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Neo-Liberal Hyperglobalism

Globalisation is a major topic of debate of our era.Globalisation can be defined as the “global growing interconnectedness between economy, technology, culture and political institutions” (Lofgren & Sarangi, 2009, pg.57).

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This essay will discuss how globalisation can be good for developing countries. By applying Neo-liberal Hyperglobalism, I will analyse and demonstrate the various beneficial effects of globalisation through the case of India and the reform measures they have recently taken towards globalisation.

Globalisation can provide new opportunities for developing countries due to increased access to developed country markets and technology, resulting in improved productivity and higher living standards (Balakrishnan, 2004). Following a major economic crises, India liberalised it’s economy in the early nineties. Inflation had rocketed to an annual rate of 17%, high fiscal deficit had become unsustainable and foreign investors confidence in Indian Economy was low (Goyal, 2006, p. 167). It was these factors that put pressure on the Indian government to call for a complete revamp of their economic policies.

Some of the major changes made, as part of the economic liberalisation and globalisation strategy, included government’s privatisation and disinvestment in a majority of the public sector undertakings, allowing foreign direct investment (FDI) across many industries, the removal of quantitative restrictions on imports and the reduction of customs tariff from over 300% to 30 % (Goyal, 2006, p. 167). The main purpose of India’s economic reform is to ultimately “integrate Indian economy with world economy” (Singh, 1995, p. 36).

This liberalisation and globalisation of the economy can help solve India’s major problems of unemployment and poverty. India’s economic reform favours a more open and market orientated economy (Goyal, 2006, p. 166). India’s new economic structure emulates the principals of neo-liberal Hyperglobalism. Neo-liberal Hyperglobalism “celebrates the global dominance of market principals over state power” (Lofgren & Sarangi, 2009, pg. 70). This means that decisions about allocation, production and distribution in the economy are left to the global economy rather than the government. Burke, Devetak & George, 2008, p. 299). States are increasingly the ‘decision- takers’ and not the ‘decision-makers’ (Goldblatt, Held, McGrew & Perraton, 1999). Three key terms that come out of neoliberalism are deregulation, liberalisation and privatisation all of which India’s new economic policies draw on. Neo-liberal Hyperglobalism favours globalism as beneficial process for a developing country. The benefits that Neo-liberal Hyperglobalism can provide are evident in India. India’s steps towards globalisation through new economic reforms have produced some significant benefits for the country.

The privatisation of particular state-owned enterprises provides the government with an increased amount of cash which they can then spend on increasing their citizen’s quality of life through increased food supplies and the development of hospitals, schools, infrastructure etc in poverty stricken regions. The domestic economy has been freed up from state control, virtually abolishing state monopoly in all sectors (Panagariya, 2001). This has lead to greater competition in industries; resulting in lower prices, a greater supply of goods which benefits the citizens (Goyal, 2006, p. 68). Another step towards globalisation that has proven beneficial for India is the decision to allow foreign direct investment in the Indian industry. The huge amounts of foreign investment that now enter India have significantly boosted the country’s economy. Many foreign companies have set up industries in India, mainly in pharmaceutical, BPO, petroleum, manufacturing and chemical sectors, which have created greater employment opportunities for Indian people, decreasing unemployment and poverty (Dwivedi, 2009).

A further benefit of globalisation due to foreign investment in India is the advanced technology that the foreign companies bring with them (Dwivedi, 2009). Advancements in medicine which improve the health of citizens is an example how becoming more technologically advanced can be beneficial for the country. The economic reforms that reduce custom tariffs and remove restrictions on imports support the principals of neo-liberal Hyperglobalism. That is that measures should be taken that allow trade and finance to have unrestricted movement (Burke et. al. , 2010).

Removing taxes and quotas can increase international trade which in turn increases economic competition. Competition was rife in the economy, after India’s economic reform, as more imports were encouraged (Balakrishnan, 2004). Exports also significantly increased as countries became more willing to accept India’s products due to the reductions in custom tariffs (Goyal, 2006, p. 170). This improved relationship between India and its trading partners can encourage low prices, reduce unemployment through the creation of more jobs and induce improved living standards.

Improved relationships between developed and undeveloped economies can prove to be profitable and extremely valuable for developing countries especially when future policies have to be negotiated. Overall, the economic reforms initiated in India since 1991 has helped the Indian economy to grow at a faster rate and led to fiscal consolidation, control of inflation, and increased foreign investment and technology (Goyal, 2006). The reforms aimed to lliberalise and globalise the domestic economy have helped boost GDP growth rates, which increased from 5. 6% in 1990-91 to a peak level of 77. % in 1996-97 (Balakrishnan, 2004). The new economic policies have also proven to increase citizen’s living standards with increased employment opportunities and a decrease in poverty from 36% in 1993-94 to 26. 1% in 1999-2000 (Fox, 2002). The new policies can be used to further support the country’s citizens and develop the country. The Indian government’s strategy to globalise their economy has revealed that globalisation can be beneficial to a developing country by aiding the nation to a more favourable financial position. However, there are also negative effects of globalisation.

A significant negative effect is the increase in inequality that can arise from globalisation. There have been arguments that state an increase in GDP can in fact increase income inequality. “Wealth is still concentrated in the hands of a few individuals and a common man in a developing country is yet to see any major benefits of globalization” (Lovekar, 2010). Also multi-national corporations (MNC) can worsen income inequality by generating jobs and producing goods that primarily benefit the richest portion of the population (Positive and Negative Effects of Multinational Corporations, 2010).

This means that the richer are getting richer and the poorer are getting poorer. Many employees are working in awful conditions where negligible health and safety regulations apply. This is an example of globalisation can develop an exploitative nature. Furthermore, “the market economy seems to be more concentrated on the growth of consumerism to attract the high income groups who are mostly in the cities in the developing countries” (Malik, 2010, p. 4). The globalisation strategy paid little attention to the rural economy and the agricultural sector, which is essentially the backbone of the Indian economy.

The agriculture sector is a major provider of food and nutrition to the people as well as raw materials to industries and to export trade (Malik, 2010). A further impact the globalisation strategy has had on agriculture sector is the decrease of agriculture’s share in GDP, which has resulted in a decrease of the per capita income of the farmers and an increase of rural indebtedness (Malik, 2010). India’s era of reforms exhibit many themes that are parallel those of Neo-liberal Hyperglobalism.

Since 1991, India has experienced the strong inroad of neoliberalism (Lofgren & Sarangi, 2009). The new economic reforms indicate a strong movement towards deregulation, privitisation and liberalisation of the Indian economy. These three factors are all examples of neoliberalism (Burke et. al. , 2010). A neo-liberal hyperglobalist state would believe that rather than the government trying to regulate and control the market through strict policies, the government should make policies to accommodate and open up the market.

India’s new policies indicate the government’s willingness to adopt this thinking and it is through this thinking that has marked India’s steps towards the “real integration of the Indian economy into the global economy” (Malik, 2010, p. 1). In other words India is taking steps towards globalisation. India is an example of how the globalisation of a developing country can be positive and beneficial. Although there are some unfavourable effects such as income inequality, the overall benefits a developing country can receive from globalisation outweigh the negatives.

India has proved how applying neo-liberal hyperglobalist principals to the domestic economy of a country can prove to be advantageous. With a greater focus on further developing a globalised economy, developing countries can aim to increase the working and living standards for the country’s citizens and subsequently become a healthy and wealthier state. A more liberal and global market can achieve improved living standards and wealth through the promotion of competition, efficiency, productivity, technological-upgradation and growth (Singh, 1995).

Hence I believe, like a hyperglobalist, that globalisation is good for a developing country. References Balakrishnan, C. (2004). Impact of Globalisation on Developing Countries and India. Retrieved October 10, 2010, from http://economics. about. com/od/globalizationtrade/l/aaglobalization. htm Burke, A. , Devetak, R. , & George, J. (2008). An Introduction to International Relations: Australian Perspective. New York: Cambridge University Press. Dwivedi, M. (2009). South Asia Security. India: Kalpaz Publications. Fox, J. W. (2002).

Poverty in India Since 1974: A Country Case Study. Retrieved October 10, 2010, from http://www. ekh. lu. se/ekhcgu/teaching/401d4/poverty%20in%20india. pdf Goldblatt, D. , Held, D. , McGrew, A. , Perraton, J. (1999). Global Transformations: What is globalisation? Retrieved October 11, 2010, from http://www. polity. co. uk/global/whatisglobalization. asp Goyal, K. A. (2006). Impact of Globalization on Developing Countries (With Special Reference To India). International Research Journal of Finance and Economics, (5), 1450-2887.

Retrieved October 10, 2010, from http://www. eurojournals. com/IRJFE%206%20goyal. pdf Lofgren, H. , & Sarangi, P. (2009). The Politics and Culture of Globalisation: India and Australia. Social Science Press. Lovekar, V. (2010). Advantages and Disadvantages of Globalization. Retrieved October 11, 2010, from http://www. buzzle. com/articles/advantages-and-disadvantages-of-globalization. html Malik, T. (2010). Impact of globalization on Indian economy- An overview. Retrieved October 10, 2010, from http://www. ibre2fashion. com/industry-article/8/738/impact-of-globalization7. asp Panagariya, A. (2001). India’s Economic Reforms: What Has Been Accomplished? What Remains to Be Done? ERD POLICY BRIEF SERIES Economics and Research Department,(2). Retrieved October 10, 2010, from http://www. adb. org/Documents/EDRC/Policy_Briefs/PB002. pdf Positive and Negative Effects of Multinational Corporations. (2010). Retrieved October 11, 2010, from http://www. socialscience. gardner-webb. edu/Faculty/craymond/Devdocs/DevMNCposn

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