LOCALIZATION: A NEW ECONOMIC PARADIGM FOR NIGERIA(BY REV DELE) From every indication with the current happenings in the international system, the force of Globalization has come to stay with its attendant socio-economic woes especially on the Third-World countries. In the African continent, Nigeria is a major victim of this uneven and diabolical economy system called Globalization. It is high-time the political and economic policy makers convergently agree together to tame this monster. Localization or Domestication of Globalization is the only feasible, logical and effective alternative to checking the negative socio-economic effect of Globalization. Nigeria is a worst hit victim of Globalization because of her mono-cultural export economy, inability to attract increased foreign investments and huge foreign debts. The problem of mismanagement according to Schneider and Enste (2002) has also weakened the Third-World Countries’ capacity to successfully compete globally. International mobility of capital, resulting from advances in communication technology, liberalization of financial markets, deregulations of domestic markets privatization and the retreat of the state from direct economic management which are features of the current global economic order have not yielded any positive economic dividend for the developing countries. Zuma (2003) argues that the unequal distribution of political, economic and military power has meant that whilst Globalization created immense opportunity for some, it has produced two contrasting global villages: one which is indeed prosperous, rich and democratic for a few who live in it and the other in which the majority are poor, alienated and marginalized with hardly any voice to determine their own destiny. The uneven global economic order is seen in the way the developed country tactically edged out the developing country by protecting their own market particularly in sectors in which developing countries have a recognized comparative advantage like textile, clothing and foot ware. Agriculture is also heavily protected especially in the form of subsidies, driving world prices down and hurting farmers in developing countries the more. As O’ Rourke (2002:39-57), puts it while responsibility for global economic reform is ceded to the International Monetary Fund and the International Bank for Reconstruction and Development (IMF/World Bank), the policies of these agents of globalization, controlled by the highly industrialized countries, have failed to narrow the gap between the richest 20 per cent of humanity and the poorest 20 per cent, which doubled between 1950 and 2000. Free trade and market forces, canvassed by globalization, as Erb-Leoncarallo (2000) opines are not closing this gap. Instead, they have contributed to widening it because after the Tokyo and Uruguay Rounds of trade liberalization in the 1980s and 1990s, the developing countries have ended up with 3 percent more trade deficits and 2 percent less economic growth in 2000 in comparison with the 1970s UNCTAD (1999) says in this respect, the economic fortunes of developing countries are hostage to the forces of globalization. The East Asian financial crisis of 1997/1998 testifies to this assertion as the contagion, which followed affected the growth of many of them. Obadan (2001) is of the opinion that Globalization is a very uneven process with unequal distribution of its benefits and losses. This imbalance leads to polarization between the developed countries that gain, and the developing countries that lose out. In this regard, the place of Nigeria in the globalization agenda requires some in-depth study. Obadan (1998:1-38) To begin with, Nigeria is economically weak due to inadequate domestic economic capacity and social infrastructure needed to boost the country’s productivity, growth and competitiveness. Secondly, the economy is made weaker by monocultural dependency and unfavorable terms of trade in its export trade as well as excruciating debt and debt service burdens. And thirdly, before 1986, economic regimes were regulated and the country pursued expansionary fiscal and monetary policies in its development efforts. These problems were exacerbated by political instability and corruption. As a result, investment choices were distorted, which eroded the confidence especially of foreign investors. Following the globalization trend, Nigeria has been liberalizing its economy. But the real sectors have had to function under conditions of unstable macroeconomic management, inadequate technology and credit facilities. These have proved to be an obstacle to strengthening the productive base, especially of agriculture and industry, in order to make them export-oriented. The IMF/World Bank and their Western collaborators are satisfied with the peripheral role of Nigeria as an exporter of raw materials, especially crude petroleum, to and importer of manufactured goods from the West. In this connection, Stewart (2002:45) maintains that the capitalist need to sustain the import capacity of peripheral economies in order to facilitate continued production and maximize profits at the center explains why in the periphery countries raw material exports are encouraged. In that event foreign exchange receipts are low; this makes external loan contraction inevitable for social and economic development. Nigeria is no exception to this rule. But then, contracted debts due for repayment, which the country cannot actually pay, are only being reprogrammed, not written off because their continued servicing helps to maintain financial stability at the center. But globalization can be of immense benefit to Nigeria and so could help the country’s development. The enabling framework would include measures to ensure the entry of Nigeria’s non-oil exports into the core markets without discrimination. In this regard, the diversification of domestic production is imperative. The unsustainable debt, which weighs the country down economically also needs to be tackled with faster and deeper debt relief by developed nations, while expanded development cooperation with them would strengthen the productive base of the Nigerian economy. Globalization and free trade are under unprecedented attack as its adverse effects on the majority and the environment becomes ever clearer. Now is the time for a comprehensive and radical alternative to enter the public arena. This must be based on a new direction for the global economic system. It must reduce inequality, improve the basic provision of needs, and adequately protect the environment. Its end goal must be to ensure aid and increase the democratic control and involvement of citizens in the rebuilding of sustainable local economies. This process is Localization- a set of interrelated and self-reinforcing policies that actively discriminate in favour of the local. It provides a political and economic framework for people, community groups and businesses to re-diversify their own local economies. It has the potential to increase community cohesion, reduce poverty and inequality, improve livelihoods, social provision and environmental protection and provide the all important sense of security. It is the very antithesis or the reconfiguration of globalization, which emphasizes a beggar-your-neighbor reduction of controls on trade and contorts all economies to make international competitiveness their major goal. Localization involves a ‘better your neighbor’ supportive internationalism where the flow of ideas, technologies, information, culture, money and goods has as its end goal the protection and rebuilding of local economies world-wide. Its emphasis is not on competition for the cheapest, but on cooperation for the best. Globalization- a world-wide reality based on unrealistic theories of Trade liberalization built on the flawed theory of comparative advantage, the unchallenged diktat of being internationally competitive, and the illusionary promise of growth generating future wealth for all. Comparative advantage, ‘do what you do best, and trade for the rest’ was an ivory tower theory that ignored the reality of the differences in power between traders and producers as well as those between nations. It was also originally developed against a backdrop of the certainty that money would remain local. Despite these fundamental flaws and the theories irrelevance to today’s realities, the World Trade Organization is the global cheerleader and enforcer of comparative advantage. Hines C. (2012), ‘Capital advantage’ holds that the free flow of money internationally ensures its efficient and rational use, allow financial investors to diversify risks globally and in the process ensure that governments run their economy to the benefit of such investors. The reality is the opposite, with investors exhibiting a herd instinct fuelled by ‘the trend is my friend’ mentality. To woo, footloose capital countries try to provide the low inflation, low tax, low government expenditure policies investors deem ‘prudent’. This means giving up power over major domestic control mechanisms like interest rates and government borrowing and risking reduced demand levels through lower domestic expansion. Recent economic crises have highlighted the adverse effects of global money flows and the Multilateral Agreement on Investment designed to speed this process up was defeated by international opposition. The Advantages of Shifting from Globalization to Localization are many. The international resistance to the adverse effects of globalization is on the rise, providing an opening to pursue the case for localization. The parameters of the ‘local,’ although predominantly the nation state, depend to some extent on the goods and services being considered. These range from the sub national for food stuffs, to the geographic region for airplanes. Localization requires widespread involvement, it will therefore be something done by people, not something done to them. The huge potential of localization includes devolved power, control of the economy, increased environmental and social protection and benign technological developments. Global financial instability makes such a radical departure evermore timely. Localization can foster and build sustainable local communities to help rebuild local economies everywhere on a permanent and inclusive basis. It allows the achievement of social cohesion and economic renewal particularly through investment in labor intensive, infrastructural renewal and face to face caring. Local businesses have a central role and much to gain. Globalization on the other hand poses a triple threat to sustainable local communities. Its fetishism of international competitiveness lead to public expenditure curbs which constrains community renewal; to the opening up of government purchasing to foreign interests, thus cutting local jobs; and the shifting of agriculture away from smaller scale farming for local markets to agribusiness methods to feed the wealthy globally. The first step to achieving localization is a ‘mind-wrench’ away from passive acceptance that globalization is as inevitable as gravity and towards a set of self- reinforcing measures that will bring about a ‘Protect the Local, Globally’ end goal for the international economic system. Protective safeguards such as import and export controls, quotas, subsidies etc will need to be introduced over a clearly agreed transition period. These will not be introduced as old style protectionism which seeks to protect a home market whilst expecting others to remain open. Any residual long distance global trade will instead be geared to funding the diversification of local economies. Such a dramatic, radical change will need to be introduced at first at the level of regional groupings of countries, especially the most powerful - Europe and/or North America. O’Rourke (2002:39-67) opines that industry should be localized by ‘site here to sell here’ policies, to ensure localized production. Threats by TNCs to relocate thus become less plausible, as the market is lost to existing, or government encouraged, new local competitors. Once TNCs are thus grounded then their domestic activities and the levels of taxation paid are back under democratic control. Campaigners demands for social, labor and environmental standards also become feasible. Adequate company taxation can help compensate the poor for any increases in prices. More seriously is also the need for Localizing Money. The disastrous effects of the unfettered international flow of money have led to global calls for some controls to be reintroduced. What is required is a ‘regrounding’ of money to remain predominantly in the locality or country of origin to fund the rebuilding of diverse, sustainable local economies. Measures include controls on capital flows, Tobin-type taxes, control of tax evasion, including off-shore banking centers, and the rejuvenation of locally orientated banks, credit unions, etc. Public and private flows of money to other countries must also be directed to serve to strengthen the local economies of the countries concerned. Also local competition policies will ensure that high quality goods and services are provided by ensuring a more level, but more local, playing field. Free of the ‘race to the bottom’ competitive pressures from foreign competition, then business can be carried out within the framework of ever improving labor, social and environmental regulations, enhanced by the best ideas and technologies from around the world. Government competition policy will cover the structure and market share of businesses, plus regulate the behavior of firms such as an ‘open books’ policies to tackle tax avoidance. There must also be strategic taxes for localization. To pay for the transition to localization and to increasingly improve the environment the majority of taxation will come from gradually increasing resource taxes, such as on non-renewable energy use and pollution. To promote as Oppenheimer (2005) opines a more equitable society the increased barriers to imports, and the removal of the option of relocation or the availability of foreign tax havens, will make it possible for companies and individuals to be taxed according to their wealth and income, on their spending through value added tax and on their land. Part of this taxation will be used to compensate the poorer sections of society from any resulting price rises and by shifting taxes away from employment to encourage more jobs. On the political front, there is the need for Democratic Localism. A diverse local economy requires the active democracy of everyday involvement in producing the maximum range of goods and services close to the point of consumption. To ensure the broadest distribution of the ensuing benefits will simultaneously require wider, political, democratic and economic control at a local level. A citizen’s income will allow involvement in the economy as a matter of right. Political funding will be strictly constrained and power will pass from the corporations to the citizens. This will involve the encouragement of maximum participation in defining priorities and planning local economic, social and environmental initiatives. What we see in the Nigeria political equation of today is the opposite of this. Socio-economic policies are planned for the community without engaging the community in the process of planning. This will require a balance of involvement of the state, community networks and organizations and citizen’s movements. On the international policy making front, there is the need for Trade and Aid for Localization. The GATT rules at present administered by the World Trade Organization should be revised fundamentally to become a General Agreement for Sustainable Trade (GAST), administered by a democratic World Localization Organization (WLO). Their remit would be to ensure that regional trade and international aid policies and flows, information and technological transfer, as well as the residual international investment and trade should incorporate rules geared to the building up of sustainable local economies. The goal should be to foster maximum employment through a substantial increase in sustainable, regional self-reliance. The primary goal of WTO law is to limit government law-making and regulatory authority that is deemed an impediment to trade. Thus national control is shifted from domestic priorities to facilitating the goals of trade liberalization. Activists must consider whether in order to achieve their issue-specific goals they should have an equally all challenging, overarching demand to overcome the process of globalization, that is the major roadblock to their aims. They should evaluate whether it is only through the roadway of something like the Protect the Local, Globally form of localization, that their priorities and those of their supporters can be met. According to Collins (2012), in this way they will constantly contribute to the rejection of this dominant paradigm and its replacement by the localist one, which could enable these activists to really experience success in their chosen areas. The current widespread resistance to globalization can be built upon to help fashion a viable localist alternative. There are already countless people and groups strengthening their local economies from the grass roots up. The greatest spur to consideration of such radical local alternatives at the governmental level will be the need to respond to global economic upheavals and the deflation, the job losses and inadequate consumer demand that will come in its wake. Equally crucial in shaping a different localist imperative amongst politicians will be the pressure that the politically active can bring to bear. This must shift from fighting separate issue specific aspects of globalization to realizing that their individual successes can only be secured as part of an overarching change to localization, but in an internationally supportive manner. The whole idea of localization of globalization is in short to protect the Local, Globally. Lasting is the need for localizing food security. Globalization is increasing control of the world’s food system by multinational companies and big farmers. There is a backlash from both consumers and farmers to this process that provides less safe food, environmental threats and rural impoverishment. Localization can reverse this trend. Food security both for rich and poor countries requires an increase in the level of self-sufficiency. Also needed is a dramatic reduction in international trade in foodstuffs until the commerce left becomes a useful adjunct to increased self-reliance. This should be governed by fair trade rules benefiting small farmers and food producers, animal welfare and the environment. Land reform and the rebuilding of rural economies is an integral part of such food localization.
Posted on: Thu, 19 Sep 2013 22:32:18 +0000
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