The complex relationship between governance and Economic development in the Economic globalization has been a major area of study for researchers. This paper authoritatively inquires into the implication of political activities in the understanding of current Global Economic patterns. This paper attempts to answer this question: How does political Economy influence the globalization of Economy? Globalization can be described as” ….a widening, deepening and speeding up of world wide interconnectedness in all aspects pf contemporary and social life, from the cultural to the criminal, the fancies to the spiritual” (Held and McGrew 1999:2).
The world economic system is patterned by the increasing dissatisfaction of people directed at the governments of the day. Economic governance dictates the distribution of resources, buying and selling and production in relations with law, custom and government.
Alfred Marshall in his book principles of economics (1920) articulates the ideas of supply and demand of marginal utility and of the costs of production into a coherent whole. Policies on the distribution of the scarce resources are usually formulated and implemented by the political faces in the country. In the politics of the present- day nations and states, governments use the economy as their key campaign strategy. This trend is active in the most developed countries such as the United States of America and even in the developing countries in Africa and Asia. This is a global trend and no society is immune.
The dynamism of the current international economy and politics have been shaped by two principle economic and social orientations i.e. capitalism and socialism. Capitalism is geared towards maintaining the status quo where the ruling class. The former is usually discriminative and under represented in key decision-making institutions such as congress, parliament and councils. The industry owners and business owners usually characterize the later; these are the employees.
Capitalism is ripe in the west where population is absorbed in industry, commerce, communication and production processes. Whereas capitalism embraces the competition of resources for maximum production, socialism advocates for fairness, equality and equity participation in the development process. The society can never be divorced from its economy. All societies of the world design policies to ensure its citizens are involved in development.
Political economy grounds its roots in the way the countries and states of the world delegate and devolve power to the units that form the government. A participatory approach towards development seems to be the global trend in modern economic development. The global market is dominated by the world super powers. The world economy is controlled by the G8 nations which comprises of the US, Britain, Canada, China, Germany, Japan, France, Italy and Russia. These states design policies aimed at controlling the global market. In such an environment, the countries of the world that not represented suffer economic blows when prices for their exports are determined for their exports.
Growth in democracy, particularly among the more developed nations has resulted to an increase of authoritarian regimes. Armed conflict has been on the rise, particularly in developing nations mostly due to resource allocation disputes. The current trend in the global economic scenario is characterized by equal economic impact across the globe. For instance, the current global inflation is the resultant effect in the rise in the price of oil. This is to a major concern to the G8, who in a recent energy forum called for an increase in oil production. In a statement, they said that they were sufficiently concerned about the uncharacteristically sharp increase in global oil prices because it posed a serious risk to the global economy.
British Prime Minister Gordon Brown state that they “would continue to impose new sanctions against illegitimate regimes that have blood on their hands” this was in view of the increasing dictatorial regimes. At the G8 summit meeting held in Tokyo, a consensus on the imposition of new sanctions on Harare was no realized following Russia’s opposition. From this perspective, the G8, consisting of the world’s richest countries, account for two thirds of the world’s gross domestic product (G.D.P).
At the summit’s closure, German chancellor Angela Merkel said that “The G8 is no longer enough solve many problems” the countries acknowledged the need to bring in other members because of he global extent of the phenomena. The summit ended with pledges concerning food security, oil production and environmental conservation measures.
On 25th September 2008, World leaders came together in New York for a high level event that was covered by the United Nations Secretary General and the president of the United Nations General Assembly to review the commitment to the achievement of the millennium Development Goals (M.D.Gs) by the year 2015. This was captured by the Secretary General, Ban Ki Moon, who stated that he was “grateful for all the energy invested in this high-level event by the developed and developing countries, civil society, faith groups, foundations and the private sector” he further stated his hope for the event was the cooperation between the development patrons in the propagation of the MGDs goals. By coming together, Ban Ki Moon acknowledged the effort and commitment to the process although the challenge was in the way forward.
Multi stakeholder discussions aimed at the sharing of success stories and lesson learnt from various parts in the world created the necessary lessons that would be the basis of the development of new partnerships. This would be necessary in the attainment of the MDGs. World governments are the principle signatories to the MDGs as an effort to improve the global economy.
Goal 8 of the MDGs embodies the global partnerships for development. The possibility and the practicability for the attainment of these goals by 2015 depended on the building and supporting of strong global partnerships. The international community has a demanding task to play in the fulfillment of the MDGs goals. Political instability and civil unrests in developing nations has since time immemorial been characterized by massive looting, property destruction, internal displacement and inflation rates and this is trend is a stumbling block to the realization of the MDGs. To ensure the effective bridging of the gap between the developed and the developing world, the following measures have been put in place by the international community;
- Acceleration of the diffusion of new technologies for development.
- Increase in infrastructure.
- Immediate re-commencing trade negotiations to revise the damaging effects cause by the recent collapse of the promise to offer a development focus trade negotiation process.
Although the current global economy is structured around three main center of economic powers, the globalization process of today brings about an inconceivably united world for rich individuals and the elites and this has resulted in an increased social and economic divide (Petrovich, 2004). Petrovic addresses the issue of considerations of society, political theory, essay writing and journalism; he narrows his focus to Globalization. Globalization is largely perceived as the continuation of colonialism i.e. western imperialism. This is manifested in the global inequality between the developed world and the developing world. The global economy consequently is structured along this line and there is fear that the existing resources will have to be shared. Consequently, there is no genuine economic progress between the Developed world and the Developing world.
Foreign investment is an indication of transnational ownership. Open markets and foreign investments puts workers under foreign appropriation of profits. This on the other hand has provided an avenue for the transfer of skills, knowledge, science and technology to the recipient countries. The foreign investors dictate the working conditions and remunerations of the employees. This has led to dissatisfaction. The unfairness in the global economy is observed below.
International trade is the cross-border trade in goods and services measured by the sum of imports and exports divided by the GDP of a national economy (Held and Mc Grew 1999 :
- I.T =∑ I +E I.T – international trade.
- G.D.P ∑ – sum of.
- I – imports.
- E – exports.
- G.D.P – Gross Domestic Product.
Statistically significant results show the wealth, Democracy and the Economic freedom all contribute to good governance. Corrupt countries have less economic freedom because a small group of people use their influence on the Economy. The case in China is a perfect example of where the civil society remains weak and controlled by the state as the government is fearful of the political consequences of democratization. Rising political instability will jeopardize China’s progress.
Betal (1998) proposes that political rights and civil liberties are the measure of freedom. Measures of economic freedom consists the participatory inclusion of people and the political goodwill of the regime. GDP is a measure of a states income and output in its Economy. This is usually the total marketq value of all the final goods and the services provided within a state in a calendar year. This can be summarized as
GDP = Consumption + Gross Investment + Government Spending + (Exports – Imports)
The states of the world portray a varying GDP rates largely because of the political environment in which business is contracted. The implications of GDP to the Economy will greatly be influenced by the political traditions of such countries.
Four practices that define a company’s position in a global expansion trend rotates around six key issues. These are;
- Executive management. Human resource management in relation to cross cultural orientation.
- Strategy and planning
- Global marketing and service delivery
- Integration of technology in service delivery
The globalization management strategies are aimed at combining the refined academic theory and practices in industry and commerce. This views localization as a management concern in a global economy emphasis on the importance of integrating innovations in the management of globalization has been boosted by the internet age where information is relayed globally without any geographical barriers. Management skills practiced in America can easily be transferred to Africa, Asia and other parts of the world. Globalization is hinged on mobilizing resources to have a coherent whole in the concepts of technology, research, branding, marketing and distribution.
International conferences such as The Hong Kong conference 24-25 August 2007 identified the need to facilitate and enhance networking among the countries of the world. Globalization generally deals with turning the ‘local’ into the ‘global.’ Different aspects of the world are brought together and harmonized into a common state. Cultural and political realities are alco captured ai such a setting.Broadcasting development as a result of technological advancement has boosted the interaction between countries.This is a worldwide force seen through International channels such as BBC and CNN which broadcast allover the world.
The reality and forces of globalization are so intense the governments are unable to forecast and predict future trends because this is beyond the local scenario. The entire global political landscape is forced to go back and reevaluate, re-strategize and redefine its objectives, aims and goals in the global Economy. International corporations such as World Bank, I.M.F and The United Nations and its agencies bring together the whole world by regulating and coordinating the dealings and relationships among countries.
The United States has dominated the power in the world because of its sound Economic background. However the current trends of globalization seems to be changing this scenario. It is projected that in the next twenty years the center of the world power shall be leaning towards China because of its tremendous Economic growth. Competition in the global market is reinforced by the struggle of many countries to maintain their position in the global market in the face of a fast growing world.
It is undisputable that globalization to almost every domain of life. It penetrates and influences finance, industry, cultural and political spheres. As long as technology improves, globalization continuously spreads. Globalization in the political domain as analyzed in this paper rotates around the creation of a world government and structures that brings together all governments of the world and this is achieved through various World Organization.
References
Held and Mc Grew. A: Globalization/ Anti Globalization. Policy Press, Cambridge, 2002 pg 51.
Johnson, Betal. Index of economic freedom : transparency international. Corruption Perceptions Index 1998.
Petrovic, Degan. The Philosophical Implications Of Globalism and Anti- Globalism. Belgrade, 2004.