GLOBALIZATION OF RURAL ECONOMY BY LOCAL GOVERNANCE

Ankita BakshiArun C BabuIpsita SheePuja KumariMani Dhingra

GENESIS: One of the earliest known usages of the term as the noun was in 1930 in a publication entitled Towards New Education where it denoted a holistic view of human experience in education

Roland Robertson, professor of sociology at University of Aberdeen:

"the compression of the world and the intensification of the consciousness of the world as a whole."

Sociologists Martin Albrow and Elizabeth King :

“ All those processes by which the peoples of the world are incorporated into a single world society.

In The Consequences of Modernity, Anthony Giddens :

“ Globalization can thus be defined as the intensification of worldwide social relations which link distant localities in such a way that local happenings are shaped by events occurring many miles away and vice versa”

Swedish journalist Thomas Larsson, in his book The Race to the Top: The Real Story of Globalization, states that globalization:

“ is the process of world shrinkage, of distances getting shorter, things moving closer. It pertains to the increasing ease with which somebody on one side of the world can interact, to mutual benefit, with somebody on the other side of the world.”

“The worldwide movement toward economic, financial, trade, and communications integration.”

“Globalization implies the opening of local and nationalistic perspectives to a broader outlook of an interconnected and interdependent world with free transfer of capital, goods, and services across national frontiers.”

GLOBALIZATION Definitions

In 2000, the International Monetary Fund (IMF) identified four basic aspects of globalization: •Trade And Transactions

•Capital And Investment Movements

•Migration And Movement Of People

•Dissemination Of Knowledge

KEYWORDS•A Smaller World•Single World Society•Interconnectedness And Interdependence

IS THIS GLOBALIZATION ??

IS THIS GLOBALIZATION ?BAD

OR THESE ??GOOD

OR THIS ??GOOD/ BAD ?

GLOBALIZATION GOOD• Increased opportunities• Increased competition• Mutual benefit• Spread of technology• Spread of knowledge, culture &

education• World trade organization(144 members),

World economic forum

GLOBALIZATION BAD• Inequality• Spread of diseases• Environmental degradation• Outsourcing & child labour• Greenpeace, Friends of the Earth,

international aid organizations like Oxfam; third world government organizations like the G-77

HOW TO MEASURE GLOBALIZATION ?

The KOF Index of Globalization measures the three main dimensions of globalization:

•Economic•Social•Political

In addition to three indices measuring these dimensions, we calculate an overall index of globalization and sub-indices referring to :

•actual economic flows• economic restrictions•data on information flows•data on personal contact•data on cultural proximity

• Jet airplanes, cheap telephone service, email, computers, huge oceangoing vessels, instant capital flows, all these have made the world more interdependent than ever brought the world closer than ever

• But this is not a new concept. Eg. overland Silk Road that connected Asia, Africa and Europe is a good example of the transformative power of international exchange that existed in the "Old World"

RURAL ECONOMY Definition

• FACTORS DETERMINING RURAL ECONOMY

• MAINLY TALKING ABOUT ECONOMIC DEVELOPMENT V/S ECONOMIC GROWTH• Measures of economic growth- % increase in output• Measures of economic development- improvement of quality of life - health, education,

income, HDI , equality etc.

LOCAL GOVERANCE Definition

ROLE & RESPONSIBILITIES OF LOCAL GOVT.

•POWERS & CONTROL OF LOCAL GOVT.

•RELATION BETWEEN LOCAL GOVERNMENT AND “THE PEOPLE”

• Form of public administration generally existing as the lowest tier of administration within a given state

• Act within powers delegated to them by legislation or directives of the higher level of government

• Common names include state, province, region, department, county, prefecture, district, city, township, town, borough, parish, municipality, shire and village.

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PART 01 Globalization and Rural Economy

PART 02 Local Governance and Rural Economy

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For Globalization ArunAgainst Globalization Mani

Questions

01. Is Rural economy growth possible via Industrialization of agriculture?02. Is the economic and institutional infrastructures, and the structure of policies, are favourable for small enterprises to succeed in international competition?03. Does FDI really favors our farmers and rural communities?

For Local Governance PujaAgainst Local Governance Ankita

Questions

01.02.

WHY RURAL ECONOMY IS IMPORTANT?

“INDIA LIVES IN VILLAGES AND ITS TRUE SPIRITS LIVES IN RURAL AREA”

– MAHATAMA GANDHI

• The rural consumer market of India is expected to attain its target of USD 425 bn by 2010-2011, which can be translated as double of 2004-05 economy size, as per the report by CII-Technopark.

• Indian rural Retail Industry: As per the report by Associated Chambers of Commerce and Industry of India (ASSOCHAM), the Indian rural retail economy is worth USD 113 bn which can be translated as 40% of the total Indian retail market worth USD 280 bn.

• Indian rural Healthcare Industry: The Indian rural Healthcare market is expected to expand at a pace of 44% by 2015, totalling its worth to USD 8.8 bn, according to a survey carried out by McKinsey.

• Indian rural Services Industry: More than 60% of the services industry of the nation is based in the rural areas, as per the research conducted by National Sample Survey Organization (NSSO).

• Indian rural Telecommunication Industry: According to the research carried out by Confederation of Indian Industries (CII), the Indian rural Telecommunication Industry is expected to account for more than 65% of the entire telecom subscribers in India.

Rural Consumer Market

Indian Economy Growth Trend

all economic activities viz., household and non-household manufacturing, handicrafts, processing, repairs, construction, mining and quarrying, transport, trade, communication, community and personal services etc. in rural areas

WHAT ARE THE COMPONENTS OF RURAL ECONOMY?

THE MAJOR CHALLENGES TO RURAL ECONOMY?

o Migration and Rural Economy Shift?

o Rural economy in recession time?

o Government’s Attitude and stated intentions towards social investments?

01. IS RURAL ECONOMY GROWTH POSSIBLE VIA INDUSTRIALIZATION OF AGRICULTURE???

?

WHY WE NEED GLOBALIZATION OF RURAL ECONOMY

•Farmers small scale industries are extremely distressed and needs desperately some scope for marketing their produce with at least a reasonable margin which the Government till date has failed to provide.

•Organized retailing in the Indian rural sector is still in the stages of finding its feet. With change in new economic policy, the government is opening up to the idea of permitting foreign direct investment (FDI) in the Indian retail sector.

•Agricultural market of India is highly fragmented and unorganized. Farmers are still kept on tenterhook, not knowing how to manage their economy, except to play it by years.

FOR

LIMITATIONS OF PRESENT SETUP

1.LACK OF PROPER INFRASTRUCTURE

2.DOMINANCE OF INTERMEDIARIES IN THE VALUE CHAIN

3.IMPROPER PUBLIC DISTRIBUTION SYSTEM

PROFIT MARGIN

PADDY WHEAT POTATO OIL SEDDS

VEGETABLES

0 – 5 % 28 14 40 44 82

5 – 10 % 46 42 52 41 14

10 – 15% 26 44 08 15 04

CURRENT AGRICULTURAL MARKETING SCENARIO IN INDIA

Source: Author’s field study(2009-10)

Retail sector US Thailand China India

Organized 85 40 20 03

Un organized 15 60 80 97Source: P.Shivakumar and S Senthilkumar, 2011[6])

SOURCE: Directorate of Economics and Statistics

AGAINST

SOURCE: Report on agriculture by Governement

DARK SIDE•Globalization has lowered the per capita income of the farmers and increased the rural indebtedness.•The agricultural growth of 3.2 per cent observed from 1980 to 1997 decelerated to two per cent subsequently.•With more than half the population directly depending on this sector, low agricultural growth has serious implications for the inclusiveness of growth.

02. IS THE ECONOMIC AND INSTITUTIONAL INFRASTRUCTURES, AND THE STRUCTURE OF POLICIES, ARE FAVOURABLE FOR SMALL ENTERPRISES TO SUCCEED IN INTERNATIONAL COMPETITION???

FOCUS ON RURAL ENTREPRENEURSHIP ???

v v

Source: Paper on Non-Farm Occupation in Rural India by A. K. Mukhopadhyay, D. Gangopadhyay & Saswati Nayak 

Source: Paper on Non-Farm Occupation in Rural India by A. K. Mukhopadhyay, D. Gangopadhyay & Saswati Nayak 

Source: Paper on Non-Farm Occupation in Rural India by A. K. Mukhopadhyay, D. Gangopadhyay & Saswati Nayak 

Source: Paper on Non-Farm Occupation in Rural India by A. K. Mukhopadhyay, D. Gangopadhyay & Saswati Nayak 

LABOUR FORCE GROWTH AND EMPLOYMENT REQUIREMENTS

QUALITY OF EMPLOYMENT

03. DOES FDI REALLY FAVORS OUR FARMERS AND RURAL COMMUNITIES???

ROLE OF INTERNATIONAL COMPANIES IN COUNTRY'S

SOCIO ECONOMIC CONDITION:

HOW IT HELPS

• 100% FDI helps both the foreign retailer and the Indian companies through transfer of knowledge and technology.

• India will significantly flourish in terms of quality standards and consumer expectations.

• Flow of capital to rural economy will promote welfare of all sections of society.

• Allowing healthy FDI in the retail sector will not only lead to a substantial surge in the country’s GDP and overall economic development, but will also help in integrating the Indian agricultural retail market with that of the global retail market in addition to providing higher profit margin to Indian farmers which the unorganized sector has undoubtedly failed to provide.

• Globalization creates developing nations the opportunities to create wealth through export-led growth to expand international trade in goods and services and to gain access to new ideas and technologies.

• Developing countries generally have an abundance of unskilled labor relative to other factors of production and relative to more developed countries, freer trade should increase global demand for developing country exports embodying relatively large inputs of unskilled labor, thus increasing employment, raising wages and reducing poverty.

FOR

• The percentage of FDI in agricultural sector is only 4.8% and concentrated in the organized sector, in few states.

THE PRESENT IMPACTS

• The new economic reform, popularly known as LPG model aimed at making the Indian economy as fastest growing economy and globally competitive. The series of reforms undertaken with respect to industrial sector, trade as well as financial sector aimed at making the economy more efficient.

• At the present, we can say about the tale of two Indias: We have the best of times; we have the worst of times. We have everything by globalization, we have nothing by globalization.

• .In the inflow of FDI, India has surpassed South Korea to become the fourth largest recipient.

• The rate of growth of the Gross Domestic Product of India has been on the increase from 5.6 per cent during 1980-90 to seven per cent in the 1993-2001 period. The annual growth rate of the GDP was impressive at 7.5% (2003-04), 8.5% (2004-05), 9% (2005-06) and 9.2%(2006-07).

• India controls at the present 45% of the global outsourcing market with an estimated income of $ 50 bn.

• In respect of market capitalization (which takes into account the market value of a quoted company by multiplying its current share price by the number of shares in issue), India is in the fourth position with $ 894 bn after the US ($ 17,000 bn), Japan ($ 4800 bn) and China ($ 1000bn). India is expected to soon cross the trillion dollar mark.

Presenting the 1991-92 Budget, Finance Minister Manmohan Singh said: After four decades of planning for industrialization, we have now reached a stage where we should welcome, rather fear, foreign investment. Direct foreign investment would provide access to capital, technology and market.

AGAINST

Source: FDI Statistics of Department of Industrial Policy and Promotion (DIPP)

Source: FDI Statistics of Department of Industrial Policy and Promotion (DIPP)

Main aim: Developing village economy

Rural Econom

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Development

Local Governanc

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Globalization

2 Opposing But Equal Forces

Rural Econom

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Development

Local Governanc

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Globalization

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Main aim: Developing village economy

Rural Econom

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Development

Local Governanc

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Globalization

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Main aim: Developing village economy

Main aim: Developing village economy

Rural Econom

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Development

Local Governanc

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Globalization

2 Opposing But Equal Forces • We need both of them in equal measure for overall holistic development of the village

economy.• Government needs to work in tandem with the

GLOCALIZATION - “Globally Local “

Globalization Localization

“Glocalization”

Genesis: The term first appeared in the late 1980s in articles by Japanese economists in the Harvard Business Review.

• Idea of globalization being simultaneously sympathetic to the local considerations

• Integration of local markets into world capitalism

• Internalized globalization

• Currently it is mostly a business jargon

Global Local “Globalocal”

Genesis: Michael Grant blogged about GlobaLocal as an exercise in thinking out loud.

“Think Global, Act Local”

REFERENCES

• http://www.investopedia.com/articles/07/globalization.asp#axzz2NdKEdhj6• http://globalization.kof.ethz.ch/• Paper on FDI and its Impacts in India by Anirban Chakrabarty• Paper on EFFECT OF GLOBALIZATION ON RURAL ENTREPRENEURSHIP IN INDIA by Kishor

Choudhary; Dept. of Commerce, N.S.B.College, Nanded, Dist. Nanded. (M.S.)• Globalisation of the Economy: A disaster for India and other developing countries by Acharya

Krtashivananda Avadhuta• Paper on GLOBALIZATION AND RURAL DEVELOPMENT by G. Edward Schuh• Paper on Social Issues & Rural Information Interest Group; Impact of Globalization on Rural

Communities: Social & Economic Impacts by Margaret Merrill

THANK YOU