Globalization and Third World Markets

Access to global capital markets is critical for less developed countries. It became a general rule for LDCs to liberate the market regulation, stimulate privatization of state owned resources, improve infrastructure, standardize integration within limited free trade zones and in such way lower risks and increasing returns for potential investors in their attempts to attract foreign investment. Russian equity market is a bright example. Under the Federal Securities Market Act of 1996, Russian government introduced U.S. style standards for disclosure of information, proof of enforcement and ownership. Consequently, in the 1990th foreign capitalization of Russian equity markets grew by 3,300% within only eighteen months of operations. Policy adopted by President Ramos in Philippines is another case. The strategy involved: “luring U.S. and European investors to the Philippines, stressing its Catholic and democratic characteristics in contrast to the corporate authoritarianism of the rest of Asia.” In more basic steps the policy included elimination of protectionist legislation alongside with endorsement of export processing zones where foreign investors could use cheap labour to manufacture goods in slave like conditions. Policy also allowed foreign investors to own one hundred percent of equity in almost all industries. In the case of Philippines, the role of federal government was essentially centred on selected local districts to make those more competitive against other offshore zones for foreign manufacturers.

Finally, the case of China, perhaps, is the most relevant and visual. China’s foreign policy is more complicated, as having a unique ideological system and still authoritative government, country manifests own sovereignty, being a member of WTO, it experiences significant difficulties when implementing domestic legislation that has to be in accordance with WTO standards, the tendency to a free ride using its status of developing country, preference for consensual and bilateral agreements and the dislike of adversarial procedures. Despite the factors listed, China adjusts to the global policy and in order to attract foreign investment partially sacrifices own ideological values on the process to international socialization. China’s international organizational policies are no longer individualistic, but are focused on the foreign policy.

Not astoundingly the centrality of national economy is hidden by this new configuration, not least, because the national economy is not mainly a spatial category. The global and the local as, correspondingly, all-inclusive economic space and production ‘node’ or ‘a growth poles’ are far more persuasive spatial configurations. The role of the government faced with this new realism is to withdraw and to facilitate private capital to exploit the prospective of the new competition.

By: Jennifer Burns

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Jennifer Burns is a professional freelance academic writer at Custom-Writing.org, college writing and editing service. Jennifer specializes in custom dissertation writing and editing and GCSE coursework writing. Jennifer now shares own writing experiences with students.