Globalisation and the South: Some Critical Issues
by Martin Khor

No. of pages: 110
Year Published: 2000
ISBN: 983-9747-46-0

Malaysia: RM15
Third World: US$9
Others: US$12

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This book examines the implications of some of the main features of the globalisation process for the developing countries. It also makes several proposals for developing countries in considering national-level policies to face the globalisation challenge, as well as coordination among developing countries in facing negotiations or making proposals at the international level.

While there are many aspects to globalisation, among the most important is the recent globalisation of national policy-making not only through the normal spread of orthodox theories but more importantly through international agencies, such as the Bretton Woods institutions and the World Trade Organisation, through which the North has leverage over the South.

The book examines the liberalisation of trade, finance and investment as well as policy implications and choices in each of these categories. It is argued that, while there are some advantages to an open regime for developing countries, the impact of openness depends on a country's level of development and preparedness to take on the challenges of subjecting local production units to foreign competition, of being able to break into world markets, and of weathering the volatility and fickleness of private capital flows and their propensity for leading receipient countries into a debt trap.

It is therefore imperative that developing countries be given the possibility to have an adequate range of options, of when, how and to what extent to open their economies. For them to maintain the choice of flexibility in policy options, developing countries have to collectively press their case in international forums and institutions where decisions on the global economy are made. Failure in doing so would mean that developing countries will continue to be subjected to international and national policies that are unsuitable to their development, and that more than ever close off their development prospects and options.

About the author:

Martin Khor is the Director of Third World Network, a network of several NGOs in different parts of the developing world. An economist trained in Cambridge University who has lectured in economics in the Science University of Malaysia, he is the author of several books and articles on trade, development and environment issues.

He is a board member of the South Centre and of the International Forum on Globalisation. He was also formerly Vice Chairman of the UN Commissio on Human Rights Expert Group on the Right to Development and a consultant in several research studies under the United Nations.


I. The Globalisation Process
A. The liberalisation of trade, finance and investment
B. The globalisation of policy-making
C. Rising inequality and the effects of globalisation
D. Weaknesses of the South in facing the globalisation challenge

II. Key Issues in Trade
A. General
B. Commodity prices and terms of trade
C. Trade liberalisation
D. The WTO and the multilateral trading system
1. General
2. Lack of realisation of anticipated benefits for developing countries from the Uruguay Round
3. "Implementation problems" faced by developing countries from the Uruguay Round
4. Pressure for new issues in WTO
5. General proposals

III. Key Issues in Finance
A. Financial liberalisation
B. Volatility and negative effects of short-term capital flows
C. Inappropriate response to debt crises and financial crises
D. Lack of mechanism for debtor-creditor burden sharing
E. Lack of transparency and regulation of international financial markets
F. Proposals
1. International-level proposals
2. National-level proposals

IV. Issues in Investment Liberalisation
A. Introduction
B. The benefits and risks of foreign investment
C. Regulation of and policy options on FDI
1. Regulations on entry and establishment
2. Policies favouring local firms and domestic economy
3. Measures to manage the balance of payments
D. Critique of attempts at international investment agreements
E. An alternative approach
F. Proposals for appropriate management of foreign investment
1. Summary of conclusions
2. National-level policies and actions
3. International-level policies and actions

V. General Conclusions and Proposals
A. Balancing opportunities and problems resulting from globalisation
B. The need for South-South policy coordination among developing countries
C. The need for appropriate and democratic global governance
D. Rebalancing the roles of State and market
E. The search for appropriate development strategies