Globalization and Public Policy

1. Globalization Defined
2. Scope of Globalization
3. The Two Perspectives in Globalization
1. Pro-globalization Perspective
2. Anti-globalization Perspective
4. Faces of Globalization
5. Globalization and Developing Nations
 1.1. Globalization Defined
• Although the contemporary era of economic globalism is
barely three decades old, neither is the essential concept of
globalism novel nor is globalization a new phenomenon. In its
conceptual, corporeal and functional forms globalism is more
than two thousand years of age.
• As the concepts of globalism and globalization cover a wide
subject area, they are shared by several social sciences.
• It is widely asserted that we live in an era in which the greater
part of social life is determined by global processes, in which
national cultures, national economies, national borders and
national territories are dissolving.
 1.1. Globalization Defined

• WEBSTER: “growth to a global or worldwide

scale”
• WIKIPEDIA: ” a social change, an increase in
connections among societies and their
elements”
• Encyclopedia of Business and Management: “ the
process of increasing integration in world
civilization”
 1.1. Globalization Defined
• Globalization (Das) “The Two Faces Of Globalization”
– Globalism implies networks of connections spanning
multi-continental distances, drawing them close
together economically, socially, culturally and
informationally.
– Globalization in turn is generally conceived as the
processes promoting and intensifying multi-
continental interconnectedness, and thereby increasing
the degree of globalism.
• The phenomenon of globalization assumes progressively
increasing globalism, which in turn stands for an
intensification of the network of connections or multiplicity
of relationships among economies and countries
 1.1. Globalization Defined
• Carnegie Endowment
– “Globalization is a process of interaction and integration
among the people, companies, and governments of
different nations, a process driven by international trade
and investment and aided by information technology.”
 1.1. Globalization Defined
• Theoretical Relevance of Globalization
– It involves processes of economic systematization,
international relations between states and an emerging
global culture or consciousness.
– It involves the systematic interrelationship of all the
individual social ties that are established on the planet.
– Globalization involves a phenomenology of contraction i.e.
it reduced the space in terms of distance.
 1.1. Globalization Defined
• Cooperation
• Competition
• Coordination
• Exchange
 1.1. Globalization Defined
• J.W. Head:
– “the process by which new multilateral institutions and
rules - especially those involved in economic activity -
grow in number and authority, at the expense of local and
national institutions and rules”
• D. Held:
– “widening, deepening and speeding up of worldwide
interconnections in all aspects of contemporary social life,
from the cultural to the criminal, the financial to the
spiritual”
• Giddens:
– “the world-wide development of social and economic
relationships”
 1.1. Globalization Defined
• In this category of definitions globalization was presented
as internationalization, liberalization, universalization and
Westernization
– Internationalization: intensification of relations between
sovereign states
– Universalization: the expansion of interactions affected by the
spread of goods, ideas, inventions and experiences to every
corner of the globe
– Liberalization: the lifting of government restrictions on the
cross-border flow of production factors and the introduction of
the open world economy
– Homogenization: the tendency of prices, products, pay,
property, interest rates and profit to resemble one another
– Westernization: the spread of Western values and cultural
patterns at the cost of indigenous cultures
– Americanization: the spread of American way of life and cultural
patterns also in well-developed Western states (McDonaldization
 1.1. Globalization Defined
• A good deal of the literature surrounding
globalization is multidisciplinary.
– The multidisciplinary and multifaceted nature of this
subject matter is obvious from its compelling economic,
financial, business, social, political, technological,
informational, environmental, cultural, educational,
international relations and security-related dimensions.
– Emphasis on economic and financial dimensions of
globalism was always high, while other dimensions were
subordinated to it.
• In simple term: globalization is the advance of human
cooperation across national boundaries.
• Yet ideas of globalization tend to remain as elusive as they are
pervasive.
 1.1. Globalization Defined
• The concept of globalization is an obvious target for
ideological suspicion because, like modernization, a
predecessor and related concept, it appears to justify the
spread of Western culture and of capitalist society by
suggesting that there are forces operating beyond human
control that are transforming the world.
• Important factors to globalization
– Countries have chosen to become more integrated through
successively reducing their restrictions on international
trade in goods and services and barriers to foreign
investment.
• Lifting tariffs and trade restrictions
• Market liberalization attempts and instruments
• Formation of World Trade Organization(WTO)
– The remarkable reduction in certain transportation costs in
international commerce since the 1950s.
• Reduction of shipping cost
• Multiple global sources of inputs
• Investment on research and development to improve quality
• Influx of tourists to different countries
– Other reasons for this recent increase in globalization
include the collapse of most communist regimes in the late
1980s and early 1990s.
Channels of Globalization
– International trade
• Substantial growth in the importance of international trade.
• Economic modernization and growth in many countries
• Trade and comparative advantage
– Foreign Direct Investment and Technology
• The relative expansion of FDI in china and India
• Promotion of international ownership of business in the globe
– International Labor Migration
• Migration leads to integration of different people from different
nations
• Some countries encourage through legal means for people to
migrate legally
Four Distinct Qualities Or Characteristics - Manfred Steger
– Globalization involves the creation of new and the
multiplication of existing social networks and activities
that increasingly overcome traditional political, economic,
cultural, and geographical boundaries.
– The second quality of globalization is reflected in the
expansion and the stretching of social relations, activities,
and interdependencies.
– Third, globalization involves the intensification and
acceleration of social exchanges and activities.
1. The Internet relays distant information in mere seconds, and satellites
provide consumers with real-time pictures of remote events.
4. The creation, expansion, and intensification of social
interconnections and interdependencies do not occur
merely on an objective, material level.
 2. Scope of Globalization
Manifestation of Globality
– A great deal of globality is manifested through
communications, that is, exchanges of ideas, information,
images, signals, sounds and text.
– Other globality occurs in the trans-planetary movement of
people.
• Global travel is undertaken by many migrant laborers,
professionals, pilgrims, refugees, tourists, adventurers, adopted
children and more.
– Some global companies also undertake trans-world
production. i.e. “global factories” or ‟global commodity
chains”
– Globality can be manifested in consumption as well as
production. Many commodities are distributed and sold
through global markets
 2. Scope of Globalization
• Manifestation of Globality
– Globality also appears in many areas of finance.
– Globality is further manifested in some military activities.
• Contemporary arsenals include a number of global
weapons that can range across pretty well any distance
over the earth.
– Much globality is also found in the area of law. Countless
formal rules and regulations have acquired a trans-world
character.
– Sometimes closely related with ecological concerns, a
number of health matters, too, have global dimensions.
– Gglobality is evident in social relations through global
consciousness. In other words, people often think globally.
 3. Faces of Globalization
A Welfare-Enhancing Munificent Force
– Without denying the challenges and policy constraints that
it imposes, it is fair to say that economic globalization is a
source of dynamic change and has myriad positive,
innovative and dynamic traits.
– The global integration of economies progresses and grows
more intense, it causes rising efficiency of resource and
input utilization in the world economy as countries and
regions specialize in line with their comparative advantage
and produce goods and services at their lowest opportunity
costs.
– Over the preceding three decades, multilateral trade flows
expanded dramatically, usually faster than the global
output growth. This rapid multilateral trade expansion has
advanced trade-driven globalization.
 1. 3. Faces of Globalization
• A Welfare-Enhancing Munificent Force
– The common factor was that trade in goods and services
and financial flows continued to progressively integrate
national economies with the global economy.
– The East Asian economies provide the strongest evidence
in favor of the positive effect of globalization on an
economy. The East Asian economic miracle was squarely
premised on globalization, in the form of export-led or
trade-induced growth.
– Until the early 1980s, both China and India were
considered among the most impoverished economies in the
world. Rapid growth in the recent past and global
integration of China first, and more recently, of India, has
had a marked favorable impact on these two economies.
 1. 3. Faces of Globalization
• A Welfare-Enhancing Munificent Force
– A much-extolled achievement of globalization is rapid
economic growth during the last two decades of the last
century in 20 or more developing countries, known as the
EMEs, that came to be better integrated into the global
economy. (such as China, India, Brazil, the Russian
Federation, Indonesia, Mexico and Turkey)
– Global economic integration through upgrading policies
and institutions. In the process of globalization, several
economies improved their domestic macroeconomic policy
structures and institutions.
– With rising global economic integration, capital receipts
from global capital markets in the sub-Saharan countries
have been increasing. Between2000 and 2007, private
capital inflows in the form of FDI, portfolio investment and
bank loans quadrupled.
 1. 3. Faces of Globalization
• A Welfare-Enhancing Munificent Force
– A basic and plausible argument could be that if growth of
the real economy is spurred by globalization, then the poor
benefit from higher growth by having better housing,
nutritional levels, education and other social services.
– As production activity expands as a result of the
globalization-induced expansion of manufacturing and
services sectors, it has a direct and positive effect on
employment opportunities for the poor.
– Contribution of domestic policy and institutional
development. Those domestic economic constraints on the
one hand and social and political malaise on the other
cannot possibly be cured by mere global integration.
 1. 3. Faces of Globalization
• A Pernicious, Marginalizing And Malevolent Force
• Myriad economic and social problems are indiscriminately
blamed on globalization. Many, logically or illogically,
consider it a negative, harmful, destructive, marginalizing and
malevolent influence upon economies and societies.
• it is correctly blamed for the uneven distribution of the
benefits from globalization. These are badly skewed within
and between countries.
• while foreign direct investment (FDI) and portfolio
investment soared markedly, they disproportionately went to
the mature industrial economies.
• while integration of global markets generally spawned
welfare gains, in some markets, like the financial markets,
integration became a source of value-destroying volatility.
 1. 3. Faces of Globalization
• A Pernicious, Marginalizing And Malevolent Force
– The Bretton Woods twins and the WTO are frequently
the targets of those who disapprove of globalization
because they see them as the principal perpetrators or
arch villains.
– Rising corporate profit upsets the detractors. It vindicates
their globalization-is-a-villain view.
– A large and conspicuous disparity has become obvious
between the return to capital and rewards of labor during
the contemporary phase of globalization.
– Global income inequality, that is, income inequality
among countries, has increased dramatically over the last
two centuries.
 1. 3. Faces of Globalization
• A Pernicious, Marginalizing And Malevolent Force
– some workers, particularly at the lower rung of the skill
and technology ladder, lost their jobs due to increasing
global integration through the trade channel as well as
through the global integration of labor markets cannot be
denied.
– Greater imports by the developing countries and they
became victims of skilled labor migration to developed
countries
• Paul Seabright [A]lthough a simple item by the standards of modern
technology, [each shirt] represents a triumph of international cooperation.
The cotton was grown in India, from seeds developed in the United States;
the artificial fiber in the thread comes from Portugal and the material in the
dyes from at least six other countries; the collar linings come from Brazil,
and the machinery for weaving, cutting, and sewing from Germany; the
shirt itself was made up in Malaysia.
The project of making a shirt and delivering it to me in Toulouse has
been a long time in the planning, since well before the morning two
winters ago when an Indian farmer first led a pair of ploughing bullocks
across his land on the red plains outside Coimbatore. Engineers in Cologne
and chemists in Birmingham were involved in the preparation many years
ago. Most remarkably of all, given the obstacles it has had to surmount to
be made at all and the large number of people who have been involved
along the way, it is a very stylish and attractive shirt. . . . And yet I am
quite sure nobody knew that I was going to be buying a shirt of this kind
today; I hardly knew it myself even the day before. Every single one of
these people who has been laboring to bring my shirt to me has done so
without knowing or indeed caring anything about me.
 4. Sources Of Globalization
• Technological advances that have significantly lowered the costs
of transportation and communication and dramatically lowered
the costs of data processing and information storage and retrieval.
• Trade liberalization and other forms of economic liberalization
that have lead to reduced trade protection and to a more liberal
world trading system.
• Changes in institutions, where organizations have wider reach,
due, in part, to technological changes and to the more wide-
ranging horizons of their managers, who have been empowered
by advances in communications.
• Global agreement on ideology, with a convergence of beliefs in
the value of a market economy and a free trade system.
• Cultural developments, with a move to a globalized and
homogenized media, the arts, and popular culture and with the
widespread use of the English language for global
communication.
 5. The Two Perspectives In Globalization
• Positive Impact of Globalization
– Several fold Rise In Trade: Emergence of worldwide
production markets and broader access to a range of
foreign products for consumers and companies.
– Commercial Gains: Emergence of worldwide financial
markets and better access to external financing for
borrowers.
– Emerging Economics: Realization of a global common
market, based on the freedom of exchange of goods and
capital.
 5. The Two Perspectives In Globalization
• Positive Impact of Globalization
– Rise in Competition and Better Technologies: Survival in
new global business markets calls for improved
productivity and increased competition.
– Increase in Information Flow: Increase in information
flows between geographically remote locations. This is a
technological change with the advent of fiber optic
communications, satellites, and increased availability of
telephone and Internet.
– World Governance: Some use "globalization" to mean the
creation of a world government which regulates the
relationships among governments and guarantees the rights
arising from social and economic globalization.
 5. The Two Perspectives In Globalization
• Common concerns of Anti-Globalists
– Environmental Degradation: The removal of forests to
make way for cattle ranching was the leading cause of
deforestation in Brazilian Amazon from the mid 1960s.
– Easier spread of Diseases: Globalization, the flow of
information, goods, capital and people across political and
geographic boundaries, has also helped to spread some of
the deadliest infectious diseases known to humans.
– Drug and Illicit Goods Trade: global trade drug and the
use of parts of endangered species for medicine.
 5. The Two Perspectives In Globalization
• Anti-Globalist of Developed Countries
– Unemployment because of cheap labor: They are
reasoning that availability of cheap labor in Asia, Africa
and South America will result in companies shutting down
there operations in the host country.
– Negative effect of economic liberalization: A flood of
consumer goods such as televisions, radios, bicycles, and
textiles into the United States, Europe, and Japan has
helped fuel the economic expansion of Asian tiger
economies in recent decades.
– Concentration of wealth in the hands of few dozen
people: this unequal distribution of wealth is voiced by
anti-globalist as frightening and dangerous for the society.
 5. The Two Perspectives In Globalization
• Anti-Globalist of Developing Countries
– Cultural Export: Anti-globalist view the effect of globalization
on culture as a rising concern. Along with globalization of
economics and trade, culture is being imported and exported as
well.
– Poverty Export: Anti-globalist see the globalization as the result
of foreign businesses investing in the country to take advantage
of the lower wage rate. One example used by anti-globalization
protesters is the use of sweatshops by manufacturers.
– International Inequality: the income gap that exists between
rich and poor countries has become substantial.
– Brain Drain: An opportunity in richer countries drives talent
away from poorer countries, leading to brain drains.
– Food Security:
– Drawback of linking of economies: economic crisis effect
transfers from developed to developing countries
 Unit Two
Dimensions of Globalization
 2.1. Economic Dimensions
• Economic globalization can be defined as a process in which
economic activity occurs progressively on an international
level.
• Economic globalization is characterized by an ever-stronger
liberal approach to international trade in goods and services, as
well as by the international flow of capital.
• An integrated market does riot mean that there is one world
market only, but that economics and markets of countries
become increasingly interdependent.
• Economic globalization refers to the intensification and
stretching of economic interrelations across the globe.
– Gigantic flows of capital and technology have stimulated trade in
goods and services.
– Markets have extended their reach around the world, in the process
creating new linkages among national economies.
 2.1. Economic Dimensions
• Facets Of Economic Globalization
– An increase in international trade: This enabled
businesses to establish different facets of their production
in different parts of the world that, in tum, leads to the
establishment of so-called transnational or multinational
enterprises.
– The globalization of financial markets: In the unlimited
economy in which we find ourselves currently, the flow of
capital is no longer limited by geographic or time barriers.
The circulation of money progressively occurs outside of
the jurisdiction -of national governments
 2.1. Economic Dimensions
• The driving forces behind economic globalisation
– The economic theory of demand: Internationial trade
(goods as well as financial transactions) started to increase
supply in answer to the growing demand for goods,
services, capital and information.
– Economic integration: is supported by the formation of'
economic regions such as the European Union (EU), the
North American Free Trade Agreement (NAFTA), and the
Asian Pacific Economic Cooperation
– Technological development: especially communication
technology, facilitated and accelerated economic
globalization. Developments in telecommunication and
mass media have resulted in the exposure of consumers
right across the world to new/different standards of living.
– The decline in the influence of the nation state:
 2.1. Economic Dimensions
• Threats and challenges associated with economic globalisation
– The ripple effect of crisis situations: a major threat
associated with the unlimited economy (where a group of
countries conduct trade, lend and borrow money and
engage in investments among themselves) is that when one
country or region plunges into an economic crisis, the
effect of the crisis can spread worldwide.
– Over-production: a growing number of companies start to
focus on production for the international market but
overlook demand. This results in supply exceeding demand
worldwide.
– Competition: the greater openness of the unlimited
economy stimulates competition from upcoming countries
in Asia and South America, increasingly threatens thc
economic dominance of the USA and Europe.
 2.1. Economic Dimensions
• Threats and challenges associated with economic globalisation
– Labor: The idea behind multinational companies is,
amongst others, to shift production to countries where labor
is much cheaper. However, this is often accompanied by
large-scale exploitation, so that multinational enterprises
have increasingly been pressurized form various quarters to
improve the working conditions of the laborers at their
overseas plants.
– Global leadership: The decline in the influence of' the
nation state has already been referred to in the discussion
of the driving forces behind economic globalization.
Despite the fact that the world is dominated in the
economic sphere by a few multinational giants, this
domination does not occur within an ethical framework.
 2.1. Economic Dimensions
• Concrete neoliberal measures include:
1. Privatization of public enterprises
2. Deregulation of the economy
3. Liberalization of trade and industry
4. Massive tax cuts
5. 'Monetarist' measures to keep inflation in check, even at
the risk of increasing unemployment
6. Strict control on organized labour
7. The reduction of public expenditures, particularly social
spending
8. The down-sizing of government
9. The expansion of international markets
10.The removal of controls on global financial flows
 2.2. Social Dimensions
• The so-called 'global village'
– In, the past, social relations and the concept 'community'
primarily referred to face-to-face communication and
interaction between people within the same geographic
space.
– This communication mainly centered on matters of local
interest and was facilitated by a local community culture.
• Examples of such interaction are getting together at coffee
bars; interaction on the village square; and shaking hands,
within view of all the parties involved, to confirm that a
contract has been closed.
– it must further be noted that the daily life of most people,
despite the fact that they are aware of their being part of the
global set-up, is bound to their local geographic space.
They incorporate elements of other societies and the global
society into their personal life in their local space.
 2.2. Social Dimensions
• The so-called 'global village'
– Fast electronic communication would lead to the
disappearance of all social, ethnic and racial divisions and
eventually create a homogeneous global society.
• The Fragmentation of Identity
– People's identity is formed by fragments that originate at
different levels. These levels range from the local to the
global.
– Hence there does not exist in real life a pure global or a
pure local identity. Rather, people's identity is a complex
blend of global and local elements.
– Within the local space people's individual and social
identities are also continuously formed and re-fined by the
incorporation of elements originating from the different
levels.
 2.2. Social Dimensions
• The Global Versus The Local
– Social globalization has furthermore resulted in local
events being influenced by events that occur at places even
thousands of miles away.
– The relations that: dominate our everyday life consequently
shift from the local to the global context, because the local
context is interpreted against the broader global framework
of time and space. The opposite is just as true.
– i.e. What occurs locally can exert an influence on locations
that are literally on the other side of the globe
– The perceptions and actions of people who live hundreds -
and even thousands - of kilometers from where we live do
consequently greatly affect our lives.
 2.2. Social Dimensions
• The formation of a global civil society
– Globalization further led to the establishment of a global civil society.
– Before modem technology made communication relations across time
and space borders possible, the civil societies of the world had
difficulty to unite in broader alliances.
– The new technology promotes, however, co-operation between a
variety of the world's non-governmental and non-profit organizations
(the so-called NGOs) in a wide variety of spheres such as human
rights, consumer issues, conflict management, women's rights, racial
equality and environmental conservation.
– Global mobilization around these issues rests on the assumption that
we are all inhabitants of Planet Earth, that is, members of the global
social community, and that transgressions in any of these spheres affect
all of us deeply.
– This significant development in the history of human communication
has already hade a powerful impact worldwide on social amid political
movements
 2.3. Political Dimensions
• Political globalization refers to the intensification and
expansion of political interrelations across the globe. These
processes raise an important set of political issues pertaining
to the principle of state sovereignty, the growing impact of
intergovernmental organizations, and the future prospects for
regional and global governance.
• The relations between states rested on the principle of
sovereignty. According to this principle each state had the
absolute right to decide on internal matters, and meddling in
the affairs of another state was regarded as pathological.
• Contemporary manifestations of globalization have led to the
partial permeation of these old territorial borders, in the
process also softening hard conceptual boundaries and cultural
lines of demarcation.
 2.3. Political Dimensions
• Changes in the position of the nation state
– The complex international links unique to globalization
ignore existing social and political borders.
– The growth of transnational processes in number and
extent implies a further contraction of the power of' the
state.
– The transnational mobility of corporations, capital arid
technology enables the private sector to ignore and evade
national legislation and regulations.
– Many spheres that traditionally fell under the jurisdiction
of the state (such as defense, communication, economic
management) are currently co-ordinated internationally.
 2.3. Political Dimensions
• Changes in the position of the nation state
– In order to be able to compete effectively in the new
economic and political climate, many states must abandon
their sovereignty infavour of larger political units (such as
the European Union) and international organizations (for
example, the United Nations, the World Trade
Organization and the International Monetary Fund).
– The sovereignty of the state is also often negated on the
multilateral level on the basis of the principle that all
inhabitants of earth experience certain societal problems
that are aggravated by the action of an individual nation
state.
– The fact that individuals and societies regard themselves as
part of a global system, causes the nation state to be no
longer the only or most important source of citizenship or
identity.
 2.3. Political Dimensions
• Changes in the position of the nation state
– The concept 'nation state' therefore implies cultural
homogeneity, that is, one nation, one state, one culture, one
ethnic identity that simultaneously also represents the
national identity of the state.
– A variety of factors led to these changes:
• The complex international links unique to globalization
ignore existing social and political borders.
• The growth of transnational processes in number and extent
implies a further contraction of the power of' the state.
• The transnational mobility of corporations, capital arid
technology enables the private sector to ignore and evade
national legislation and regulations.
• The fact that individuals a:nd societies regard themselves as
part of a global system,
 2.3. Political Dimensions
• New role-players on the world scene
– While the power and legitimacy of the nation state are
declining, various new role-players have appeared on the
international political scene.
– Diplomatic relations between states are greatly
supplemented and even replaced by noni-governmental
agents such as the so-called non-governmental
organizations (NGOs), private individuals and groups.
– The private sector has also started to take over services that
were traditionally provided by the state, and state-
controlled industries are progressively privatized.
 2.3. Political Dimensions
• The decline of the nation state
– Hyperglobalizers: most of them consider political
globalization a mere secondary phenomenon driven by
more fundamental economic and technological forces.
– Pronouncing the rise of a "borderless world',
hyperglobalizers seek to convince the public that
globalization inevitably involves the decline of bounded
territory as a meaningful concept for understanding
political and social change.
– This group of commentators suggests that political power
is located in global social formations and expressed
through global networks rather than through territorially
based states.
– Territorial divisions are becoming increasingly irrelevant,
states are even less capable of determining the direction of
social life within their borders.
 2.3. Political Dimensions
• There is no question that recent economic
developments such as trade liberalization and
deregulation have significantly constrained the set of
political options open to states, particularly in the
global South.
• Some civil rights advocates even fear that the
enormous resurgence of patriotism around the world
might enable states to re-impose restrictions on the
freedom of movement and assembly.
 2.3. Political Dimensions
• Political globalization and global governance
– Political globalization is most visible in the rise of
supraterritorial institutions and associations held together
by common norms and interests.
– Governments have formed a number of international
organizations, including the UN, NATO, WTO, and
OECD.
– The proliferation of these transworld bodies has shown that
nation-states find it increasingly difficult to manage
sprawling networks of social interdependence.
– The emerging structure of global governance is also shaped
by 'global civil society', a realm populated by thousands of
voluntary, non-governmental associations of worldwide
reach. i.e. Green Peace And Amnesty International
 2.3. Political Dimensions
• A global political culture
– This culture rests in the first place on the idea of‘
individual human rights, that is, the conception that each
individual has
• The right to autonomy in certain spheres of thought and action (for
example, freedom of religion and political thought);
• The right to own and sell
• Property;
• The right to elect a government and participate in it, and
• The right to equal participation and influence.
– The latter implies that liberal democracy is accepted as the
norm for governments and political systems in the global
sphere.
 2.4. Cultural Dimensions
• The process of cultural globalization
– The horizontal and vertical dimensions of globalization can
nowhere be observed better than in the cultural domain.
– The cultural situation of the world is intrinsically linked
with the flow of information and knowledge that in
themselves can be designated as cultural flow.
– These processes are the following:
• The flow of individuals (Tourists, migrants, refugees, etc);
• The spread of technology;
• The spread of capital; the spread of information
• Spread of political values and ideas (for example, ideas on
freedom, democracy and human rights).
• The spread of religious values and ideas.
 2.4. Cultural Dimensions
• The volume and extent of cultural transmissions in the
contemporary period have far exceeded those of earlier eras.
– Facilitated by the Internet and other new technologies, the
dominant symbolic systems of meaning of our age - such
as individualism, consumerism, and various religious
discourses - circulate more freely and widely than ever
before.
– The a soulless consumer capitalism, critcised by writers,
that is rapidly transforming the world's diverse populations
into a blandly uniform market.
 2.4. Cultural Dimensions
• The emergence of an universal consumer culture
– the increase in the flow of information - and in particular
the introduction of the Internet - would lead to the
establishment of a homogeneous world society and culture
– The spread of global consumer culture is promoted by the
enormous growth in world trade and the concurrent spread
of publicity for the mass market; the rapid development of
communication technology and other technological
innovations; the mass media; the worldwide spread of
electronic entertainment; the spread of commercially
packed cultural products such as food, clothing, popular
music.
 2.4. Cultural Dimensions
• Cultural Imperialism
– The term 'cultural imperialism is often used to refer to the
homogenizing influence of the global consumer culture,
that is, the equalization and even extermination of local
cultures as a consequence of the worldwide spread of the
Western-American lifestyle and the values and consumer
goods associated with it.
– Local initiative is however suppressed and the production
of local cultural products is impaired. The local culture is
indeed silenced.
– Current scenario indicates that the cultures of third-world
are virtually being fully absorbed by the homogenized and
commercialized global culture.
 2.4. Cultural Dimensions
• Intercultural Communication
– The international flow of individuals increasingly enables
people to come into contact with more than one culture,
but also increases their first-hand experience of problems
associated with intercultural communication.
– Increasing migration - mostly also as a result of economic,
financial and technological globalization - and numerous
political refugees further contributed to the liberation of
many cultures front their containment in a particular state
or geographic space, allowing them to spread across the
borders of existing states and even across the world.
2.5. Technological Dimensions
 2.6. Ideological Dimensions
• Globalization is about the liberalization and global integration of
markets
• Globalization is inevitable and irreversible
• Nobody is in charge of globalization
• Globalization benefits everyone
• Globalization furthers the spread of democracy in the world
 Unit Three
Impacts/effects of globalization and
policy implication
 Effects of Globalization
• Foreign Direct Investment (FDI), shows a spectacular economic
invasion of the TNCs (Transnational Corporations) in domestic
economies.
• The impact of soft technologies as the second major factor of
globalization has been combined with the relevant growth of high
value services (banking, financial activities, advertisement etc.).
• Favoring economic and financial globalization coincided with the
acceptance of economic policies based on a growing aversion to
government intervention and regulation in economic affairs and
on theoretical doubts about the effectiveness of such intervention
in terms of the rational expectations
• The net result of trans-nationalization seems to have greatly
increased the interdependence and the interpenetration of free
economies, but it has not led to a corresponding decline in the
invisible and visible barriers in many countries.
 Effects of Globalization
• Public Policy And Administration Implication
– Diminution of state: The first major casualty public administration
had to suffer in the era of globalization was the increasing
diminution of state. Drawing on the New Right philosophy, the
advocates of globalization had forcefully argued in favor of the
rolling back of the state from the social sector, leading thereby to
de-politicization.
– Increasing pauperization: This is more of a corollary to the
previous point. The increasing shrinkage of state, especially from
the social sector led to pauperization. Examples were aplenty which
demonstrated that the pernicious impact of globalization on the
common men led to increasing pauperization.
– Breakdown of the Social Safety Net: This is perhaps the most
debilitating impact of globalization for post-colonial countries like
ours. As a part of SAP, globalization had advocated the steady roll
back of the state from the social sector which in effect exposed the
core areas of social sector like health,
 Globalization and National Public Polices
• From what might be seen as a snowball perspective of
globalization and public policy, the global community have
since embraced the concept of setting international policy
standards, which may explain the influence of globalization on
public policy but also serve as a yardstick for the evaluation of
policy development and implementation.
• Domestic public policy making is no longer independent of
international concerns. International treaties and regional
agreements now often guide states in the making domestic
policies.
• As multinational corporations and international organizations
come to exercise a great degree of influence, so the capacity of
national policy-makers to frame their own agendas is reduced.
 Globalization and National Public Polices
• Globalization has a deep impact on the policy making process
of a government which is manifested in the decisional,
institutional, distributional and structural aspects of the policy
making process.
– Decisional Aspect of Government Policy is affected since
government has to absorb the changes to relative cost and
benefits of different macroeconomic, industrial and
sectorial policies.
– Institutional Aspect of Government Policy: the
government has to take initiatives for an institutional
reform to improve global competitiveness of the economy.
It has to take into account the growth of global production
network, multilateral economic surveillance and
regulations.
 Globalization and National Public Polices
• Globalization has a deep impact on the policy making process
of a government which is manifested in the decisional,
institutional, distributional and structural aspects of the policy
making process.
– Distributional Aspect of Government Policy: is also influenced with
the emergence of globalization, since the government's policy making
process is now much influenced by the global division of labor and
wage competition across the economies. In this connection,
negotiations over tradable and non-tradable sectors and benefits of
skilled and unskilled labor forces are prime agenda for government
policies.
– Structural aspects of government Policy: globalization also brings
some structural changes in the national economy since the government
has to cope with the altering balance of power between the state and
markets. Identifying the country's comparative advantage and areas of
trade specialization figure high in the prime agenda for government
policies in a globalized world.
 Developing countries
• Developing countries are particularly vulnerable to global
events and actions and have come to depend heavily on the
international community for financial and technical
assistance.
– Consequently, national policies are interlocked with global issues.
 Developing countries
• Developing countries are particularly vulnerable to global
events and actions and have come to depend heavily on the
international community for financial and technical
assistance.
– Consequently, national policies are interlocked with global issues.
 Developing countries
• Impact on developing countries
– The first casualty of globalization in the context of the
developing countries is the shrinkage of social sector. The
social sector has so long been jealously guarded by the state.
Health, education, and infrastructure have so long been
provided by the state.
– The exposure of the social sector to the market forces as part
of sap had a far-reaching and pernicious impact for the
developing countries as it led to exclusion, marginalization of
resources and pauperization.
– Globalization has also led the developing countries to an
extractive mode of economic development. Examples are
aplenty where the developing and the underdeveloped
countries are forced to extract their marine resources, mineral
resources, or agricultural produces and tailor them for the
export market.
 Developing countries
• Impact on developing countries
– as a corollary of the previous point, the above compulsion
of globalization had a serious ramification for the
environment per se. The said compulsion of the developing
and the underdeveloped countries had further exemplified
the position taken by the South in the protracted debate
between the North and the South over environmental
degradation
– Public administration also includes the administration of
justice. It is mostly concerned with issue of justice within
the territorial jurisdiction of the nation state. The onset of
globalization with increasing enmeshment and
interconnectedness has brought the issue of global justice
in the forefront, which has so long been considered as
cosmopolitan utopia at best.
 Policy agendas at global level
• Environment
– Pollution of the air and water, destruction of forests and loss of fertile soil are
becoming critical problems with serious consequences for health, food
production, productivity, and perhaps even the ability of the earth to support
human life. Protection and improvement of the quality of the environment has
become a global issue since 1980s.To Porter and Brown, the environmental issue
is increasingly penetrating policy issues, such as international security, North-
South relations and world trade. Their study shows how the issue has involved the
development of new levels of interactions among states to form a “global
environmental regime”. Because of a growing global environmental stress, there is
a sustained pressure on national policy-makers to change or modify their policy
positions. The World Commission on Environment and Development (WCED)
observed the following: “The traditional forms of national sovereignty are
increasingly challenged by the realities of ecological and economic
interdependence. Nowhere is this more true than in the shared ecosystems and in
“the global commons those parts of the planet that fall outside national
jurisdictions” [24, p. 261].Industrial growth places pressures on policy-makers to
prevent control pollution. International agreements on ways to control pollution
and close ties between environmentalists have provided an exchange of
information that shapes the policy agenda [18,p. 157-159]. The United Nations
Conference on Environment and Development in Brazil in June 1992 produced
treaties to control global warming and preserve the diversity of species. The
meeting issued the Rio Declaration, setting forth broad principles of
environmental protection and sustainable development, and Agenda 21, a
detailed plan for combating various environmental problems. In sectors, such as
land, fresh water, forests, biodiversity and climate change, the 1997 UN
assessment found that conditions either were no better than in 1992 or had
worsened
 Policy agendas at global level
• Poverty and Population Growth
• Developing countries are facing increasingly serious population growth and poverty
problems. Despite lower poverty rates, the number of poor people has increased largely
because of population growth in developing countries, as well as uneven development, and
increasing concentration of wealth. Almost half of the world’s population (approximately 2.5
billion) lives on less than $ 2 a day, and one fifth of the world’s population (approximately 1.4
billion) live on less than $ 1.25 a day . This horrific level of poverty persists despite
unprecedented increase in global wealth in the past century. As the 21st century begins, a
growing number of people and rising levels of consumption per capita are dimensions of
poverty. Poverty and population growth have now become global issue. The World Bank’s
(WB) new strategy proposes, for example, an approach to fighting poverty. The three-
pronged approach of the WB focuses on increasing opportunities for people, facilitating their
empowerment and enhancing their security . Policy-makers and environmentalists now
largely agree that efforts to reduce poverty and population growth and to achieve better
living standards can be closely linked and are mutually reinforcing. The policy agenda at the
global level is now slowing the increase in population and attacking poverty. Most countries,
especially developing ones, have come out with national health policies, which are global in
context. As diseases have no barriers, there is the need for international cooperation and
national political action by turning statements of principle into specific policies and actions
throughout the world. Family planning is seen as a strategy to reduce population growth. The
1994 International Conference on Population Development (ICPD) programme of action
states that “the aim of family planning programmes must be to enable couple and individuals
to decide freely and responsibly the number and spacing of their children” with a view to
reducing population size [20]. Governments of nations that sign international documents of
principles make a commitment to act on these principles. The extent of government
attention to such commitments and the amount of money allocated to implementing them,
however, vary considerably around the world.
 Policy agendas at global level
• AIDS
– AIDS as a communicable disease has become a serious concern to the international
community. ADIS has already killed more than 20 million people, and today 35 million
people are living with HIV/AIDS, 23 million of them alone are living in Sub-Saharan
Africa. Every day another 7,000 people are infected. And around the world, the
epidemic is having a huge effect on GNP.Since it is a global issue, the policy analyst must
find a global solution involving a coordinated international cooperation and national
political action. Iohnatan Mann, the Director of the WHO’s AIDS Programme, stressed
that AIDS has been bringing about a “new paradigm of health, because of four factor: “it
is a global problem; it is understood and spoken as a global problem; and it is known
worldwide; and AIDS is combated at the truly global level”
• Migration
 Policy agendas at global level
• Drugs
– The use of drugs has become an equally global concern. Earlier, it was regarded as a social
problem and the focus was on seeking a national policy. However, since 1980s drug use has
posed a serious menace to the international community and it requires a global cooperation
and action [21, p. 192-93]. The international concern has addressed the supply and
transportation of drugs from the producer nations, such as Thailand, Afghanistan, Pakistan,
Columbia, Peru and Bolivia.
• Trade and Industry
– Changes have occurred in industry as a consequence of global changes and shifts. The major
sources of global shift are transnational corporations which organize production on a world-
wide scale, the policies pursued by national governments and the enabling technologies of
transport, communication and production. This has largely weakened the ability of national
governments to make policies independently of those changes. Dicken observes the
following: “[...] the well-being of nations, regions, cities and other communities depends
increasingly no merely on events in their own backyards but on what happens at a much
larger geographical scale [...] We need a global perspective” [3, p. 3]. Yet nearly 80 countries
containing a third of the world’s population are being increasingly marginalized, and over the
past 20 years developing countries’ share of global trade fell from 0.8 to 0.4 percent [8, p. 9].
The fact is that 2.5 billion people live on less than $ 2 a day, and 1.4 billion live on less than $
1.25 a day [23]. In this way, international development cannot be achieved. However, national
policy-makers have the task of formulating policies which help create business climate. The
global industrial environment interacts with the national political processes, and
consequently, national policies are increasingly inf luenced by activities and events happening
well away from the national context. So, the capacity of the national policy-makers to frame
their own agendas is considerably reduced.
 Policy agendas at global level
• Privatization
• The beginning of the 1990s witnessed a marked privatization
instead of government control. There has been a renewed
emphasis on privatization and competition throughout the world.
Governments of most countries, both developed and developing,
have adopted policies of (1) transferring government – controlled
enterprises to have private sector; and (2) opening up a large
number of industries to the private sector to encourage
competition [17, p. 275]. Privatization is now fashionable in
European community, South and North America, Australia, Asia,
Africa, and is gaining popularity in Eastern Europe. The concept of
privatization is ambiguous, as it may imply severe reductions in the
size of the public sector and a drastic shrinkage of public ownership
of key industries [10,p. 186]. Privatization is being driven by the
shift of important economic sectors to operation on a global scale.
National policy agendas are being shaped by forces of global
economic restructuring.
 Policy agendas at global level
• Terrorism
• Terrorism is another global problem, which is spreading like a cancer. In
Iran, examples of terrorism are Hypocrites group (MKO), Jundullah in
Sistan and Baluchistan Province, PJAK group in west of Iran. In the world,
Al-Qaeda, Taliban, Revolutionary Armed forces of Colombia, Ansar al-
Sunnah Army, Basque Fatherhood and Freedom are operating as terrorist
organizations. Attacks on the World Trade Centre and Pentagon in the
United States on 11 September, attacks on India’s Parliament on 13
December in 2001, bombings of three subway trains and one bus in the
UK on 7 July 2005 and an attack by bombing to Islamic Republic Party
office in Iran on 1 October 1982 are four important dates that made the
whole world realize that terrorism had challenged the world community.
Sabharwal observed that “Our main enemy in the twenty-first century will
be terrorism. Terrorism organizations or countries using them as a front,
could explode a stray nuclear warhead or carry out biological or chemical
attacks which in turn could cause a chain reaction and bring the world to
the brink of destruction” [16].There were several wars in the last century,
including two World Wars, but the first decade of this century saw a
radically different scenario – highly motivated groups of people launching
attacks on nation-states. The shadowy figure of the terrorist has loomed
large in homes and outside, menacingly.
 Policy Transfer and Policy Diffusion
• Policy transfer
– a process in which knowledge about policies,
administrative arrangements, institutions and ideas in one
political setting (past or present) is used in the development
of policies, administrative arrangements, institutions and
ideas in another political setting.
– Policy transfer allows policymakers to:
• to see what options worked and what did not
• to have a broader approach towards issues
• to be effective and efficient in planning and implementing
• to be innovative and creative
– Examine policy transfer primarily reveals voluntary ‘lesson
drawing’ from state to state
 Policy Transfer and Policy Diffusion
• Policy transfer marketing
– Mass media is used to share the idea via media which has a broad
circle of readers and TV audience. This provides politicians,
academics, and general public with considerable information on
foreign models and offers the policy transfer agenda.
– Internet and Social networks have nowadays an important role in
policy formation. The feedback is most easily received through social
media where there is a high participation and involvement.
– Publication of Reports and studies can also illustrate the proposed
policy change; those are primary sources of information which
demonstrate all details and peculiarities considered, the transfer from
one political environment into another one.
– Roundtables/Meetings/Visits to be organized for certain target groups
who refer the policy. These meetings are important to talk to people to
get them the essence of the proposed change and take their viewpoint
on the case
• Why Transfer Fails: some of the transfers fail mostly due to
uninformed, incomplete or inappropriate transfers.
– Uninformed transfer: the borrowing side might not have
sufficient and detail information about the policy/institution and
how it operates in the originating system. The lack of such
information can cause to which leads to failure.
– Incomplete transfer: In spite of the occurred transfer, some of
the crucial elements of the policy or institutional structure that
leads to the success in the original country might not be
transferred or might be not transferable, such incomplete
transfers lead to failure.
– Inappropriate transfer: Insufficient attention may be paid to the
differences between the economic, social, political and
ideological contexts in the transforming and borrow systems
which can again lead to failure due to the inappropriate transfer.
All these factors must be considered in policy transfer process
 Policy Transfer and Policy Diffusion
• Why transfer succeeds
– Local peculiarities should be considered when transferring the
policies, otherwise there might be big problems in transfer.
– The policy should be transferred enough flexible to adjust to local
needs if necessary.
– If government favors the policy, the transferred one has more
opportunities for success as it is most probably a voluntary transfer
and government is really interested in making certain changes.
– Cultural habits and environment of the country are important for the
life of transferred policies.
– The countries with similar background/history are likely to develop
successful transfers, as they have similar institutions that developed in
the common past.
– Policy transfer analyses what worked and what not are extremely
important to guarantee the success of the next policy transfer exercise
 Policy Transfer and Policy Diffusion
• Agents of Transfer
– Elected/Government officials: directly or indirectly involved in policy
transfer.
– Civil Servants: play important role in the policy implementation process.
– International governing organizations(IMF, WB etc) play an increasing
role in the spread of ideas around the planet.
– Policy experts/consultants have a crucial role in policy-making process.
They have a key role in spreading ideas and programs and are known as
channels between various political systems, countries, groups,
– Political parties are in continuous need of new policy ideas to increase
their electorate i.e. prssure groups have an impact on policy making
process.
– Think tanks are engaged in research and advocacy
– Corporations(national/regional/international) are involved in lobbying
directly or indirectly for certain policies.
– Supranational instructions: like the EU, AU
 Policy Transfer and Policy Diffusion
• Policy diffusion
– Similar to policy learning, policy diffusion is a process in
which policy innovations spread from one government to
another.
– In other words, the ‘knowledge about policies, administrative
arrangements, institutions in one time and/or place is used in
the development of policies, administrative arrangements and
institutions in another time and/or place’.
– Most studies of diffusion have focused on policy adoptions as
both an independent variable and a dependent variable—that
is, whether earlier policy adoptions influence the likelihood of
later policy adoptions
– If a state has not yet adopted a policy, politicians in that state,
along with staffers, the media, interest groups, and other
relevant political actors, will look to see what other states have
done.
Mechanism of Policy Transfer and Diffusion
• Learning: in most transfer literature, learning implies a
‘rational’ decision by governments to emulate foreign
institutions and practice to the extent that these measures
produce more efficient and effective policy outcomes than
the alternatives. Learning can lead to complete or partial
policy transfer and may take place on a strictly bilateral
basis, or through transnational problem solving in
international policy networks or epistemic communities.
• Competition: the argument is that the growing importance
and mobility of capital explains why more and more
countries have come to adopt broadly similar investor-
friendly policies, including privatization, deregulation,
balanced budgets, low inflation and strong property rights.
Mechanism of Policy Transfer and Diffusion
• Coercion: most scholars are keen to allow some room for
various forms of coercion as an explanation of growing
similarities among different countries institutions and policies.
Such coercion may come from powerful states, or from
international organizations like the IMF and World Bank via
the conditions attached to their lending.
• Mimicry: also known as emulation or socialization, explains
the process of copying foreign models in terms of symbolic or
normative factors, rather than a technical or rational concern
with functional efficiency. States adopt the practices and
institutional forms of social leaders (either states perceived to
be more advanced or models provided by international
organizations) and thereby are perceived by others and
themselves as being advanced, progressive and morally
praiseworthy.
 National Policies And The Politics Of Adjustment To
Globalization
• The political economy of national adjustment to international
trends and demands has become a central issue since the
introduction of SAPs at the beginning of the 1980s.
• There is practically nobody who argues that adjustment is not
(sometimes and in some form and degree) a necessity.
– Rather, debate is on the form and content of such adjustment, about
how fast and how radically adjustment should be executed and about
who should take part in deciding on and implementing it.
• Debate on the degree and timing of adjustment centers
primarily on whether or not it should take place for all policy
areas at once (such as in the ‘Big Bang’ executed for the
liberalization of the financial sector in a number of ‘transition
economies’) or take place gradually.
– The argument for gradualism is one which states that the appropriate
institutions should be in place before adjustment takes place.
 National Policies And The Politics Of Adjustment To
Globalization
• Global adjustment raises to important questions: the balance
between efficiency and legitimacy of decision-making.
– Efficiency is the assumption is associated with allowing the
international organization like WB and IMF to engage in policy
adjustment from design to implementation
– Legitimacy of decision-making implies the presence of basic societal
support in order for decisions to be sustainable
 Impact of Trans-National Corporations
• Global governance is the political attendant phenomenon and
aftereffect of globalization.
– Defined as “multi-actor, multi-level political decision-
making”, global governance emphasizes political
consequences of globalization as increased political capacities
of non-state and supra-national actors.
• From the perspective of various observers, most notably
business actors – particularly transnational corporations
(TNCs) – are the major political beneficiaries of globalization.
 TNCs and Developing Countries
• A transnational corporation (TNC) or a multinational
corporation
– TNC is a company that operates in at least two countries.
Globalization has allowed many businesses to set up or buy
operations in other countries.
– TNCs invests in other countries by buying factories or
shops, this is called inward investment.
– The headquarters and research and development (R&D)
departments are often located in the country of origin, the
home country, while the production tend to be overseas.
 TNCs and Developing Countries
• Roles of TNCS
– Research and Development: multinational corporations
usually undertake their research and development activities
outside their home countries. Similarly, they spend
significant amount fund on R&D outside their home
countries.
– Foreign Direct Investment: have spurred innovation in
various global or host countries in sectors such as the
pharmaceuticals or biotechnology, automotive, information
technology and electronic or electrical equipment sectors .
– Knowledge Transformation: The Multinational firms have
created various global innovation networks through
collaboration and interaction with different organizations
and companies outside their home areas thereby creating
new knowledge.
 TNCs and Developing Countries
• The changing role of transnational corporations
– Horizontal integration: refers to consolidation at a given
point in the production process: a relatively small number
of firms effectively control a given market. Horizontal
concentration increases the market power of the dominant
firms, enabling them to secure excessive profits.
– Vertical integration: describes an industry where one
company either owns, or controls through joint ventures,
multiple stages in a production chain.
– Privileged access: The sources of market power for
transnational agribusiness are multifaceted, extending
beyond concentrated market power.
• The companies also have privileged access to information, to
capital and to political power, all of which help to limit competition
by creating barriers to entry.
 TNCs and Developing Countries
• Manifestations
– The executives of TNCs may build their businesses up by buying
foreign firms. These are called mergers and acquisitions.
– Much of the manufacturing work done in so-called ‘sweat shops’ is not
actually conducted in buildings owned by the TNC or using labor that
has been directly employed. Instead the work has been sub-contracted
to a third party. This is what makes it hard to enforce good working
conditions in factories where global brands are made. Employee-
exploitation may be carried out far down the supply-chain.
– Most manufacturing TNCs are assembly industries, relying upon a
chain of interconnected upstream and downstream suppliers. Some
suppliers may be independent sub-contractors, some may be owned by
the parent company. For instance, the Mini factory in Oxford is owned
by the German firm BMW. A vast 2,500 different suppliers provide
parts to assemble the Mini, from the engine right down to the
windscreen-wipers, sending them to the main Oxford assembly plant.
• Dimensions of power of TNCs (Doris Fuchs)
– Instrumental power
• Instrumental power is defined as the power deriving from an
actor’s material resources, which is used to exert direct influence
on decision makers. Transnational corporations wield instrumental
power most notably through lobbying, which has expanded
quantitatively and qualitatively in the course of globalization.
– Structural Power
• The traditional conception of structural power primarily focuses on
business actors’ power, accrued from mobility of capital, to
influence governmental policy making by implicit threats of
relocating investments.
– Discursive Power
• increasingly important role due to the growing extent to which
political decisions depend on the competition for power of
definition within the public discourse
 TNCs and Developing Countries
• The Asian Tigers were heavily industrialised by
manufacturing TNCs in particular. The advantages of these
countries to be the host countries for large TNCs were:
– A reasonably well-developed level of infrastructures such as roads,
railways and ports.
– Relatively well-educated population with existing skills.
– Cultural traditions that appreciate education and achievement.
– Good geographical location - Especially for Singapore as it is situated
between the Indian and Pacific Ocean, which made it perfect for
trading, imports and exports.
– Government support, for example, offering low-interest rates in bank
loans.
– Less rigid laws and regulations on labor, taxation and pollution than in
home countries of TNCs, allowing more profitable operations. (Low-
cost manufacture with cheap labor)
 TNCs and Developing Countries
• Positive Effects
– Employment - TNCs helps countries by providing jobs and skills for
local people. When TNCs buy local resources, products and services it
brings foreign currencies to the local economy, therefore, bringing
wealth to the local communities. This is known as foreign direct
investment (FDI) where business enterprise in one country is owned
by an entity based in another country.
– Multiplier effects - FDI can trigger more employment through the
process of cumulative causation, bringing wealth into the local
economy. The location of a TNC in a region has the potential to create
jobs in; companies that supply components to the plant, companies that
distributes goods from the new plant, companies that supply services to
the new plant from servicing plant machinery to supplying canteen.
– New Methods of Working: these have included quality management
systems which monitor the standard of output in supplier firms and
just-in-time component supply. They create more skilled workforce by
transferring technology to the host country.
 TNCs and Developing Countries
• Negative Effects
– Competition - TNCs can be in direct competition with local firms,
which may be less efficient and so lose business and employees.
Globalization operates mostly in the interest of the richest
countries, therefore, they dominate world trade at the expense of
developing countries.
– Labor Exploitation - Some TNCs have been criticized that they
exploit cheap, flexible, non-unionized labor forces in developing
countries. There is an absence of strictly enforced international
laws meaning TNCs may operate in host-countries in a way that
may not be allowed in their home country.
– Environmental concerns - TNCs can cause damage to the
atmosphere, water and land. Many developing countries have less
strict pollution laws than those in the developed world.
– Urbanization - TNCs establish in cities of developing countries
which causes urbanization and younger workers to migrate to the
city from the rural communities.
 Global Recession and Developing Countries
• The crisis originated in the major financial centers in the
developed countries.
– The force of impact on the developing and transition countries became
apparent only gradually.
– Developing countries are the victims of the crisis, but they did not
cause it.
– The regression in economic growth entailed a sinking per capita
income, at least in countries with high population growth rates. Macro-
economically the crisis manifested
• Mounting deficits in trade and payment balances,
• Dwindling currency reserves,
• Currency devaluations,
• Increasing rates of inflation,
• Higher indebtedness and
• Soaring public budget deficits.
 Global Recession and Developing Countries
• Resource flow and developing countries
– Private capital flows such as foreign direct investment
(FDI)
• The crisis has led to a drop in bond and equity issuances and the
sell-off of risky assets in developing countries.
• The global banks currently experiencing difficulties granted less
and less credit to developing and threshold countries.
– Portfolio flows and international lending;
– Official flows such as development finance institutions;
– Capital and current transfers such as official development
assistance and remittances.
 Global Recession and Developing Countries
• Recession, Migration and Remittance
– Remittances reduce poverty for families who receive them and can
benefit workers who do not migrate, for example, to build or improve
housing or invest in small businesses, creating jobs for non-migrants.
Migration opens a window to development, but sending workers
abroad and receiving remittances cannot alone generate development.
– The major effect of the global recession on labor migration was to slow
new entries of legal and illegal migrants to fill jobs in sectors hardest
hit by the recession, including construction and manufacturing. There
were smaller reductions in the number of migrants arriving to fill jobs
in services, including care giving and health-related services.
– Some governments sought to reduce the influx of migrants by reducing
quotas for guest workers, while others sought to discourage
unauthorized migration with stepped-up enforcement of migration and
labor laws.
 Global Recession and Developing Countries
• Riley (2009):influences of recession on developing countries:
– Foreign Direct Investment declines resulting in reductions in access to
loans from banks. However, some developing countries have their own
wealth funds to spend in this kind of cases.
– Export revenues fall due to lower demand (and falling prices) for
commodities and a sharp reduction in demand for manufactured goods
from many emerging market countries. The companies may not be able to
sell their products due to lower demands for their products.
– Recession cuts export prices – but another key effect has been increased
volatility of prices – this increases revenue uncertainty for commodity-
dependent countries and acts as a barrier against much-needed capital
investment.
– A recession in global tourism – often a significant share of GDP for
many poorer nations. And huge numbers of developing countries are
tourism or export dependent nations who get affected the most because of
falling demand.
– Increased unemployment, under-employment and loss of income. Many
laid-off formal sector workers are forced into low-income jobs in the
informal and rural sectors.
• Privatization
• Migration
• Environment
• Poverty and population
• Drug and illicit trade
 Unit Four
Change and Reform Management in
Public Policy
 Chapter Content

1.The Notion of Change and Theories of Change

2.Change and Reform Compared
3.Change Management and Public Policy
4.Policy Change and Stability: Reframing
Problematic Policies
5.Politics of Policy Change and Reform
 The Notion of Change and Theories of Change
• Theories of Policy Change
 Theories of Policy Change
• Path Dependence
– This model argues that it is generally difficult to change
policies because institutions are sticky, and actors protect the
existing model (even if it is suboptimal)
• Path dependence means that ‘once a country or region has
started down a track, the costs of reversal are very high’
– Public policies and formal institutions are usually designed
to be difficult to change so past decisions encourage policy
continuity.
– To introduce a major change, policy-makers have to wait for
a critical juncture i.e. the theory able to explain why policy
continuity is more likely than policy change.
• Once a country has set on a certain policy path, it remains difficult
to change this path because actors and policies have become
institutionalized which necessitates great efforts and costs by actors
who desire change.
 Theories of Policy Change
• Advocacy Coalition Framework
– It specifies that there are sets of core ideas about causation
and value in public policy; these coalitions form because
certain interests are linked to them.
– Policy change occurs through interactions between wide
external changes or shocks to the political system and the
success of the ideas in the coalitions, which may cause
actors in the advocacy coalition to shift coalitions.
• Policy brokers are concerned with keeping the level of
political conflict within acceptable limits and reaching
some reasonable solution to the problem.
– Advocacy coalitions involving politicians, interest group
leaders and researchers emerge around higher education
reform. i.e. more applicable for policy areas characterized by high
goal conflict, high technical uncertainty the problem, and a large
number of actors from multiple levels of government
 Theories of Policy Change
• Policy Learning
– Policy learning refers to ‘relatively enduring alterations of
thought or behavioral intentions which result from
experience and which are concerned with the attainment (or
revision) of policy objectives’.
• Changes in the main aspects of a policy usually result from shifts in
external factors such as macro-economic conditions or the rise of a
new systemic governing coalition.
– Learning is considered a process by which networks learn
from past experiences, and thus is mostly about techniques
and processes in order to improve policy
• Policy learning assumes that countries, regions and systems can
change policies by learning from others and hence shifting their
beliefs.
– Policy learning includes three complex processes: learning
about organizations, learning about programs, and learning
about policies.
 Theories of Policy Change
• Policy Diffusion
– It is a process in which policy innovations spread from one
government to another.
– In other words, the ‘knowledge about policies,
administrative arrangements, institutions in one time and/or
place is used in the development of policies, administrative
arrangements and institutions in another time and/or place’.
– There are four mechanisms of policy diffusion: learning
from earlier adopters, economic competition, imitation,
and coercion.
– Policy diffusion differentiates between four mechanisms
and thus allows analyzing change through a broader
spectrum
 Theories of Policy Change
• Punctuated Equilibrium (PE)
– Many ideas are competing for attention but then something
happens at some point.
• The process comes about from external events that disrupt the
political system, particularly the ones that are big enough to disrupt
or punctuate its equilibrium.
– PE is the process of interaction of beliefs and values
concerning particular policy (termed policy images) with the
existing set of political institutions (venues of policy action).
– Political actors, capable of strategic action, employ a dual
strategy:
• They try to control the image of the policy problem through the use
of rhetoric, symbols and policy analysis.
• They also seek to change the participants who are involved in the
issue by seeking out the most favorable venue for consideration of
their issues.
 Theories of Policy Change
• Institutional Change
– Institutions are ‘formalized rules that may be enforced by
calling upon a third party’ [for instance courts].
– Policies are institutions in the sense that ‘they constitute
rules for actors other than for policy-makers themselves,
rules that can and need to be implemented and that are
legitimate in that they will if necessary be enforced by
agents acting on behalf of society as a whole’
– Institutional adjustments can either consist of:
• Adding authority and procedures to the existing institutions
(patching) or
• The transfer of responsibility between institutions
(transposition) or elimination of institutions.
 Theories of Policy Change
• Multi-Level Governance
– Change is a multi-actor and multi-dimensional process.
– Policy-making has increasingly become complex where
actors move between different levels of action and
authority is dispersed across multiple tiers (i.e. national,
regional or local).
– Government reforms can be seen as integral parts of
ongoing processes of change where policies of
governments can be a response to change as well as a
source of change.
– The main benefit of multi-level governance is its scale
flexibility, while its main disadvantage lies in the
transaction costs of coordinating multiple jurisdictions.
• Coordination is necessary due to potential spillover effects of
jurisdictions.
 Theories of Policy Change
• Disruptive Innovation (DI)
– It is an interesting concept especially for more radical
change and has been applied to a variety of policy areas.
– It needs to be differentiated from sustaining innovation,
which ‘introduces improved performance to existing
services, systems or products along an established
trajectory. In contrast, disruptive innovations ‘do not meet
existing customers’ needs as well as currently available
products or services’ .
– DI have a significant impact on industrial structures and
have often led to social change in the process, even if it
was unintended.
Change and Reform Compared
 Change Management and Public Policy
• Traditional public processes and institutions are less effective
in satisfying people’s needs.
• Globalization, the wide use of communication and
information technologies, and the coming of the knowledge
society, among other factors, are rapidly changing the world’s
order. This has created new challenges to nation-states as
people’s expectations from government have increased, job
seekers are more demanding on job content, and societies call
for more investment in education, health, and society but are
unwilling to pay more taxes.
• Therefore, to be able to respond to a changing environment the
public sector has to transform its structures, processes,
procedures, and above all, its culture.
 Change Management and Public Policy
• The origin of the necessity of change lies in the
dissatisfaction with the current state or the perception of a
problem.
– Dissatisfaction may derive from different sources like obsolete
regulations, processes, procedures and/or ideologies.
• The management of change as a result has been identified as a
critical variable for the success or failure of a reform policy.
– Managing change aims at ensuring that the necessary conditions
for the success of a reform initiative are met.
• The ability to manage change effectively is determined, to a
large extent, by the inclusion (consultation and negtation) or
exclusion of public participation in the definition of the reform
agenda.
 Change Management and Public Policy
• Internal events such as economic crises, political turmoil,
ineffective response to natural disasters, health and sanitary
emergencies etc., may also provoke changes at the interior of
the public sector to deal with problems more effectively.
• When the need for change is imposed by external forces
(coercive transfer), it is more difficult for all stakeholders to
commit to the reform initiative and can undermine the success
of the reform initiative.
 Change Management and Public Policy
• Managing change refers to the way of dealing with the intended
or unintended consequences of a reform programme.
– Under this logic, it may be argued that managing change is part of the
design and implementation process of a policy initiative.
• Managing change refers to the adaptation of people’s mindsets,
culture and attitudes to a new environment, paving the way for
reform initiatives to produce the desired results through facing
undesired side-effects and resistance to change.
– The success of a reform and the production of change require the
support and commitment of politicians, civil servants and civil society
• Paradigmatic change is only possible with the simultaneous
change of institutions ̶ if institutions remain unchanged, policy
change can only be gradual.
• Paradigmatic change in a policy subsystem require exogenous
shocks that cause radical disintegration of the existing policy
ideas, beliefs, actors, institutions and behavioral practices.
 Change Management and Public Policy
• Factors leading to resistance to change
– Lack of coherence of the reform and consistency with other reform
initiatives may produce confusion and generate opposition.
– Fear and uncertainty to a new work environment generate opposition to a
reform initiative.
– The negative implications perceived by individuals and groups may
trigger resistance to change.
– The complexity of a reform initiative may result in opposition if it is not
clearly explained by leaders and managers and understood by all
stakeholders.
– Imposition of change may generate opposition towards the reform
initiative.
– Change may be perceived differently by people at different levels of the
organization.
– Diminishing the importance of the human factor in the process of
change.
– Lack of information and communication may increase uncertainty and
distrust causing resistance to change.
 Change Management and Public Policy
• The Leading Change Factor In Managing Change
– A strong, trusted and committed leadership is a key
determinant for making a reform happen.
– Leadership is a key factor to reduce resistance to change.
– An effective leadership implies obtaining people’s
commitment through persuasion, negotiation and
influencing their values and culture.
– Although values are difficult to change, it is possible to
give another meaning to what is valued and, in that way,
transforming organizational culture (i.e. the New Zealand
Treasury reform).
– Leadership development strategies are essential to prepare
public sector leaders to take up their role as promoters of
reform.
 Change Management and Public Policy
• The institutional politics factor in managing change
– Public participation in agenda-setting is crucial to obtain
legitimacy, support and commitment to change.
– Negotiation between different groups within the
organization is necessary to reach agreement on the
necessity to undertake reform programs and obtain and
maintain stakeholders’ commitment to the reform proposal
– Advocacy coalitions in public organizations may also be
integrated by external members from the media, opinion
leaders and academics to push for changes in the public
service.
 Change Management and Public Policy
• The implementation capacity factor in managing change
– An effective management of change requires organizations
to have the capacity for change (specifically access to
resources of all kind) and depends on the ability and
commitment of the organization to learning
– Managing change requires time and knowledge resources
more than anything else.
– Knowledge and information produce a learning system at
the interior of the organization which permits adaptation to
changing circumstances.
– Time for changing is generally scarce and producing
change is very often a long-term process.
Change Management and Public Policy
Change Management and Public Policy
Change Management and Public Policy
Policy Change and Stability: Reframing Problematic Policies

• The concept of ‘change’ refers to an empirical observation of

difference in form, quality or state in time of a specific entity.
• Policy change occurs with the change of the intrinsic
properties of a policy.
Policy Change and Stability: Reframing Problematic Policies

• There is also the possibility that policy change does not occur,
despite changes in some important elements in the internal or
external environment.
• Policy Stability is influenced for example by the process of
‘feedback loop’ and the related path dependency approach and
close networks.
Policy Change and Stability: Reframing Problematic Policies

• Policy Innovation
– The concept of innovation was mainly asserted in business
management and refers to ideas, practices or objects that
individuals or organizations adopt from elsewhere and
perceive as new.
– Innovations contain new behavior, habits, expectations,
patterns of rules, and have numerous social functions.
– Innovations can also influence the change of social
objectives or social structure in a way that does not bring
about the complete change of the system’s identity.
– It can be said that in the recent period innovation in the
public sector became the subject of huge interest, following
the model of promoting innovation in the private sector
Policy Change and Stability: Reframing Problematic Policies

• Policy Reform
• It is ‘the fundamental, intended, and enforced change of the
policy paradigm and/or organizational structure of a policy
sector’. Therefore reform can be characterized as:
– Fundamental: ‘it implies a deviation from the existing
structure or paradigm with the changed organizational
structure, its paradigm or both’ – a change in priorities.
– Intended: a policy decision maker that intentionally strives for
change and is capable of changing a policy’s direction or the
organizational structure of a policy sector
– Enforcement/adoption of the proposed policy reform, the
criterion of which is the success of the reform proposal in all
the stages of the policymaking cycle, except its
implementation.
Policy Change and Stability: Reframing Problematic Policies

• Policy Reform
• A reform policy may fail to achieve change, may generate
unintended results or face resistance from organizations and/or
individuals whose interests are affected.
• For that reason, policy-makers and politicians need to pay
special attention to issues such as leadership, shared vision,
sequencing, resources for change, and cultural values while
designing and implementing a reform initiative.
• Reforms are not risk-free. They can be supported or opposed
by people depending on their point of view; may produce
unintended results; may be difficult to implement; may
generate the need for further reforms; or simply may not work
at all endangering the survival and legitimacy of public
organizations and its managerial and political leadership.
Policy Change and Stability: Reframing Problematic Policies

• Policy Reform
• Public sector reforms are complex, in many cases unpopular,
contested, fraught with risk, and require a long time to produce
results and prove their benefits.
Policy Change and Stability: Reframing Problematic Policies

• Policy Change
• Policy change means the replacement of one or more existing
policies with one or more other policies.
– New policies can be adopted, the existing ones can be changed, or also
terminated.
• Policy Change Classifications: Peters and Hogwood
– Policy Innovations (for example the government faces the
problem or sector that is new to it),
– Policy Succession (the replacement of an existing policy with
another one, which, however, does not include radical change,
but the continuation of the existing policy),
– Policy Maintenance (adaptation of the policy to maintain its
orientation and functioning) and
– Policy Termination (abolishment of all policy related activities
and public financing).
Policy Change and Stability: Reframing Problematic Policies

• Sabatier identifies three types of policy change:

– Change of means, specific technical instruments (secondary
aspect of beliefs),
– Change of general political strategy (policy core) and
– Change of fundamental ideological values and goals (the core
component of policy).
• The transfer of ideas, innovations, and best practices among
countries has been facilitated by global, international and
transnational sources of policy change.
• Policy changes may demand more than a simple change in
direction from the Implementing Organizations; they may turn
-previously established programs into "mistakes" that must
then be rectified.
Policy Change and Stability: Reframing Problematic Policies
Change and Reform Compared
Change and Reform Compared
 Politics of Policy Change and Reform
• Broad reforms (policy changes) are possible when there is
sufficient political will and when changes to a sector are
designed and implemented by capable planners and managers.
• Reform is political for the following reasons: [Reich]
– It represents a selection of values that express a particular
view of society.
– Reform has distinct distributional consequences in the
allocation of benefits and costs.
– Reform promotes competition among groups that seek to
influence consequences.
– Enactment or non-enactment of reform is often associated
with regular political events or political crises.
– Reform can have significant consequences for a regime’s
political stability.
 Politics of Policy Change and Reform
• For reform to succeed, policy-makers need effective methods
to analyze relevant political conditions and shape key political
factors in favor of policy reform.
• Models for policy reform [Reich 1995}
– Political will model: decisions by political leaders are necessary and
sufficient for a major policy change. This model is more likely under
political circumstances such as ‘a strong mandate, strong state, narrow
coalition and strong leadership’.
– Political factions model: politicians seek to serve the desires of
different groups (interest groups, political parties). Reform occurs
when it corresponds to a preferred distribution of benefits to specific
constituent groups of government leaders.
– Political survival model: government officials seek to protect
individual interests (as power-holders) in order to maintain or expand
their existing control over resources. Reform occurs when it serves the
personal political survival or the personal interests of political leaders.
 Politics of Policy Change and Reform
• Concentrated effects on more powerful societal groups tend to
have more influence on government decisions than diffuse
effects on less powerful groups.
• These problems can be overcome by political alliances and
compensatory benefits.
– Bargains reached with external actors have to be politically acceptable
and sustainable in the domestic political game.
– As a result, passing a new policy requires a well-organized and highly
mobilized interest group.
• Political timing provides opportunities for policy entrepreneurs
to introduce ideas into the public debate and political
management of group competition allows leaders to control the
political effects of distributional consequences and protect
regime’s stability.
• Radical changes require careful consideration of timing, while
minor incremental changes are not as dependent on timing
 Politics of Policy Change and Reform
• Politicians generally have multiple reform tools at their
disposal, which carry distinct levels of expected performance
gains and political costs.