ECONOMICS OF GLOBALIZATION AND GLOBAL MARKETS

ECONOMICS OF GLOBALIZATION AND THE MARKETS

AURNOB ROY

THE MODEL OF GLOBALIZATION WAS GIVEN BY MICHEAL PORTER IN WHICH HE USED 4 I’S NAMELY-1-INVESTMENT, 2-INDUSTRY OR MANUFACTURING-3-INFORMATION TECHNOLOGY AND 4-INDIVIDUAL CONSUMER OR MARKETIZATION. TO THIS I HAVE ADDED THE 5TH [I] CALLED AS INTERNATIONAL BUSINESS[I.B] WITHOUT WHICH A NATION WILL OPERATE UNDER NO TRADE CONDITIONS CALLED AUTARKY. BUT WITH INTERNATIONAL TRADE IT CAN PRODUCE BEYOND THEIR PRODUCTION POSSIBLITY FRONTIER, (PPF) SO AS TO PROMOTE, INTERNATIONAL BUSINESS AND LOWER THE MANUFACTURING COSTS LIKE BARBIE DOLLS OF USA MADE BY MATTEL TOYS ARE NOWADAYS MADE IN CHINA AND THE PRICES HAVE FALLEN FROM RS. 500/-PER DOLL TO RS. 135/- PER DOLL.

THE OPENING UP OF OVER 3000 ITEMS UNDER WTO REGIME POST-2001IN CHINAINCREASED THE SALES OF COSMETICS, HALOGEN BULBS, TORCHES AND TOYS, CONDOMS ETC. AND MORE THAN RS. 5000 CRORE WAS THE LOSS TO THE INDIAN INDUSTRY. NOW, WE GET DURING DIWALI, RS. 100/-PER 500 PIECES, OF SMALL BULBS, FOR NIGHT DECORATION at our Homes ILLUMINATION AND THEN DURING HOLI FESTIVAL WE HAVE THE PLASTIC BASED CHINESE SPRANKLERS. FURTHERMORE, THE INDIAN CONSUMER IS VERY PRICE CONSCIOUS RATHER THAN QUALITY CONSCIOUS SO WE HAVE CHINESE MADE GANESHA AND LAXMI IDOLS DURING DIWALI AND ALSOWE HAVE SEVERAL IDOLS OF GODDESS MAA DURGA MADE IN CHINA DURING THE DURGA POOJA.

THERE IS NO DOUBT THAT THE CHINESE INFRASTRUCTURE IS VERY STRONG. THE CENTRAL GOVT IN MAINLAND CHINA, HAS INVESTED ON HOUSES, DRAINAGE, ROADS, ONE ROOM ACCOMODATIONS AND FREE PUBLIC TOILETS UNLIKE BINDESHWARI DUEY’S SINCE 1960-SHULABH SHAUCHALYA WHEN 70 PER CENT OF URBAN INDIANS GO TO THE FIELDS FOR SANITATION AND THE OLIGOPOLISTIC MARKET OF 225 MILLION MOBILE PHONES WITH MAJOR PLAYERS VIZ. VODAFONE-HUTCH, RELIANCE INFOCOM, AIR TEL, IDEA, SPICE, BSNL, TATA INDICOM ETC. BRINGING A COMMUNICATION REVOLUTION BUT A SANITATION MARKET REVOLUTION IN INDIA IS YET FAR BEHIND, WITH NO OLIGOPOLISTIC SANITATION MARKET,  USER PRICE CHARGES, TO MAKE IT A SUSTAINABLE BUSINESS AND MARKET OF EXCRETA PROPOSITION WITH MARKET BASED PRIVATE PUBLIC PARTNERSHIP [PPP] INITIATIVE. India HAS FIRST CLASS CARS HONDA-CITY, ZX, TAYOTA- COROLLA, INNOVA, QUALIS MODELS, GENERAL MOTORS, FORD-IKON ETC. BUT THIRD CLASS ROADS, PHYSICAL INFRASTRUCTURE. THIRD CLASS MANAGEMENT SYSTEMS. CORRUPTION AND BRIBERY IS THE ORDER OF THE DAY BOTH IN PUBLIC AND CORPORATE SECTOR. CORRUPTION AND MONEY INCENTIVES IN INDIA IS SEEN AS A WONDERFUL MANAGERIAL TECHNIQUE OF MOTIVATION. TO SET UP A BUSINESS IN INDIA WE REQUIRE 16 LICENSES, EVEN NOW, WHEREAS IN CHINA THERE IS SINGLE WINDOW CLEARANCE SYSTEM AND IN 15 MINUTES A FOREIGN COMPANY CAN SET ITS BRANCH AND BUSINESS VIZ.MR. N.R.NARAYANA MURTHY-CHIEF MENTOR-FOUNDER-INFOSYS TECHNOLOGIES, BANGALORE, INDIA.

CHINA STARTED ITS ECONOMIC REFORMS IN 1977 WITH AGRICULTURE AS THE KEY STRATEGIC PLANK IN A COMMUNIST ECONOMIC REFORMS-1977, SET-UP UNDER DENG XIO PENG. LATER THE SPREAD EFFECTS WHERE SPREADING AND DOMINATING IN OTHER SECTORS.

HOWEVER, INDIA HAS FORGOTTEN AGRI-BUSINESS MGT. COMMERCIALIZATION OF AGRICULTURE MANAGEMENT.IT IS RELYING MORE ON SUBSISTENCE FARMING AGRICULTURE. MOST OF BELOW THE POVERTY LINE PEOPLE LIVE IN RURAL AREAS WHERE WE HAVE HAD ON AN AVAERAGE 2 PER CENT PER ANNUM AGRICULTURE GROWTH, WHEN THE REQUIREMENT IS 4 PER CENT AGRICULTURAL GROWTH. 90 PER CENT OF THE CITIZENS, IN MY NATIVE STATE OF UTTAR PRADESH, DO NOT HAVE SANITATION SYSTEMS, IN RURAL AREAS AND GO TO THE FIELDS TO DEFECATE, WHEREAS OUR MALLS ARE FULL WITH BRANDS, LIKE MARKS AND SPENCER, WALMART, PANTALOON, TESCO ETC. ALL WORLD CLASS IN A THIRD CLASS INSTITUTIONAL MANAGEMENT SYSTEM WITH SYSTEMATIC FAILURE OF IMPLEMENTATION AT GRASSROOT LEVELS. DECENTRALIZATION OF FINANCIAL MANAGEMENT TO PANCHAYATS, GLOCALIZATION [GLOBALIATION+LOCALIZATION], LOW COST HOUSING, LOW COST SANITATION SYSTEM, NATIONAL CULTURE BUILDING, LOW COST PRIMARY EDUCATION, LOW CAT TECHNICAL, JOB RELATED EDUCATION STATEGIES ARE “THE FORTUNE AT THE BOTTOM OF THE PYRAMID MODEL” YET TO BE ADOPTED ALONGSIDE “GLOBALIZATION IN INDIA.”

SO FAR, NO ATTEMPT, HAS BEEN MADE, ON A MASS SCALE, TO HAVE FDI IN AGRICULTURE, OF JV WITH INDIAN AND MNC FIRMS, ON GROWING EXOTIC VARIETY OF FLOWERS, TO PROMOTE FLORICULTUE WITH COLD CHAINS.

INDIA STARTED ECONOMIC REFORMS IN JULY-1991, WITH TRADE SECTOR REFORMSAS IMMEDIATE BALANCE OF PAYMENTS PROBLEM (BOP) IN THE TRADE SECTOR AS OUR FOREIGN EXCHANGE RESERVES WERE ONLY $2 BILLION DOLLARS, SUFFICIENT FOR 2 WEEKS OF IMPORTS AND DEVALUATION OF THE RUPEE BY OVER 21 PER CENTBY THE GOVERNMENTPRIMARILY TO MAKE INDIA’S EXPORTS CHEAPER AND IMPORTS COSTLIER IN THE INTERNATIONAL MARKET. BY 199510% OF INDIAS ECONOMY COMPRIZED OF EXPORTS. TODAY, 35% OF INDIA’S ECONOMIC GNP ARE EXPORTS ORIENTED. INDIA’S GDP IS 1.1 TRILLION U.S DOLLAR ECONOMY.WHEN THE WORLD ECONOMY IS $45 TRILLION AND USA GDP IS $25 TRILLION AND CHINA ECONOMY IS $1.8 TRILLION. THE WORLD’S LARGEST INVESTMENT BANKER, GOLDMAN AND SACHS, HAVE PREDICTED THE EMERGING MARKETS BRICS ECONOMY MODEL OF BRAZIL, RUSSIA, INDIA AND CHINA AND COUNTRIES TO WATCH FOR LOW LABOR COST AND KPO, LPO, BPO OUTSOURCING IN FUTURE YEARS BUT THE FACT REMAINS THAT THEY HAVE PUT CHINA AS NO. 1, INDIA AS NO. 2 AND USA AS NO. 3 WORLD ECONOMIC GIANTS IN ITS JANUARY 2007 ANNUAL REPORT. HOW WILL THIS BE POSSIBLE?

THE LPG MODEL,[LIBERALIZATION,PRIVATIZATION AND GLOBALIZATION] WAS PROPOGATED BY THE US-BASED GLOBAL FINANCIAL INSTITUTIONS- WORLD BANK AND THE IMF- DURING THE 1980’S AND MORE THAN 130 COUNTRIES AROUND THE GLOBE, HAVE ADOPTED ITWITH STRINGENT REGULATIONSLIKEBRINGING DOWNTHE FISCAL DEFICIT BELOW 5% OF GNP, BRINGING DOWN THE CAD-CURRENT ACCOUNT DEFICIT (EXPORTS-IMPORTS=CAD) BY LESS THAN 1%  OF GNP AS EARLIER IT WAS 3% OF GNP.

MOREOVER, POVERTY IN INDIA WAS 38% OF GNP IN 1991 AND NOW,IT IS AROUND 25% OF POPULATION LIVING BELOW THE POVERTY LINE. (BPL)VIZ. 1, 800 CALORIES PER PERSON PER DAY IN URBAN AREAS AND 2, 400 CALORIES PER PERSON PER DAY IN RURAL AREAS. THIS DATA IS PROVIDED BY THE YOJNA BHAWAN, PLANNING COMMISSION, NEW DELHI. ANOTHER FACTWORTH NOTING PRIOR TO THE GLOBALIZATION ERA IN 1985, 15 PAISA USED TO GO TO THE POOR OUT OF 1. 00 RUPEE THE GOVT SPENT IN EMPLOYMENT PROGRAMMES IN RURAL INDIA AND BY 2007 PROF MONTEK SING AHLUWALIA, DEPUTY CHAIRMAN, PLANNING COMMISSION HAS FOUND OUT THAT ONLY 6 PAISA PER PERSON PER DAY WAY ACTUALLY GOING TO POOR BENEFICIARIES OUT OF EVERY RS. 1. 00 INVESTED [IN THE PRIME MINISTER MANMOHAN SINGH’S EMPLOYMENT YOJNA IN RURAL INDIA].

GLOBALIZATION IS MARGINALISING RURAL INDIA.PROBLEM IS THAT FOR A 8-10 PER CENT, GNP GROWTH, PER ANNUM, INDIA REQUIRES $150 BILLION OF INVESTMENTS IN PHYSICAL AND SOCIAL INFRASTRUCTURE DEVELOPMENT.

 THEN, NATIONALISTIC ATTITUTDE TOO IS LACKING AMONG THE INDIANS.

 THEN TERRORISM AND 160 DISTRICTS OF 600 DISTRICTS OF INDIA ARE MANAGED AND ADMINISTERED BY THE MAFIA, GOONDA RAJ, VEERAPAN-PHOOLAN DEVI TYPE GLOCALIZATION LORDS BECAUSE OF THE FAILURE OF NOT MARKETS BUT STATE PLANNING AND ALSO THE INDIAN INSTITUTIONAL SECURITY SYSTEM INCLUDING THE POLITICAL SYSTEM OF DEMOCRACY, WE,THE PEOPLE,POLICE AND  THE ARMY.

THE DAILY RAPES OF DAUGHTER’S, MOTHER’S AND WIVES OF THE CITIZENS OF J&K BY THE ARMY PERSONNEL IS A MAJOR CAUSE OF CONCERN FOR HUMAN RIGHTS IN THE NAME OF COMBATTING TERRORISM.

 ITS MARKETING INDIA ABROAD,CREATING INDIAN BRAND,DEVELOPING MARKETS,BUSINESSES,INNOVATIONS, CREATIVITY,EMPLOYMENT, MONEY MAKING, ENTREPRENUERSHIP AND EDUCATION  ARE SOME OF THE KEY STRATEGIC INITIATIVES, WHICH INDIA NEEDS, TO TACKLE,ON WAR FOOTING,WITH FIRM RESOLVE, WITH EDUCATIONAL CULTURE, HAVING AN EXPONENTIAL EFFECT, WHICH WILL BRING IN MONEY,IN THE HANDS OF THE PEOPLE, THROUGH CREATIVE INNOVATIONS WITH R&D.

BILL GATES AND MALINDA GATES FOUNDATION HAS SPEND OVER $500 MILLION ON AIDS AWARNESS AND CONTROL PROGRAM WHICH MANY FEAR WILL SPREAD LIKE AN EPIDEMIC IN INDIA. MALARIA, TYPHOID, DIPTHERIA, CHICKEN POX, TUBERCULOSIS ARE OTHER DISEASES WHICH ARE LIFE THREATENING ALONG WITH CANCER.

GLOBALZATION SEEKS THE INTEGRATION OF THE ENTIRE GLOBAL ECONOMIES TROUGH FORWARD AND BACKWARD LIKNAGES. IT IS BASED ON BRIDGING THE-

1- INVESTMENT GAP -THIS INDIA IS DOING WELL 35% NOW.

2- SAVINGINGS GAP-HERE TOO INDIA IS DOING VERY WELL WITH 31%

3- MANAGERIAL GAP-IT REMAINS A CHALLENGEAS WE ARE PRODUCING MBA’S ON A WHOLESALE  MARKET RATE WITHOUT ANY REGARD TO QUALITY OF PROFESSIONAL EDUCATIONINDUSTRY TRAINING, PROJECT, VISITS TO THE MANUFACTURING SITES AND INDUSTRIAL TRAININGS. WATCHING HOW THE “NAWAB BRAND” OF MANGO OF “DUSHERRI” VARIETY IS BRANDED FROM MALIHABAD, KAKORI, MALL AND HARDOI BELT OF UTTAR PRADESH AND EXPORTED TO CHINA, USA AND UK.

THE MANAGERIAL GAP NEEDS TO BE FILLED UP BUT THE MANAGERS NEED TO BE OF WORLD CLASS QUALITY.

4- “FOREIGN CAPITAL GAP” WILL ALSO BRIDGE THE “TECHNOLOGICAL GAP” TO MAKE PRODUCTS FOR EVERY SEGMENT OF SOCIETY.

AS IT IS A REQUIREMENT IN THE WORLD. GLOBALLY, WE HAVE 6 BILLION GLOBAL CITIZENS. SADLY, 4 BILLION DO NOT HAVE TWO SQUARE MEALS A DAY, I HEARD THE LECTURE OF PROF AMARTYA SEN IN 1986, FOR 6 HOURS, ON GLOBAL HUNGER, ON A SUNDAY EVENING SPECIAL PROGRAMME ON BBC WORLD SEVICE, LONDON, RADIO. LITTLE HAS CHANGED SINCE THEN, AS BY 2005 PROF CK PRAHLAD, CALLED UP,” FOR FORTUNE AT THE BOTTOM OF THE PYRAMID MODEL.” IF THIS IS FOCUSSED BY USA, EU, APEC, ASEAN, SAFTA, NAFTA, MERCOSUR ETC ON “WORLD HUNGER”, THE “WAR ON TERROR” WILL BE OVER. IF EDUCATION IS ON TOP. IF ECONOMY IS ON TOP. IF EMPLOYMENT IS ON TOP. IF INFRASTRUCTURE DEVELOPMENT BITH PHYSICAL AND SOCIAL IS PUT ON TOP AS A MANAGEMENT MANTRA ALONG WITH PROPER MARKETING AS EVERY BUSINESS BGINS AND ENDS WITH MARKETING WE WILL HAVE A SAFER EQUAL BETTER WORLD TO LIVE THAN IT IS TODAY.

ONLY TWO BILLION GLOBAL CITIZENS EARN MORE THAN $2 DOLLARS A DAY WHILE THE REST OF THE BPL-BELOW THE POVERTY LINE POOR PEOPLE EARN ONLY RS. 38/-VIZ $1/- A DAY. AS PROF C.K PRAHLAD STATES THEY ARE THE FIRST LEVEL OF FUTURE EMERGING MARKETS. FOR THEMLOW COSTHIGH QUALITY GOODS AND SERVICES ARE REQUIRED VIZ. RS. 2 /-ICE CREAM, RS. 2 /-PC, RS. 2/-CELL, RS. 2/-MOBILE PHONE SET JUST WE HAVE TODAY RS. 2/-NEWSPAPER AND RS. 2/- 1 PKT BIDI WHOSE NET BIDI INDUSTRY WORTH IS RS. 18, 000 CRORE. INDIA’S PHARMA INDUSTRY IS WORTH RS. 75, 000 CRORE.

POSITIVE ASPECTS OF GLOBALIZATION ARE MANY-

1- MORE CHOICE OF CARS, TV, MOBILE PHONES, REFRIGATORS, COMPUTERS, LAP TOPS AND A PLETHORA OF FMCG AND CONSUMER DURABLES ARE AVILABLE.

2- PRICE SIGNALS AND COMPETITION GIVE PROPER PRICE TO THE CONSUMER.

3- WITH THE COMING OF LOW PRIZED RADIO, TRANSISTORS, TWO-IN-ONE, CD PLAYER, DVD PLAYER, HAIER PLANET BRAND IN CTV, WASHING MACHINE ETC HAVE REDUCED THE PRICE OF LUXURY GOODSNOW AFFORDABLE TO THE COMMON MAN ON THE STREET.

4- THE EMI-EQUAL MONTHLY INSTALMENTS ON CARS, MOTORCYCLES, SCOOTER, AUTO-RICSHAWS OPERATED BY CNG HAVE MADE IT AFFORDABLE TO THE LOWER AND UPPER MIDDLE CLASS SEGMENT AND HAS ALSO ENCOURAGED CONSUMERISM AMONG EVERY INCOME SEGMENT.

5- RETAIL MARKETING HAS BROUGHT TO INDIA THE VERY BEST FROM MARKS AND SPENCER, BYFORD, PETER ENGLAND, ARROW, DENIM, SHOPPERS STOP, KHADIM’S SHOES, TESCO, ENGLAND, WALMART, K-MART ETC. THUS HELPING IN BULK BUYING AT CHEAPER RATES FOR CONSUMERS WITH THE ADVANTAGE OF WORLD CLASS BRANDED PRODUCTS.

6- THE REVOLUTION IN MOBILE TELECOM IT IS HARD TO IMAGINE A PERSON IN INDIA WITHOUT A CELL PHONE. 225 MILLION CONSUMERS IS THE INDIA MARKET. THE 1974, MARTIN COOPER, MOTOROLA SYSTEMS ANALYST DISCOVERY HAS BECOME SO FASIONABLE THAT PER WEEK IN CHINAA NEW MOBILE PHONE BRANDCOMES IN TO THE MARKETS. THE NO. OF CELL PHONES HAVE OUTNUMBERED THE LAND LINE PHONES IN INDIA.

7- EXPORTS OF SPORTS GOODS IS ANOTHER SILVER LINING FOR INDIA. EQUESTRIAN EVENTS, CRICKET BATS, PADS FOOTBALLS ETC.

8- THE OTHER MAJOR EVENT WAS THE NON PERFORMING ASSETS RAPIDLY CAME DOWN OF THE PSU BANKS. PRIVATIZATION OF BANKS WAS ALSO INTRODUCED AS PER THE RECOMMENDATIONS OF NARASHIMHAN COMMITEE-1992 AND SO WAS THE CASE OF INSURANCE SECTOR WITH THE MALHOTRA COMMITTEE REFORMS IN 1995WHERE FOREIGN PLAYERS LIKE PRUDENTIAL OF UK, STANDAD LIFE OF UK ING OF UK ALLIANZ OF GERMANY ETC. WERE INTRODUCED IN THE INSURANCE GENERAL AND LIFE INSURANCE MARKETS.

9- AS FAR AS THE ECONOMIC REFORMS MODEL (ERM)  IS CONCERNED BASICALLY I BELIEVE, IT WAS A SRTINGENT MODELTO DO AWAY WITH SOCIALISM, EQUALITY AND SOCIAL JUSTICE,  USSR- BASED- PARADIGMS BUT TO BRING IN MILTON FRIEDMAN’S-USA, 1976, NOBEL PRIZE IN ECONOMICS WINNER, ” SUPPLY SIDE ECONOMICS” PRIVATIZATION, PRICE SIGNALS, TRANSACTIONS COST, MARKETING ECONOMICS BASED USER PRICING, PRICE SIGNAL’S IDEOLOGY OF PRACTICALITIES AND WORLD CLASS ADOPTION IN IMPLEMENTATION WITH “THATCHERISM” AND “REAGANOMICS” IN THE FOREFRONT BASED ON “MONETARISM”, PRUDENT-PUBLIC EXPENDITURE/ SPENDING-CONTROL CAP WITH “FISCAL RESPONSIBILITY BILL” IN 2003.

INDIA‘S FISCAL DEFICIT MUST STAY BELOW 5% OF GNP.

TO DO AWAY WITH SUBSIDIES BILL IN FARM SECTOR.

BUT DEVELOPED NORTH NATIONS KEEP SUBSIDIZING THEIR FARMER’S IN E.U COUNTRIES TO THE AMOUNT OF 27% OF GNP.

ECONOMIC REFORMS IN INDIA LPG WORLD BANK-IMF BASED MODEL POST JULY-1991.

FFIIT MODEL=FISCAL SECTOR REFORMS+FINANCIAL SECTOR REFORMS + infrastructure SECTOR REFORMS+INDUSTRIAL SECTOR REFORMS+TRADE SECTOR REFORMS.

10- INDIA’S PER CAPITA INCOME HAS ALSO INCREASED FROM $470 IN 2001 TO $875 TODAY

INDIA NEEDS A TOTAL MENTAL ATTITUDINAL TRANSFORMATION OF THOUGHT AND ACTIONS WITH DISCIPLINE. A TOTAL PEACEFUL REVOLTION.ANOTHER NON-VIOLENT REVOLUTION. THE SCALE AND THE STYLE NEVER THOUGHT OFF BEFORE, WHERE MAN HAS NEVER REACHED BEFORE. SO THAT WE MAY SAY PROUDLY “MERA BHARAT MAHAN”.

 

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One thought on “ECONOMICS OF GLOBALIZATION AND GLOBAL MARKETS”

  1. Well India is set for a transformation.We do need LPG liberalization Privatization and globalization but we must focus our strategy of Development at Late CK Prahlad formerly of IIM Ahmadabad and lately at University of Chicago that FOB works meaning harness entrepreneurial skills at fortune at the bottom of the pyramid..micro finance,group loans for men and women without any collateral with world bank USA help.Now to make it happen attitudinal change for nation building is required which can only come by education and it job led growth linkage.This we need not only from CSR corporate Social Responsibility by Pvt sector in India,Indian MNC’s abroad and Global Companies in India like NOKIA,SAMSUNG,MICROSOFT,ORACLE, Mercedes etc must build roads,housing at low cost and go for sanitary market.All areas have high potential but we cannot do away with Indian culture just as we cannot throw away afghanistani,irani and Iraqi culture..do in Rome as romans do USA must understand this and WAR ON TERROR is no solution to end Terror but WAR ON EDUCATION,WAR ON JOB LED GROWTH,WAR ON PARTICIPATORY DEVELOPMENT,WAR ON HUMAN DEVELOPMENT,WAR ON EMPLOYABILITY SKILLS UP-GRADATION IN EDUCATION is India and Global need.This is my hypothesis of 2010-July 25th.Thanks for reading.

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