Further Globalization
I am so confused by whether globalization is good or bad. I am getting the feeling that globalization is like communism - in theory it is good but in reality it has a lot of bad side effects. Ideally it should be removing borders, thus allowing knowledge and richs to freely flow about. Something like thermodynamics: money will flow where it is most needed, resulting in a uniform money through out. But in reality it can drain the resources of poorer nations, resulting in extreme contrasts. Ofcourse we can argue that it has been globalization and the out sourceing which has allowed india to gain riches and become its own powerhouse. But it seems to me the Indias of the world are few and far between. More often than not, resources of a country are drained. Look at Iran for example. How much of a knowledge drain has Iran undergone? Unlike India, people do not return to Iran once they become established and wealthy. Money does not really get sent back to iran. So in the right circumstances, globalization can work. But third world nations generally have so many political and cultural problems that the right circumstances are rare. What do you think?
The other thing was the comment of Brinda about why middle east countries are poor. Basically, Juan is correct. They have raw resources but they don't have the technology to develop these raw materials. So they sell them cheaply to other countries and buy back the refined material at a much higher cost. This was what was happening to the petrol industry in iran during the shah regime. Iran was selling raw petrol to england (i think) and buyin back refined petrol at a loss and this was what Iran had!! Jeerjeerak, do you know much more about this?
5 comments:
YAY you said I'm right ... this is memorable :P
well, this is not an easy question. One possible answer is, technology to develope the natural resources is not the key. You could as well sell the oil, invest the money in intl money market and get the same level of benefits as if you were an industrial country. In my opinion the problem is the 'rent' associated with the oil revenue. in mideast governments (as opposed to private entities) own the oil, that this gives them a 'rent' that they shouldn't have gotten. compare it with US. They have oil too, but the state does not have the ownership right, and thus is free of this abnormal revenue.
I really dont think its a simple as selling raw material but buying back a refined product. I think that it may have a lot to do with the fact that it was govt run industry - and the govt tends to be inefficient - and that turns out to be bad overall for the country. From waht I remember reading about much of the oil-dependent economies - there has been little effort to diversify and when they had some sort of economic downturn it was because the govts spent a lot of the oil money on grandiose schemes and largely behaved like oil money was a bottomless pit of resources.
Also I don;t see why refining technology can't be bought or developed in-house. I think right now Iran pumps like 2 million barrels a day - or something like that - and refines 42 million litres of petrol ad day - but needs 70 million litres of oil actuallly - so the govt is importing petrol ... which is sold at something like 50c/gallon ... Subsidized oil is often a big reason why its consumed in large quantities ..
Governments have to put into place policies that encourage economic growth. Much of Indias economic growth has happened post 90s - when the economy was liberalized.
I think globalization can be viewed as just more integrated economies - and I was reading some stuff which suggested that being integrated into the global economy fuels a lot of growth and is good for the country - east asia is often touted as an example. But integrating into the global economy has to be done gradually and carefully ...
I also think that communism is morally acceptable/fair at first look but not necessarily if you study how it spans out ...
Thats my rather more than 2 cents!
I just saw syriana, and the simple part I could understand was that about puppet goverments, nothing new there, but I think I still missed a lot of it.
I didn't get anything from the lawyers story.
So, another thing, when brinda says liberalized economy... is it the same thing I know as "privatización" that is to say enterprises run by goverments are sold to private companys to run them.
Is this right?
And if it is, I usually hear negative things about it, than positive. I think for some reazon a lot of people always get fired during the process so that is why they hate that.
I'm not sure.
Anyone could clarify pleas?
Prior to the 90's, setting up a private enterprise in India was fraught with red-tape. You had to get a gazillion licenses - and it was all famoulsy dubbed the "license raj". In the 90s, we had run out of money - and it was pretty much a do-or-die situation. At that point Manmohan Singh ( the current PM and an economist) actually worked on easing many of these rules and regulations. This really did make a difference to our economy. We havent see this kind of economic growth earlier. Nevertheless India has a long way to go before all this growth reaches most of the population.
Yes part of hte process has been to get privatize state-run industries as well.
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