The Positive and Negative Effects of Globalization on the Nigerian Economy.

The Positive and Negative Effects of Globalization on the Nigerian Economy.

CHAPTER TWO

LITERATURE REVIEW AND THEORETICAL FRAMEWORK

2.1 Literature Review

There has been a consensus among the scholars of the Third World extraction that globalization is not a new phenomenon. The new phase has however assumed new dimension to further undeveloped and entrench dependency in Africa. According to Stiglitz (2002:62), globalization is:- A new social architecture of cross-border human interactions – in which the integrity of the national territories state as a coherent political economy is eroded, as the functions of the state became re-organized to adjust the domestic economic and social policies…

Again, Nabudere (2000:16) sees globalization as an unequal process of capitalist development. He posits that uneven and unequal economic opportunities are characteristics of the present capital modernization. This process is reflected in the unequal integration and fragmentation of many communities, especially, what came to be called the “The World”, in the process f the unfolding economic, political, social and cultural activity.

More concretely, Ake (1994:22) views globalization as a March of capital all over the world to search for profits, a process reflected in the rich and power of MNCS. He asserts that; It is about growing structural differentiation and functional integration in the world economy; it is about growing interdependence across the globe; it is about the national-state coming under pressure from the surge of transnational phenomenon, about the emergence of a global mass culture driven by mass advertisement and technical advances in mass communication, (Ake, 1994:22-23)”.

The foregoing has shown that the roots of African underdevelopment and Dependency lie with the capitalist expansion globalization are therefore a phase in the process of this expansion. Hoogvelt (2001:68); submits that as an instrument of imperialism, globalization is linked systematically with social exclusion. This means that as globalization proceeds, more and segments of populations as well as whole areas and regions are being excluded from its benefits.

In the same vein, Nnoli (2000:173) consider globalization as imperialism. According to him, globalization is a dynamic phenomenon, which changes in accordance with the laws of capitalist expansion. Consequently, it has assumed different focus in the past such as slave trade, legitimate trade, colonialism and nee-colonialism today, it is simply globalization.

It is implicit therefore that globalization is a relation of domination and exploitation between nations and groups of nations. This relationship takes place at different levels of economic, political, social and so on. In this contribution, Oyebody (2002:48) maintains that the different economic and political strategies such as globalization, liberalization. Privatization, foreign aid and the activities of MNCS are instruments of under-developing and entrenching Dependency in Nigeria and the whole of the developing world.

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More so, Ogude (2001:12) posits that globalization, if taken off the rhetoric; still assume the character of colonialism. According to him they both exploit the weak to make the rich richer. Globalization, like colonialism has also facilitated the repatriation of resources to the capitalist metropole. This view agrees with Rodney’s (1972:64) submission that the colonial process was not just a system of exploitation, but one whose essential, purpose was to repatriate the profits to the so-called mother country.

It is important to reiterate the globalization affects all the dimension of an individual and national life. However, Hirst and Thompson (1999:38) opined that the strong version of the thesis of economic globalization is due to the fact that without the notion of a truly globalization is due to the fact that without the notion of a truly globalize economy, many of the other consequences adduced in the domains of culture and politics of the world either cease to be sustainable or become less threatening.

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To Khor (2000:16), the aspects of economic globalization are the breaking down of national economic barriers; the international spread of trade, financial and production activities and the ubegrowing power of MNCS and international financial institutions in these processes. The liberalization aspect results in greater openness and integration of countries in the world market.

In the same way, Tandon (200:66), sees globalization more as economic phenomenon. He opines that it is both the source of capitalisms problems and its vaunted solution. He argues that in order to overcome the crisis in the system;

Capitalism has to globalize itself both to sell its knowledge – intensive products and services and exploit cheaper sources of human labour and raw materials. (Tandon, 2000:66). Tendon further submits that the principal instrument of the contemporary phase of globalization is the World Trade organization (WTO). To him, the older Bretton Woods Institutions, the IMF and the World Bank, have both in their constitutions and operation provided added instruments for financial institutions. The most important and unique aspect of the current globalization process, according to Khor is the globalization of national policies and policy-making mechanism. To him, national policies in all aspects of a nation’s life have been taken over by international agencies and processes of big private corporations. This has therefore led to the entrenchment of economic dependency and governments and people to make choices. In the guise, most developing countries, including Nigeria, have seen their independent policy-making capacity eroded and have come to adopt policies made by other entities.

More so, Kandwenda (2003:14), while recognizing the emphasis on economic globalization also argues that it requires a political globalization. This, according to him, is because the new economic institutions require new governing patterns that are compatible with the requirements of growing economic globalization. In these circumstances therefore, the state is being confined to creating a conducive environment including macro-economic policies for private sector enterprises to flourish and competitive markets to function.

In line with Khor’s submission, Ihonubere (2002:9), asserts that the new globalization erodes states sovereignty and creates dependency. He submits that;

One of the major features of the new globalization is the increasing powerlessness of the state… as far as regulating the movement of… capital and even skills in concerned (Ihonubere, 2002:9).

He also states that counties caught in the storm of globalization are taking steps to give more autonomy to private initiatives and to cede some political grounds to powerful corporations. The situation has ensured dependency of developing countries on the more enveloped ones. It is implied from the foregoing that, globalization is a world-wide spread or the universalization of certain economic practices, identities and structures. It is also a process of change in which the world’s countries and increasingly integrated as an unction of cross-border activities. The bourgeois scholars, according to Okpe (2000:38) argue that there would be universal equity and Prosperity through globalization. They also contend that the process that the process would definitely benefit both developed and developing nations of the world.

Similarly, the IMF (1997:6) catalogued the advantages of this process to the developing nations. It argues that “through globalization, these countries would be exposed to a wide range of technologies, a development that would facilitate their catching up, with the Advanced Capitalist Countries (ACCs) more rapidly. As it argues, far from being a curse, globalization enables countries to seize opportunities irrespective of their degree of development. The same report concludes that far from being a zero sum game, both developing and developed countries would benefit tremendously from the effects of the shape up that globalization involves.

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Again, Obadan (2002:20), posits that economic globalization has made very significant gains in direct economic instruments across the world, even though it is recognized too that this multilateral nature of economic development is largely shared among the three main economic blocs (the US, Europe and Japan). It has also been observed that because of the propagation of economic liberalism of the globalization agenda, genuine competition has emerged among countries of Africa, Asia and Latin America. The exponent of the globalization also argues that an unprecedented advances in living standards and that over three billion people have been lifted out of poverty in the last ten years. They thus argue that countries that are getting poorer are the ones that are not imbibing the liberalization agenda of globalization.

However, Nafrudere (2000:18) and Khor (2000:10) opined that globalization is a very uneven process with unequal distribution of benefits and losses. To Khor, this imbalance leads to polarization between the few countries and groups that gain, and many others and groups in ht society that lose land or are marginalized, more so, despite the so-called significant impacts of globalization may have made for the players involved in it, the negative respects of it abounds for the Sideliners of the game. As observed by Castro (2002:62), the number of people living in extreme poverty has significantly increased everywhere under globalization.

The implication of the foregoing is that globalization has affected the countries of the South adversely, especially; as domestic policies are made by the WTO and other international financial institutions. Khor (2000:8) posits that non-compliance to the imposed policies can result to trade sanctions taken against such a country’s exports. Therefore many domestic economic, political and invariably, social policies of the developing economics are made in the WTO negotiations, rather than in the parliaments, bureaucracy or cabinets at the national level. The erosion of national sovereignty and the entrenchment of economic dependence have created a situation where the underdeveloped countries have lost their development opportunities and have been robbed of development initiatives. Globalization has therefore posed a great challenge to dependent and underdeveloped economies like Nigeria. The Nigerian state is a post-colonial state. This means that it is the colonial history that can best explain how Nigeria, like another African state, participates in the globalized international economy.

Okpe (2000), posits therefore that African countries, including Nigeria are marginally significant in the global economy. The reason is that the scope and magnitude of the crises of dependence which faces the continent has denied it the opportunity to take its rightful place in the progress of humanity.  It is obvious that globalization has come to stay and is inescapable. Though a sovereign state, Nigeria cannot exist in isolation. The unfortunate fact however, is that Nigeria does not stand a chance t derive significant net benefits from globalization.

According to Dotun (1999:15), Nigeria is “allergic” to all arrowheads of development like the rapid growth in export, incomes, employment, technological resources, research and development, improved welfare and quality of life, among others. Thus Nigeria risks being confirmed to the fringes of globalization unless she moves to acquire these characteristics.

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The transition from colonial to neo-colonial political history was achieved in 1960 with political independence. Through the monetization of the economy, introduction of taxation and so on, the societies that now constitute Nigeria, were incorporated into the international capitalist system. The colonial economy therefore creates a dependent relationship between Britain on one hand and Nigeria on the other hand. The former served as a centre that supplied manufactured goods whiled the latter was an appendage that provided raw materials. The emergence of neo-colonialism gave the state and its functionaries some stake in its economy, but nothing was done to change the inherited colonial structures of the economy.

From that era of capitalist expansion to the present era of economic integration and inter dependence, the economy is anchored on external dependence which has profound explications for the sovereignty of the nation. According to Kuna (2003:168), multilateral capitalist institutions and centers have controlled the economy since. Dependency in Nigeria economy is eloquently typified by the international financial institution like the World Bank, Multinational Corporations (MNCs) etc. thus foreign coordination and control of the Nigeria economy has been strengthened though the polices of these bodies as well as clearance of annual budgets by creditors (clubs, IMF and Bank), monitoring visits to access progress reports and permanent World Bank representative in Nigeria to oversee extent of the austerity package. Thus globalization ensures that the peripheral states are perpetually dependent on the capitalist metropolis.

Furthermore, foreign aids have become recurrent reality within the context of ever changing international capitalist system. The effects of external financial, material, military and technical assistance or inducement bring forth a lot of socio-economic and even ideological implications that have a deep bearing on national aspirations. It is one of the key aspects of the workings of the globalized economy where the powerful states exert influence and control on the poor and the weak states. In this wise, Offiong (1980:15), states that crucial economic decisions are not made by the countries that are being “developed”, but by foreigners whose interests are carefully safeguarded. Their control, thus, distorts the dependent country thereby making them more dependent.globalization and economic economy

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