Governance & Globalization in the
Context of LDCs and Nepal
Prof. Sohan K. Karna
The most basic truth about
globalization: No one is in
charge
11
The terms governance and globalization have been two
of the most frequently used terms in economic,
political and international discourse.
Governance in global context is used to designate all
regulations intended for organization and
centralization of human societies on a global scale.
It does not mean world government, and even
less democratic globalization. It refers to the
political interaction that is required to solve
problems that affect more than one state or
region when there is no power to enforce
compliance.
It is the complex of formal and informal
institutions, mechanisms, relationships, and
processes between and among states, markets,
citizens and organizations, both inter- and non-
governmental, through which collective
interests on the global plane are articulated;
duties, obligations and privileges are
established; and differences are mediated
through educated professionals.
Globalization is as an excellent tool which should lead
to “good governance” and reformed societies.
There should be more intensive cooperation, win-win
situations and improved living standards for everyone.
It as an important policy instrument to advance
economic, social, and political development.
The counter argument supports the view that
development and globalization are mutually
exclusive.
In developing nations there have been complaints
about wage and income inequalities, corporate
flight, recession, rising unemployment, growing
wealth concentration, enlargement of the urban
underclass and massive immigrant inflows.
The most basic truth about globalization: No one
is in charge.
One of the most widely discussed vital issues
today related to changes in state formation, has
been the process of globalization and the
emergence of the “new political economy”.
On one side, the process of globalization which
implies the integration of national economies,
political systems, cultures, and identities into the
world capitalist system, requires the elimination of
all barriers to cross-national interaction.
On the other side, in order to facilitate such
globalization, various global forces and actors,
including TNCs, world media networks,
international agencies(WB, IMF, WTO, IFC,
ADB, etc), and regional blocks(OECD, EU,
APEC,ASEAN, etc), have prescribed or
advocated, adopted or imposed, major policy
reforms under the rubric of new political economy
based on a unique set of pro market assumptions,
theoretical propositions, and practical strategies.
Under this influence of globalization reinforced
by new political economy, the state has not only
adopted market-driven policies like
streamlining, privatization, deregulation, and
liberalization to transfer its major
socioeconomic activities to the private sector, it
has also transformed the remaining public sector
into business like entities in terms of role,
structure, orientation, and organizational culture.
Today these contemporary changes in the governance
system can be found in almost all capitalist, post-
socialist, and Third World Countries(TWCs).
Such a trend toward changing public sector
governance has often been characterized as a
tendency toward a managerial state or a hollow
state(not sincere). In the TWCs, this represents a
fundamental shift from their past tradition of a state-
centric mode of governance under the so-called
“developmental state”.
In most TWCs, the postcolonial period found the
emergence of a state-centric mode of governance,
especially due to the relative absence of private
capital and lack of advanced market forces.
More importantly, the scope and role of the state
expanded considerably as a result of government’s
nation-building developmental agenda in these
countries irrespective of their ideological identities
based on capitalist or socialist inclinations.
In fact, the recent transition in TWCs governance
based on the assumptions and principles of new
political economy which invariably prescribes the role
of the state to be replaced with that of the market is in
line with the preconditions of globalization requiring
minimal state intervention and maximum market
expansion.
These recent reforms in state and governance have
been prescribed for TWCs by the advocates of market-
friendly globalization and public policies on the
ground that such reforms and policies would reduce
fiscal crisis, overcome deficit, increase efficiency,
enhance quality, and improve allocation.
In line with the new political economy, TWGs have
attempted to reduce the scope of public governance
through measures such as privatization,
deregulation, and downsizing, and to streamline its
functions by recasting the state’s role as a facilitator
while assigning the main role to the private sector.
For example, based on the prescription and pressure
of the WB and the IMF, massive privatization and
deregulation initiatives have been undertaken in
most Asian, African, and Latin American countries.
In these countries diverse modes of privatization,
including divestment, leasing, equity sales,
management contracts, and corporatization, have been
adopted in major sectors such as telecom, airlines,
electricity, petroleum, auto mobiles, television,
fertilizer, tobacco, banking, insurance, and so on.
This unprecedented process of privatization has
considerably reduced the state’s scope of ownership
and economic control in these
countries.
Most governments have also taken initiatives to
directly downsize the public sector to create greater
avenues for the private sector.
In Asia, under the influence of the WB and the
ADB, Malaysia has adopted measures to
downsize the public service, the Philippines has
adopted the strategy of “streamlining the
bureaucracy” to reduce staff by 5-10 percent,
Singapore has practiced a zero manpower
growth policy in order to eventually reduce the
number of public employees by 10 percent, and
Thailand has frozen new employment and
replaced underutilized public employees.
Similarly, India has decided to de-monopolize and
right size governance by
reducing public employment by 30 percent, Nepal has
frozen all vacant positions to reduce the size of the
public sector, and Sri Lanka has introduced early
retirement policy and retrenched thousands of
government employees.
In Africa and Latin America, governments
have decided to reduce or freeze public sector
employment in cases such as Argentina,
Bolivia, Brazil, Costa Rica, Ghana, Guatemala,
Kenya, Mali, Mexico, Senegal, Somalia, and
Uganda. A recent study shows that as a
percentage of total population, the number of
central government employees decreased from
2.6 to 1.1 percent in Asia, 1.8 to 1.1 percent in
Africa, and 2.4 to 1.5 percent in Latin America
These downsizing exercises demonstrate the
growing tendency of Third World States to
restructure public governance in line with the
overall agenda for its diminishing role in
socioeconomic activities.
In fact, these countries have revised the role of
public governance in such a manner that it
becomes a facilitator or catalyst rather than the
main agent of economic production and
distribution.
In recent years, the governments in Bangladesh, India,
Malaysia, Nepal, Pakistan, Singapore, Sri Lanka, and
Thailand have de-emphasized the role of public
bureaucracy as the primary actor in socioeconomic
development, redefining its role to facilitate or enable
the business sector to take more active initiatives to
deliver services.
But in reality, there are many adverse
outcomes of these current changes pointed out
by scholars who are more concerned for the
critical implications of such new politico-
economic reforms for poorer TWCs.
Internally, the main worries are about the
worsening conditions of poverty and inequality
and weakening status of citizens’ social and
political rights during the period of such
globalization-led pro market reform policies
Externally, the primary concerns are for the
diminishing state sovereignty, worsening external
dependence, and expanding international inequality
brought about by the process of globalization
reinforced by new political economy.
Globalization has become one of the most contested
concepts in history is due to fundamental
disagreements concerning the perception of the
interests globalization primarily serves, the processes
involved, and the consequences that result.
‘Why has globalization a force that has brought so
much good become so controversial?
Opening up to international trade has helped
many countries grow far more quickly than
they would otherwise have done. International
trade helps economic development when a
country’s exports drive its economic growth.
Export-led growth was the centerpiece of the
industrial policy that enriched much of Asia
and left millions of people there far better off.
Because of globalization many people in the world
now live longer than before and their standard of
living is far better.
Globalization has reduced the sense of isolation felt in
much of the developing world and has given many
people in the developing countries access to
knowledge well beyond the reach of even the
wealthiest in any country a century ago.
Those who vilify globalization often overlook its
benefits. To those who have benefited, globalization
offers unimagined opportunities and wealth.
But to many in the developing world, globalization has
not brought the promised economic benefits.
To those who have been overwhelmed and then
abandoned, globalization appears like an irresistible
tsunami wave which strips away their material
livelihood, social support and cultural identity leaving
only the wreckage of their former economy and
society.
Searching for explanations for this cruel
divergence in outcomes leads to the inescapable
conclusion that the international market forces
unleashed in globalization disproportionately
advantage the advanced industrial countries, and too
often leave developing countries exposed and
vulnerable.
Governance
Elements: transparency, accountability, participation
(participatory development processes), efficiency (strong
state, democracy, social equity, respect for human rights ,
and the rule of law (reflected):
in institutions,
rules, and political system within countries
Importance of Governance
Global governance-global public policy (tackling green
house effects, climate change)
management of issues, which spread across borders
conjures up images of world government
Reform in Global Governance
Governance is a decision-making process — through
consultation, dialogue, exchange and mutual
respect seeks to ensure coexistence and, coherence
between different and sometimes divergent points of
view.
Fundamental importance of good governance in all
countries,
at all levels of development for effective and equitable
participation in the global economy.
The basic principals that guide global participation are:
democracy, social equity, respect for human rights ,
and
the rule of law
These need to be reflected:
in institutions,
rules, and political system within countries,
and respected by all sectors of the society since
globalization has an impact on local values and
cultures and our vision of globalization is anchored at
local level.
This involves seeking some common ground and extending
it to the point where joint action can be envisaged.
Globalization reveals a new sphere of common interests
that transcends states, cultures and national histories.
Indeed, the disproportion between the enforcement role of
states and their actual capacity to handle issues calls for
new forms of governance.
The basis for good governance is a well-functioning
democratic political system
- that ensures – representative and honest
governments responsiveness to the needs of the
people,
respect for basic civil liberties such as
- freedom of expression and association –
- measures to promote representative organizations
of the poor and other socially disadvantaged groups.
The foundation of good governance lies on the
fundamental conditions for the development of vibrant civil
society that reflects the full diversity of views and interests,
Civil society means to ensure participatory processes of policy
design and implementation, and
provide continual check and balance on the exercise of
governmental authority and private power,
safeguarding the rule of law and effective administration of
justice.
Good governance deemed necessary for
an equitable legal framework that defends people from
abuse of power by the State or by non-State actors.
Empowers people to assert their rights – to property,
education, decent work, freedom of speech and other
springboards for human growth and advancement.
This requires transparent and accountable government
institutions at executive, administrative and
parliamentary levels and independent judiciaries as well.
The need for good governance also extends to the formal
institutions required for the efficient and equitable functioning of
market economy.
The basic requirements are:
a sound financial system that mobilizes savings and promotes
investment,
prevents abuse and anti-competitive behavior,
ensures transparent and socially responsible corporate
governance as such to avoid the recurrence of enormous abuse of
mismanagement.
One important aspect of national governance is the need for
countries to take into account the impact of their domestic
policies on others.
In an interconnected world, the economic policies of the major
players in the global economy have a substantial impact on all
other countries. (e.g., the current debt crisis of the USA expected
to raise the debt ceiling to 60 trillion dollar and cutting govt.
spending by 2.1 trillion in ten years).
Global governance
Global governance is the political interaction of
transnational actors aimed at solving problems.
It refers to the management of issues which
spread across borders and typically involve
governments, of course, but also international
organizations, civil society, often the private
sector, and sometimes and indeed increasingly
formal or informal networks.
To deal with climate change, for instance, it is
obvious that there must be just such a global
public policy.
Increasing globalization has led to more intense
discussions of global governance,
a concept that affords a basis for the organization of
power,
or the elements of consultation,
and dialogue necessary to securing greater harmony in
the global context.
As with any system of power within the nation-state, what is
needed is good global governance — that is,
a system that offers a good balance between efficiency and
legitimacy, adapted to this new universal context.
If we are to capture the promises of globalization while
managing its adverse effects, we must learn to govern better,
and we must learn how better to govern together.
Although transparency remains crucial to ensure that
governments are both accountable and challengeable at home,
domestic accountability and democracy cannot be simply
transposed and applied in the international institutions context.
What do we mean by “governance” when applied to the
international realm? What are some of its desirable attributes if
our aim is to successfully manage the transition from a national
to a global world?
In the minds of some, the term still conjures up images of world
government, of centralized bureaucracy trampling on the rights
of people and states.
Weak states are one of the main impediments to effective
governance today, at national and international levels alike.
For the good of their own people and for the sake of our common
aims, we must help to strengthen the capacity of those states to
govern, not undermine them further.
By the same token, states need to develop a deeper awareness of
their role in our global world.
In addition to the separate responsibilities each state bears
towards its own society,
states are collectively the custodians of our common life on this
planet — a life the citizens of all countries share.
This highlights the important role of the State in the process of
integration into global economy.
(provision of health, education, and law and order (empowering
people);
correction of negative externalities such as environmental
degradation; investment in areas of public interest where private
investment is not forthcoming).
These essential functions of the State - be maintained in the
context of globalization.
Also should limit the impact of globalization on income
inequality, through progressive taxation, wage policies, social
programs and other measures.
Successfully managing globalization, therefore, requires —
first and foremost — that states act in a manner consistent
with their role.
This implies, in turn, that decision-making structures through
which governance is exercised internationally must reflect the
broad realities of our times.
Better governance means greater participation, coupled with
accountability.
Therefore, the international public domain — including the
United Nations — must be opened up further to the participation
of the many actors whose contributions are essential to managing
the path of globalization.
Depending on the issues at hand, this may include civil society
organizations,
the private sector,
parliamentarians,
local authorities,
scientific associations, educational institutions and
many others.
People see the world through the optic of their workplace.
People are most directly affected by globalization through their
work and employment.
For the gains from globalization to be widely shared,
countries, enterprises and people have to be able to convert
global opportunities into jobs and incomes.
Here lies the importance of governance in globalization.
Problems of good Governance
All countries affliated by some forms of poor governance.
In public sector, the accountability of public servants and
public administrators is often inadequate in both high and low-
income countries
In private sector, poor corporate governance has become an
issue of major concern.
Corruption is widespread.
Corrupt practices in LDCs too often involves
counterparts from developed countries willing to offer
substantial bribes (Sudan scandal).
Rent seeking attitudes grow in volume and magnitude
(symptom of weak governance in the context of
globalization).
Good governance should curb such attitudes.
Reform of Global Governance
Up until now, issues of governance focused on the
national level.
Global governance now warrants serious
consideration.
It is a system of rules and institutions established by
international community and private actors to manage
political, economic and social affairs.
Good governance, at both national and global level,
should further values such as freedom, security,
fairness and solidarity.
Also should ensure respect for human rights,
international rule of law, democracy and participation,
promote entrepreneurship, and adhere to the principles
of accountability and efficiency.
Increasing globalization has generated a need for
better global governance.
The growth of interdependence means a broader range of issues
affecting countries more strongly than ever before.
Demands collaborative global action.
E.g; the problems of financial contagion (diffusion of cross-
border financial problem), communicable diseases, cross-border
crime, are some of the examples.
Unfair rules of globalization
Mechanisms for ensuring coherence in global governance is
either weak or non-existent.
Because of these, there is the emergence of uneven socio-
economic impact of globalization
Fair and inclusive benefits of globalization not extended in
all fronts.
The need of the time is fair and inclusive globalization to
address the socio-economic goals embodied in the
Millennium Declaration.
For this , good global governance is a must.
Greater consistency must be achieved among
macroeconomic, trade, aid, financial and environmental
policies, so that all support our common aim of expanding
the benefits of globalization.
This draws attention on the part of the national governments
as well for strong efforts to improve national governance.
The most basic truth about globalization is this: No one is in
charge."
To conclude, governance is fundamentally a capacity
building process, entailing the mobilization of official
and social competencies to solve primarily macro
problems.
Modern governance is predominantly, a process of
activating and coordinating social actors to deal with
complex crisis issues in society
The framework within which this plurality of
governing actors, public and non-public, operates
cannot therefore be externally imposed.
Rather, it requires voluntary interaction whereby each
actor can influence the other in the search for
solutions.
Governance therefore assumes “weakening the
autonomy of the state.
Good governance means competent management of
a country’s resources and affairs in a manner that is
open, transparent, accountable, equitable and
responsive to people’s needs.
The transparent and accountable management of
human, natural, economic and financial resources
for the purposes of equitable and sustainable
development, in the context of a political and
institutional environment that upholds human rights,
democratic principles and the rule of the law.
Waltz, Kenneth N. (1999). “ Globalization and
Governance ,"Columbia University.
Smith, Gordon (2001). Globalization and Governance,
Annual meeting of the Trilateral Commission in London.
Lamy, Pascal (2006). Globalization and Global Governance
Haque M. Shamsul(2002).Globalization, New Political
Economy, and Governance: A Third World Viewpoint.
