patenting of crop genetic resources and to

favour agricultural research in expensive technologies that sideline the poor like genetic engineering, rather

than research in organic farming or agro ecology. Agriculture under the WTO forces countries to open their

borders to the cheap, dumped food imports that drive their own farmers out of business, off the land and into

hunger.

The causes of increased poverty in the developing countries are also mainly attributed to the

irresponsible attitude of the global community. While Sen (1997) and Narayan (2000) put the blame on local

governments and NGO agencies, George (1976) argues that hunger in the third world is a deliberate

manipulation of the rich nations. Hasan (1997) accuses the failure of growth to address the problem,

claiming that those who are supposed to contribute the resources towards financing the eradication of global

poverty have not been ready to sacrifice their growth prospects. As for Navaratnam (2003), he claims that

poverty persists in society because those in decision-making organs are only concerned with the welfare of

the middle and upper-middle income groups, while the poor and the deprived have no one to articulate their

cause effectively.

The report on the World Social Situation, 2003, also condemns globalisation for having further

accentuated vulnerability, uncertainty and insecurity within and among countries and for being a major

source of impoverishment and social exclusion to developing countries. The report further alleges that

globalisation does not represent a free market system as it is believed but propagates the continuation of a

new interventionist framework that eliminates exports from third world countries through a variety of

instruments ranging from high tariffs on agricultural imports and subsidised exports to new demands for

trade-linked labour standards and trade-linked environmental standards. The report thus concludes that rapid

trade liberalisation only leads to a sharp increase in imports while exports fail to keep pace.

Rodrik (1992) condemns macro-economic policies and structural reforms implemented in sub-

Saharan Africa since the early 1990‘s in order to raise real per capita incomes, reduce inflation and narrow

financial imbalances to have proved a great failure as international trade tends to be skewed in favour of the

rich nations in terms of market share and the pricing of primary commodities from the South. At the same

time, most of the foreign direct investments channeled to developing economies have proved to be not




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suitable because they mainly comprise short-term financial capital that is more speculative and not very

much related to trade.

Since globalisation is closely linked to trade through advocating the opening up of trade barriers,

liberalisation, privatization and abiding to intellectual property rights, among other items, it also shares

responsibility on problems that are associated with trade like failing to curb critical issues, which Visser

(2004) describes as ecological decline, poverty, greed, trust, and hope, to the extent of Chortareas and

Pelagidis (2004) questioning the ability of trade to increase welfare. There is also continued discontent by

political activists and social movements against trade globalisation, multinationals and international

organisations for forcing poor countries to open their economies while the developed nations themselves

remain protective, pitying unskilled labour in developed countries as victims of globalisation.16

The insensitivity of the World Trade Organisation (WTO) and the International Monetary Fund (IMF)

to address the plight of poor nations creates further doubts on the relevance of liberalisation to solve the

problems of least developed countries (Taylor, 1981; Rodrik, 1992). Sharma (2001) observes that

liberalisation has only minor impact on productivity growth for industries that were not relying on foreign

investment. In the same line of argument, Abhayaratne (1996) rejects the hypothesis that foreign trade

stimulates economic growth, disproving the findings of previous research.17

Like wise, Al-Roubaie (2004)

does not consider trade as an engine of growth for poor developing countries because of the constraints

imposed on the economy by the export sector. He considers the group of very rich countries who control

globalisation to be too selfish to accommodate the interests of the poor.

The exports in poor countries always face unfavourable trade terms that forces them to produce and

export more in exchange for the same goods imported from rich nations. The prices of their exports have

always deteriorated in relation to imported manufactured goods causing the purchasing power of most

developing countries to decline. Al-Roubaie claims that this declining export income must again be

16

Although trade as a percentage of GDP in OECD countries increased from 12-13% in mid 1970s to around 19-20% in mid

1990s, the situation was less favourable elsewhere. In the Middle East, North Africa, Latin America, and parts of Asia (including

dominant countries like Brazil and India) the performance was stagnant for the last 25 years while the impoverished sub-Sahara

Africa experienced a negative trend.

17 These studies included Michaely (1977), Heller and Porter (1978), Balassa (1978, 1985), Tyler (1981) and Feder (1980, 1983).




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channeled back abroad to meet international obligations like servicing foreign debts, importing luxury

products for the elites, investing on behalf of the elites, and payment for expatriate services. He further

argues that for trade to eradicate poverty, substantial investment is required to create economic stability

through sustained economic growth because the terms of trade in poor countries are persistently

deteriorating, narrowing the degree of economic openness due to dependence on a limited number of

commodities.

Productivity is low in poor countries because the human and physical structures are weakened by

technological and economic incapability, and the vulnerability of the economy due to unfavourable global

trade. As a result, liberalisation and privatisation are viewed as the cause of even wider income inequalities

as in the cases of Bangladesh and Chile. Torres (2001) attributes existing inequality to unequal participation

of individuals in the globalisation process owing to stagnating incomes of the poor despite sizable increase in

average household incomes. A large body of literature has also explored the relationship between trade

openness and inequality but has not reached a consensus. Dollar and Kraay (2002 and 2004) find no effect

of trade openness on inequality while Ravallion (2001), Milanovic (2002) and Lundberg and Squire (2003)

find relationships varying with the level of income.

The United Nations report on the World Social Situation, 2003, records that globalisation has further

accentuated vulnerability, uncertainty and insecurity within and among countries and has been a major

source of impoverishment and social exclusion, particularly in developing countries which lack the capacity

for local responses to its adverse economic and social consequences. The report cites the attitude of

industrialised countries, which always favour exporting goods between member states but require only raw

materials from developing countries, as the reason for average tariffs on the manufactured goods imported

from developing countries to be four times higher than the ones they impose on products within

themselves.18

On the benefits arising out of foreign direct investment (FDI), the report further notes that

where the benefits are received they tend to be highly localised and do not reach the wider community of the

poor and disadvantaged.

18 Also refer to Chakravarthi Raghavan, Developing nations reject labour issues in WTO, (Third World Resurgence

112/113 of December 1999/January 2000).




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Khor (2000) is not surprised at such findings because he sees that globalisation is not meant to help

the poor but to specifically assist the developed countries to recover their debts from developing countries

after the structural adjustment programmes of the 1970‘s failed to do so.19

He thus concludes that trade

liberalisation does not necessarily bring about economic growth and, if pursued ruthlessly, could even trigger

off a vicious cycle of financial instability, debt and recession just like the case of the East Asian economic

crisis.20

Arguing almost on similar inclination, Chossudovsky (nd) describes the macro-economic reforms

under globalisation as a mere reflection of the post-war capitalist system and its destructive evolution

intended to regulate the process of capitalist accumulation at the world level. For him, globalisation does not

represent a free market system but is the continuation of a new interventionist framework following the debt

crisis of the early 1980s. It is mainly geared at dismantling state institutions, tearing down economic borders

and impoverishing millions of people in the search for profit.21

Chossudovsky further interprets the whole picture as international bureaucracy trying to supervise

national economies through the deliberate manipulation of market forces that open up through the concurrent

displacement of a pre-existing productive system. As a result, small and medium size enterprises are forced

into either bankruptcy or producing for a global distributor. Hence, state enterprises have either to privatise

or close down while independent agricultural producers are further impoverished. He further notes that the

extensions of markets for the global corporation cannot succeed without the deliberate fragmentation and

destruction of the domestic economy, the removal of barriers to the movement of money and goods, the

deregulation of credit, and the take over of land and state property by international capital. Auerbach and

Siddiki (2004) are pessimistic about the success of financial liberalisation in developing countries because

they find its impact on economic performance to be too remote. However, Dermirgüς-Kunt and Detragiache

(1998) and Sen (1999) relate the success of financial liberalisation in a country mainly to the level of

institutional development in that particular country.

The main problem with trade is its close link to growth, which is regarded as the main cause of human

suffering. Khan (1994) criticizes the over-emphasis placed on increasing GNP without caring about the

mechanism used and those benefiting from such increase, arguing that such attitude has resulted in third

19

The Third World Network, 228. 20

Also refer to the Third World Resurgence, issue no. 114-115, February/March 2000. 21

The Globalisation of poverty: impacts of IMF and World Bank reforms, Third World Network, Penang, Malaysia.




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world countries ignoring the productive capacities of their own people. He feels that growth is unable to

address poverty directly. Stewart (1985) confirms that the levels of economic growth in most countries are

not efficient enough to ‗trickle down‘ their benefits to the poor. Ravallion and Chen (2004) and Griffin and

Khan (1978) all give evidences of countries in which poverty increased alongside increasing per capita

income. Hasan (1995, 1997, 2003), Kouwenaar (1986, 1988) and McNamara (1980) all consider the impact

of growth to be too slow and too little to benefit the poor as it requires too much time and unrealistically high

growth rates to bring any reasonable effect, and that whatever is gained out of economic growth is

outweighed by the resultant costs.22

Likewise, Stewart (1980) find no systematic relationship between a country‘s economic growth and

its performance in addressing absolute poverty in the medium term and concludes that poverty is a response

to the shortcomings of policies concentrated on economic growth. As such, Huq (Pramanik) (1997)

disagrees that high growth could be a prerequisite to alleviate poverty. In the same reasoning, the United

Nations Development Programme (UNDP) concludes that a high rate of economic growth alone is not

enough to solve the problem of poverty;23

unless coupled by a labour-intensive growth and adequate

provision of social services. Current studies still confirm the inability of growth to address poverty and

vulnerability.24

McCoy (2003) attributes the failure of growth to ignoring the resultant ecological cost

because economics must be ecologically responsible, a view also shared by Malaysian ex-Premier Mahathir

Mohammed who appeals for a balance between conserving nature and using resources for development.25

The World Resources Institute report, World Resources 2002-2004: Decisions for the Earth –

Balance Voice and Power, discloses shocking information on the eco-gap. It is reported that one billion

people depend on fish for protein, yet 75 percent of the world‘s fisheries are over fished or fished at the

biological limit. While the global forest cover has declined by 50 percent since pre-agricultural times,

affecting 350 million people who are directly dependent on forests for their livelihoods, 65 per cent of global

22

These could be in the form of rapid depletion of natural resources, pollution, congestion in urban areas, noise pollution, crime, strip mining and the indiscriminate clearing of timber in the countryside. 23

Taiwan is an unusual case where growth was the driving force for development (see Fei, Ranis and Kuo (1979)). 24

According to the Report on the World Social Situation 2003, experience has shown that the trickle-down effect of

economic growth per se cannot be relied upon to remedy social problems, suggesting an integration of social and

economic policies while keeping the appropriate priorities.

25 New Straits Times, 29 July 2003.




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agricultural lands show soil degradation forcing more than 40 percent of the world population live in water-

stressed basins. A gap on consumption lifestyle is also recorded where a nine-fold increase in advertisement

expenditure since 1950 of more than $446 billion annually. While private consumption expenditure also

records a four-fold increase since 1960 reaching the tune of $20 trillion in 2000, most of this consumption is

enjoyed by those living in North America and Western Europe who comprise hardly 12 percent of the

world‘s population (Visser, 2004).26

The number of poor countries is on the increase since 199027

. While in 21 countries a larger

proportion is going hungry, in 14 countries, more children are dying before reaching the age of five, primary

school enrolments are shrinking in 12 countries and life expectancy in 34 countries has fallen. It is concluded

that if no efforts are taken to contain the current pace, Sub-Saharan Africa would not eradicate poverty until

2147 while for child mortality it can reach year 2165. It is believed that this state of affairs perpetuates

because the massive economic development in the world has not benefited all the people due to the unequal

distribution of wealth and income.

Hasan (2003) reports that the developed world that produces and controls 70% of the world industrial

output through 500 multinational corporations scattered throughout the world, consumes almost 80% of the

annual world production despite forming less than 20% of the global population.28

It is also reported that the total revenue of the world‘s top 11 largest corporations during 2002 was about

US$2 trillion equivalent to twice the income of all the low income countries combined. While the ratio of

income of the richest 20 countries to the poorest 20 countries is 40 times, all the developing countries made

only US$6 billion out of the global GDP of US$32trillion.

26

This amount was 60 percent in 2000 but is now over 80 per cent.

27 The United Nations Human Development Report (2003) reports an increase on life expectancy in the developing world by eight

years over the past 30 years and a 50 percent cut in illiteracy to 25 percent, a 50 per cent cut on the poverty level in East Asia in

the 1990s., a 50 per cent cut on those not having access to safe water in South Africa in seven years (1994-2001), from 15 million

to 7 million, and in China where the poverty level was reduced from 33 percent to 18 percent in nine years (1990-1999).

28

The United Nations Human Development Report 2004 confirms that in 2002, this high-income group with only 19% of the world population received 84% of the global GDP. The Report also has on record that the six richest countries in the world, with only 11% of the world population, received two-thirds of the global income in the same year.




15

On increased income gap between the rich and the poor within and between countries, Khan (1994)

attributes this state of affairs to the economic order that favours the rich more with no trickle down effect to

the poor and the policies of developed countries to subsidise their own farmers while imposing trade barriers

against third world exports; and the debt burden. He also points out factors like failure to appreciate local

human capital and instead putting more emphasis on creating and increasing the physical capital, and the

possibility of rampant corruption in third world countries that deprives the people‘s access to resources to the

enjoyment of the military and civil bureaucracies.

Moten (1997)29

introduces the idea that the increase in income gap is an indication that economic

benefits from the national development plans do not trickle down to the poor. He condemns the resultant

capitalist free market model that enjoyed a unilateral monopolistic development strategy after the fall of

communism. He criticises the World Bank and the IMF policies for failing to create a top-down model of

development strategy that promotes social justice and redresses persistent poverty, widening income

inequality and worsening living standards. As a remedy, he proposes for ‗humane development,‘ which

would reform the conventional paradigm of development and give priority to the type of development that

centres on the people and society and that also recognises the harmonious relationship between people‘s

material and spiritual realms.

As few developed countries accumulate wealth and income, the income gap between developed and

poor developing countries also widens. During the 1950‘s the income per capita of low-income countries

was reported to be $164 while that of the high-income countries was $3,841, creating a gap of $3,677. The

gap increased to $9,403 during the 1980‘s when income per capita of the low-income countries was $245 and

that of the high-income countries increased to $9,648. The 1990‘s witnessed a further increase of the gap to

$19,820 when the income per capita of poor countries was $353 as compared to $20,173 in the rich

developed countries. The same sources reveal that the average citizen in Luxembourg enjoys monetary

29

Ataul Huq (Pramanik), Human and development with dignity, (Kuala Lumpur: Cahaya Patai, 1997), xv-xix.




16

resources 62 times higher than the average Nigerian .(Eissa and Elmagboul, 2004:17; Chotikapanich,

Valenzuela and Rao, (1997); Seligson and Passe-Smith, 1993:3).30

Although business is expected to increase economic growth and spearhead development, the UN

statistics show that the link is neither obvious nor automatic. Even the business practitioners disown this

responsibility by claiming that poverty alleviation is the responsibility of government and not the private

sector. Moyers (2004) gives the following evidence to show that the livelihood in America is worsening

despite its status as a leading business country. More children in America grow up in poverty than in any

other industrial nation; millions of workers are earning less money today in real dollars than they did twenty

years ago although working people are putting in longer and longer hours. The problem is also felt in health

care where eight out of ten people in working families, are uninsured and cannot get the basic care they need.

America is also experiencing the worst inequality among all western nations where the gap between

rich and poor is greatest in 50 years. It is recorded that the gap the richest 20% and the poorest 20% has

increased from 30 fold in 1 in 1960 to more than 75 fold four decades later. Poverty in the US has also

shifted from the normal single, jobless mothers with low education to include even families with two parents,

workers, and heads of households with more than a high school education. Such inequality is also portrayed

in political participation, which is dominated by the people with money as economic inequality begets

political inequality, and vice versa. Tax cuts of over $2 trillion dollars reduced from taxes on the largest

incomes, investment income and on huge inheritances mainly benefited the wealthiest one percent.

The problem of equity or social justice seems to have been perpetuated and exacerbated by business

practitioners in areas like executive pay.31

It is noted that the minimum wage would be more than three times

its current level, if it had increased as quickly as CEO pay since 1990. For example, during 2003 alone,

average CEO pay was $8.1 million, up 9.1% from the previous year, a year in which the US employees‘ pay

inched up only 1.5% and the economy shed 410,000 jobs. It is also reported that it would take one Haitian

30

World Development Report 2006 records that the mean annual consumption expenditure ranges from purchasing power parity (ppp) $279 in Nigeria to ppp $17,232 in Luxembourg. 31

According to Business Week’s Annual Executive Compensation Survey, the gap in pay between average workers and large company CEOs surpassed 300-to-1 in 2003, up from 282-to-1 in 2002 and just 42-to-1 in 1982. Between 1990 and 2003, CEO pay rose 313%, compared with profits rising 128% and average worker pay increasing only 49% (just ahead of inflation at 41%).




17

worker producing Disney clothes and dolls 166 years to earn what CEO Michael Eisner was earning in one

day in 2001.

Consequently, public opinion on multinationals is reported to be very low. A survey conducted in

2002 by the World Economic Forum where 36,000 people were interviewed across 47 countries on six

continents statistically representing the views of 1.4 billion citizens, showed that global companies and large

national companies are the third and second least trusted (most distrusted) institutions respectively. Another

more detailed follow-up survey in 2003 across 15 countries revealed that executives of multinational

companies are the second least trusted of eight categories of institutional leaders.

The World Trade Organisation (WTO), as the regulating body under globalisation, is accused of not

responding favourably to pertinent issues concerning the course of poor nations, leading to unending disputes

and misunderstandings during WTO forums.32

Protests by civil societies, developing countries and the US-

EU differences33

tend to undermine the success of the WTO. Further, in the eyes of many the WTO is seen

to be non-transparent and undemocratic, favouring the interests of big corporations at the expense of

developing countries, the poor, the environment, workers and consumers, and strictly backing up the

controversial Multilateral Agreement on Investment (MAI) and genetic engineering that developing countries

complain against.34

Developing countries express a lot of reservations with regard to the WTO. They complain that even

after many years of the WTO‘s creation, they do not seem to benefits since the global free trade system

favours only the rich amid growing gaps between rich and poor countries. And that although developing

countries face a continuous decline in commodity prices, they are not able to diversify or upgrade their

exports due to supply side constraints as well as limited market access. Many poor countries also feel cheated

when they incur the cost of implementing trade commitments that can be more than a whole year‘s budget

(cutting tariffs), while they find that rich countries had cut their tariffs at a lesser amount. Poor countries

which face potentially enormous dislocation when they implement their obligations arising from the WTO‘s

many agreements, only now are realizing that they did not adequately understand the implications of the

32

WTO Ministerial meetings held in Seattle Washington in 1999 and the one held in Cancun, Mexico in September 2003 both ended up in chaos. Refer to Third World Resurgence 112/113 of December 1999/January 2000. 33

US-EU differences centre on agriculture subsidies in Europe and investment and competition issues by US. 34

Third World Resurgence 112/113 of December 1999/January 2000.




18

proposed issues, and from that limited understanding, the new agreements or rules would add to their heavy

obligations.

Although proposals submitted by poor countries to resolve the ‗problems of implementation‘ of the

WTO agreements were dismissed,35

rich countries put forward their own proposals to further empower the

WTO through introducing new areas such as investment, government procurement, and labour and

environmental standards. These new issues are likely to further open up the markets of developing countries

to rich nations‘ big companies or to give these rich nations new protectionist tools to block Third World

products from entering the North. The North is trying to keep out exports from Third World countries by

using a variety of instruments ranging from high tariffs on agricultural imports and subsidised exports to new

demands for trade-linked labour standards and trade-linked environmental standards. For example, the

average tariffs charged on the manufactured products imported from developing countries are four times

higher than the ones they impose on products that come mainly from other industrialised countries.

It is also noted that the North is reluctant to liberalise the few areas in which poor countries have

comparative advantage, like textiles, footwear and agriculture contrary to the norms of the multilateral

trading system. Anti-dumping duties are meant to stop emerging economies from offering their products at

competitive prices on the pretext of dumping. The industrialised countries‘ food surpluses that are generated

by subsidies worth $250 billion a year are always dumped on world markets, thereby threatening the

livelihood of millions of poor farmers in the developing world, who cannot compete with such subsidised

imports.36

Developing countries suspect that trade policy is used as yet another form of disguised

protectionism. As a result, only a few countries have enjoyed moderate or high growth in the last two

decades whilst an astonishing number have actually suffered decline in their living standards.

Globalisation faces problems that undermine its relevance in many areas. First, it is still dominated by

the unilateral policies of the big nations of the North resulting in an escalating imbalance with a very heavy

burden on developing countries. The notion that liberalisation has benefited all is far fetched as some have

gained more than others and many (especially the poorest countries) have not benefited at all but may have

35

Developing countries had wanted an improvement to the system so that they are able to get their fair share of benefits, reduce or eliminate their losses and reverse the trend of disillusionment. 36

This will affect developing countries’ ability to effectively take account of their development needs, including food security and rural development.




19

suffered a severe loss in their economic standing. Developing countries have also come under pressure to

liberalise from developed countries, international financial institutions and the WTO despite developed

countries having not lived up to their liberalisation commitments. Worse still, new agreements and

obligations in new areas would not bring about reciprocal benefits as the developed countries stand to obtain

most of the gains further adding to the present imbalance while developing countries will find even more of

their development options closed off.

Tariffs charged by developed countries on many agricultural items of interest to developing countries

are prohibitively high (some over 200 to 300 per cent).37

The US still insists that it would be imposing tariffs

of up to 30 per cent on some of its steel imports to safeguard its local steel industry. At the same time, while

developed countries lowered their already very high industrial tariffs at very low rates of between 3.8% and

6.3%, developing countries were bound to make huge reductions in their tariffs. For example, India reduced

from 71% to 32%, Brazil from 41% to 27% and Venezuela from 50% to 31%.38

High import duties still

remain in rich countries for many industrial products that developing countries export. For example, the US

tariff on concentrated orange juice is 31%.

Domestic subsidies in OECD countries rose from US$ 275 billion during 1986-88 to US$ 326 billion

in 1999, according to OECD data. Very few quota restrictions were removed in textiles even after the grace

period of 10 years that ended in 1995. For example, the United States of America removed only 13 out of

750 quota restrictions, the EU 14 out of 219 and Canada 29 out of 295.39

It is hard for developing countries

to encourage domestic industry due to the prohibition on investment and subsidies. While the developed

countries have been allowed to maintain most of the high subsidies that existed prior to the Uruguay Round

conclusions or reduce them by only 20%, most developing countries that had no or little domestic or export

subsidies earlier are now barred by the Agriculture Agreement from having them or raising them in the

future.

The viability and livelihood of small farmers, who not only form a large part of the population but are

also the main basis of Third World economies, are threatened due to import liberalisation in agriculture.

37

Specific examples include tariffs charged by the US: sugar (244%) and Peanut (174%); EU: beef (213%) and wheat (168%), Japan: wheat (353%) and Canada: butter (360%) and eggs (236%). 38

According to the WTO’s Bhagirath Lal Das as reported in the Third World Resurgence, issue No. 114-115, February/March 2000. 39

International Textile and Clothing Bureau, June 2000.




20

Their products face competition from cheaper imported foods, many of which are artificially cheapened

through massive subsidies. In the virtual absence of safety nets, the process also marginalises small

producers and adds to unemployment and poverty. Local food production could also be threatened by

cheaper imports thus eroding national food security.

Under the Trade Related Investment Measures (TRIM) Agreement, starting from January 2000

foreign firms investing in a country are not compelled to use a specified minimum amount of local inputs.

This will affect the ability of Third World countries to promote local firms to enable a greater linkage to the

domestic economy and protect the balance of payments. Exorbitant prices of medicines and other essentials

hamper access by developing countries to industrial technology due to a high standard intellectual property

right (IPR) regime and patenting by Northern corporations of biological materials originating in the South.

Local service providers are rendered non-viable due to increasing pressure on developing countries to open

up their service sectors.

Another list of those who view globalisation with great caution and suspicion include Hasan (2003)

who perceives it as another form of domination, which he equates to colonialism. In his view, the rich

Western nations want to take advantage of globalisation in order to benefit from the resources and markets of

developing economies. Sharing the opinions of a German economist, List, and former Malaysian Prime

Minister Mahathir Mohamed, he concludes that globalisation will always benefit the stronger because unless

all nations are on an equal footing there can never be fair trade and perfect competition in the world. And,

that, globalised trade prompted by the WTO is detrimental to labour and environmental interests, damaging

to national economies and beneficial only to transnational companies and government officials. This view is

also shared by Dos Santos (1993) who claims that multinational corporations transfer profits back to their

home countries instead of reinvesting them in the poor countries from where the profits are made, and worse,

they may only create enclaves of prosperous areas as islands within a sea of poverty thus either creating or

even escalating internal inequalities within countries.

Dos Santos lists world leaders reported to be critical against globalisation under the WTO included

Dominica‘s Prime Minister Edson James, Jamaican Minister of Foreign Affairs and Foreign Trade Seymour

Mullings, St. Lucia‘s Foreign Minister George Odlum, Brazil‘s Felipe Lampreaia and Kofi Annan of the

United Nations. James is of the view that globalisation leads to deprivation, desperation and destitution




21

instead of bringing development to the people, while Mullings accuses globalisation of systematically

marginalising developing countries. Odlum doubts the sincerity of developed countries on globalisation.

Lampreaia is not convinced that developing countries‘ exports can cause unemployment to the North

and lower labour earnings since developing countries are merely exporters of agricultural products and raw

materials that account for a very small percentage of trade in manufactures to cause any danger to the

products from the North.40

As such, the measures taken against developing countries such as, high tariffs on

agricultural imports, subsidised exports, and trade linked labour and environmental standards and domestic

support in various guises are, therefore, perceived as just protectionist instruments aimed at deliberately

keeping the developing countries out of the market of the industrial world.

Annan warns against using globalisation as a scapegoat for domestic policy failures and asks the

industrialised nations not to ransom the interests of the poor when trying to solve their own problems. He

disagrees on the use of trade restrictions to tackle problems whose origin is not related to trade, arguing that

such restrictions would often aggravate poverty and obstruct development even more and would as well

undermine governments‘ determination to tackle social and political issues directly. Accordingly, he is

opposed to the inclusion of labour and environmental issues on the WTO agenda, acknowledging fears

expressed by developing countries concerning such inclusions owing to the high prices that developing

countries have already paid in past attempts to liberalise the world economy.

The WTO, on the advice of the Breton Woods Institutions, is pressurising many governments in

developing countries to privatise the water supply.41

There are fears that this move will cause further health

hazards owing to the fact that privatisation of the water system may exclude the poor through high prices.

Politically, it can also have far reaching repercussions. Transferring a citizen‘s rights over public assets to

private ownership could be construed as a disregard of the national resources.42

Further, privatising water supply means that water becomes an economic commodity, its allocation

and delivery to be determined by market forces under the Transnational Water Corporations (TNWCs)

through agreements negotiated with governments. When water harvesting, processing and distribution are

40

See Also see the coverage by Chakravarthi Raghavan in the Third World Resurgence 112/113 of December 1999/January 2000. 41

The Bretton Woods Institutions include the World Bank and the International Monetary Fund. 42

Sothi S. Rachagan, Managing Water … for People … Privatisation or Water – Who Benefits? (Kuala Lumpur: EPSM, 2003a), 164.




22

surrendered to the TNWCs, there are fears that because water conservation affects profitability it could be

ignored. It is also feared that the granting of communal ownership to a monopolist may endanger national

water security and force governments to incur more costs to compensate failing water privatisation

schemes.43

The WTO, supported by the United States, Australia, New Zealand, the European Union and Japan,

also wants to see education services liberalised by year 2005. Education will also change status from being a

public good to being a commercially transacted service. Such moves would definitely erode the capacity of

national governments to make national policy and compromise the nations‘ social objectives and conception

of the right to education. The governments are made to surrender their rights to regulate and introduce new

regulations on the supply of services in pursuit of national policies and objectives.44

Mofid (2006) is optimistic that after decades of selfishness, greed, individualism, emphasis on wealth

creation without care about how this wealth is being created, the world is entering a period of reflection, self-

examination and a spiritual revolution because he believes that only a spiritually and philosophically

committed mind, will strive for humane globalisation and achieve corporate social responsibility at global

level. He opines that if there is no humanity and spirituality, there is no love; then, the laws enforcing

business ethics and corporate responsibility will be broken in the selfish interests of profit-seeking.

4.0 THE NEED FOR GLOBAL ETHICAL CONSCIOUSNESS

Despite various deliberations and commitments to address poverty, its magnitude keeps on increasing,

reaching 1.3 billion in the year 199545

and 3 billion in 200346

. In that respect, the first Millennium

Developmental Goal of reducing by half the current world population of 1.2 billion people living in absolute

poverty by the year 2015 was passed.47

43

Ibid. 44

Sothi S. Rachagan, Accessibility to education and information, (Kuala Lumpur: SUHAKAM, 2003b), 109. 45

K. R. Holmes and M Kirkpatrick, The Asian Wall Street Journal, 16 December, 1996. 46

The Star, a Malaysian Daily, (Kuala Lumpur: Star Publications, 10, September 3rd

, 2003). 47

According to the Report on World Social Situation 2003, the goal is set out in the Millennium Declaration (General Assembly resolution 55/2 of 8 September 2000) and is derived from the World Summit for Social Development of 1995 and the 24

th special

session of the General Assembly, entitled “World Summit for Social Development for all in a globalising world.”




23

All in all, the solution to this problem seems not to lie in the lip service of passing empty promises

and deliberations but showing a deliberate commitment to own and the problem. The globalisation for the

common good must portray the moral obligation by those who enjoy affluence to sacrifice their pleasure for

the sake of the vulnerable, deprived and marginalised. There is thus a need to sensitise the international

community on their role as members of the ‗global village‘ to be concerned with human suffering. This

consciousness may sometimes be closely linked to spirituality as Arburdene (2010) wants to put it.

McGaffigan (2009) also draws inspiration to the religious identity in providing the prospects for

global humane governance which he considers superior to any social or political foundation. Platt (2006)

refers to Christian teachings that demands extra obligation to emulate a higher standard of honest in all

dealings with others: Colossians 3:22, "Obey your earthly masters in everything; and do it, not only when

their eye is on you and to win their favour, but with sincerity of heart and reverence for the Lord." Smith

(2002) considers economic justice and the attitude of caring for others as ways of portraying submission to

the love of God.

However, the main challenge before us is on how such consciousness can be sensitized to be

understood, accepted and applied. In appealing to this course, The Report of the World Social Situation,

2003, suggests that increased poverty has to be addressed because, first, the poor have greater exposure to

many downward risks such as illness, death, loss of employment or famine, without being able to cope with

them. Second, failure to provide checks on poverty will cause the human and physical assets of the poor to

be depleted to the extent that it will be very difficult for the poor to move out of poverty. Navaratnam (2003)

fears that, people who feel deprived and oppressed may resort to violence, which may eventually culminate

into terrorism and cost the world even more.

Diouf48

reports that fighting hunger makes economic and social sense because it has negative effect

on the economies of those countries it inflicts by causing an estimated one percent per year loss in the rate of

economic growth through reduced productivity and nutritional diseases. Better still, those deprived through

hunger form a very large potential market, which if empowered will increase the effective demand by big

margin

48

Jacques Diouf was then the Director-General of the UN Food and Agricultural Organisation (FAO).




24

True, as long as poverty and distribution inequality prevail in society, they will cause an imbalance in

the social, political and economic stability resulting in the culmination of social ills and vices. And once

such violent conflicts occur, economic development is set back because industries are destroyed, social

services are abandoned, agricultural areas are laid waste and the already poor populations are faced with the

threat of famine.49

Even the United Nations report on the World Social Situation 2003 further confirms that

poverty and inequalities within and among nations are responsible for fuelling social tension and

undermining the social cohesion needed to pre-empt and respond to emerging dangers manifested through

civil strife and the proliferation of conflicts; they also contribute to increased mobility of populations and

changes in family structures. The report further stresses that once such violent conflicts take place, they

destroy the structures of social support and governance, thus putting civilian lives in danger and disrupting

children‘s education and the delivery of other social services. This often leads to internal displacement and

refugee flows that further perpetuate the degree of poverty.

According to authoritative reports on conflicts, during the last two decades of the twentieth century,

there were a total of 164 violent conflicts affecting 89 countries for an average of six to seven years.50

And

because conflicts tend to be concentrated in poor countries, more than half of all low-income countries have

experienced significant conflicts since 1990 with the greatest impact falling in Africa, where virtually every

country or an immediate neighbour has suffered a major conflict over the last decade.51

.

Kasozi (1996 and 1999) identifies poverty and distribution inequality between regions and ethnic

groups as being amongst the problems that cause instability in Uganda.52

As for Sudan, poverty and

distribution inequality has disturbed the social fabric, security and stability therein posing a threat to its unity,

integrity, freedom and sovereignty. Poverty and marginalisation in Sudan did not only cause resentment, but

fuelled the flames of civil war that perpetuated even more poverty to the affected areas due to insecurity.

49

Even Ehorlich (1995) claims that exposure to armed conflicts, political upheavals, and HIV/AIDS epidemics have led to a reversal in development indicators in too many countries. 50

Heidelberg Institute of International Conflict Research (HIIK), Database KOSIMO (1945-1999), last updated 8 November 2002 (Heidelberg, Germany, University of Heidelberg) Available from http://www.hiik.de 51

World Bank, World Development Report, 2003, (New York, Oxford and Washington: World Bank, 2002). 52

In another paper for a Colloquium organized by the UNDP in Uganda in May, 1997 he links the insurgency in northern Uganda with poverty and deprivation in the area and appeals for effective distribution measures to contain the situation. Also refer to UNDP (1996:37).




25

Such political instability hampers the solicitation of foreign capital and contributes to the wastage of

financial and human resources (Eissa and Elmagboul (2004)).

.

5.0 CONCLUSIONS

Globalisation is condemned for having further accentuated vulnerability, uncertainty and insecurity within

and among countries and for being a major source of impoverishment and social exclusion to developing

countries. Further, it does not to represent a free market system as it is believed but propagates the

continuation of a new interventionist framework that eliminates exports from third world countries through a

variety of instruments ranging from high tariffs on agricultural imports and subsidised exports to new

demands for trade-linked labour standards and trade-linked environmental standards. Rapid trade

liberalisation only leads to a sharp increase in imports while exports fail to keep pace. Even in countries that

have succeeded in trade, the poor in those countries are not sufficiently rewarded, at least from the

perspective of enjoying quality life.

Statistics profiles have record of poor performance in the enjoyment of social services for a large part

of the world‘s population especially in the developing countries. Increased global food output due to

advancement in technology has failed to contain hunger and malnutrition in developing as well as developed

countries. While medical innovations, better diets and improvements in sanitation have reduced morbidity

and raised life expectancy, there has been no dramatic improvement in the quality of life for the vulnerable

and the poor in the world. Such imbalances are also reflected in the provision of education, health and

shelter. Moreover, despite handsome levels of economic growth attained in different parts of the world,

absolute poverty still prevails in alarming proportions because those in power only care for the welfare of the

middle and upper-middle income groups.

Globalisation is pro growth. It is on record that the GNP-led measure of development or of economic

welfare in the narrow sense is responsible for widening the gaps between and within countries creating

unequal access to power and privileges of all sorts that eventually manifests into social (ethnic) tensions and

crimes, discontentment and deprivations. Since the vulnerabilities that groups face are largely the outcome

of economic, social and cultural barriers that restrict opportunities, which happen because of the existence of

some form of exclusion that is not primarily market oriented but socially generated, no social group is




26

inherently vulnerable.53

Thus, unless there is change in mindset to redress such abnormalities, the existing

vulnerability and poverty will perpetuate each other indefinitely.

The affluent society should know that they are equally responsible to address global vices not only as

a moral or social obligation but as an economic incentive as well. It will make very little sense to neglect

improving the quality of life, which is a vital human right that must be fulfilled first before considering the

other rights like the right of expression, right to have democracy, right to have demonstrations, rights to

detentions with or without trial, etc. It is therefore necessary to address poverty and distribution inequality in

society to ensure social cohesion, and political and economic stability and prevent social ills and vices. It is

on record that the violent conflicts that took place during the last two decades, mainly affected low-income

countries.

In all indication, there is widespread disparity in all segments of social life between and within states

in the world. For example, according to Milanovic and Yitzhaki (2002), out of 78 per cent of the world

population that is considered poor, 97 per cent of them live in Africa, Asia and Latin America (76 per cent

out of the 78 per cent of the world poor live in developing countries). Instability within the countries

themselves and the consequences of trade liberalisation policies under globalisation are known to be the

causes. Free trade that is given an upper hand under globalisation and considered as an engine of growth has

failed poor developing countries because of the constraints imposed on the economy by the export sector.

Rich countries that control globalisation are acting too selfish to accommodate the interests of the poor.

Liberalisation and privatisation are thus viewed to have caused even wider income inequalities.

Equity or fair distribution is normally perceived to guarantee participation in development opportunities and

eliminates the wastage of human potential. When all members of society have similar chances of

participating socially, politically and economically, it is a major contribution towards sustainable growth and

development. Inequality is damaging to society because first, it reproduces itself over time and across

generations in a phenomenon known as the inequality trap that is difficult to eliminate. Secondly, it

undermines the potential of those discriminated and thus impair their prospects for self development and

participation in the economy.

53

Refer to the Report of the World Social Situation, 2003, on Social Vulnerability: Sources and Challenges.




27

Education affects the capacity of individuals to engage in economic, social, and political life. Studies

have shown that it is countries that put greater emphasis on the development of human capital that perform

relatively better. Thus, as inequalities in education also contribute to inequalities in other important

dimensions as well, the global position of illiteracy raises much concern. Hence, when 900 millions adults

and 130 million children of school going age in the world are illiterate, the whole world stands to loose as the

impact of illiteracy affects the present and future generations and is passed over to the children.

Even inequalities in health can transform into inequalities in other dimensions as well because poor

health directly influences individuals‘ opportunities in areas like earning capacity, performance at school,

ability to care for children, participation in community activities, which contribute much towards economic

development. Privatisation of social services initiated by the ‗Neo-Liberal Revolution‘ and unquestionably

adopted by governments despite their moral and political obligation to offer healthcare services, has defeated

the whole idea of making healthcare a right for all.

Countries that rapidly liberalised their imports did not necessarily grow faster than those that

liberalised more gradually because while a country can control how fast to liberalise its imports, it cannot

determine by itself how fast its exports can grow as export growth partly depends on the prices of the

existing exported products and also on having or developing the infrastructure, human and enterprise

capacity for new exports. Hence, since exports mainly depend on the existence of market access, especially

in the developed world, the many tariff and non-tariff barriers that the North have imposed on the potential

exports of developing countries make it impossible for the South to realise their export potential. Thus trade

liberalisation often causes imports to surge without a corresponding surge in exports, resulting in the

widening of trade deficits, a deterioration in the balance of payments and the continuation or worsening of

the external debt.

In view of a myriad of problems associated with globalisation, there is doubt whether through

globalisation developing countries can presently or in the future pursue development strategies and

objectives, like industrialisation, technology upgrading, development of local industries, survival and growth

of local farms and agriculture, attainment of food security goals, and fulfilment of health and medical needs.

Hence, forcing countries to liberalise when circumstances do not allow, may do more harm than good.




28

The post-Enron world has shown the importance of adhering to ethical business practice. There is

now increased understanding on the need to serve the interests of all stakeholders and abiding to values and

ethics in favour of the ―triple bottom line,‖ of a commitment to ―people, planet, and profit.‖ This creates

good opportunity to further sensitise the global community to understand their moral and social obligation to

serve the global community.




29

6.0 RECOMMENDATIONS

In view of the foregoing observations and conclusions, the following fifteen recommendations are put

forward.

i. Unless the institutional framework in nations is embodied with specific target-group oriented

poverty-focused policies that directly benefit the poor, mere redistribution of some kind of assets

and income through policy choices may not eliminate poverty.

ii. There is a need to involve every member of society in the development process by ensuring that

all people are neither deprived nor marginalised. Globalisation for the common good cannot

succeed unless there is change in attitude by affluent societies to address vulnerability and

poverty.

iii. The majority in the developing world suffer far more from deprivation of economic, social and

cultural rights than they suffer from the limitations of political freedoms. So the world

community should reconsider their unbalanced approach of putting more emphasis on enforcing

civil and political rights while acting soft on the need to ensure the provision of economic, social

and cultural rights. Civil and political rights can only become relevant if the ability to live and

survive is guaranteed.

iv. The move to privatise the social services should be geared at serving the poor much better and

should not be profit motivated. The justification should be offering better services at affordable

costs.

v. Conflicts and terrorist acts within and between countries are presumably linked to the unfair

global economic and political order. As such, rather than suppressing the culprits militarily,

consideration should be given to economic incentives.

vi. Complaints against liberalisations and privatisations portray lack of proper handling by the World

Trade Organisation (WTO) as a supervisory body, the WTO should therefore act fairly for the

interest of all members.

vii. Most accusations labeled against the way globalisation is implemented accuse the rich North of

insincerity. It is therefore the responsibility of the developed countries to clear this perception by

proving their innocence. .




30

viii. Countries that are forced to liberalise when conditions for success are not present, may not

benefit. In that case, each country should be left to choose its own pace and scope of

liberalisation after considering its own abilities and the fate of its local firms and farms.

ix. If we truly want to change the world for the better, then all of us, the business community and

politicians included, must share a common understanding of belonging to the same family by

sharing love and understanding, embracing kindness and tolerance, celebrating and respecting the

diversity of cultures and religions, peacefully resolving conflicts and being ready to sacrifice our

own pleasure for mutual development in the spirit of global corporate social responsibility.

x. Labour should regain its rightful respect to be appreciated as a community treasure for human

development and not as a mere factor of production that can be substituted.

xi. The need for an explicit acknowledgment of true global values is an essential requirement in

making economics work for the common good. A revolution in values is therefore needed that

demands economics and business both to embrace material and spiritual values simultaneously.

xii. Globalisation under the current arrangement cannot solve poverty. Thus, unless weaker countries form

more political and economic integration in the form of custom unions and common markets, they are

likely to lose both their political and economic stability.

xiii. The post-Enron world has changed perceptions on values and ethics into business in favour of the ―triple

bottom line,‖ of a commitment to ―people, planet, and profit.‖ This is good opportunity to sensitise the

global community to recognise their role of fighting global vices and addressing the problems of

marginalized communities.

xiv. The majority of the people in the developing world suffer far more from the deprivation of economic,

social and cultural rights than they suffer from the limitations of their political freedoms. So, there is no

consolation in enforcing civil and political rights to them when they are impoverished, suffer from

malnutrition and are unable to survive, as civil and political rights can only become important in the

developing world if the basic needs to live and survive have been fulfilled.




31

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