The course of globalization reflects advances in technology, allowing international trade and financial flows to be completed quickly and easily. It is an extension of human economic activities, village markets, urban industries, or financial centres beyond the national borders, making them accessible to all.
Globalization is really a world-wide phenomenon that differs with regard to rich and powerful countries versus poorer underdeveloped countries like those of the Caribbean. There is no doubt that globalization promotes growth, providing countries worldwide, especially developing ones, with many opportunities for them to capitalize on. These opportunities of globalization do not come without risks – “risks arising from volatile capital movements and the risks of social, economic, and environmental degradation created by poverty,” [Globalisation: Threat or Opportunity? IMF Staff April 12, 2000]. It is therefore essential that Caribbean countries prepare themselves to embrace the policies/strategies and source support needed from the international community to reduce the threats and benefit more from the opportunities of present day globalization.
The processes of globalization threaten every aspect of a country, including political systems. These adversities must be dealt with, and appropriate strategies must be implemented to deal with them. Trevor Munroe, 2002 stated that there are some negative aspects of present day Caribbean politics. He believes that there has been a significant deterioration in systems of democratic governance. Therefore, there are some signs of decay in the criminal justice system; for example, corruption in government and the police force. He continued to argue that, “unemployment and underemployment are relatively high throughout the region.” This affects the high level of crime, increases in drug trade and poverty, as well as threatens the survival of democracy.
Certain characteristics of globalization have been promoting the drug trade and causing it to flourish. The technological advances have made communication and other technical issues easy, endowing trafficking networkers with new and more efficient working tools to adapt, and better export to the world economic system. This rise in drug trafficking has been affecting the economic potential of the Caribbean states. It is therefore necessary that the Caribbean invest in advanced technology that can help greatly to minimize the increase in drug trade within the region.
For many decades the income gap between rich and poor countries has been widening and has been giving rise to the high level of poverty in many developing countries. According to the UN Human Development Indicator (HDI), the quality of life for many countries has not improved, and many persons are still living in abject poverty. The ability of Caribbean countries’ businesses to turn over profits has been reducing greatly as a result of the high level of competition in the domestic and external markets, causing our economy not to be booming so as to implement proper welfare policies to improve the quality of life of many persons.
Globalization has been facilitating increased awareness and access to communication. As a result, Caribbean people are now aware of the happenings of many other countries around the world and are now able to compare their own country and systems of government to those of the advanced and more developed nations. This has been affecting the electoral turnout and the rise in unconventional political behaviour within Caribbean states. These practices show that citizens are not satisfied with democratic institutions, and these negative aspects affect the Caribbean states because more advanced countries are improving democratically. The Caribbean is threatened by many problems, but one must focus on ways in which to advance so it can be embraced worldwide. This can be done through the theory of comparative advantage; where countries will specialize in what they do best and therefore focus all their efforts in one area in order to receive profitable results.
Caribbean countries are quite small when compared to the other western countries and are measured largely by population size and their Gross Development Product (GDP) level. Because of their small populations and GDPs, domestic markets in the region are small, suggesting a limited supply of labour and few firms; thus, low domestic competition. In order for the Caribbean to improve, or to be able to compete on the international market, it must be able to produce sufficiently and receive enough profits.
In terms of trade and finance, the world markets are now more open. Openness in this sense speaks to the free movement of goods, services and investments in the region as a result of the countries' inability to produce high quality goods and services at reasonable prices, and to finance business returns without overseas assistance. Science, Commerce and Technology, Minister Phillip Paulwell at the Scientific Research Council (SRC) Press Conference on October 21, 2004, pointed out that globalization and free trade have put traditional exports such as sugar and bananas under threat and an, “urgent move must be made to diversify the economy by increasing non-traditional exports and capturing niche market products. We cannot continue to be a nation of samples…”
As a result of the opening up of the domestic and export market, Caribbean countries are now faced with increased competition from multinational/international companies outside of the region. This has been intensifying over the years as businesses endeavour to maintain their market position by staying out, or displacing imports on the basis of the level of competition, and seeking new market opportunities by exporting.
Though there are some advantages to the openness of the economies of the region, the disadvantages far outweigh them; for example, the exploitation of workers. The exportation of goods and services is another of the adversities of globalization. Caribbean countries are not gaining as much as they would like from exports as a result of the high production costs and fluctuating exchange rates. They are depending on only a few export earnings, making them particularly vulnerable to changes in the international markets. This vulnerability has also been contributing to the diminishment of the economy of many Caribbean countries. For example, Jamaica pays over 70% of all income to debt repayment and imports millions of dollars more than earnings.
The Caribbean must therefore integrate to face the threats that they are bombarded with by globalization, and work together towards better economic harmony. This will allow the region to have: access to larger domestic markets; assistance from a stronger economy; reduction of the fear of extra-regional competition; and avoid hostility. It is commendable that Caribbean states are now working towards integration once again so as to facilitate economic growth and development.
It is also important that heads of governments in the region create, “conditions that are conducive to long-run per capita income growth,” placing high emphasis on institution building, economic stability, and structural reform, which are, “important for long-term development. What matters is the whole package of policies, financial and technical assistance, and debt relief if necessary.” The components of this package are:
Structural reform which encourages domestic competition;
Education, training and research and development to promote productivity;
Strong institutions and an effective government to foster good governance;
Macro economic stability to create the right conditions for investment and saving;
Outward oriented policies to promote efficiency through increased trade and investment;
External debt management to ensure adequate resources for sustainable development.
Countries are therefore encouraged to implement these policies on a country by country basis to reduce poverty and promote policies that are pro-poor and properly budgeted – these include health, education, and strong social safety nets. A participatory approach is also encouraged, which should include the civil society and add greatly to the chances of the policies being successful.
Low-income countries should also seek help from advanced countries, as they can make vital contributions to their efforts to integrate and become a part of the global economy. These countries can help by promoting trade. This is so as they are able to: “provide unrestricted market access for all exports from the poorest countries;” encourage private capital flows, “to the lower-income countries, particularly foreign direct investment, with its twin benefits of steady financial flows and technology transfer;” and by, “supplementing more rapid debt relief with an increased level of new financial support,” [Globalization: Threat or Opportunity? IMF Staff April 12, 2000].
Globalization offers access to foreign capital, global export markets, and advanced technology, while breaking the monopoly of inefficient and protected domestic producers. Faster growth, in turn, promotes poverty reduction, democratization, and higher labor and environmental standards.
Trevor Munroe believes that revolutionary technologies is a classical industry and the Caribbean must therefore be as well positioned as any other part of the world to benefit from it. Technology has made travel cheaper and increased the possibility of migration. Communication technology has also increased significantly by cable television, fax machine, telephone and cellular telephone. This is evident in the Caribbean as in 1996; the number of international calls per Caribbean person was more than anywhere in the world. Both advances in communication and transportation have made it possible for many people to become more aware, informed and less deferential. Many people now possess the ability to run efficient businesses/organizations internationally, as well as online.
The travel industry has also been booming as a result of technological advancement. This is evident in the number of visitors vacationing in the countries of the region, helping one of our main sectors; the heart of globalization: tourism, as described by Munroe, to thrive. This enables countries to reduce their dependence on single commodities such as cocoa, cotton, sugar and bananas.
Globalization also promotes growth in developing countries through a number of channels. For example, as a result of technologicl advances, the region has been able to attract foreign students from the U.S. and other industrial countries. The region exports highly skilled labour to industrial countries, and there are large Caribbean communities outside of the region whose remittances have helped raise the living standards of those of us remaining in the region.
The experience of small open economies world-wide demonstrates that globalization offers tremendous benefits in terms of new jobs, technology transfer, and higher incomes. The Caribbean nations have the potential, and indeed the right, to aspire to more of these benefits. The government's role is to make sure that we are doing all that we can to harvest these benefits and make sure that the gains are evenly distributed.
Globalization has also facilitated the decrease in infant mortality, and an increase in literacy rates, which have risen to more than 70%. Millennium Development Goal statistics show that world poverty has declined - in the 5 years after 1993, for example, the number of people living on less than $1 a day (the newly adopted international poverty line) fell by more than 100 million. Life expectancy in developing countries is now around 65 years, only about 10 years less than in the industrial countries. Economic growth has also raised the demand for democracy and representation. A large part of the world's population now lives under elected governments.
The Carribean region needs to cover at least three core elements. First, it needs to develop a more supportive macroeconomic policy framework; second, make economies more flexible, especially in the labor market; and third, strengthen domestic institutions in areas critical to entrenching growth and macroeconomic stability. Of course, policies in these areas need to be phased in with full ownership; there are some clear near-term priorities, while others would naturally need a somewhat longer timeframe to be developed and implemented.
Globalization will continue to be a threat to the Caribbean and it is therefore important that ministers and heads of government within the Caribbean prepare themselves to mobilize stakeholders, civil servants, business men and women, other non-governmental organisations and citizens to help in minimizing the risk and capitalize on the benefits of globalization.
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