Globalisation and the Third World

Towards A Conceptual Clarification. Globalisation has become the biggest buzz word in contemporary academic discourse and the popularity of the term is not accidental. It is a broad process permeating the whole world, with far reaching impacts covering economic, political and cultural dimensions of contemporary life. Globalisation heralds the emergence of a global cultural system. A global culture that is, more or less a kaleidoscope of trans-national socio-cultural characterisation. It has been viewed as the compression of the world and the intensification of consciousness of the world as one whole entity Robertson, In a nutshell, globalisation describes the growing interdependence of peoples and countries Held and Mc Graw, Globalisation is also defined as increasing integration of the nation economies with the rest of the world.

Its features are economic integration through: Globalisation is essentially the geographical dimension of the phenomenon of imperialism, a transition to geo-finance system. Eskor Toyo saw it as: A phase in the anti-stagflation, counter-revolutionary, tripartite competition, and neo-monopolistic propaganda offensive of imperialism Toyo, The latter segment in the contemporary world is led by transnational capitalist class.

It is important to note that this is not a monolithic bloc advancing a unified and uncontested agenda. According to the World Bank perspective: Globalisation is about an increasingly interconnected and interdependent world, it is all about international trade, investment and finances that have been growing faster than national incomes World Bank, Indeed, globalization represents the triumph of a capitalist world economy tied together by a global division of labour Wallestine, This capitalist world economy is driven by the logic of capital accumulation.

However though, globalization has brought about the integration of the third world as well as its progress in an uneven and unbalanced manner. This has meant that the third world has continued to be on the margins of the globalized world economy. Of course, someone was bound to be marginalized for it is in the nature of capitalism that capitalist accumulation can only take place on the basis of some countries loosing put those which gain and control the entire system of production and reproduction Naburere, Third world position in this globalized world economy is no different despite her famed human and material endowment.

Different types of globalisation has been identified. These include mercantilist ; free —trade globalization ; and the monopolist and colonialist globalisation of late 19 th century and early 20 th century. The fourth type of globalisation is that of the development of underdevelopment countries ; while the fifth is the globalisation of the SAP era, the to date Toyo, Globalisation is also the third phase of scientific technological revolution, the promotion by transport and communication revolution of a greater linking up of economies and cultures of the world and continues expansion of world trade Toyo, Globalization in the contemporary world is characterized by objects in motion- they include ideas and ideologies, people and goods, images and messages, technologies and techniques.

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It is a world of flows Appadurai, It is also a world of structures and organization. Globalization is not a single unified phenomenon but a syndrome of processes and activities, which embody a set of ideas and policy framework organised around the global division of labour and power Mittelman, It is usually apprehended at two levels.

The first level is the increase in interactions. The second level is the intensification of worldwide social relations, which link distant localities in such a way that local happenings are shaped by events from distant points on the globe and vice versa. It is within this context that third world international relations can indeed, be situated and appreciated.

This structure in turn may engender either accommodation or resistance Mittelman, The economic essentials of globalization are evident in the acclaim of multilateral agencies with respect to the third world. According to the World Bank, globalization is good for economic growth and growth is good for the poor. This is a simple yet forceful fact-based conclusion and cannot be dismissed by specific examples to the contrary and such examples could be countered by more examples where globalisation works for the benefit of the poor World Bank; It was also promoted that globalization would enhance competition which would encourage rationality and efficiency in capitalism Toyo, But there is inequality in this type of capitalist competition, because there is no level playing field.

There has been a lot of debate among scholars and policy makers both within the developed world and the third world with respect to the impact of globalisation on third world international relations. While it has been praised for being an opportunity for the third world countries to make it in the twenty first century, it has also being criticized for its anti third world posture. This implies first that it is another way of projecting European values on the rest of the world. Hence it is termed cultural imperialism Philips, To the critical minded third world, globalization has been seen as a replacement of imperialism or modernity.

It displaces a focus on domination of third world countries by the so-called developed world, or of local and national economies by transnational corporations. It is important in the light of the above to clearly state that there is increasing fear of marginlisation and possible re-colonisation of the third world with reference to global relations. This is accentuated by the fact that almost all the structures, upon which the foundation of the global village is to be built, are controlled by the so-called developed countries.

Jakarta, Calcutta, Rio, Cairo, Bombay, Istanbul, Shanghai, Lima, Caracas and many others bear witness to the real outcome of changes in the world economy.

Globalization's Effects on Third-World Countries

In most regions, change was at first associated with intrusion of Western capital. Later local bourgeoisies developed greater coherence and ambition but even in the post-colonial period they have remained junior partners in the imperialist system. Today some are little more than parasitical groups which share revenue from processing of local raw materials: Other ruling classes have made complex, sustained interventions in the local economy, largely through structures of the state.

This is in general the case in the Newly Industrialising Countries NICs --a handful of states in which there has been relatively rapid industrial growth. Alex Callinicos comments of the NICs: They combine in equal measure 'advanced' and 'backward' features--advanced industry and authoritarian politics, a modern proletariat and great pools of misery and poverty. It is this combination which makes them liable to huge social and political explosions.

One feature of change in the Third World which has invariably puzzled bourgeois analysts has been the level of engagement of urban populations and especially of the working class. Among a host of examples, the Chilean events of , the Iranian revolution of , the struggles in South Africa throughout the s, and the Indonesian upheaval in , have all demonstrated the specific weight of the proletariat within societies still regarded as in the process of development. Trotsky's analysis of class relations within the process of combined and uneven development has proved prophetic.

The NICs are examples of capitalist advance, but the unevenness of the world system has also produced the contraction and collapse of local economies.

Globalization and its impact on Third World Countries | Kishwar Munir -

All states are subject to problems of world crisis but those most distorted by the world system are especially fragile. Thus, where capital has penetrated a country or region in order to extract specific raw materials or to use local resources for processing, changes in the world market or in local conditions can produce very rapid decline.

In the mids, two thirds of exports from Chad were cotton; two thirds of Chile's exports were copper; and two thirds of Ghana's exports were coffee. In the same period, almost three quarters of Congo's exports were timber; a similar proportion of Cuba's exports were in sugar; and of Liberia's in iron ore. In some cases, local revenues declined precipitately. In Zambia, where the state had obtained half its income from the copper industry, a fall in world prices meant that by its receipts from this source had declined to nil, with catastrophic consequences for a population soon deprived by the state of subsidised basic foods.

During periods of world recession, some vulnerable regions can be pushed to the margins of the system. Throughout the s and s countries of the Horn of Africa faced increased difficulties. They had not been exploited intensively for mineral or agricultural riches and were of little concern to the centres of world power. When wracked by repeated famines, mass movements of population and dislocation of economic and social structures, local states became highly unstable and by the early s one state, Somalia, had collapsed. This produced a spectacle which might be a metaphor for world development: There have since been further collapses in West Africa, where a series of local economies have become increasingly fragile and where in the mids the Liberian state disintegrated.

Worldwide, more and more regions face such prospects. The theory of combined and uneven development embraces change at a world level: It is a global perspective--but not one of 'globalisation'. It does not speak of positive integration by the market but of unevenness, inequality and asymmetry. Rather than harmony and increased prosperity we have more of instability, conflict and needless suffering.

And rather than a passive population ready to accept its allocated role in global consumerism we have increasingly large and energetic political collectives, above all a more assertive working class. The theory of combined and uneven development provides a framework for understanding the pattern of world development. But just as Trotsky relied upon Marx's economic theories to explain the dynamics of Russian capitalism, so it is necessary to mobilise Marx's approach to understand recent developments in the world economy, especially the increased inequalities between the West and the Third World, and within Third World societies, that the globalist account conceals.

Marx's approach to the circulation of capital is vital to this task, especially because of the globalisers' insistence that capital flows are the key element in making a more equitable world. In classical economics and its contemporary variant, neo-liberalism, capital is essentially unitary, expressing itself as money, investment or profit and growing by virtue of entrepreneurs' energy in exploiting opportunities offered by the marketplace. In the globalist perspective, capital flows worldwide as the result of direct investment by companies and individual entrepreneurs, of activity on stockmarkets and commodity exchanges, and of initiatives taken by banks and finance houses.

It is the change in volume and speed of capital transfers that makes for the more even distribution of capital and hence for globalisation. Marx argued that capital can take different forms. He suggested that capital is not unitary, nor does it expand 'naturally' through the alchemy of the market.

Rather, as he explained in Volume 2 of Capital , its form depends upon the human relationships involved in its mobilisation. Thus money and commodity capital are expressions of capital in circulation. Each, however, has its origins in productive capital, that which results from the direct exploitation of human labour. As Chris Harman insists, 'The point is important--money-capital often seems to be the "pure" form of capital, the form in which the self expansion of value is most vividly to be seen.

But like the other forms of capital, it is in reality, as Marx put it, "not a thing but a relation", a relation which involves the exploitation of people at the point of production'. Identification of different forms of capital does not mean that they exist wholly independently: Production, which is at the core of the capitalist economy, requires that money-capital is used to buy machinery, materials and labour; and production itself brings into being commodities, which are in turn exchanged for money.

But money can be moved through the system far more quickly than capital in form of material objects--machines, production lines, transport systems, etc. This is especially important in the context of credit. Banks and finance houses have emerged through the efforts of capitalists to benefit from situations in which they have profit to invest--but not necessarily enough to invest immediately in productive projects such as new factories or machinery.

They may therefore lend what they have in hand to other capitalists, usually through banks. When they need to mobilise large sums they apply to banks for loans. In effect, the loan is an advance to the capitalist on the expectation of later realisation of surplus value through direct exploitation. It is in this context that speculation takes place, as capitalists gamble on anticipated profits, often using credit, and hoping to drive up prices in the process.

The distinction between forms of capital is of special significance in periods of slump. Faced with this prospect some capitalists may mobilise more of their resources in the form of money or commodity capital. This must be moved through financial networks based on banks, stockmarkets or commodity exchanges but does not require the relatively complex and stable sets of relationships associated with productive capital. Above all, it does not require the elaborate social and political systems within which accumulation of surplus value from human labour is accomplished.

This helps to explain why a world economy which, at one level, is integrated by movements of money, becomes increasingly prone to destabilisation. It also explains the glaring contradictions associated with general movements of capital: Even orthodox economists have recently become alarmed by the disproportion between what they call the 'paper' economy--debt--and 'fundamentals' such as growth in output.

Drucker warns, 'Ninety percent or more of the transnational economy's financial transactions do not serve what economists would call an economic function'. Movements of capital in the form of money and of commodities have increased greatly in volume and speed over the past 30 years.

Axford sums up the approach of many theorists by depicting this development as 'the most unequivocal indicator of the globalisation of economic affairs'. Stopford and Strange describe the new environment in which these huge volumes of capital have become increasingly mobile: Instead of a system of national financial systems linked by a few operators buying and selling credit across the exchanges, we now have a global system, in which national markets, physically separate, function as if they were all in the same place.

The balance has shifted from a financial structure which was predominantly state based with some transnational links, to a predominantly global system in which some residual local differences in markets, institutions and regulations persist as vestiges of a bygone age. The new system, it is argued, has been made possible by rapid advances in communications technology. The Financial Times has observed that, because of these, banking 'is rapidly becoming indifferent to the constraints of time, place and currency'. It is in this context that Waters concludes, 'Elimination of space has accomplished the conquest of time'.

In a revealing remark, Cerny suggests that today 'the world order follows the financial order'. These comments reflect the conviction of many globalisation theorists that world integration is a product of the autonomous functioning of modern technologies. In a typical observation, Gray notes, 'We are not the masters of the technologies that drive the global economy: Such an approach offers no hint of why such means have been mobilised; in particular it ignores the initiatives taken by leading financial institutions to put new technologies to the service of profit.

In the s many banks attempted to counter the problem of holding funds which were 'idle' due to recession in the West by lending to Third World countries. This was an effort to counter one manifestation of a general problem--the systemic tendency of the rate of profit to decline. It ended in near disaster, as Mexico defaulted, prompting the IMF to step in and rescue its financial institutions.

As banks moved more fully into these activities they pressed into service the technologies of communication which were just becoming available: The capacity to switch money at speed through global networks did not mean that the relationships mediated by money changed, however. Despite an appearance of 'indifference' to place, the mass of transactions were conducted within and between traditional financial centres such as New York, London and Tokyo.

Even by the late s over half of all 'stateless' currency--known as the Eurodollar--circulated within the US, principally among New York institutions that had dominated the money markets for decades. At the same time, large volumes of capital have been moved through new banking centres in the Third World, especially in East Asia and South East Asia, and globally organised speculative activities now affect profoundly many African, Asian and Latin American economies.

Again, this is not an entirely novel development: In the post-colonial period many independent states then introduced controls, providing some insulation from capital movements in the wider market. But these measures were in turn reversed during the drive for deregulation which from the s exposed such countries to more powerful flows of finance and to voracious profit seeking.

By the s many countries which had been closed to international speculative activities were appearing on 'emerging markets' listings. In Emerging Markets Investor magazine detailed 51 emerging capital markets in which securities could be traded; it also commented that 'many of the markets currently inaccessible can be expected to open up before long'. Although external financial involvement in many countries may be modest on the world scale, it may be very significant in the local context. This becomes apparent as the level of exposure to financial flows is increased, especially when Third World countries open stock exchanges or other markets on which a range of securities can be sold.

Transnational movements of finance do not operate through the evenly integrated 24 hour global marketplace depicted in globalisation theory but through a series of interlinked networks--what management consultants McKinsey call 'distinct world markets for each type of instrument The result has been greatly increased vulnerability to speculators who make finely calculated judgements about each financial gambit, moving immense volumes of capital against local currencies and tradeable securities.

In the Malaysian ringitt and Thai baht dropped precipitately after evidence of local vulnerabilities produced huge outflows of money. Neighbouring states such as Vietnam and the Philippines, which were less exposed to the international markets but well integrated into the regional economy, also experienced steep falls in the value of their currencies and turmoil on their stockmarkets.

There was a flood of money out of the region, mainly to secure 'home bases' in Europe, the US or Japan. Such is the fragility of many Third World currencies and local markets that specific local collapses can spread rapidly through financial networks, producing a 'contagion' effect. In August financial crisis in Russia prompted a collapse which the Financial Times said would cause developing markets in general to 'disappear into a black hole'--Third World currencies and stocks having become 'so much nuclear waste'.

There can be no doubt that transnationalisation of world finance has had a profound effect, most importantly in generalising crisis. Thus events in South East Asia and Russia have not just weakened currencies in Latin America but through the 'domino effect' they threaten to subvert whole financial systems. The Asian crisis, having swept through Russia, is now engulfing the continent. Its biggest economy, Brazil, is fighting to avoid a currency collapse or a debt moratorium. If it is forced into either, the next biggest economies, Argentina and Russia, would well follow suit While predatory activity across the world has intensified, longer term involvement of major banks with the Third World has greatly diminished.

The level of world integration through trade is much less pronounced than in the area of finance. It is true that during the long boom world trade grew very rapidly but growth rates have since slowed. In globalisation theory, deregulation is identified as the main means of achieving a free trade network in which commodities flow across old protective regimes. But developments among the world's dominant economies are not towards an open market model but towards regional links and trade agreements. Nafta is not really about global free trade. It does remove trade and investment barriers among the United States, Canada and Mexico, but it retains and erects in the form of 'rules of origin' barriers between the three countries and the rest of the world.

Appearances aside, Nafta is a prudent step towards creating a regional trading bloc that would withstand the devolution of Western Europe and Asia into rival blocs. The treaty's free trade proponents would never admit this, but Nafta's underlying thrust is toward managed trade and investment. The notion that formation of such blocs represents a genuine alliance of national capitals must also be questioned.

In the case of Nafta, for example, regionalisation has been driven most strongly by US producers' desire to gain direct access to the Mexican market. During the late s US exports to Mexico rose rapidly: Kegley and Wittkopf assert that 'Nafta was written to accelerate this growth'. As Milward has argued in The European Rescue of the Nation State , Europeanisation is intimately associated with the dynamics of the most powerful of the regional economies, that of Germany.

Rather than being integrated simply by trade flows, the global environment is also one of new blocs, each dominated by one or more of the major economic powers of North America, Europe and East Asia--what Sandholz calls 'regional neo-mercantilism'. The exceptions, such as Mexico in the Nafta group, are left weaker as their notional independence is diminished. Even conservative accounts of the world order confirm this development. As Philips and Tucker comment, 'For the developing countries, the prospect of a world divided into separate regional centres is disconcerting.

It leaves too many countries out of the system altogether, and even those it encompasses are left relatively weak as their bargaining power is divided'. Third World countries now occupy a more marginal position in world trade. In the share of 'industrial' countries was By the figures were If the four, which together have a quarter of the 'non-industrial' world's trade, are reallocated to the 'industrial' group, the figures reveal an even starker difference: The picture is one of greatly increased asymmetry; notions of simple world integration once more seem implausible. Productive capital and foreign direct investment: In the early s, after 25 years of sustained growth through the 'long boom', international production seemed to be playing a new role in integrating the world economy.

Exchange of manufactured goods became the most dynamic sector of world trade; at the same time, the internationalisation of manufacturing itself seemed to be breaking down barriers between national states. Harris noted, 'The great boom thus tended to wash away what hitherto had been seen as the clear national identification of production'. Even by the early s their combined sales were estimated at almost 20 percent of world output of goods and services and economists were beginning to depict a novel global development.

What was unexpected was the speed of their growth and the contrast this presented with the preceding period during which national states and state capital had dominated the world economy. By the early s the largest MNCs accounted for 70 percent of foreign direct investment FDI and 25 percent of the world's capital. They operated enterprises which required long term investment and demanded sophisticated local infrastructures. Most important, they employed tens of millions of workers in productive activities: This places MNC activity in an altogether different category from other perceived globalising activities, notably that of finance, where, as Hoogvelt comments, profits 'are based on fictitious capital formation, namely on debt and exponential debt creation'.

Even the repeated world recessions of the s and s, which deeply affected growth of trade, did not halt the process of restructuring. This can be seen in the rapid growth of FDI. Hirst and Thompson note that during the s FDI grew almost four times faster than world merchandise trade, a development which these two writers--who are in general sceptical of the globalisation thesis--see as 'a very basic change in the nature of the international economy'.

Chris Harman observes that much of the credibility of the 'globalisation' orthodoxy depends upon perceptions of MNC activity: On figures collected by Hoogvelt, until the Third World received about 50 percent of total world investment; by this had fallen to 25 percent; by it had fallen to FDI involves a much smaller proportion of investment.

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It grew significantly during the s and especially in the s, when the increase averaged 12 percent a year, almost double the increase in growth of total world exports. In fact, such capital entered only a handful of economies. The World Bank recently confirmed that between and just nine of the 'developing' countries received 90 percent of all such flows, the most favoured being China, Singapore, Malaysia, Thailand and Brazil. Hirst and Thompson have correlated FDI with world population structure.

They estimate that, even when major population centres such as coastal China are included in the recipient category, countries containing just 28 percent of the world's population receive This asymmetric pattern is consistent with the regionalisation of FDI within economies of the West. Ruigrok and van Tulder show that almost all MNCs invest more in one country than in any other: Kiely concludes that 'evidence points to the maintenance, and indeed the intensification of uneven development in the global economy'.

In a recent critique of globalisation theory, Chris Harman comments, 'It is very easy for firms which trade internationally to move money internationally. But moving money is not the same thing as moving productive capital. Productive capital is made up of factories and machinery, mines, docks, offices and so on.

These take years to build up and cannot be simply picked up and carted away Productive capital simply cannot be footloose. Kiely makes a similar point, that 'capital faces a number of sunk costs, which constitute significant barriers to exit'. Labour costs are only one factor in decisions about location made by MNCs. Corporate managers routinely summon up the idea of a globalised labour market in which their workforce must be prepared to accept the discipline imposed by market conditions. But the idea of global portability of jobs is false.

The most that can be said is that in some labour intensive industries such as clothing, textiles and electronic assembly, fixed costs are lower than in most other sectors and capital is somewhat more mobile. Korzeniewicz has shown, by analysing the activities of footwear manufacturer Nike in East Asia, that companies must balance the gain in lower wages against a host of other factors.

He comments, 'The advantages of lower labour costs in the developing manufacturing areas [have] to be weighed against disadvantages in production flexibility, quality, raw material sourcing and transportation'. These considerations do not mean that companies remain wholly within the national state of origin. But even in the late s relatively few have moved outside their regional bases, where they can rely on well established industrial links and infrastructures. Ruigrok and van Tulder conclude that, under these circumstances, 'neither individual firms nor states but industrial complexes constitute the centre of gravity of the international restructuring race'.

North America, Europe and Japan. The rest of the world contributes only 19 percent of the sum of manufacturing exports and of this total two thirds comes from the Tiger economies, plus coastal China. It is on this basis that Ruigrok and van Tulder argue that what is usually called 'globalisation' would be better described as 'triadisation'.

In this context structures congenial to long term investment of capital are of immense importance. When MNCs do invest outside regions of origin the character of the local state is a critical factor and nation states perceived as stable, with well-integrated infrastructures and mechanisms of social and political control, are highly favoured. As Kiely observes, the pattern of FDI worldwide takes place 'because of, and not despite the state'. Capitalism is not using the Third World in general as a site for intensified exploitation, it is marginalising it.

Globalisation theory is not a description of a much changed world. Rather it is the imposition of neo-liberal economic principles upon the reality of an unequal and disordered system: It is certainly true that the internationalisation of capital has accelerated over the past 30 years. But within this process two developments have taken the system in a direction different from that envisaged by the globalisers.

First, a key response to the fall in the rate of profit has been increased speculative activity and a huge growth in financial markets.

It is time to reflect more now on how these choices could either develop or under-develop the third world. Axford sums up the approach of many theorists by depicting this development as 'the most unequivocal indicator of the globalisation of economic affairs'. But developments among the world's dominant economies are not towards an open market model but towards regional links and trade agreements. They had not been exploited intensively for mineral or agricultural riches and were of little concern to the centres of world power. If it is forced into either, the next biggest economies, Argentina and Russia, would well follow suit Such cities also express the yawning gap which has emerged between the new bourgeoisies of such countries and the mass of the exploited, captured in the presence of five star hotels offering haute cuisine alongside slums in which vast numbers of people struggle for survival.

This has not complemented the growth of productive capital at a global level but has diverted investible funds from it, making less likely the emergence of new centres of capital accumulation. A second development involves decisions taken by MNCs to develop manufacturing on a regional, rather than a 'global' basis. Emergence of the 'triad' of investment zones has concentrated more and more of productive capital among networks of advanced economies.

These networks are connected to Third World economies but are not active agents of the latters' development; on the contrary, their consolidation is a vote of 'no confidence' in the Third World. Declining rates of productive investment have left most such economies weak and vulnerable to the currents, eddies and tidal waves created by global speculators. The two tendencies have a combined effect of greatly increasing the development 'gap' between the 'triad' and the NICs, and 'the rest'. They intensify the unevenness of the world system, relegating to the also-rans even those states in which there were once hopes of modest advance.

These changes mean that the vision of advance towards NIC status is an illusion. The dispersal of capital worldwide would certainly involve more and more economies, he argued: It seems inconceivable that the general trend could now be reversed'. But the trend has been reversed. What now seems inconceivable is that even among the more stable countries of Africa, Asia and Latin America there might emerge states able to follow the paths of Korea or Taiwan, which over a generation from the s changed radically, becoming substantial if junior industrial capitalisms.

Callinicos's criticisms of Harris in this journal in have proved substantially correct. Emergence of new NICs, Callinicos suggested, would 'depend heavily upon international conditions reflecting largely the state of the advanced economies' and would be 'limited by the ways in which Western capitalists, still the dominant force in the system, respond to the fall in the world rate of profit'. In effect, capitalism has closed the NIC option for the forseeable future. Its ideologues nonetheless maintain a double fiction: As recently as , one leading US bank published lists of Tigers, Near-Tigers and Tiger Cubs, encouraging Third World governments to believe that they could join the developing elite.

In fact, from the s, regimes in the East Asian NICs had followed a state capitalist path to industrialisation and represent specific and probably unrepeatable cases of rapid capital accumulation in the Third World. As Harris argued, 'Before the four existed, it had been necessary to invent them in order to justify [neo-liberal theories]; and after they expanded, not a little invention went into rendering the facts of their performance consistent with the postulates of the free market'.

Especially misleading is the notion that in cases of the most rapid advance, notably Korea, the local state withdrew from direct intervention in economic affairs. On the contrary, the state was and remains central: Institutions such as the World Bank and the IMF continue to embellish the myth while using control over funds to induce Third World governments to move away from protectionism, state ownership and market controls.

Such 'liberalisation' was pioneered in the mids by the Sadat regime in Egypt through its infitah 'opening' policy. The regime immediately enriched itself and its supporters through commission agencies, import-export scams, and speculation in property and finance. Within a few years a 'Sadat class' of nouveaux riches had been accommodated by the ruling senior bureaucrats and army officers of the earlier nationalist period.

Globalisation - How To Create A "Third-World" Economy

Hinnebusch describes the outcome: The new prosperity widened and solidified the regime's support among those who got the lion's share of the benefits, the bourgeoisie. Revitalisation of the private sector created powerful interests with a stake in the regime. Contractors, real estate speculators, and merchants flourished on the economic boom; importers, partners and agents of foreign firms, tourist operators, lawyers and middle men who helped investors against bureaucratic tangles, thrived on the cuts they took from resource inflow On the other hand, the lower middle and lower classes bore the main costs of infitah while reaping the fewest benefits The explosion of conscipuous consumption at the top fed a growing perception that class gaps were widening, the rich getting rich and the poor poorer.

Twenty five years after the initiation of infitah President Mubarak still talks of creating a 'Tiger on the Nile' but sustained industrial growth on the NIC model remains a distant prospect. The story has been repeated in scores of states worldwide, as regimes with roots in an earlier era of state-led development have embraced neo-liberalism and launched the inevitable attacks upon living standards, social welfare and upon workers' and peasants' rights. In many poor countries the aim of development policy has been less ambitious--simply to halt economic decline.

In the UN secretary general commented that Africa was heading for 'an unrelenting crisis of tragic proportions'. Sandbrook comments, 'If it were not for the unenumerated and unregulated informal or parallel economy, life [for the masses] would be more even desperate'.

The more compliant have been local regimes, the more seriously they have been affected. In Zimbabwe was ranked as a 'middle income' country by the World Bank, above Indonesia, the Philippines and other states aspiring to rapid advance. While opposing IMF 'adjustment' programmes rhetorically, the Mugabe regime had implemented them, fulfilling requirements for aid and development assistance.

But during the mids world prices for Zimbabwe's main exports, tobacco and gold, fell sharply and investors began to withdraw. In November there was a run on the local currency and a collapse in the Harare stockmarket. Food prices soared and were given a further upward push when, under pressure from the World Bank and IMF, the Zimbabwean regime increased the cost of the main staple, maize, by 24 percent. One report commented that in a few months the country had gone from being one of Africa's top performers--'about to achieve sustained growth and prosperity'--to 'economic disaster'.

Zimbabwe suffers from the increased vulnerability which affects all economies 'opened' to the world system. As a corollary, states which have been somewhat less compliant with the IMF, or less effective in 'opening', have been punished less heavily. After the collapse of world markets in September one investment manager in London commented, 'As liquidity has drained out of the emerging markets, countries with relatively little foreign participation and generally illiquid markets have suffered the least At the same time, these very vulnerable countries are being revisited by the problem of debt.

This has often been viewed as a problem of the s and early s which receded when commercial banks reduced lending. But everywhere except Latin America scene of the earlier debt crisis debts to Western governments and multilateral creditors have continued to mount. By the late s the volume of debt was increasing massively: Despite the increase in FDI to some developing economies, Western banks and governments now receive more in interest on debt from the Third World than the MNCs extract in profit--a reversal of the situation in the s.

With commodity prices falling, and the trade liberalisation of the Uruguay Round of negotiations on tariffs further penalising Third World economies, such countries might have expected relaxation of payment conditions. Countries such as Tanzania, which was told to wait until to qualify for promised 'debt relief' under HIPC, face crushing burdens.

According to one aid agency, the country's debt is rising so rapidly that development projects are hardly feasible. A Christian Aid official illustrates a problem which is causing anxiety to even the most conservative aid bodies: The money is simply going round in circles.

In , that was equal to about million [Tanzanian] shillings. In local currency terms we have already repaid the debt several times. But it just goes up and up. What seems incomprehensible to aid officials is that Tanzania has implemented IMF adjustment programmes, as instructed, since the mids.

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Among its 'liberalisation' measures, the government has repeatedly devalued the local currency, so that by the shilling was at 1, percent less than its international value in These stark problems have not prevented US strategists restating the global masterplan in blunt terms. In the State Department sent a senior trade official to tell an African summit meeting: End of the 'Third World'? The notion of a 'Third World' has never been closely defined. As deployed by radical nationalists in the s it was meant to indicate a state directed development path independent of Western capitalism and of Eastern state capitalism.

This homogenised a vast range of countries; it also concealed class relations within them and the common interests between their rulers and those of the 'First' and 'Second' worlds. As such it obscured the workings of capitalism. Since the s the main use of the term has been as a shorthand to indicate the gulf between a minority of rich countries and the majority of poor countries of Africa, Asia and Latin America. As an expression of contemporary world inequalities it may then be more significant than hitherto--for such inequalities have become far more pronounced.

In addition, it is a useful corrective to globalist babble with its imagined universe of happy consumers. In globalisation theory the notion of a Third World is rendered meaningless, for the inequalities it implies are said to be disappearing beneath worldwide capital flows. This is Nigel Harris's position in The End of the Third World , published in , in which he argued that a strong tendency to distribution of manufacturing across the globe was transforming relations between rich and poor countries.

But neither the notion of a globalised world, nor that of a system divided between First and Third worlds or North and South are appropriate ways of depicting world capitalism.