Globilisation, Trade and Financal Liberisation: Implication for the ...

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830 International Conference on Applied Ecomonics – ICOAE 2009 Table 1: Foreign Direct Investment (FDI) Overview, Selected Years FDI Flows 1990-2000 2003 2004 2005 2006 Nigeria Inward Outward Germany Inward Outward China Inward Outward United Kingdom Inward Outward France Inward Outward Singapore Inward Outward United states Inward Outward Japan Inward Outward 1477 302 29354 44323 30104 2195 40321 73378 22611 47659 9204 4757 109513 92010 3149 25409 2171 167 32369 5822 53505 2855 16778 62187 42498 53147 11664 2695 53146 129352 6324 28800 Kenya Inward 29 82 Outward 3 2 Source: UNCTAD, World Investment Report 2007 2127 261 -9195 14828 60630 5498 55963 91019 32560 56735 19828 8074 135826 257967 7816 30951 46 4 3403 200 35867 55515 72406 12261 193693 83708 81083 120971 15004 5034 101025 -27736 2775 45781 21 10 5445 228 42870 79427 69468 16130 139543 79457 81076 115037 24207 8626 175394 216614 -6506 50266 According to the United Nations, Foreign direct investment (FDI) in its classic definition is defined as a company from one country making a physical investment into building a factory in another country. Its definition can be extended to include investments made to acquire lasting interest in enterprises operating outside of the economy of the investor. Inward foreign direct investment is a particular form of inward investment when foreign capital is invested in local resources while outward foreign direct investment, sometimes called "direct investment abroad", is when local capital is invested in foreign resources. This type of investment plays an extraordinary and growing role in global business, in the other hand investment is a function of capital. According to table 1, Kenya and Nigeria are the least globalized, when it comes to outward foreign direct investment among countries listed while United States is the highest in terms of inward foreign direct investment. This goes a long way to buttress our stand on globalization that unrestricted free trade benefits those with more financial leverage (i.e. the rich) at the expense of the poor. Majority of the inward foreign direct investment into US and UK are from industrialized nations, who have enough legitimate capital to invest outside their country not from African countries where monies sent abroad are ill gotten and hidden in foreign banks. 51 24
International Conference on Applied Economics – ICOAE 2009 831 Table 2: Cross-Border Merger and Acquisition Overview, 1990-2006 Sales Purchases 1990-2000 2004 2005 2006 1990- 2000 2004 2005 2006 Nigeria - 10 43 28383 2 - - 21 United states 36118 81939 105560 172174 27256 110022 147551 171288 Europe 56362 185809 445126 451288 66085 176095 413405 483637 Africa 651 4595 10509 17569 1266 2718 15505 11208 Asia and 4757 24820 59450 72240 5531 20604 53601 79789 Oceania World 117889 380598 716302 880457 117889 380598 716302 880457 Source: UNCTAD, World Investment Report 2007 Table 2 also shows the level of globalization in terms of cross- boarder merger and acquisition. In 2006 Nigeria recorded only 21 cross- border mergers and acquisition while US recorded 171288, a difference of 171267. in 2006, Africa contributed only 1.3% of the world cross-boarder merger and acquisition while United States alone contributed 19.5%, which is more than the whole of Africa. See table 2. ANY JUSTIFICATION FOR GLOBALIZATION? Admired and academic literature has sufficiently addressed the scope and complexity of globalization, its assumptions, goals, strictures, and processes. Issues associated with human rights, labor conditions and compensation, environmental protection, national sovereignty, poverty, investment patterns and productivity are among the many concerns embedded in the broad theme of globalization. Analysts from a number of disciplines and political persuasions approach globalization from a variety of perspectives Garofalo (2002). Often they see globalization as either the inevitable next step in human progress or the evil free-trade juggernaut that threatens the future of most of humanity. What they tend to omit from these discussions, however, is an explicit concern for the underlying moral basis and justification for globalization and the particular role of public administrators across the planet. To the best of our knowledge and based on the facts so far made available in this paper, there is no justification for globalization and for international financial liberalization, if anything is to go by the antecedents of the western nations, i.e. unfavourable economic policies designed to further impoverish developing nations. One of the reasons why there is no justification is this; why did the western nations not consult the third world countries before coming out with the idea and the so-called ideals of globalization? If they did really mean well for the developing nations, why did they not consult them for a policy that would eventually affect them? Apart from that, why are the developed nations trying to force down this policy on the throats of the developing nations. Many developing countries (that have smelt the rat), have been threatened with sanctions or withdrawal of development aid. If the developed nations were sincere, then there would have been worldwide consultations mainly on non-consultation and the incessant threats by the developed countries, globalization and its financial liberalization is hereby rejected and hence, there is no justification for it. EFFECTS OF GLOBALIZATION Globalization has various aspects which affect the world in several different ways such as Industrial, Financial, Economic, Political, Informational, Cultural, Ecological, Social, Transportation, Technical etc. our interest is the effect on developing nations such as Nigeria. Financial globalization, in combination with good macroeconomic policies and good domestic governance, appears to be conducive to growth. For example, countries with good human capital and governance tend to do better at attracting foreign direct investment (FDI), which is especially conducive to growth. More specifically, research by IMF (2003) shows that corruption has a strong negative effect on FDI inflows. Similarly, transparency of government operations, which is another dimension of good governance, has a strong positive effect on investment inflows from international mutual funds. Emergence of worldwide production markets and broader access to a range of foreign products for consumers and companies. Particularly movement of material and goods between and within transnational corporations, and access to goods by wealthier nations and individuals at the expense of poorer nations and individuals who supply the labour. Globalization enables world governments to regulate the relationships among nations and guarantees the rights arising from social and economic responsibilities. Politically, the United States has enjoyed a position of power among the world powers; in part because of its strong and wealthy economy. With the influence of Globalization and with the help of The United States‘ own economy, China and Japan has experienced some
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