The process of globalisation is aggressively influencing public policies and industries including economic liberalisation, standardisation of production process and procedures, labour policies and tax policies Globalisation has serious implication for Pakistan in the areas of economic development, poverty, unemployment, regional economic integration and competitiveness.
This rising consumption of goods and services is an opportunity for the business corporations to take maximum advantage by turning into efficient competitors. The impact of globalisation on Pakistan is mixed one because the fruits of economic progress is only reaching to middle and high-income groups while the low-income class is getting nothing.
The free trade and the reduced role of the state in economic activity are the means to open the economies of the countries for free flow of capital, labour, goods, services and ideas. The proponents of economic integration and the anti-globalisation activists, policy makers, NGOs and institutions are competing against each other in order to serve their diverse interests.
The United Nation Conference on Trade and Development (UNCTAD) has recently conducted a research survey of the 192 trans-national corporations. About two-thirds of these corporations have formulated strategic plans to increase their foreign direct investment (FDI) from 2007 to 2009. The survey reveals that South Asia and South East Asia are among the popular investment destinations.
In the last financial year, more than $5.1 billion foreign direct investment came to Pakistan. Over the past seven years the size of the national economy has doubled. The per capita income increased to $950 but it is ‘one of the lowest in Asia. The inflation on food items, residential and commercial rents, transportation and education has gone up significantly This has reduced the disposal income of the ordinary citizens and the per capita income of 90 million peoples is $450 or below.
Although the increase in FDI is a healthy sign but a large portion of these foreign investment comes in acquiring the shares of privatised public enterprises and in stock exchanges and it does little to overcome the problem of unemployment. In some cases, the privatisation has increased the unemployment. Many privatised manufacturing plants have been closed down.
The relationship between globalisation and poverty is direct. The opportunities for free flow of capital, goods and services have been increasing while the poverty has also increased over the past seven years. According to the IMF about one- third of the population is poor while the Economic survey claims that the 25 per cent of the population lives below poverty line and its per capita income is $350.
The globalisation that offers benefits to all stakeholders is healthy for the economic development while the pro-corporate globalisation is harmful for socio-economic development and it must be avoided. The privatisation of KESC and PTCL brought FDI but it has provided marginal relief to its consumers in terms of better services and customer satisfaction. The lower power supply than anticipated for residential and commercial units is widely common. Load shading, over-billing, partial treatment of complaints, corruption and red-tape are still the major problems facing the consumers.
The MNCs have strategic objective to influence the economic policies of developing countries through international institutions like IMF, World Bank, WTO and trade groups like G-7 and to create opportunities for free trade and competition as this offers an advantage for their quality competitive products and services in contrast to the products and services that are produced by the local industries of the developing countries.
At least 40,000 MNCs engage in global business. The enormous production of goods and services has provided them huge power and according to one estimate, the 500 largest global corporations produce more than $9.2 trillion worth of goods and services. It is about 30 per cent of the world’s total economic production.
Unfortunately, the South Asian region has little to offer for open competition to the SAARC members because of strong trade and non-trade barriers. The policies of the SAARC countries are not fully encouraging economic regionalism. The restriction on free flow of goods, services, capital, ideas, tourists and difficulties in cross border travel in this region has reduced the capacity of their economies to be an active player in globalisation.
The small and medium-sized firms of the developed and developing countries have similar pressure to be competitive. The smaller firms are more vulnerable than large and medium size enterprises to survive in their respective markets because they possess little capital and insufficient human resources.
Pakistan’s textile exports have been loosing their share in global markets as Chinese and Indian products are more competitive than Pakistan’s products. The family business and ‘Seth style’ management and ownership reduces management’s capacity to adjust production processes to be competitive.
These industrialists are still following the ‘rule of thumb’ in managing their production instead of adopting modern management and technology- driven production process.