History of Globalisation

The great depression of the 1930’s and the collapse of the international monetary system were attributed to economic nationalism, competitive exchange rate, devaluation, absence of international co operation etc. In July 1944 representatives of 44 nations met at Bretton Woods [New Hamphire] to create a new international monetary order.The United States and United Kingdom drew up a plan for new system of international monetary management. The Anglo-American plan was approved at Bretton Woods. But on August 15, 1971 US President announced to the world the end of Bretton Woods system. He made it clear that US would no longer abide by the rules and procedures of international monetary order. Factors which led to globalisation in the 1990s are the successive oil crisis, the growing instability in the market economies and fall in the growth rate of industrialized countries.

IMF[International Monetary Fund]: It is a specialized agency within the United Nations system. It seeks to promote international monetary co-operation and facilitates the expansion of trade. Membership of IMF is a prerequisite to membership in the World Bank. The important functions of IMF are [1] to facilitate the expansion of balanced growth of international trade and to contribute thereby to the promotion and maintenance of high levels of employment and real income, [2] to promote exchange stability to maintain orderly exchange arrangements among members and to avoid competitive exchange depreciation., and [3] to eliminate exchange restrictions which hamper the growth of world trade. IMF maintains a large pool of financial resources available to members temporarily and subject to conditions to enable them to carry out programmes to remedy their payment deficits.

International Bank for Reconstruction and Development[IBRD][World Bank]: The IBRD was established in 1945. It has two other affiliated institutions. They are the International Finance Cooperation[IFC] established in 1956 and the International Development Association[IDA] established in 1960. Membership of the IMF is the principal condition for membership of the IBRD. The main objectives of the bank are [1]to assist in the reconstruction and development of the member states by facilitating capital investments for productive purposes, [2] to promote foreign investment by means of guarantees, and [3] to promote long ranged balanced growth of international trade and the maintenance of equilibrium in the balance of payments. Normally it does not finance projects of primarily social character such as education. Most loans have been made for provision of basic utilities, such as power and transport. The Bank indirectly encourages promotion of local private enterprise.

General Agreement on Tariffs and Trade[GATT]: After the Second World War, the major economic powers of the world negotiated a set of rules for reducing and limiting trade barriers and settling disputes. These rules were called the GATT. The two outstanding features of GATT were the principle of non-discrimination and the principle of promoting fair and free international trade among members. Several rounds of negotiations aimed at reduction of tariff and non tariff barriers to trade led to the lowering of duties on trade.

Uruguay Round Talks: The last round[8^th round] of multilateral trade negotiations which began in Punte del este in Uruguay in 1986 was the most significant. It was called the Uruguay Round of Talks. It lasted till 15 December 1993 and involved 117 countries. The talks centred around three main issues. . They are Trade Related Intellectual Property Rights[TRIPS], Trade Related Investment Measures[TRIMS] and Trade in Agricultural Commodities. The third world countries have been by and large dissatisfied with GATT negotiations.

World Trade Organisation[WTO]: The Uruguay Round of Talks was scheduled to be completed by 1990. However the negotiations reached a dead lock over several contentious issues. Then ARTHUR Dunkel, Director General of GATT proposed a draft that is known as the Dunkel Draft. It is also called Dunkel Draft Text[DDT]. The Dunkel Draft was signed by member nations on December 15, 1993. The significant aspect of the GATT agreement s the establishment of the World Trade Organisation. It superseded the GATT. The WTO came into being on January 1,1995. The traty is binding all its 117 member countries. The two-third of these are less developed countries. The organization is expected to be the arbiter between the trading parties and generally ensure that the rules of the game are being followed.

Impact of Globalisation on Third World Countries: The technological advances of the last two decades have brought about a revolution in transport and communication. It eroded the boundaries between markets and nation states. Thus economic process has become increasingly internationalized in a number of key spheres like communication, production, trade and finance. New technology has also globalised economies of the world. This has paved the way for the ideal of global trade.

Globalisation has brought about radical changes in the production process. While earlier labour remained a major factor of production, technology rendered human labour insignificant. This increased unemployment and under employment. Normally such pressures have been met by state interventions like protectionism. But globalisation with a free market ideology removed the possibility of such state intervention. Granting of subsidies and protection of internal market have been disallowed.

An important consequence of globalisation is labour migration. As labour migrates to the industrial countries of the West or the oil producing countries of the Gulf in search of jobs social conflicts are on the increase. Liberalisation of trade related intellectual property rights would mean that the third world countries would have to compete with the advanced countries. TRIPS covering copyrights, patents, and trade marks is likely to harm indigenous technology and nascent industries, particularly pharmaceutical and drug industry. If the developed countries get a monopoly over the life saving drugs would become too expensive for consumers in the third world countries.