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Archive for July, 2011

Will Globalization Destroy Black America?

THE BIG DIVIDE

By Phillip Jackson

Wednesday, June 30, 2010.

The lack of response to globalization by Black America is frightening and troubling. While much of the world has adapted to the new-world economy and new-world standards of existence, most of Black America is still operating much the same way it did in the 1950s and 1960s. But now, throughout Black communities in America, there is a whisper campaign by Black people who don’t know each other and Black people who live in different parts of the country, saying to each other, “We are in trouble!” We know it and the rest of the world knows it! Black America, as we know it, is in danger of not surviving globalization.

In the 21st century, there are only two kinds of people. Not Black or White, or rich or poor, or foreign or national. The two kinds of people in the world today are those who are educated and those who are not. Although education has become the new currency of exchange in the 21st century, the old American educational paradigm stopped working decades ago for Black Americans. Simply sending Black children to American schools without a clear purpose or goal has contributed to the demise of the Black community. Black America watched formerly third-world countries catapult over America to become educational super powers while America rested on its old, stale educational laurels and fell way behind much of the world in educational performance. And because Black America unthinkingly depended on the American education system to educate its children, we have fallen way behind.

The horrific educational, social, health, economic and criminal justice indicators in much of Black America predict a meltdown of gargantuan proportions in the near future for the Black community. But still, the thing that is most remarkable and unbelievable is the lack of response by Black Americans to this impending doom! Without numerous positive changes, practical well-thought-out ideas, massive mobilization and immediate action, the fate of many Black Americans is sealed. We will not be able to prosper in the cities of America or possibly in any city in the world where the new currency for existence is access to global information, higher-order critical thinking and advanced technological skills. There used to be a time when it was better to be poor in America than rich in other countries. Now it might be better to be poor in some other countries than to be poor in America.

Black people in America must immediately disengage from the diversions of mind-deadening entertainment, useless sports, hyper-sexuality, excessive social celebrations, pointless conversations and debates, meaningless media and the civil rights issue de jour approach to managing our problems. We must focus on the most important issue in our communities — making education the highest priority. We must create a culture of literacy and learning that replaces intellectual apathy and resistance to educational progress. Somehow, we must re-inspire our children to want to learn and to love to learn. But having educated children is not enough. We must have educated families and educated communities. Every Black man, woman and child must become part of this new community of learners.
Black America must take education out of the schools and universities and root it in our homes, our workplaces, our communities, our churches and even in our streets and prisons. The purpose of education as defined by the Equipped for the Future initiative, a federally sponsored effort to develop a framework for accountability in adult education, is to help people actualize their roles in society as parent/family members, citizen/community members and workers in the economy. If the education system that serves us is not meeting these objectives, it is a disservice to our children and our communities.
The ability of a people to survive in changing times is not magic, nor is it by chance. Success depends on that people being able to change to survive in a new environment! And new environments demand new skills for survival. Equipped for the Future tells us that without certain basic skills, survival will be extremely difficult for Black people, or any people, in the 21st century. These essential skills are the ability to read with understanding; convey ideas in writing; speak so that others can understand; observe critically; listen actively; solve problems and make decisions appropriately; plan and put those plans into action effectively; use math to solve problems and to communicate; cooperate with others; guide others; advocate and influence; resolve conflict and negotiate; take responsibility for life-long learning; learn through research; reflect and evaluate; and use information and communication technology. These are the skills necessary to survive in the 21st century.

Black people in America must immediately disengage from the diversions of mind-deadening entertainment, useless sports, hyper-sexuality, excessive social celebrations, pointless conversations and debates, meaningless media and the civil rights issue de jour approach to managing our problems.”

The solution to the issue of Black America’s poor response to globalization is to 1) Deconstruct value systems that have caused Black people to arrive at the precipice of non-existence; 2) Construct value systems that will rebuild the Black family as a purveyor of positive values, cultures, mores and education, and re-establish the Black family as the primary and most important social unit of our culture and society; 3) Embrace education as the highest value in the Black community; 4) Effectively manage the negative cultural influences that hugely impact the thinking and actions of Black boys; and 5) Understand that for the rest of existence, change is a required part of the living process. The faster Black America is able to put this plan into action, adopt these new principles and manage change, the more likely we will survive.

Today, many Black people seem to be having “cosmic flashbacks” to our time in slavery, which was the first crude effort at globalization that helped to set the stage for today’s globalization. For years, Black America was buffered from modern globalization by political boundaries and economic barriers. Now globalization has come to our country, our cities, our communities, onto our blocks and into our homes, schools and workplaces. Globalization has happened, whether Black America is ready for it or not. We still have time to make the necessary changes that will guarantee that Black people will survive into the 21st century and that we will thrive in this global economy. But there is not much time. With globalization, Black America has entered into the “Educate or Die” era. In this era, there are only two questions worth answering: “Will we change? Can we survive?” How we emerge from this era is up to us.

Phillip Jackson is the executive director of The Black Star Project

REPRINTED from The New Black  Magazine.com

 

 

The Challenges of Globalization for Africa

 

 

The Challenges of Globalization for Africa

Address by Alassane D. Ouattara
Deputy Managing Director of the International Monetary Fund
at the Southern Africa Economic Summit
sponsored by the World Economic Forum
Harare, May 21, 1997


Introduction
Globalization has become a major topic of discussion and concern in economic circles since the mid-1990s. It is clear that the trend toward more integrated world markets has opened a wide potential for greater growth, and presents an unparalleled opportunity for developing countries to raise their living standards. At the same time, however, the Mexican crisis has focussed attention on the downside risks of this trend, and concerns have arisen about the risks of marginalization of countries. All of this has given rise to a sense of misgiving, particularly among developing countries.
So what is “globalization”? What are its implications for the conduct of economic policy, particularly in Africa? What are its potential benefits and risks? What will developing countries have to do to benefit from it, to avoid its downside risks? Is there any good reason to fear globalization? To answer these and other questions, it would be useful first to explain what globalization is, and what it is not, what has caused it, and what effects it has had. Situating the discussion in this context will make it easier to identify the benefits and the true risks of the trend to global integration and, in turn, to determine the correct policy response.

What is globalization?
In most basic terms, the globalization of the world economy is the integration of economies throughout the world through trade, financial flows, the exchange of technology and information, and the movement of people. The extent of the trend toward integration is clearly reflected in the rising importance of world trade and capital flows in the world economy. An increasingly large share of world GDP is generated in activities linked directly or indirectly to international trade. And there has been a phenomenal growth in cross-border financial flows, particularly in the form of private equity and portfolio investment, compared with the past. In addition, the revolution in communication and transportation technology and the much improved availability of information have allowed individuals and firms to base their economic choices more on the quality of the economic environment in different countries. As a result, economic success in today’s world is less a question of relative resource endowments or geographical location than it used to be in the past. Now, it is more a question of the market perception of the orientation and predictability of economic policy.

Globalization is first and foremost a result of the expansion, diversification and deepening of trade and financial links between countries, especially over the last ten years. This reflects above all the success of multilateral tariff reduction and trade liberalization efforts. The Fund has played a key role in encouraging current account convertibility as a basis for the expansion of world trade, and more than two-thirds of the Fund’s member countries have committed themselves to this principle by accepting the obligations of Article VIII. Also, economic thought itself has evolved over time, toward the general acceptance of the fact that outward- oriented and open economies are more successful than closed, inward-looking ones. Consequently, more than at any time previously, individual countries in all parts of the world are liberalizing their exchange and trade regimes in the conviction that this is indeed the best approach for growth and development. Moreover, there is a deeper commitment of national authorities throughout the world to sound macroeconomic policies, and to creating a more stable environment for investment and the expansion of economic activity. Finally, with the increasing liberalization of financial markets, and their growing sophistication, capital markets have become integrated, and capital flows are now largely driven primarily by considerations of risk and return.

The benefits of these developments are easily recognizable–increasing trade has given consumers and producers a wider choice of low-cost goods, often incorporating more advanced technologies, and facilitated a more efficient use of global resources. Greater access to world markets has allowed countries to exploit their comparative advantages more intensively, while opening their economies to the benefits of increased international competition. The rapid increase in capital and private investment flows has raised the resources available to countries able to attract them, and accelerated the pace of their development beyond what they could otherwise have achieved.

Moreover, greater openness and participation in competitive international trade have increased employment, primarily of skilled labor, in tradable goods sectors. With the expansion of these sectors, unskilled labor has found increased employment opportunities in the nontradable sectors, such as construction and transportation. The expansion of merchandise trade may also have lessened migrationary pressures. On the other hand, the movement of labor across national boundaries has in many cases lessened production bottlenecks, raising the supply response of recipient economies, and increasing income in the supplying countries through worker remittances. Openness to foreign expertise and management techniques has also greatly improved production efficiency in many developing countries.

But there are also risks to globalization. The ability of investment capital to seek out the most efficient markets, and for producers and consumers to access the most competitive source, exposes and intensifies existing structural weaknesses in individual economies. Also, with the speedy flow of information, the margin of maneuver for domestic policy is much reduced, and policy mistakes are quickly punished. Indeed, increased capital mobility carries the risk of destabilizing flows and heightened exchange rate volatility, in cases where domestic macroeconomic policies are inappropriate. And finally, it is clear that countries that fail to participate in this trend toward integration run the risk of being left behind.

Who benefits and who loses?
It is important to recognize that globalization is not a zero-sum game–it is not necessary for some countries to lose in order that others may gain. But to take advantage of this trend, countries will have to position themselves properly through the right policies. Clearly, those economies that open themselves to trade and capital flows on a free and fair basis and are able to attract international capital will benefit the most from globalization. Open and integrated markets place a premium on good macroeconomic policies, and on the ability to respond quickly and appropriately to changes in the international environment.

Success in open markets, and in attracting new investment and advanced technology, also means that the structure of economies is changing more rapidly than ever before. As with any structural change, there will be some segments of society that are at a disadvantage in the short term, even while other segments, and the economy as a whole, are benefiting. This does not mean, however, that countries should seek to isolate themselves from globalization. Rather, governments must fully embrace globalization in awareness of its potential risks, and seek to provide adequate protection for the vulnerable segments of society during the process of change.

While globalization raises the rewards of good policy, it also accentuates the costs of poor policy. Credibility of economic policy, once lost, has become more difficult to regain. What is now critical is the perception of markets that economic policy formulation and implementation is consistent and predictable. This underscores the importance of flexible and well-informed policy-making, of solid, well-governed institutions, and of transparency in governance. Countries with a poor or inconsistent policy record will inevitably find themselves passed by, both from expanding trade and from private capital flows for development. These are the countries that run the risk of marginalization.

What policy response to globalization?
The question of what policies are needed to benefit from globalization has preoccupied economic thinking in recent years. In fact, this topic is a central theme of the most recent edition of the IMF’s World Economic Outlook. We studied those economies that have made the most economic progress in recent years, and have profited the most from recent trends. We found that success is closely linked to an appropriate combination of policies with three main objectives: (i) achieving and preserving macroeconomic stability; (ii) promoting openness to trade and capital flows; (iii) and limiting government intervention to areas of genuine market failure and to the provision of the necessary social and economic infrastructure.

More importantly, no one set of policies is a sufficient condition for success–indeed, experience shows that poor policies in one area can obstruct progress, even if policies in other areas are good. The three objectives of policies complement and reinforce each other:

 

  • macroeconomic stability, embodied in low inflation, appropriate real exchange rates and a prudent fiscal stance, is essential for expanding domestic activity, and is a precondition for benefiting from and sustaining private capital flows;
  • openness, in the resolute pursuit of policies to rationalize and liberalize the exchange and trade regimes, is vital in international competition. This forces the economy to fully exploit its comparative advantage through trade;
  • and finally, the primary role of the government should be the creation of an enabling environment that encourages foreign and domestic investment, and of a solid infrastructure to support an expanding economy. The government must also implement policies that eliminate the structural weaknesses that would be exposed by the heightened international competition. Not surprisingly, these elements are generally central to the policy dialogue between the International Monetary Fund and its members.

The Challenges of globalization for Africa
Globalization will continue to reinforce the interdependencies between different countries and regions. It can also deepen the partnership between the advanced countries and the rest of the world. And to support this partnership in a mutually beneficial way, the advanced countries could help to further open their markets to the products and services in which the developing world has a comparative advantage. In addition, the reform efforts of the African countries will need to continue to be supported by adequate financing on concessional terms. In this regard, I am pleased to note that the Fund has put the ESAF, our concessional lending facility, on a permanent footing, so that it can continue to support reform efforts of the poorer countries, especially in Africa. Moreover, the Fund and the World Bank have recently begun implementing the framework for action to resolve the external debt problems of heavily indebted low-income countries (HIPC), including their large multilateral debt. Three African countries–Burkino Faso, Côte d’Ivoire, and Uganda–are among the first countries to be considered under the Initiative.

The challenge facing the developing world, and African countries in particular, is to design public policies so as to maximize the potential benefits from globalization, and to minimize the downside risks of destabilization and/or marginalization. None of these policies is new, and most African countries have been implementing them for some time. In particular, sub-Saharan Africa has made substantial progress toward macroeconomic stability:

 

  • there has been continued improvement in overall growth performance. Average real growth has increased from less than 1 percent in 1992 to over 5 1/2 percent in 1996, and this positive trend is expected to continue;
  • there has been some success in bringing down inflation–many countries have already achieved single digit inflation rates, and for the region as a whole, average inflation is expected to fall from the peak of 60 percent in 1994 to 17 percent in 1997;
  • countries have also reduced their internal and external imbalances. The external current account deficit has fallen from an average of 15 1/2 percent of GDP in 1992 to about 9 percent projected for this year, while the overall fiscal deficit has been cut from almost 12 percent of GDP to 6 percent over the same period.

African governments have also made considerable strides in opening their economies to world trade. A good indicator of this is the fact that 31 Sub-Saharan African countries have accepted the obligations of Article VIII of the Fund’s Articles of Agreement, almost all of them since 1993. Most countries have moved ahead with trade and exchange liberalization, eliminating multiple exchange rates and nontariff barriers, and also lowering the degree of tariff protection. A recent qualitative study by the African Department of the Fund indicates that the number of countries in Sub-Saharan Africa with a “restrictive” exchange regime declined from 26 in 1990 to only 2 in 1995, while the number of countries with a “substantially liberal” trade regime rose from 26 to 38 over the same period.

Finally, the restructuring of many African economies is gaining momentum. Throughout the continent, government intervention in economic activity is on the wane. Administrative price controls are being reduced and agricultural marketing has been widely liberalized. The process of restructuring and privatizing state enterprises has been underway for some time in most countries, though with varying speed and degrees of success. And finally, fiscal reform is gaining ground–African countries are taking firm steps to rationalize their tax systems, to reduce exemptions, and to enhance administrative efficiency. At the same time, they are also reorienting expenditures away from wasteful outlays towards improved public investment and spending on key social services, particularly health and basic education.

But, as I pointed out earlier, it is essential to achieve the right combination of policies. While Africa is clearly on the right track, there is still some way to go. I see five main areas where African countries need to achieve greater progress in order to speed up their participation in globalization:

  • maintaining macroeconomic stability and accelerating structural reform
    As the continent enters the “second phase of adjustment”, the emphasis must be to maintain economic stability and to reinforce the implementation of structural policies that will make the economies more flexible, encourage diversification, and reduce their vulnerability to exogenous shocks. These include further reforms in the areas of public enterprise activity, the labor markets, and the trade regime. Governments must also ensure that public services–including transportation networks, electricity, water, and telecommunications, but also health services and education–are provided in a reliable and cost-efficient fashion.
  • ensuring economic security
    Establishing the right framework for economic activity addresses the second requirement of policy–removing the sense of uncertainty that still plagues economic decision-making in most of Africa. The direction and orientation of future policy must be beyond question. This requires the creation of a strong national capacity for policy formulation, implementation and monitoring. Moreover, the transparency, predictability and impartiality of the regulatory and legal systems must be guaranteed. This goes well beyond the respect of private property rights and the enforcement of commercial contracts. It also involves the elimination of arbitrariness, special privileges, and ad-hoc exemptions, even where these are intended to encourage investment.
  • reforming financial sectors
    As the Interim Committee observed during its April meetings in Washington, an open and liberal system of capital movements is beneficial to the world economy. However, rising capital flows place additional burdens on banking regulation and supervision, and require more flexible financial structures. This aspect of globalization thus confronts developing countries with a new challenge–to accelerate the development and liberalization of their financial markets, and to enhance the ability of their financial institutions to respond to the changing international environment. Much remains to be done to reform and strengthen Africa’s financial systems, many of which are weak and poorly managed.
  • achieving good governance
    National authorities should spare no efforts to tackle corruption and inefficiency, and to enhance accountability in government. This means reducing the scope of distortionary rent-seeking activities; eliminating wasteful or unproductive uses of public funds; and providing the necessary domestic security. Many African countries will also have to undertake a comprehensive reform of the civil service, aimed at reducing its size while enhancing its efficiency. In short, governments must create confidence in their role as a valued and trusted partner of private economic agents.
  • a partnership with civil society
    Finally, African governments will need to actively encourage the participation of civil society in the debate on economic policy, and to seek the broad support of the population for the adjustment efforts. To this end, governments will need to pursue a more active information policy, explaining the objectives of policies and soliciting the input of those whom the policies are intended to benefit.

Globalization and regional integration
With closer economic integration, each country has an interest in ensuring that appropriate policies are followed in its partner countries. This could be achieved by coordination the relevant national policies within a regional context. Throughout the continent, African governments are coming together to coordinate components of their policies, and virtually all countries are now members of regional organizations. Efficient regional cooperation allows the economies of Africa to overcome the disadvantages of their relatively small size and, by opening access to larger markets, to realize economies of scale. The obligations of membership in some of these organizations also make it easier for each individual country to achieve further progress in regulatory and judicial reform (as is the case in the CFA franc zone); to rationalize payments facilities and to relax restrictions on capital transactions and investment flows (as in the Cross-Border Initiative); and to develop the mutual economic infrastructure (as in the SADC). Enhancing the trade links among themselves naturally also strengthens their ability to participate in trade on a global scale, and could lead toward further progress in the direction of nondiscriminatory multilateral trade liberalization. The challenge for the future will be to ensure that these regional organizations are perceived as effective vehicles for the integration of African countries into the world economy, providing mutual support to their members in their reform efforts. They should not be considered as defensive mechanisms, intended to ward off the “negative” aspects of globalization. Common regional objectives should be set in terms of international best practices. And the regional organizations should seek to push through reforms in the areas of the legal and regulatory frameworks, financial sector restructuring, labor and investment code reform, and exchange and trade liberalization that seek to reach international standards as quickly as possible. The pace of progress should be what is feasible, not what is comfortable for the slowest member.

REPRINTED from the IMF website