Int.
Political ECONOMY
Economics - The social science that deals with the production,
distribution, and consumption of goods and services and with the
theory and management of economies or economic systems.
Macroeconomics - The study of the overall aspects and
workings of a national economy, such as income, output, and the
interrelationship among diverse economic sectors.
Megaeconomics It studies the interaction of national
economies through comparative analysis of the economic systems.
International Economics - A branch of economics that
studies economic interactions among different countries, including
foreign trade (exports and imports), foreign exchange (trading
currency), balance of payments, and balance of trade. The study of
interational economics focusses on two related areas - international
trade and international finance
Changed economic activity of the society
In our days no one sphere of life, including economic
sphere can act independent and isolated. All processes
and events should be examined and understood in the
broad sense of economic, political, social, ecological and
demographic context, taking into account their
interdependence.
The area of economic science is already too narrow to
explain all the aspects of the complex and
interdependence world.
Globalization of Economics and Development
Two Sites of One Process
WHY?
The main spheres of life are inseparable;
Economics is one of these spheres of life;
The technological development fosters the development
of all other spheres;
Simultaneousness development of communication
technologies, culture, education and etc.;
Trends for universality of development;
Economic activity of the society has changed;
The universal and national development are tightly
bounded
Our choice is to examine globalization of economics in
the broad context of development !
The Nature of Globalization
Till 19
th
century global meant spherical;
At the end of 19
th
century global meant the whole
world;
20
th
century global meant definition of capacity and
dissemination of events and processes
Main key words
About the process:
Universality
Internationalization
Integration
Generality
Worldwide
About the main key
players/agents:
Global companies
International
economic
organizations
Global markets
The state
Communication
technologies
Some special features of Economy in present
days
Growing interdependence of all processes
Establishing of a global financial-economic
area
Information technologies - WWW
Change in the states functions
vanishing of the national boarders
Universality of the world dissemination of
the democratic system and socio cultural
values
Global a new scientific category, which treats
the processes and events on a global scale
Globalization an approach which expands
and deepens the economic theory as well as
other scientific fields
Subject of globalizations are:
- MNCs;
- regional structures;
- the state;
- international economic organizations
Evidences
Civilizations they have originated
independently from one another and have had
common standards and rules of life;
Religions they have monotheistic character,
universality of values and trends towards
expansion of ideas;
Colonizational processes they have
similarity of reasons, forms and consequences:
creation of one-sided economic relations;
From the great migration of peoples till now
there is a tendency for decreasing the
uncertainty
Influence of Globalization on different spheres
of life
Economic the trade roads were built; global
companies started their functions; global economy and
finance system have been created.
Political tribes transformed to peoples, nations and
states formed, after that regional unions and finally
international authorities of governance.
Geographical the great migration of peoples started,
new lands were founded, empires created.
Ideological unified social ideas spread on huge
territories
Informational the speech and writing were created,
after that literature, finally massmedia and Internet
Definitions of globalization
Globalization is a very high level of
development of the globality of
economics and life in the
conditions and content of life
activity expanding with a tendency
for planetarism.
Globalization is a compression of
time and space.
REGIONALISM
Regionalism originated along with globalization
and approximately at the same time.
Factors leading to the formation of regional
structures during ages:
Political;
Geographical;
Religious;
Military and defense;
Economical.
REGIONALISM
40
-ties
and 50-ties of XX century new wave of regional
structures in Europe:
1948 Organization for European economic Cooperation;
1950 European Coal and steel Community;
1957 European Economic Community;
1959 European Free Trade Association
1949 1991 Council for Mutual Economic Assistance
(socialist countries)
New factor for regional integration appears:
according to the social system- the world was divided into
two social systems.
40-ties and 50-ties - Economic stabilization was the
leading idea
REGIONALISM
80-ties economic regional structures with
mutual political, social or military and strategic
goals:
- EU;
- ASEAN
- NAFTA North American Free Trade Agreement
90-ties the regional structures became even
more closed with very clear mutual economic,
social, cultural, educational etc. relations.
They form the new structure of the world
REGIONALISM
Economical aspects:
Similar economic development;
Common priorities;
Forming common economic model;
Regional competitiveness and
comparative advantages in a global arena;
Common reaction to the risks of the
environment
The role of technological factor
Technologies are a product of science.
Technologies are materialized reality of science.
Technologies are socially neutral and all the
conflicts that occur in society does not relate to
technologies.
The effect of and role of technologies in life
depend on the way of application and the goals
pursued.
Technologies the main source for
development
17th century scientific revolution
scientific knowledge was applied and
machines were invented.
18
th
century the beginning of the
industrial revolution.
19th century - intensive application of
science in the material production.
20
th
century inventing the computer and
its using, replacing some functions of the
machines
Technologies the main source for
development
21th century expansion and
development of the functions of
technology. Technology acquires also
some social characteristics - new
technologies can reproduce biological and
mental functions.
The effects of technologies are:
A possibility and necessity for public production
to go out of the national-state frames;
A possibility and necessity for the management
of the society to be performed by means of
information technologies and communication
networks;
Acceleration of the synthesis between the
results of R/D and the transfer of technologies;
Formation of a new type of consumer demand
which can not be shut off within the frames of
national markets
Industrial revolution
created the global market
Technological revolution
created the global society
and the global economy
Negative tendencies
Technological competition;
Technological dictate;
Technological determinism;
Technological imperialism;
There is no free movement of technology
Global media and communication
Modern communications and their basic form
media are a product of the new technologies
and major circumstances which have given rise
to globalization.
They ate total global structure with universal
effects.
They have organizational transformation on a
company level:
At first a process of uniting in communication and
media complexes began;
Then their merger into huge industrial and financial
corporations.
Economics - Culture
The common feature between them is that both
follow the overall development of the society;
The development of culture is not always
following the development cycle of economics;
The cultural specifics of a nation, state or region
is much more clear then their economic or
political specifics;
Cultural processes are determined by the
national and state differences.
Culture - Globalization
The cultural processes gain the importance of
major conditions of life and effect each human
activity;
Culture is turning into one of the basic factors of
economic growth, while cultural product is
among the new strategic resources of society;
Culture became a specific sphere of
entrepreneurship;
Culture, education and science form new
economy - knowledge economy
Is their Global Culture?
The early 70-ties the French Ministry of
Culture introduced in the scientific space
the concept cultural imperialism;
80-ties and 90-ties the theses of war of
cultures, conflict of civilizations were
very popular;
Later appear the concept of
Americanization of world culture
Some conclusions
The very globalization of economics,
science and technologies requires a very
high degree of development of cultures.
The concept of glocalization, introduced
in Japan in 1996 a combination of global
and local, expressing the need for
globalization to be carried out in
compliance with the specifics of the
individual countries.
The main contradictions of culture in the
global world is between its economic form
of realization and its esthetic and artistic
nature.
Democracy and politics
Democracy means that peoples and their
parliaments should be sovereign judges in their
own countries. They should choose the national
model of development and solve the main
problems of organization and functioning of the
national economics.
In practice the decisions are taken at the head
offices of the global corporations and are
implemented in the individual countries. This is
how the issues of the structure of production, of
investment and technological policy, of strategic
marketing are solved.
After 11
th
September 2001 the world is not the
same:
Unstable political relations and political systems;
New paradoxes of democracy appear:
New wave of religion expansion;
Terrorism;
Using weapons to solve problems and conflicts
Economics of war opposes the humanism and
subordinates the world order to corporative interests.
Globalization
Globalization comes in contradiction with
human rights and with the very principle
of individualism, which along with
competition, is the fundament of capitalist
system.
Globalization in contemporary conditions is
an unevenness
Deepening gap between the economies of
the developed and developing countries;
Intensified struggle for additional access to
resources and markets;
Ecological asymmetry;
Poverty and polarization of men;
Uneven location of people;
Continuing international debt crisis
ECONOMIC CHALLENGES FOR
PAKISTAN
The Pakistans economy is currently passing
through the most difficult phase of its economic
history.
Once a robust economy, with economic growth over
6% of GDP, now it has been transformed into a
fragile economy, due to serious economic
challenges, the most important being our countrys
frontline role in War on Terror and the persistent
Power and Energy Crisis which has crippled
our industrial sector.
what the IMF Mission, which recently visited
Pakistan in October 2012, says in its Report :
The Pakistans economic situation is
deteriorating and Islamabad urgently needs
to address deep problems in its energy sector
while boosting growth to meet a rapidly
growing population.
The IMF Mission further goes on to say that:
The countrys GDP in 2012-13 is likely to
grow at the annual rate of 3% to 3.5%, not
enough to provide jobs to the growing labor
force. Decisive and far-sighted action is
needed to address this challenging outlook.
The IMF Mission Report points out that ENERGY
PROBLEM is the largest single impediment to higher
economic growth for Pakistan and a major factor behind
macroeconomic imbalances. For this, it has outlined a
comprehensive approach to reform to tackle these
problems.
Pakistan offers huge potential and
opportunities for trade and investment to both
foreign investors and the local economy.
Pakistan is worlds 2
nd
largest producer of water,
buffalo meat and milk
Pakistan is worlds 3
rd
largest producer of cotton
Pakistan is the 4th largest goat meat supplier
Pakistan has 5th largest Coal and Gold reserves
Pakistan is the 7th largest wheat grower
Prospects and Economic Revival
Efforts
The economic growth of Pakistan stood at 3.7% in FY
2012 which is higher than 3% realized in previous
year, but less than the target of 4.2 percent. The State
Bank of Pakistan in its third quarterly Report State of
the Economy says that this performance is notable,
given the following challenges:
Considerable damage to cotton crop due to floods
Ongoing energy shortages;
Rise in international oil prices; and
Security concerns.
The State Bank comments on the economy recovery
prospects as follows:
Although Pakistans economy has shown some recovery in
terms of GDP growth, the key macro indicators still remain
weak. Persistent inflation and pressure on the fiscal and
current accounts, remain the key challenges for the
economy
Like IMF, the State Bank of Pakistan also pinpoints
that Low investment and energy shortages have
direct growth implications. Other areas that poses
challenge and major risk to the macro-economy is
the persistently high fiscal deficit
Pakistan must overcome its economic
challenges as it has vital role to play to bring
economic prosperity in SAARC Region
SAARC region has potential of becoming a vibrant
region in the world given its enormous resources in
manpower, technology, agricultural and mineral assets,
its history and civilization.
Pakistan must take immediate measures to meet its
present economic challenges as it has a more vibrant
role to play for the regional cooperation in the SAARC
region.
Pakistan could play an important role in bringing the
people of SAARC together by promoting investment,
trade and people to people contacts.
The Existing Potential in the
South Asian Region
South Asia is the second fastest growing region
in the world and it has the potential to be an
economic power by the year 2025. Many in South
Asia, however, still face extreme poverty,
especially the SAARC countries.
South Asia is home to half of the worlds poor,
with 40% of its population living on less than
$1.25 a day.
South Asia accounts for only 2.5% of GDP 2% of
world exports, and 1.6% of world Foreign Direct
Investment .
SAARC countries have common economic
goals and economic challenges
Significant challenges and barriers still exist
which continue to restrict the economic
growth and integration in the SAARC region.
What is required is a firm commitment by the
SAARC countries to move towards
prosperity by placing stronger emphasis on
economic development through REGIONAL
PARTNERSHIPS as they share common
economic goals and challenges.
Key Challenges for SAARC Region
While SAARC countries continue to make
efforts for economic development and intra-
regional integration, their progress is
curtailed by a continuing sub-set of systemic
issues and challenges common to all
member nations.
Political Mindsets and Issues
Abject Poverty
Low Intra-regional trade
Low- Intra-regional or cross-border Investment
Poor Transport Network or Infrastructure to facilitate trade
Sizable Sensitive List, Para Tariff and Non-Tariff Barriers
Food Security issues
Climatic Change Issues (floods and natural disasters)
Under-utilization of renewable energy resources
Stringent visa requirements
The above challenges need to
be dealt on preferential basis by
the SAARC countries, especially
the two big nations PAKISTAN
and INDIA.
