[RESHAN JAYAWARDANE]

Individual Assignment
LANKA
(BLB00012-3)

Globalisation and International Institutions

HF1631 IBM
HAND OUT DATE

: 13th July 2016

HAND IN DATE

: 19th Sep 2016

WEIGHTAGE

: 100%

INSTRUCTION TO CANDIDATES:

1. Students are advised to underpin their answers with the use of references.
(Cited using the Harvard Name System of Referencing)
2. Late submission will be awarded zero (0) unless Extenuating
Circumstances (EC) is upheld.
3.

Cases of plagiarism will be penalized.

4. The assignment should be submitted through Turnitin link given in APIIT

Learning Management System (LMS)
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Abstract
This report mainly focuses on Globalization concept and different views on globalization
by various authors and institutions. It will discuss the debates to globalization about
Hyper-globalists, Sceptics and Transformationalists views and the different perspectives
of globalization (economic, political and social).
Key Words: Globalization, WTO, IMF, WHO, ILO, Hyper-globalists thesis, Sceptical
thesis, Transformations thesis, Economic perspective, Social perspective, Political
perspective.

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Acknowledgment
First I would like to thank my lecturer Miss. Shurmara Fernando for giving me the
support and the courage to do this assignment and to complete this assignment
successfully without any doubts.
On behalf of that I would like to take this opportunity to thank my friends for giving me
maximum support and for encouraging me to work on this assignment when I faced many
difficulties.
Finally, I would like to thank my parents for guiding me and for giving their
encouragement to fulfill my dreams and their support for this report to do my best in this.

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Table of Contents
1.

Introduction............................................................................................................- 7 -

What is Globalization............................................................................................- 8 -

Debates related to globalization..........................................................................- 11 -

Costs and Benefits of globalization process in the perspective of a small country

economy........................................................................................................................- 14 5

Conclusion............................................................................................................- 17 -

Reference..............................................................................................................- 18 -

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List of Tables
Table 1: Comparison of different institutions.................................................................- 9 Table 2: Conceptualizing globalization.........................................................................- 12 -

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Abbreviation
AI - Amnesty International
BPO Business Process Outsourcing
ETCA - Economic and Technology Cooperative Agreement
EU European Union
FDI Foreign Direct Investment
GDP Gross Domestic Product
GSP Generalised Scheme of Preferences
ILO International Labour Organisation
IMF International Monetary Fund
MNE Multinational Enterprises
NGO Non Governmental Organizations
SAARC South Asian Association for Regional Cooperation
UNICEF - United Nations Children's Fund
WB World Bank
WHO World Health Organization
WTO World Trade Organization

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1. Introduction
The concept of Globalization is vital for a country because it allows countries to benefit
from economic interaction and collaborate in handling economic, social and political
challenges in todays world. Different Authors and Institutions have defined globalization
in different ways because there is no one definition for globalization. In this report the
author has compared the institutional and general definitions separately. As per the next
step, the author has explained debates related to globalization in detailed. In the last
section the author has described how small country like Sri Lanka have been impacted in
terms of economic, political and social perspectives using costs and benefits for each
perspective.

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2 What is Globalization
Various authors and institutions have defined globalization in different ways. According
to Hamilton & Webster (2009), globalization refers to the social, economical, political,
cultural and technological which links in various countries. In addition to that,
globalization defined as a process or set of processes which considered as a change of the
spatial organization of social relations and transaction (Held et al. 1999). As stated by
Ohiorhenuan (1998), it is the wider and deeper linkages of national economies into a
global market for goods and services, especially capital.
According to WTO globalization can be defined as the exponential growth of the concept
of exchanging goods and services at a profit, similar to the one that took place with the
19th century industrial revolution. It is how societies have changed due to the advent of
technology that has led to the integration of social and economic forces beyond
traditional geographic boundaries (Wto.org, 2016).
In addition, as stated by IMF, Globalization is the increasing interaction and connectivity
of economies around the world by exchanging goods, services, money, people and
knowledge with each other. The technological developments that came about in 1980s
made such international dealings quick and simple (Imf.org, 2016).
Also, as defined by ILO, globalization is the rapid integration of countries in the world
fueled by the ease in which international trade, investments and capital flows take place.
This has come about due to international activities such as trade of goods & services,
capital flows (both long and short term), the role played by MNEs, the changes in
production network at international level and the use of latest technology (Ilo.org, 2016).
Finally, according to WHO, Globalization is the interdependence and interconnectedness
of people and countries. WHO refers to two related elements; the opening of international
borders to allow the movement of goods, services, people, ideas, money; and the changes
in institutional (such as world bank, IMF, UNICEF actions) and policy (monitory , fiscal
etc.) regimes by countries and economic regions (SAARC, EU etc.) that promotes and
facilitates such movements (Wto.org, 2016).

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Table 1: Comparison of different institutions

WTO

IMF

WHO

ILO

Economic

Recombining

Integration of

Interconnectedne

Economic

Impact

of economic

economies

ss of countries

integration

forces

around the

Historical stage

world
The term began

No specific

countries
No specific

to used

reference

reference

Goods and

during 1980s
Movement of

Flow of goods,

Trade in goods

services

capital across

services, finance,

and services,

borders.

people and ideas

capital flows

Social impact

Timeline

between

commonly
What is
exchanged

Implies that
information
and knowledge
Social and

Recombining

is shared
Cultural

Interdependence

cultural

social forces

dimension of

of people

Technological

globalization
Reflection of

No specific

The application

revolution

technological

reference

of new

New territorial

advances
Across

Across

technology
Production

dimension

boarders

international

network on an

boarders

international

Impact
Reference to
technology
Beyond
traditional
boarders

scale
Source: IMF (2016), WHO (2016), WTO (2016), ILO (2016)

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As illustrated by the listed definitions from the above Table 1, the four institutions agree
that a large component of globalization is economic and social liberalization.
However, contrasting opinions are formed as regards to the timing of globalization. The
WTO definition suggests that globalization is not a new phenomenon and its origins
stretch to the distant past of 19th century and that it is nearly a continuation of old
process. The IMF definition forms a similar opinion in that globalization is a historical
process it speaks of a recent past date in back to 1980s. The ILO and WHO have not
attached a timeline to globalization, however references to technology information
sharing etc. may recognize globalization process as being part of the contemporary era.
As it draws attention to the industrial revolution and market capitalism, it may seem that
WTO refers to the exchange of only goods and services whereas the other institutional
definitions suggest the movement of not only goods and services but capital, people, and
knowledge.
All four institutional definitions draw reference to advances in technology which
indicates that technology has played an integral role in the globalization process.
The four institutions collectively agree that the movement of goods, services, people etc.
are not confined to traditionally define geographical boundaries, thus globalization has
resulted in opening of international doors.
When comparing Authors definitions with institutional definitions, there is a gap between
these definitions. According to authors definitions it talks about links in different
countries and economies, whereas in institutions it has not mentioned specifically.
Likewise in institutional definitions it talks about timeline, technology etc. but in authors
definitions it is not mentioned. Therefore as per the recommendation there is no one
specific definition for globalization but it is an involving phenomenon.

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3 Debates related to globalization

Hyper-globalist perspective is identified by the declining relevance and authority of
nation-states, brought about mainly through economy logic of global market (Held et al,
1999). Supporters of this view see globalization as bringing about a denationalization of
economies through the establishment of transnational networks of production, trade and
finance (Held et al, 1999, p.3). According to this view free trade and investment across
global markets allow people to share in the prosperity of a growing world economy
(Marston and Knox, 2011).

This view also suggests a period of global governance whereby institutions such as IMF,
WTO, World Bank etc. tends intervene in the affairs of and threatens the sovereignty of
the nation state. It also talks about global civil society where NGO's such as Greenpeace
and Amnesty International play a larger role in global politics (Held and McGrew,
2003, p.38). At a cultural level, growth of cheaper travel and of mass media has led to
dissemination of ideas, music, Art, food etc. from one culture to another. While the
Hyper-globalist perspective sees these related events as positive, the perspective similarly
accepts that globalization has created inequalities, however sees these remedied by the
advance processes of capitalist market expansion.
Secondly in the Sceptics, whilst rejecting the notion of globalization as anything
essentially new, believe that the golden age of globalization occurred at the end of 19th
century and that the current processes show, at best, a regionalization (Held et al, 1999,
p.5). From a cultural standpoint it can be argued that cultures have always mixed and
shared ideas. The Sceptics have argued that the existing economic interdependence that
describes the global system is not without precedent and would point to statistics from
over hundred years ago to back up their claims (Held et al, 1999, p.5). They also argue
that national governments are important to the regulation of international economic
activity and the continuing liberalization of the global economy only can be facilitated by
the regulatory power of national governments (Marston and Knox, 2011). Authors with a
Sceptical view reject the notions of the development of a global governance structure or a
global culture. Authors with a Sceptical perspective reject the notions of the development

of a global culture or a global governance structure (Held et al, 1999, p.6).

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According to Transformationalist perspective theres no single cause (market or

economic logic) behind globalization and the processes of globalization result is not
determined (Held et al, 1999, p.7). Similar to Hyper-globalist this group believes that
globalization is changing societies, economies, etc. In contrast to Hyper-globalists and
Sceptics this group makes no claims about the future of globalization, nor do they see
globalization as a long term historical process (Marston and Knox, 2011).
This group of authors views the national governments as changing as supposed to waning
as viewed by hyper-globalists and growing as viewed by Sceptics. In summary it can be
said that the authors of Transformationalist perspective have a much less determinate
understanding the process of globalization authors from the other perspectives (Held et
al, 1999).

The three perspectives of globalization are summarized in the following Table 2.

Table 2: Conceptualizing globalization

Sceptics
Trading blocs,

Transformationalists
Historically

weaker governance

unprecedented levels

than in earlier

of global

Declining or

periods
Reinforced or

interconnectedness
Reconstituted,

governments
Pattern of

eroding
Erosion of old

enhanced
Increased

restructured
New architecture of

stratification

hierarchies

marginalization of

world order

Conceptualization

As a reordering of

South
As

As the reordering of

of globalization

the framework of

internationalization

interregional relations

human action

and regionalization

and action at a

Whats New

Power of national

Hyper-globalists
A global age

distance
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Dominant

Global capitalism

World less

Features

Global governance

interdependent than

Thick (intensive
and extensive)

Driving forces of

Global civil society in 1890s

Capitalism and
States and markets

globalization
Combined forces of

globalization
Dominant Motif

technology
Mass consumption

National Interest

modernity
Transformation of

Historical

And entertainment
Global civilization

Regional

political community
Indeterminate: global

blocks/clash of

integration and

Trajectory
Summary

The end of the

civilizations
Internationalization

fragmentation
Globalization

Argument

nation-state

depends on state

transforming state

acquiescence and

power and world

support

politics

Source: (Held et al, 1999).

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4 Costs and Benefits of globalization process in the

perspective of a small country economy
The integration of the world economy is gathering momentum. With the liberalization of
the economy in 1977, Sri Lanka entered into the arena of globalization (Indraratna,
2001).
From an economics perspective, free trade capability can be viewed as a significant
benefit of globalization. Trade barriers in the past prevented countries from exporting
domestics goods/services and importing the ones not available locally. For example, Sri
Lanka has benefited greatly by GSP plus concession in order to develop its apparel
industry which is the greatest source of foreign income for the country (Reffai, 2015).
The flipside of it being, international pressures such as human rights related
requirements, NGO demands that is exerted on the government which may lead to
negative political impact (Ft.lk, 2016).
Whilst free trade helps countries to grow their GDP, reduce unemployment etc. it also
impacts the domestic infant industries which cannot compete both price and quality wise
with more established MNEs, which begs the question as to who really benefits from
globalization; is it the developed nations or developing countries such as Sri Lanka? Free
trade has negative consequences such as contraband, drugs etc. entering the local market.
But the biggest adverse impact of free trade is its impact on the trade deficit. Given that
Sri Lanka is a developing nation its import value is considerably more compared to the
export revenue, which in turn affects the balance of payments of the country. According
to a recent newspaper article, the country is having a huge trade deficit which is a serious
strain on the balance of payments. Given that last years trade deficit was expected to be
around US$ 9B, this years trade deficit is expected to increase to about US$ 11B
(Sanderatne, 2012).
From an economics perspective, capital movement is yet another benefit of
globalization, especially for developing nations. Cash inflows, by way of Foreign Direct
Investments, loans, grants etc. has enabled such countries to fund large public
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development projects, such as road development, ports development etc. carried out in
Sri Lanka with the funding of Chinese, IMF loans and FDIs. For an example in 2009
Chinese funded worth of US$ 410 million for several projects in Sri Lanka such as
development of international airport at Mattala, highways and new constructions etc.
(Mfa.gov.lk, 2009).
The opponents may suggest that, this would make such countries financially more
volatile due to the build-up of foreign debt. For an example Sri Lanka has a major debt
issue. After more than 10 years of taking out large amount of loans to build large scale
infrastructure most of which has not yet produced adequate returns, currently the country
is struggling to make the payments (Shepard, 2016). The constant pressure in the form of
periodic loan financing needs which may adversely impact the currency of the nation as
well as negatively impact inflation and interest rates. The ease of capital movement has
also seen an increase in financial crime such as money laundering and terrorism
financing, which is a downside of globalization.
Globalization has contributed positively towards the development of the service sector of
Sri Lanka, especially tourism and BPO industries have seen significant growth by
opening the Sri Lankan shores to foreign entities and individuals. It not only has made
way to foreign currency inflows, but has also created the opportunity for knowledge and
skills sharing.
Globalization has also seeing significant movement of labor resources. Sri Lankans,
including skilled staff opting to migrate to more developed and financially fruitful
countries and thereby draining the country of its skilled labor pool. Upside being the
migrant remittances which boosts the country's economy.
From a political perspective, drawing from the views of Hyper-globalists, global
institutions and organizations such as IMF, NGOs continues to influence the political
decisions of countries. On a positive note it compels governments to be more transparent
in their policies and decision making whilst ensuring proper governance and financial
control. However, it also threatens the sovereignty of the nation-state, in instances leading
political instability. The present Sri Lankan regime is scrutinized by the United Nations
Human Rights commission with regard humanitarian irregularities, which in turn has
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caused a rift among various internal political bodies (Kurukulasuriya, 2012). Global civil
societies, a by-product of globalization, explains the divergence of activist groups (such
as diasporas) that exert considerable pressure The Tamil diasporas have caused political
havoc by questioning certain decision of the Sri Lankan government at the international
circuit (Samath, 2009).
With reference to the sceptics view of globalization, which currently is viewed as
regionalization at best, one must analyze the impact of over dependence on one region or
country. The obvious benefits would in turn expose the economy to uncertainties of
immense impact, which was evident from the after effects of the recent Brexit. The
consequences of such over-attachment to given countries was a discussion point during
the previous regime, where the Sri Lankan government fostered a rather unhealthy
relationship which China and related entities, by isolating itself from the west whilst
exposing itself to corruption, trade irregularities etc (Hariharan, 2015; Pattanaik, 2015).
The ETCA between Sri Lanka and India is a classic example of a double edged sword
with both economic and political implications, which one may say is an ultimate result of
globalization (Keerthisinghe, 2016). Whilst it promotes free trade and knowledge sharing,
it also has created great deal of insecurity amongst Lankan employees due to the potential
job losses to Indian migrants.
From social perspective, the impact of globalization can be analyzed by deep diving in
to the life style of people, more importantly ascertaining the quality of life. Sri Lanka has
access to better variety of food, clothes, recreational activity (foreign travel) has
enhanced the life style, thereby uplifting the social status of individuals in general
(Gamage, 2016).
Another major social aspect is that globalization has influenced the social structure of
different societies. Pre global-media (via internet, satellite TV etc) era saw social
institutions with their own unique values, beliefs etc. in contrast, social institutions in the
modern world are constantly influenced by various other cultures mainly due to the
advent of technology plus free movement of people who in turn inculcate their values,
beliefs in other societies. The phenomenon has enabled people in developing nations to
come out of conventional mindset and become more independent and skilled to tackle the
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modern day challenges. Opponents may argue against religious and cultural impact due to
over-westernization.
The impact of globalization from a social perspective can be further explored by
addressing education level of a nation. Sri Lankan's have now access to international
universities via distance and online learning programs at concessionary prices, which in
turn allows students to get a flavor of foreign culture as well. For example, Sri Lanka has
made a massive progress in the field of distance education over the past few three
decades. Opportunities for Sri Lankan students are increasing where they can access both
national and international educational organizations through advanced technology
(Wasala, 2010).
Growth of MNEs, owing to globalization, does bring up both environmental and social
implications. Firstly, MNEs have attracted negative publicity due its labor practices (such
as low wages, unpleasant working conditions etc.). Sri Lankan apparel giants that cater to
leading global brands have been questioned in this regard. Secondly, the impact on scarce
resources, pollution etc. are issues synonymous to MNEs.

5 Conclusion
As per the conclusion, globalization concept can be determined as important to this
world, as the integration of the globes economies increasing into a single global market
could create so many benefits for every individual. However, there can be few
disadvantages as well when looking into both the sides. The debates related to
globalization of Hyper-globalists, Spectics and Tranformationalists views are mentioned
in detail. Finally, costs and benefits of economic, social and political perspectives in Sri
Lanka were discussed by giving real world examples.

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