Open Forum
Fourth Quarter 2002

An Examination of the Caribbean’s Response to Globalisation

 Meagan Sylvester
University of West Indies, St. Augustine Campus

The phenomenon of globalisation has gained ascendancy within the landscape of contemporary international relations during the last decade. While the term has emerged and absorbed great currency in the literature and in the jargon of political economists, sociologists and other social scientists, there has arisen a divide amongst scholars as they attempt to date the genesis of this perspective. As the world’s polarisation exists presently between the North and the South, it therefore becomes crucial and critical for countries of the South of which the Caribbean is part, to arrest their development formulae to be more reflective of what has been posited by theorists.

 

Process and Ideology

The phenomenon of globalisation has gained ascendancy within the landscape of contemporary international relations during the last decade. While the term has emerged and absorbed great currency in the literature and in the jargon of political economists, sociologists and other social scientists, there has arisen a divide amongst scholars as they attempt to date the genesis of this perspective. To theorists such as Girvan (1999) and Pantin (2001) globalisation can be said to have been under way for the past 500 years. However, other thinkers such as (Castells, 1996; Benn, 2000 posit that while the similarities between colonial expansion and the imperialist phase of development dovetails to a large extent with the globalisation project, there remains a qualitative attribute about the concept of global reach in this present dispensation which heralds both technological progress and conscious economic policy on levels not previously seen.

Despite this reality though, the process of globalisation says Benn (2000), has sought to universalise the application of neo-classical economic principles in terms of the promotion of private sector initiatives and unfettered liberalisation based on the primacy of market forces. In order to capture the essence of globalisation (Klak, 1998; Benn, 2000; Chomsky, 1998; Pantin, 2001) posit that it becomes necessary to re-visit the tenets of neo-classical economic orthodoxy and compare the similarities and subtle differences between what Chomsky calls “the doctrinal system” and the neo-liberal model which Klak states is the policy affiliate of globalisation. 

Features of Globalisation

Following on the destabilising developments of the 1970’s, such as the ascendancy of the Eurodollar market, the subsequent shocks in the oil prices, the growth of international finance and the onset of international lending, global re-structuring began to gain credence. The start of the 1980’s saw the decline of Keynesian consensus in the North being supplanted by the new orthodoxy of neo-liberal monetarism which was clearly visible in the administrations of Reagan in the United States and Thatcher in Great Britain. Together with the interest-rate shocks imposed by the US and other “super-power” territories claiming a monetarist anti-inflation strategy, the countries of the South were thrown headlong into a severe debt crisis. This paved the way for Northern-led international financial institutions to unleash an economic structural adjustment policy conditionality on the South. The dimensions of the terms encompassed devaluation, privatisation, trade and investment liberalisation and previous financing arrangements, which were facilitated for development are now steered in the direction of structural adjustment and policy reform.

Accordingly, the establishment of structural adjustment programmes (SAPs) and economic stabilisation in developing countries was said to be geared towards re-orienting these economies in the direction of increased reliance on the private sector and increased market liberalisation states Benn (2000), with an aim to augment economic efficiency and sustainable development. On a cursory glance, this seems like “a good idea” as Chomsky would put it, but the reality has been as Girvan (1999) and Chossudovsky (1997) indicate, a mixture of severe social costs and decidedly unclear economic results. These bad policy decisions that emanate from “good ideas” are seen to be operating out of self-interest with the intention to affect a global system designed to further the interests of its principal architects.   

Globalisation- A Blessing?

Yet, there are those who do not foresee as gloomy an outlook of the globalisation project. In fact, proponents such as Clare Short, Kofi Annan and former US President Bill Clinton provide suggestions for utilising the great wealth that extrudes out of the globalisation project. Short (1999) postulates that poverty and global inequality can be quelled by the massive wealth, which emanates from globalisation. Further she alludes to the fact that poorer countries can indeed benefit from global re-direction of funds harnessed by both the domestic and international private sector spawning investment and growth. A call is also made for an increase in investment and trade, which would allow for developing countries to take advantage of, and have access to basic necessities.

Interestingly, Short does not recite vacuous hopes, but challenges the crafters of the neo-liberal policy reform to re-assess their own protectionist techniques. It is asked that they be prepared to re-open sectors, as laid down by the Caribbean Basin Initiative, in which developing countries have a competitive advantage such as agriculture, textiles and clothing. Added to that, all blame is not attributed to the “usual suspects” of uneven development but instead, it is suggested that sound regulation of banks, action against corruption and the proper enforcement of contracts at the local level, can only be effected via democratic local governments who have a vested interest in human rights and labour standards. It is further noted that the latter can only be achieved when some national ethic is fostered and this can only be aided by economic growth and development, which does not remain skewed in favour of developed countries only.

Not only theorists from the developed world see positives from globalisation. Norman Girvan in his 1999 article, Globalisation, Fragmentation and Integration: A Caribbean Perspective posits that indeed the Caribbean has benefited from the global project with regards to tourism and offshore banking centres. With regards to the former, the tourist industry has expanded the growth of travel internationally and has become the principal foreign exchange earner in the majority of Caribbean countries while it continues to be the fastest growing export industry for the region as a whole during the 1980’s and 1990’s. Similarly, the globalisation of finance has allowed for the growth of the offshore banking industry in the Caribbean. Territories such as the Bahamas, Barbados, Antigua, Aruba and the Netherlands Antilles, together with the Cayman Islands have successfully exported their financial services. 

Globalisation- A curse?

Yet, despite the protestations made by Short et al., about the positives that can achieved from globalisation, there still remains basic tenets about the globalisation project that do not provide equity.  As Chomsky puts it, ‘the “principal architects “ of the Washington Consensus are still the masters of the private economy, mainly huge corporations that control much of the international economy and have the means to dominate policy formations as well as the structuring of thought and opinion.’ While Clare Short champions hopes for this powerful entity to lead off the change towards trade tariffs and labour standards in favour of the developing world, she seems to forget what Adam Smith pointed out as a major truism about neo-classical positioning, which still applies to today within the neo-liberal re-positioning about the merchants and manufacturers in England, ‘they used state power to serve their own interests however, “grievous” the effect on others, including the people of England,’ their own people (my emphasis).

Endemic in the neo-liberal fashioning of the new political economy is the tendency to demand a political and economic climate which is solely conducive to private investment where the repatriation of the profits extend to its principal architects, the developed world. In that regard, within the local setting, nationalistic regimes, which are responsive to popular and community based needs and foster improvement of living and working standards are seen as being in direct opposition to the upper classes and large foreign enterprises. This point takes us back to Clare Short’s view about the great wealth of globalisation being able to ‘to reduce poverty and improve on the basic necessities such as clean water, sanitation, electricity, telephones and transport systems’. As the evidence shows, post war planning saw different regions in the world assigned to specific roles. The developing world was not intended to be on a level playing field with the developed world. In fact, as Chomsky tells us ‘stability in the developing world means security for the upper classes and large foreign enterprises’ therefore, if radical nationalism engenders questioning of the established status quo and that act is seen as subversive, Short’s prescription for policy-makers to embrace transparency at WTO, to re-assess the terms of trade and to provide a human face to development, indicates a certain ignorance of what Chomsky calls “the knowledge of the ‘secret record’”.

Girvan et al, are quick to point out, what the Caribbean region has gained from the globalisation project. However, they move with alacrity when they critically assess the negative impact on the economy and society. Let’s take the two aforementioned examples of tourism and offshore financing to illustrate the point. Despite its provision of economic returns to the region, tourism adversely affects the social and environmental fabric of the West Indies. Environmental degradation, visitor harassment, crime, prostitution and the presence of STD’s are representative of only a few of this industry’s shortfalls. Similarly with the offshore industry, the downside is that money-laundering and drug trafficking become part of the landscape. 

The Globalisation Project

Philosophically speaking, theorists like Pantin (2001), Shaikh (2001) and Benn (2000) attest, that globalisation and its inherent mantra of neo-liberalism, is constructed on a flawed intellectual foundation. Whereas at the national level, there is an understanding that the polity is in existence to provide societal responsibility, equity and a sense of the common good, within globalisation there is no corresponding supranational authority which is vested with the accountability for effecting rectitude amongst participating states in the international economic system. Instead, what obtains at the international level is a system of open unequal competition, where the mighty is endorsed over the incapacitated. As Klak (1999) points out, this policy affiliate of globalisation, neo-liberalism has inborn into it, an uncompromising nature which facilitates the might of developed countries to the point where they are allowed to even limit the power and sway which international organisations such as the United Nations have. These institutions tend towards principles of fair-play and equity, and since these interests are diametrically opposed to those of the “principal architects”, their contributions are often downgraded for fear that they advance counter to globalisation.

Benn (2000), speaks of the North-South divide and describes the imbalance as one where glaring power asymmetries exist within globalisation. Girvan (2000) dovetails with this position and asserts that the South’s position as a cohesive force in international economic relations (G77, NAM) has been virtually in retreat since the tide turned against it in the run up to the WTO. Further fracturing has resulted through ‘regionalisation’ of the North-South negotiations within the framework of the EU-ACP, NAFTA and FTAA contexts; as well as by the rapid growth of East Asia followed by its equally dramatic collapse. Ideological diversity is seen to be yet another way in which cohesion has been undermined in South-South relations since there polarities exist as some are in favour of the neo-liberal policies and fixate on market liberalisation while others hold steady to market structure reform.

Globalisation and the Caribbean

The Caribbean as part of the Southern region has been impacted by globalisation in myriad ways. Girvan (1999) posits that the effect has been deleterious both in the past and in the present day. The initial impact he states was the decimation of indigenous populations, mercantilism, slavery, the plantation system and rivalry amongst colonial powers. Fragmentation and disintegration have become the legacy. In today’s Caribbean, which encompasses 28 independent states and other dependent territories, globalisation’s impact is on size, dependency and fragmentation among the nations of English, Spanish, French, Dutch and Danish heritage. The differences in production, structure and external associations lend itself to contradictory short-term interests among countries and marked divergences in economic policy. These lead to increased marginalisation, inter-state competition and regional disintegration.

As evidenced by the trend towards macro-economic policy convergence, the majority of Caribbean states have implemented market-oriented policy reforms of some type or the other within the last twenty years. Wide variations have resulted such as in exchange-rate policy where for example Guyana, Jamaica and Trinidad and Tobago have instituted floating rates and no capital controls whereas Barbados and the ECCB territories have maintained fixed rates with restrictions on capital movements. The Dominican Republic and Haiti have floated their exchange rates as well while Cuba has follows a two-tired system. Differences also exist in terms of the extent to which economies have been privatised and the nature of trade and financial liberalisation. Not surprisingly, Girvan (2000) points out that the countries with the most severe debt and adjustment crises in the 1980’s have advanced neo-liberal policy reforms.

With regards to external relations, almost all of the Caribbean territories are special within the developing world since they have previously enjoyed one-way preferential trading agreements with the EU under Lome and the US under the CBI. However, both these concessions have been undermined due to the multi-lateral, reciprocal trade liberalisation under the terms of the WTO Treaty. Additional further complicating the issue is the feature of ‘cross-compatibility’ between the terms of the FTAA and post-Lome arrangements.

On a positive note, in early 2000, the ACP-EU Lome negotiations went successfully in favour of Caribbean and for the rest of the ACP group. Part of the Convention’s tenets have been crafted to reflect a continued commitment to the part of the EU to allow for a ‘reasonably significant’ levels of development assistance as well as to supplement preferential arrangements to the region for the rest of the period of the new agreement.

Coming out of NAFTA of 1994, the producers of Canada and Mexico were allowed duty-free access to the US market. This policy feature ruined the preferential benefits, which the exporters from the Caribbean Basin had enjoyed prior under the CBI of 1983 and the 806/807 Customs provisions. Caribbean Basin governments have been acquiescing Washington, mind you, the same Washington of the ‘Washington Consensus’ fame who as Chomsky (1998), tells us is really a ‘de facto world government’ representing the interests of Trans-national Corporations, banks and investment firms in a ‘a new imperial age’. The request was for NAFTA Parity, that is, duty-free access to the US market equivalent to that of Mexico and Canada. However, in 1998 US administration launched new policy reforms, which now centres on the advancement of the Free Trade Agreement of the Americas (FTAA) by means of hemisphere-wide negotiations set to conclude in 2005. This new agreement focuses on liberalisation of trade in services and on the flow of investments as well as involving a whole set of regulatory effects which would affect how governments practise and negotiate both their national and international policies. 

Apart from tourism and offshore banking, Girvan (2000) does allude to other positives emanating from the globalisation project. Regional co-operation has been facilitated across linguistic barriers within the Caribbean Greater region. During the last decade in particular, there have been three significant examples of regional co-operation. Firstly, the Lome convention widened to incorporate Haiti and the Dominican Republic within the ACP group, and these territories joined together with its CARICOM neighbours to form Cariforum to foster trade and aid negotiations in the EU. Secondly, the Association of Caribbean States (ACS), which is a mechanism of co-operation in trade, transport and tourism, was instituted with the core of its members extending to all the independent states of the Greater Caribbean. Third, CARICOM expanded its boundaries to accommodate its first non-English speaking members, that of, Suriname and Haiti.

Alternative Scenarios

As the evidence proclaims, the Caribbean’s response to globalisation has involved some measure of the ‘walking on two legs’ strategy that (Girvan, 1999; 2000) alludes to. This policy objective involves the strengthening of the bargaining position and negotiating capacity of the region’s states in external economic relations. The efforts made with regards to regional co-operation sanction a move in that direction. Yet, there still is much more to be accomplished.

Many theorists posit their prescriptions for a reversal of the economic and financial imbalance existent in this global arena. Chomsky (1998), in particular asks the question, How did Europe and those who escaped its control succeed in developing? For Chomsky (1998), defeating the negatives of globalisation is a war that must be waged based on a re-visit to actions of the rebels of old. He answers his question by stating that Europe, East Asia and the United States all radically violated the approved free market doctrine and engaged in massive protectionist techniques, which afforded them monopoly status in their own right.

Secondly, Chomsky (1998) tells us, standard economic history recognises that state intervention has played a central role in economic growth. In fact, he asserts Japan rejected the ‘neo-liberal doctrines of their US advisers, choosing instead a form of industrial policy that assigned a predominant role to the state. Further he champions that “lessons from the East Asian Miracle” assert that the government took major responsibility for the promotion of economic growth, “abandoning the religion” that markets know best and intervening to enhance technology transfer, relative equality, education, and health, along with industrial planning and co-ordination. Added to this, Chomsky (1998) mentions that the UN 1996 Human Development Report stressed the ‘ “vital importance of government policies in spreading skills and meeting basic social needs as a springboard for sustained economic growth”’.

Ankie Hoogvelt in Globalisation and the Post-Colonial World chides the local ‘indigenous’ bourgeoisie for not rising to the challenge of arresting the local state and acting on behalf of them to at least experiment with community exchange programs, establishing working links between unmet wants and needs and unused resources. Instead she states, local leaders get caught up in assisting the internationalisation of domestic capital. However, she suggests that perhaps a first step in reversing the negative trend of globalisation is to re-visit the perception of money. Developing societies need to implement twin or parallel economies, in which the circulation of money is divorced from interest-bearing money, where strict controls can be enforced to regulate leakages.

Benn (2000) offers his treatise about globalisation and alerts us to the view that the negative effects of a global economic system created to facilitate the continued economic dominance of the developed countries could well produce global economic instability that would adversely affect the economic interests of all countries, inclusive of the developed world as well. Following on this, he makes a call for the international community to take immediate advances to remove the glaring power asymmetries inherent in the flawed process of globalisation. Benn  goes on to lay emphasis on the fact that the concept of globalisation itself is not where the problem lies but it is with the form that it takes, where there is an ever-increasing disparity between the developed and the developing world. Furthermore,  Benn  dovetails with Chomsky (1998) when he says that it is quite clear that the market on its own is unable to guarantee economic stability, and that some form of multilateral intervention by governments will become necessary to ensure that economic rationality takes place within the international economic system.

Both Clare Short and Norman Girvan name amongst their suggestions, strengthening the capacity of developing countries to negotiate and to implement agreements and to take advantage of the agreements reached. Girvan (2000) goes one step beyond that and calls for development of the productive and competitive capacities of regional producers to participate successfully in markets that will be increasingly hemispheric and global in scope. Comparatively speaking, Girvan (2000), Hoogvelt (1997), and Short (2000) focus on the ‘window of opportunity’ concept that is provided for the South to insert itself into the re-designed fabric of the international financial and monetary system. Further Girvan advances that the Caribbean is well poised to challenge the principles of universalistic neo-liberalism on which current international trade and economic negotiations are based, and seek recognition of the principles of selectivity, sequence, particularity, pluralism and learning. Every state has its own peculiarities and on that score, each ought to be given the leeway to establish its own policies surrounding industry, the public enterprise, the private sector, small scale and community-based enterprises. As an integrated group, CARICOM needs to address the completion of its Single Market and Economy in an attempt to strengthen its bargaining power both on the regional level and at the international. 

Conclusion

As the world’s polarisation exists presently between the North and the South, it therefore becomes crucial and critical for countries of the South of which the Caribbean is part, to arrest their development formulae to be more reflective of what has been posited by the prescriptions of the aforementioned theorists. Yet, the Caribbean response must be cautioned by the looking at the reality of what globalisation means. For Gray (1998), it is seen as a false dawn, to Sassen (1996), it is merely seen as a ‘constitutive processor of immigration’ to Chomsky (1998), simply a tool of the principal architects of the Washington Consensus. Added to that, Streeten (1997) gives us eleven important implications of globalisation and alerts us to navigate through this global project by ‘selecting the positive impulses of globalisation and encouraging them, while minimising the impact of the negative and cushioning the losers against them’. The task ahead seems daunting but as Girvan (2000) posits the counter-globalisation strategies hold the key to empowering the peoples of the South and by extension, the Caribbean to be proactive in their methodological applications rather than reactive to the clearly Janus-faced characteristics of globalisation.

References 

Benn, D. (2000). Globalisation and the North-South Divide: Power Asymmetries in       Contemporary International Economic Relations. In D. Benn, & K. Hall, (Eds.),       Globalisation: A Calculus of Inequality. Perspectives from the South (pp.). Kingston, Jamaica: Ian Randle Publishers.

Castells, M. (1996). The Information Age: Economy, Society and Culture. Vol.I: The    Rise of the Network Society. Cambridge MA: Blackwell Publishers.

Chomsky, N. (1998).  Neo-liberalism and Global Order: Doctrine and Reality. Retrieved    May, 20, 2002, from the Alternative Information and Development Centre Web Site: http://aidc.org.za/archives/chomsky_01.html

Chossudovsky, M. (1997). The Globalisation of Poverty: Impacts of IMF and World          Bank Reforms. Malaysia: Zed Books and Third World Network.

Gray, J. (1998). False Dawn: The Delusions of Global Capitalism. London:                         Granta Publications.

Girvan, N. (1998, January). Globalisation, Fragmentation and Integration: A Caribbean    Perspective. Paper presented at the International Meeting on Globalisation and        Development Problems, Havana, Cuba.

Girvan, N. (2000). Globalisation and Counter-Globalisation: The Caribbean in the         Context of the South in Globalisation. In D. Benn, & K. Hall, (Eds.), A Calculus of Inequality. Perspectives from the South. Kingston (pp.). Kingston, Jamaica: Ian Randle Publishers.

Hoogvelt, A. (1997). Globalisation and the Postcolonial World: The New Political Economy of Development. London: Macmillan.

Klak, T. (Ed.). (1998). Globalisation and Neo-liberalism The Caribbean Context.   Maryland: Rowman and Littlefield.

Pantin, D.  (2001, November). If the Caribbean (is) crying, what is the Caribbean   Economist doing:Revisiting Caribbean Economic Thought through a methodological lens. Paper presented at the Association of Caribbean Economists (ACS) VIIth Conference on Caribbean Economics, Knowledge and Power: Invitation to a Caribbean Brainstorm. Port-of-Spain, Trinidad and Tobago.

Sassen, S. (1998). Globalisation and its Discontents. Essays in the New Mobility of            People and Money. New York: New Press.

Shaikh, A. (2001, November). Economic Theory: At A Crossroads? Paper presented at        the Association of Caribbean Economists (ACS) VII’th Conference on Caribbean             Economics, Knowledge and Power: Invitation to a Caribbean Brainstorm. Port-of-            Spain, Trinidad and Tobago.

Short, C. (2000). Globalisation and Poverty. Speech to the assembly at The World Trade     Organisation Symposium. Seattle: Washington.

Streeten, P. (1997). Globalisation and Competitiveness: Implications for Development   Thinking and Practice. In L. Emmerij (Ed.). Economic and Social Development     into the XXI Century (pp.). Inter American Development Bank: Washington, D.C.

Reference citation:

Sylvester, M. (2002 Fourth Quarter ).  An examination of the Caribbean’s response to globalisation. In Focus Journal, Open Forum, Retrieved Month day, year, from http://www.escotet.org/infocus/forum/sylvester.htm