Globalization and Economic Governance

With globalization there is competitiveness between excessive market blocs and stronger collaboration and competition in the appearance of new county blocs that are economic, social and political in nature. When we speak of economic globalization, it refers to the increase in the economic interdependency of domestic economies over the world which increases the movement of trade in goods and services, flows of capital and technology across borders. It is important that countries must benefit from the interdependency and to mitigate the risks such as systematic risk. Globalization can occur as either a positive or negative phenomenon. With globalization, countries mostly focus on regional or world markets and not on the local markets any more. Globalization must help people, and must not only be implemented for profit.
The effects of the global crisis did not exclude South Africa entirely as Ms G. Marcus mentioned, but South Africa did not experience a banking crisis as other countries did, for example Europe. Moody’s caused a downgrade in South Africa where debts of the country was increased and caused economic tension to increase which is a problem for the economy. We must now ask the following questions that are raised: Are we on the right way for globalization? Do we need to govern globalization and how do we govern globalization? How do we guide the risk elements?
There is a great disengagement that exists between the decision makers (the global bodies) and the government (on national level). The International Monetary Fund (IMF), the World Bank (WB) and the World Trade Organisation (WTO) are main pillars (or role players) of the modern global economic governance. The question that we now ask is if the main role players must be replaced, re-invented or must we just create a completely different system. Not everyone is represented by the top role players, more people must be represented and have a say to prevent a top-down system.
Globalization forces the government to expand markets across borders and forces markets to collaborate. Capitalism is expanding and causes tension on the government which is good. Should China stop exporting cheaper clothes to the South African market? Cheaper clothes are a great advantage for the poor, but South African markets cannot compete with the Chinese prices, that led to no jobs in the textile industry. This will come to the decision of how the regulators regulate, which will affect the consumer at the end in terms of costs that need to be paid.
To prevent another financial crisis the government needs to know how to support markets by creating a safety net for them. Do we need more or better regulation? The three main pillars as mentioned earlier, has to put in a much greater effort to can implement more regulation and so that everyone can be suited equally (developed and developing world). They need to monitor the regulations, otherwise the regulations is not worth it.
Another question should be asked: Should the regulations be more tailor-made, generic or county specific? When standardising the rules and with the disclosure of regulations, decisions must be shortened, because the time it takes to get one regulation running is too long and when the regulation is in order there is a new problem arising. Each country must benefit from globalization through the regulations implemented. The people from the top must represent the people at the bottom as well, so that there can be more democracy to decrease the risk of dominance of the party. This can also put more accountability back into the system.
The government can help through more intervention in the industrial policy. The government must support markets where they can invest in infrastructure and education to allow firms to become more productive to adopt more efficient technologies and hiring more efficient workers. Avoid a top-down system. Let the people be more creative and innovative to create a better environment for others and not only for themselves. A more enabling capacity must be created, a system where others can benefit from.

by I. Roodt


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