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Unit 14: Globalization

To that extent the less developed countries with very few exceptions have by and large evolved their Notes
policy framework that underscores irreversibility of the policy measures-be it in terms of structural
adjustment or trade liberalization. At the same time they also underline that the policy mix will be
such that it would ensure some modicum of social safety net to overcome the problems of
marginalisation and impoverishment.
In respect of the adverse effects of the current economic globalization, many of the developing countries
are engaging their attention on reforming, to the extent possible, the international trading and financial
institutions to cater to their critical economic needs. Leading among these are countries such as India
which have taken initiatives to reexamine the evolving rules of the WTO in respect of issues such as
intellectual property rights, anti-dumping restrictions, subsidies to agriculture and other countervailing
measures. Another concern relates to enlarging the developing countries’ market access in the
industrially advanced countries of the world. Cumulatively their demands are in respect of expanding
their access to international trade through seeking lowering of tariff, and exemptions on a number of
non-tariff barriers. In this connection, mention may be made of the less developed countries seeking
support in the WTO to seek revision in the standards of sanitary and phyto-sanitary requirements
regarding their exports especially towards the European Union.
While the afore-mentioned concerns largely relate to trade matters, the less developed countries are
also making demands in respect of issues relating to foreign direct investment. In this context the
highly indebted poor countries are seeking initiatives that would minimize their debt burdens.
Specifically in this connection they are demanding debt relief measures that would help reduce the
levels of poverty and attendant economic hardships in their domestic economy. Secondly, they are
also making efforts that would bring about increasing rate of flow of private foreign direct investment
in order to meet their current economic bind. In their effort to attract foreign direct investment efforts
are afoot to reduce if not eliminate, the risk perceptions of potential portfolio and direct investors and
also by improving the credibility of their public financial institutions.
Initiatives at the International Level

Aware of the immediate adverse impact of economic globalisation, the less developed countries had
joined the Uruguay Round of the General Agreement on Tariffs and Trade (GATT) with two objectives-
first, to deal with the backlog issues relating to textile exports and agricultural subsidies and second,
to remove GATT rules regarding anti-dumping and countervailing duties. They were less inclined to
negotiate on the newer areas which meant opening their infant service sector, removing all restrictions
on foreign direct investment and rewriting their patent laws. These requirements, they felt were
unwarranted intrusion into their economic space.
So, they put up a united front against the intrusion of new areas such as service sector, investments
and international property rights. Yet, their efforts were met with stiff opposition from the advanced
countries. In the final analysis, all that the less developed countries could achieve in respect of service
sector, investment and intellectual property rights were as follows:
Service Sector

In the Uruguay Round, what was finally agreed upon was that the service sector will have to be
liberalized but based on multilaterally agreed and legally enforceable rules to govern trade and services
such as most favoured nation (MFN) treatment, transparency of laws and regulations, recognition of
operating licences and arrangement for dispute settlement. However, thanks to the concerted effort
of the less developed countries, several exceptions have been made in the service sector. Yet, the less
developed countries had to concede liberalization in such service sectors as advertising, construction
and engineering.
Intellectual Property Rights
So far in respect of intellectual property rights, the Uruguay Round provided for an international
system for the protection of such rights to be embodied in a legal institutional set up called World
Intellectual Property Organisation (WIPO).

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