SW23A: Introduction to Social Policy Development Globalisation and Social Policy

1. SW23A: Introduction to Social Policy DevelopmentGlobalisation and Social Policy

2. Objectives • Explaining the current developments in Caribbean social policy • Delimiting the paradigmatic shifts • Analysing the impact of globalisation and community participation in social policy • Examining the needs of vulnerable groups including the disabled and children

3. Paradigms • Traditional (Prevailing) • Latent / Emergent – arising from economic pressures due to the introduction of Structural Adjustment and Stabilization programs of 1980s • Perhaps a mixture of the best features of the two might achieve greatest efficiency & efficacy

4. Paradigms • Important Dimensions to be Considered When Comparing both Models • Institutional Forms • Decision-making process • Financing • Objective • Criterion re priorities for expanding system • Beneficiary population • Approach • Indicator used

5. Institutional Form

6. Institutional Form

7. Centralization • Centralization can lead to inefficient resource allocation, favouring of dominant/well-organised and vocal groups located in capital or main towns, inhibited participation by citizens; cost implications for service users (members of the public travel time etc.) and for service providers (HSOs must transport goods to various locations if bulk buying is used). • Susceptible to corruption.

8. Advantages of Decentralization • Advantages of Decentralization • - greater social consensus – local participation benefits • - greater control of bureaucracy • - smaller scales could mean greater opportunity for cost-benefit analysis • - paves the way for widespread development of system-wide capabilities.

9. Disadvantages of Decentralisation • Disadvantages of Decentralisation • - local autonomy in providing social services could lead to some unacceptable variations in the standards of services delivered. • - increased research (offset by increased relevance of policy and programme), monitoring and evaluation costs.

10. Decision-making process

11. Financing – Source of Resources

12. Financing – Resource Allocation

13. Objective – Universality?

14. Criterion re Priorities for expanding system

15. Criterion re Priorities for expanding system

16. Beneficiary Population

17. Approach

18. Indicator Used

19. Implications • Under the traditional paradigm, there is prevailing view that more resources available means more persons were helped or that the system lowered the number of poor persons. • Necessary to disaggregate social expenditure and analyse the real beneficiaries. • Cost-impact ratio is recommended in Emergent paradigm - optimization of resource use.

20. Globalisation

21. What is Globalisation? • Globalisation can be viewed as the increased international economic interdependence and interconnectedness of world markets and societies facilitated by rapid advances in communication and transportation technologies.

22. What is Globalisation? • Often referred to as creation of the “global village” • Not a new phenomenon, globalisation has occurred in waves. The first wave1800s to 1930s (colonial period). • The volume of the flow of goods and capital in the 1800s was only exceeded by the wave of globalisation of the late 1970s

23. Distinctive Features of the Latest Wave of Globalisation (mid 1970s --) • Change from nationally organised economic activity/growth to globally organised economic activity e.g. World car vs. German car. (See article on Red Stripe on OURVLE) • The rise of huge transnational corporations (TNCs) some of which are larger than individual states. • TNCs which dominate markets can exert great pressure on governments .

24. Distinctive Features of the Latest Wave of Globalisation (mid 1970s --) • Transnational corporations (TNCs) also called multinational companies. • A transnational, or multinational, corporation has its headquarters in one country and operates wholly or partially owned subsidiaries in one or more other countries.

25. Distinctive Features of the Latest Wave of Globalisation (mid 1970s --) • The subsidiaries report to the central headquarters. • The growth in the number and size of transnational companies since the 1950s has generated controversy because of their economic and political power and the mobility and complexity of their operations.

26. Distinctive Features of the Latest Wave of Globalisation (mid 1970s --) • Some critics argue that transnational corporations exhibit no loyalty to the countries in which they are incorporated but act solely in their own best interests.

27. Distinctive Features of the Latest Wave of Globalisation (mid 1970s --) • Growth of regional trading blocs, NAFTA (1994), EU (1993), CSM (2006), Mercusor (1991), Andean Pact (1969) • Underlying philosophy – Economic Neo-liberalism, open markets and free trade. (Ferguson, Lavalette et al, 2002). • Asian tigers held up as examples of export-driven success stories, but McMichael, (2004) points out that these countries, Singapore, Taiwan, Hong Kong and South Korea began as centrally planned not liberalised economies.

28. Distinctive Features of the Latest Wave of Globalisation (mid 1970s --) • Growth of regional trading blocs, Nafta, EU, CSM, Mercusor, Andean Pact • Mercosur was established in 1991 and encompasses Argentina, Brazil, Paraguay and Uruguay. Venezuela was accepted as a member in 2006 and is currently in the process of integrating into Mercosur.

29. Distinctive Features of the Latest Wave of Globalisation (mid 1970s --) • The Andean Pact – The Andean Community is the regional integration in the Andean countries consisting of Bolivia, Colombia, Ecuador, and Peru, along with some associate and observer countries also located in Latin America that was started in 1969 with the signature of the Cartagena Agreement creating the Andean Group with the objective of creating a customs union and a common market.

30. Distinctive Features of the Latest Wave of Globalisation (mid 1970s --) • In 1979 the Andean Council of Foreign Ministers was established at the Andean Tribunal and the Andean Parliament in Bogotá. • In 1985 the Andean Parliament agreed to the establishment of the Andean University Simon Bolivar located in Sucre, former capital Bolivia. • In 1993 it established the free trade area; 1995 the Andean countries adopted a Common External Tariff.

31. Distinctive Features of the Latest Wave of Globalisation (mid 1970s --) • Structural adjustment programmes (SAPs) opened economies in the South and accelerated the process of globalisation for those countries. • Underlying belief of globalisation is that increased trade will benefit all nations - “a rising tide lifts all boats”. Some economies were not able to withstand foreign competition associated with open markets, e.g. local manufacturing and agriculture in Jamaica. • Free trade, is not necessarily fair trade.

32. Features of Globalisation • Spread of US cultural influence and value systems via internet and cable TV. • Increased culture of individualism (each man for himself approach) seen in Caribbean nations, undermines collectivism and community spirit.

33. Main Actors • GATT – General Agreement on Tariffs and Trade Created in 1947 after WWII. Aim was to reduce tariff barriers, quotas and trade subsidies • World Trade Organisation established Jan 1995- product of the GATT Uruguay Round. WTO is the major institution in process of globalization. WTO Trade rules are enforceable, it can punish member states for violation. • WTO has power to regulate all aspects of trade - agriculture, investment, intellectual property, services Many groups worldwide oppose the WTO.

34. Main Actors • WTO rules based on theory of comparative advantage - Specialize in production of goods which can be produced efficiently and import other goods. • Small island developing states (SIDS) lack economies of scale, and adequate subsidy protection to produce most goods more efficiently than other countries.

35. Main Events Affecting Caribbean • NAFTA – 1994 • Led to demise of Jamaica’s free-zone garment sector • Factories relocated to Mexico • Job losses for low-skilled women • CARICOM – CSM • Winners and losers, Jamaica is a net importer from CARICOM, imports far exceed exports • Trinidad emerged as dominant economic power, largely owing to its subsidized energy. OECS has formed economic union with T’dad, planning to move to political union.

36. Main Events Affecting Caribbean • WTO 1997 ruling against EU LOME Banana regime – led by Bill Clinton on behalf of Dole and Chiquita. Preferential tariff treatment by EU deemed in violation of WTO rules • Major economic fall-out in the Windward islands, Grenada, St. Lucia, St. Vincent and Grenadines, Dominica • Increase in poverty in Windward islands • Economic collapse of Dominica led to IMF agreement • Jamaica ended its banana exports to EU in 2008 partially due to lower earnings and repeated hurricane damage. Major unemployment fallout in banana parishes.

37. Main Events Affecting Caribbean • WTO 2004 ruling against EU LOME sugar protocol – led by Brazil, Thailand and Australia • EU forced to phase out preferential arrangement with ACP sugar producers which included duty-free access for agreed quantities of sugar and a guaranteed price approximating that applied for European beet farmers • Agreement phased out between 2005-2009

38. Main Events Affecting Caribbean • Trinidad and St. Kitts ended sugar production • Jamaica cut sugar production, made some workers redundant, divested factories • B’dos producing more high-end speciality sugars for hotel/tourist market. • Moving to diversify into ethanol production

39. Main Events Affecting Caribbean • Economic Partnership Agreement (EPA) – Oct 2008 with EU • Based on reciprocity, not the one-way preferential access of LOME • Some items excluded and delayed phase-in for others • Wide-ranging, includes trade in services, government procurement, investment rules which were not part of LOME • May influence negotiation with Canada and US who intend to negotiate FTAs with Jamaica.

40. Globalisation Opportunities • Increased availability of a wider array of technologies, goods and services. • Increased competition leading to lower costs in some sectors, e.g. cellular competition between Lime, Digicel and Claro

41. Globalisation Opportunities • Increases access to investment capital, but most Foreign Direct Investment (FDI) has gone to developed, not developing nations. • Many Third World countries lack the capacity to absorb FDI, i,e. good physical infrastructure, highly skilled workforce etc. – Note Intel’s Costa Rican example.

42. Globalisation Opportunities • Third World nations are more dependent on FDI to generate growth than First World nations with FDI accounting for a larger share of their GDP (15% vs 9% for First World countries (Hann, 2007). • Globalisation has increased economic growth of some countries, but not at rates faster than in previous decades (Hann, 2007)

43. Challenges/Concerns • “Race to the bottom” –resulting from intense competition among states to attract FDI from TNCs. Countries offer lower wages for labour, lower corporate tax rates, (in Jamaica gov’t offers 100% tax holidays to some investors, e.g. those who build hotels). • Also sees less enforcement of occupational health and safety standards, environmental protections also union busting or suppression, e.g. collapse of buildings and injury/death of workers at Bahia Principe hotel site in St. Ann due to lack of adequate safety measures. Also hotel site was deemed an environmentally protected area but building permit was still issued by the GOJ.

44. Challenges/Concerns • Race to the bottom - Use of Child labour especially in Asian countries • Global Capital flows liberalised but labour has seen increased controls/ immigration laws. • Movement of capital causes labour dislocations E.g. NAFTA led to closure of factories and relocation of jobs to Mexico, Jamaican workers could not relocate to keep those jobs.

45. Challenges/Concerns • Has increased international inequality between and within nations, as some sectors collapse while others emerge, especially in Africa, Caribbean and Latin America (McMichael, 2004, Hann, 2007) • Increase in poverty among marginalised groups, e.g. ethnic minorities (Hann, 2007) and the low-skilled

46. Challenges/Concerns • Reduction of government tax revenue e.g. from lower import tariffs/duties. • These duties are often not used to protect competing local products, e.g. car import duty, but to generate revenue to fund social services. • TNCs often avoid paying corporate tax locally by locating global headquarters in tax havens e.g. Amazon and Apple.

47. Challenges/Concerns • Trade liberalisation pressures from WTO/ IMF/WB led to increased agricultural imports and collapse of local agriculture in the South - increased rural poverty. • New global movement focused on food sovereignty has emerged to revitalise local farming in Southern countries (McMichael, 2004). In Ja this is seen in the “grow what we eat and eat what we grow campaign”.

48. Challenges/Concerns - Labour • Increased long-term unemployment due to relocation of jobs to cheaper manufacturing sites or closure of industries like banana and free-zones • Job-less and job-loss growth – economic growth often associated with job losses as global competition forces firms to increase use of labour-replacing technology to increase “efficiency”. • NB: Zuboff’s Catch-22

49. Challenges/Concerns - Labour • Increased migration of skilled workers, (brain drain in Jamaica) and illegal migration of unskilled workers. • Huge exploitation of undocumented workers worldwide. Not only of Caribbean, African and Latino workers in US/EU but also Haitians exploited in Dom Republic and Jamaica. Many often work in near slavery conditions.

50. Challenges/Concerns - Labour • Informalisation and Casualisation of Labour –firms move to temporary or part-time contracts with few or no benefits, limited union protection, (McMichael, 2004) • Concepts of workplace being a life-time employer with full-time work, pensions and social and legal protection, perks and benefits is fast becoming extinct.