CHAPTER ONE
INTRODUCTION
Globalization is a comprehensive
term for the emergence of a global society in which economic, political,
environmental, and cultural events in one part of the world quickly
come to have significance for people in other parts of the world.1 The
term is also used to refer specifically to economic globalization in the
context of integration of national economies into the international
economy through trade, foreign direct investment, and capital flows,
migration and spread of technology.2
It is the transnational
circulation of ideas, languages, or popular culture through
acculturation. Bhagwati Jagdish sees the globalization process as the
result of advances in communication, transportation and information
technologies as well the “growing economic, political, technological,
and cultural linkages that connect individuals, communities, businesses,
and governments around the world.”3 The term describes a process by
which regional economies, societies and cultures have become integrated
through a globe spanning network of communication.
In the history
of inter state relations, travels, trade and migration have been taking
place for centuries. Even in the ancient and medieval world,
international trading companies were formed, promoted and financed by
states, governments and groups of individuals to explore and, at times,
pillage and conquer distance and less ambitious ones. Globalization is a
concept which is not new in the international trade, although in the
world scene, it has been known by different names.4 Those who are
conversant with the industrialization of Europe and America will recall
the writings of Adam Smith in the Wealth of Nations where the doctrine
of globalization and liberalization were enunciated.5
Globalization
describes a process by which regional economies, societies, and
cultures have become integrated through a globe-spanning network of
communication and trade. The term is sometimes used to refer to
specifically to economic globalization: the integration of national
economies into the international economy through trade, foreign direct
investment, capital flows, migration and the spread of technology.6
However,
globalization is usually recognized as being driven by a combination of
economic, technological, socio-cultural, political and biological
factors.7 Globalization as it is used today, refers to the growing
interaction in the world trade, national and foreign investments,
capital markets and the ascribed role of government in national
economies. Globalization focuses on economic capitalism and world market
power. It seeks to encompass all the countries of the world into one
economic unit, possibly without government or without borders.8
The
Romans, Phoenicians, religious crusaders, European slave dealers and
their collaborators and colonizers operated internationally and in the
global world of their time. Particularly after the 15th century, the
various exploration, trading and colonizing groups of the west
transverse East Indies, North America, South America and Africa, in
search of economic gains and empires usually at the expense of those
within when they made contacts, conquered or colonized. The European
powers partitioned Africa among themselves. The political and economic
domination of Africa assisted and complemented the Christian missionary
evangelistic and Islamic crusaders who brought new and different
cultures, goods and gods in Africa.9
All these worldwide
enterprises were globalization of a sort and were undertaken by almost
the same group of countries and races that are the main protagonist of
today’s globalization. Even though the present day globalization bogey
differs in scope, manner and intensity from the earlier international
processes, like slavery, colonialism or religious fervor, it benefits
the same powerful nations at the expense of the developing nations.10
Globalization is diminishing the economic competitiveness of an
increasing number of people and countries outside the triad (Europe,
North America and China), because the less economically developed
economics are finding it increasingly difficult to be fully integrated
into the global economy.
On the other hand, many of the weaker
countries are being, once again recolonized economically and
politically. Africa is obviously the hardest hit by the globalization
process and by financial and economic institutions that promote and
sustain the globalization paradigm.11 The African continent has suffered
and is still suffering from the problems of arrested development.
Attempts by Africa to catch up or bridge the gap between it and other
continents have always be frustrated by African’s technological and
organizational inferiority vis-à-vis the more dominant economies.12
Aims and Objectives
The objectives of this research are as follows:
To show how globalization has affected the economic and political status of the Nigerian economy.
The role of global institutions in the globalization process as it concerns Nigeria.
To
show how the dependency of the less developed economy on the western
economy has led to underdevelopment of the less developed countries,
through evaluation of the dependency theory.
Scope
This
study will focus on the globalization process, right from the 19th
century and its effect on the African economy, using Nigeria economy as a
case study.
Methodology
This work will review the works
of both African and foreign authors view in the area of globalization,
Africa and development. The works mainly rely on both primary and
secondary sources from newspapers, journals, development reports,
lecture notes, internet sources, and textbooks.
Significance of Study
This
study is important, as it will look at globalization process and the
challenges to African development especially in the area of its economy.
It will also look at the impact of some of the global institutions like
the IMF, World Bank, World Trade Organization in Africa. The study will
also add to the existing body of knowledge in the area of Africa
economy.
Literature Review
There are previous efforts in
the study of globalization and the Nigerian economy. Joseph Stiglitz
work, Globalization and its Discontents is a classical example.
Stiglitz, a former chief economist at the World Bank describes
globalization as a process that has to be reshaped. In his book,
Stiglitz analysis shows that there is an enormous cost to continuing
global instability. Globalization can be reshaped, and when it is
properly, fairly run, with all countries having a voice in politics
affecting them, there is a possibility that it will help create a new
global economy in which growth is not only more sustainable and less
volatile but the fruits of this growth are more equitably shared”13.
Joan
Sparo and Jeffrey Hart’s Politics of International Economic Relations14
is another outstanding example. It undertook an important analysis of
the discussions at the Bretton Wood’s Conference and examines the
provisions of the original Bretton Woods’ agreement that like to the
creation of global institutions such as the IMF and World Bank. It
exposes the management strategies of the Bretton Woodian institutions
under the leadership of the United States and opines that the management
of global economic was “made easier by a high level of agreement among
the powerful on the goals and means of international economic system”15
and that the foundation of this agreement reached was a share belief in
capitalism and liberalism in the global world.
Maurice Obong
article, “The Facts and Fallacies of IMF Loans in Nigeria” also contain a
short analysis of the genesis of International Monetary Fund and the
nature of the global economic management.16 He noted that as the outcome
of the Conference, the aforementioned institutions provided an
immediate answer to the problems of international payments and noted
that the conference had the privileges of being the first to discuss and
hammer out the rules by which the world financial system and flow of
trade should be managed.17 Bode Onomide’s work on the role of
International Monetary Fund in the economies of developing nations is
another article that is relevant to the research. It explains that the
international monetary fund is the most powerful international
organization in today’s world based on the resources it control and its
power to interfere in the internal affairs of borrowing states which
gives it the authority that is almost supreme.18
In Global
Political Economy, Robert Gilpin also explains that the post War World
II international monetary system and its fundamental principles was
“that exchange rates should be fixed in order to avoid the ‘beggar-
thy-neighbour’ policies of the 1930s and the ensuring economic
anarchy.”19 The international monetary fund created at the time was
intended to achieve this goal and to provide monetary reserved
sufficient to enable member governments to maintain the exchange rates
for their currencies at predetermined values. Solomon Ajayi looks at the
evolution of international economic system. He identifies and discusses
the issues that propelled international economic relations right from
the fifteen century to the contemporary times.20 These aforementioned
research works explains that globalization since World War II is largely
the result of planning by politicians to break down boarders hampering
trade to increase prosperity and interdependence thereby decreasing the
chance of future war.21 This led to the Bretton Woods conference, an
agreement by the world’s leading politician to lay down the framework
for international commerce and finance, and the founding of several
international institutions to oversee the process of globalization.22
These
institutions include the International Bank for Reconstruction and
Development (the World Bank), the International Monetary Fund, World
Trade Organization, etc. The IMF and World Bank were both established at
the United Nations Monetary and Financial Conference, held at Bretton
Woods, New Hampshire in July 1st – 22nd 1944.23 The two were created to
oversee stability in international monetary affairs and to facilitate
the expansion of world trade. Membership in the World Bank requires
membership in the IMF to monetary exchange rates, provide short-term
financing for balance of payments adjustments, provide a forum for
discussion about international monetary concerns, and give technical
assistance to member countries.
The impact of the globalization
process has also been described by Omowale Kuye in “Alternative to IMF
Staff Report on Nigeria.”24 He opines that there is no doubt that the
power of globalization has affected the character of domestic and
international politics, economies and relations at every level.
According to him, “globalization seeks to bring together in one global
economy, social, and political structure based on capitalist value and
liberal democracy.”25 Its watchword being integration, today’s
globalization seeks to climb, domesticate and reshape all cultural
barriers in the quest for profit. The Final Act of the Uruguay Round
Agreement that was signed in April 1994 and became effective in 1995
after passage by 1244 national legislatures substantially reduced tariff
and non-tariff trade barriers in many sectors. It also established its
world trade organization to replace the 47 years old General Agreement
on Tariff and Trade (GATT).26 The Geneva-based WTO is intended to
oversee the agreement to settle trade disputes. The three major
provisions of the accord from the perspective of developing nations are
To developed countries, cut tariffs in manufactures by an average of 40% in the five equal annual reductions
Agricultural Product which came under the authority of WTO were to be progressively liberalized.
For
textiles and apparel, the multi-fiber arrangement quotas, which have
long penalized exports of African countries were phased out by 2005,
with most of the reductions taking effect towards the end of the
period.27
Africa is obviously the hardest hit by globalization
process by these financial and economic institutions that promote and
sustain the globalization paradigm. Attempts by Africa to catch up or
bridge the gap between it and other continent have always been
frustrated by African’s technological and organizational inferiority
vis-à-vis the more dominant economies. According to the dependency
theory, which state that “the dependency of the less developed countries
on the developed countries is the main cause of the underdevelopment of
the former.”28
A.G. Frank also holds that the whole world is
divided between two set of countries; developed countries and less
developed countries. The former are in the centre and the latter are in
the periphery.29 The inequality between the centre and the periphery has
resulted in a situation whereby the LDCs are dependent on the DCs in
trade, investment, technology, etc. This dependence has resulted in the
underdevelopment of the periphery. Consequently, Dos Santos believes
that “Dependency is a situation in which the economy of certain
countries is conditioned by the development and expansion of another
economy to which the former is subjected. The relation of
interdependence between two or more economies and between these and
world trade assumes the form of dependency when some countries (the
dominant) can expand and give impulse to their own development, while
other countries (dependent) can only develop as a reflection of this
expansion”.29
Sanjay Lall points out that “LDCs are poor because
they are dependent and any characteristics they display signify
dependence”. He views this as leading to immoderation, that is, the
growing poverty of the mass of the population in the periphery.
According to Amin, “The periphery is just an appendage of the central
economy.”30 The development of the centre causes underdevelopment of the
periphery and its dependence on the centre. Dependency economists have
given divergent views to overcome dependency and underdevelopment of the
periphery. Sunkel advocates structural changes in all sector s of the
economy as a way to remedy this problem.31
Santos suggests a
qualitative change in the internal production structures and external
relations of the LDCs. Amin suggest a new developmental strategy for the
periphery countries which are:
Self reliant developmental strategy based on one’s own resource
collective self reliance strategy based on mutual cooperation and economic integration of LDCs
Demand for a new international economic order based on the transfer of technologies to the LDCs.32
To
many in the developing world, globalization has not brought the
promised economic benefits. A growth divides between the world and the
dire poverty, lining in less than a dollar a day. Despite repeated
promises of poverty reduction made over last decade of the 20th century,
the actual number of people living in poverty has actually increased by
almost 100 million33
In Africa, the high aspirations following
colonial independence have been largely unfulfilled. Instead, the
continent plunges deeper into missing, as incomes full and standards of
living decline. The hard one improvements in life expectancy gained in
the past few decades have begun to reverse, while the scourge of AIDS is
at the center of this decline, poverty is also a killer. Even countries
that have abandoned African socialism, merged to install reasonably
honest governments, balanced their budgets and keep inflation down found
that they simply cannot attract private investors. Without this
investment, they cannot leave sustainable growth.34
In the light
of the aforementioned, the honourable speaker of the National House of
Representative, Nigeria, Hon. Dimeji Bankole said this when he was
delivering a speech at a two-day international parliamentary conference
in Moscow. In his words,“Africa countries need foreign trade and long
investments to develop its economy, not aids.” He noted that Nigeria and
indeed other African nations never believed that aids would solve their
problems in the long run. In spite of the aids from development
agencies to African countries in the last 25 years, Africa have been
unable to addressing its sectors economic problems. We need most now is
cooperation, partnerships, trade wealth and create employment.35
In
advancing to meet the world, Africa must be circumspect of the WTO,
IMF/World Bank set of advice which tends to set off economic crisis and
instability. Empowered in its new vision of NEPAD, we must then move at
our own pace, on our own terms. If caution is the world, then, Africa in
interpreting the clearly not value free globalization concept, make
selective integration. De-linking as once advocated by Samir Amin may be
attractive but impracticable now but selective integration actions
would salvage the vulnerable in the society and enable certain sectors
where we do have comparable advantages to grow and steady us to compete
at a later day at global levels. Liberalization policy must not be
wholesale, otherwise the import substitution programme of years ago
would flounder. Again the entire framework for action calls for
strategic thinking for and in a global world. The issues to be
considered are urgent and imperative. If this is the present, how does
Africa sustain itself for the moment, be relevant in terms of global
needs and seek to evolve its own hegemonic and salvaging ideals and
strategy.36
According to A.G. Frank, Dos Santos and Sanjay Lall,
they hinged the backwardness of the LDCs on over dependency of the LDCs
on the DCs in terms of trade, investment, technology. They are of the
opinion that LDCs should be independent of the DCs. But how can this
happen, when we are living in the era of ICT, were the world have become
a global village. Africa cannot just break away all of a sudden because
she is still technologically backward. It has to be a gradual process,
if this idea must be a adopted. Amin has attributed the underdevelopment
of LDCs, to the development of the DCs. The DCs according to him have
developed themselves without carrying the LDCs along with them. To this
he has suggested that the LDCs should come together to demand a new
international economic order which will be based on the transfer of
technologies to the LDCs. This will favour development of the economies
of the LDCs.37
Joseph Stiglitz also suggest that the process of
globalization should be reshaped to favour all and sundry, both the
North and South should be involved in decision making, policies that
affect the economic and political status.38 Africa should be given a
voice and allowed to be part of the total global process. Thus, if the
African continent is to participate effectively as a member of the
global village, its people and government must first undertake two
tasks. First, borrow a leaf from Friedrich list, the 19th century
German-American economist who was faced with how a left behind economy
could catch up.39 Africans must have to go back to the drawing board. –
That is culture, as culture whether we accept it or not is a major
factor that aids development of a nation. For example if we look at Asia
continent, e.g. China and Japan look at how they have developed over
the years. They made sure that cultural heritage was a major foundation
in their developmental strategies.