case studies on globalization & local development stefania scuderi - italy roney parente -...

Case studies on globalization Case studies on globalization & local development& local development

Stefania Scuderi - Italy

Roney Parente - Brazil

Ke Yu - China

IndexIndex

Overview of national responses to make globalization work for human development

Case studies– Brazil-Norway– Foreign and local investment in Mauritius

National responses to make globalization National responses to make globalization work for human developmentwork for human development

Globalization has opened wide the door to opportunities in the world’s markets. But markets can go too fast and squeeze the non-market activities in basically three different ways:– Fiscal squeeze– Time squeeze– Incentive squeeze

What can countries do to make What can countries do to make globalization work human development?globalization work human development?

– Capture global opportunities in trade, capital flows and migration

– Protect people against globalization vulnerabilities– Overcome the resources squeeze– Generate pro-poor growth– Create alliance of all actors– Formulate new strategies for managing new

issues

Capturing new global opportunitiesCapturing new global opportunities

– Enhancing trade– Attracting capital– Getting the most from migration

Enhancing tradeEnhancing trade

Countries can accelerate growth through trade liberalization if they have sound macro economic management, good infrastructure and social service and strong governance. They need to:

– Translate trade and growth into human development

– Maintaining labour and environmental standards

Attracting capitalAttracting capital

Attracting long-term capital flows Managing the volatility of short term capital

Getting the most from migrationGetting the most from migration

Egypt managed to get $4.7 billion in remittances in 1995 – close to the $6 billion it earned from Suez canal receipts, oil exports and tourism combined

The Philippines received $7 billlion in remittances in 1996

Mexico $4 billion

Protecting people against Protecting people against vulnerabilitiesvulnerabilities

Coping with changing labour marketHow to overcome vulnerabilities in the labour

markets?– Providing education and training– Supporting the unemployed in finding jobs– Maintaining workers benefits and rights– Managing transitional labour markets

Managing the social costs of financial crises

Overcoming the resources squeezeOvercoming the resources squeeze

The fiscal resource base of developing countries is been squeezed in four ways:– Trade liberalization– Globalization of the tax base– Tax competition– Growth of the underground economy

To cope with:– Generate more revenue from direct taxes– Introduce a value added tax– Make tax laws simple– Restructure expanditures

Generating pro-poor growthGenerating pro-poor growth

Creating effective alliances of Creating effective alliances of national actorsnational actors

Formulating strategies for emerging Formulating strategies for emerging new issuesnew issues

Brazil-NorwayBrazil-Norway

Economic main characteristics Market characteristics Special growth sectors Prospects for Norwegian export industry in

Brazil Norway-Brazil Trade

MMain ain eeconomic characteristicsconomic characteristics

Negative facts:– World economy lower growth in 2001– Argentina’s economic crisis– Brazilian’s energy crisis

Positive facts:– GNP: 2000 increased by 4,5%– GNP: 2001 increased by 2,7%– Brazilian industry index increased by 2,5%

MMain ain eeconomic characteristicsconomic characteristics

Real-plan was introduced 1994 Hyperinflation and minimal economic

predictability – 1000% to 10% Inflation 6% in 2000 and 8% 2001 Possibility to plan the economy

MMain ain eeconomic characteristicsconomic characteristics

Foreign investment in Brazil (American dollars):– In 1993, only 1 billion– In 1999, 30 billion– In 2000, 32 billion– In 2001, 23 billion

In 1999, China was the only country to receive more foreign investments than Brazil

In 1994, introduced Real-plan - $1,00 = R$1,00 In 1999, devaluation of the real $1,00 = R$2,35 – Jan/2002

MarketMarket characteristics characteristics

World’s fifth largest population – 167,5 million Large market opportunities 40 million have a buying power equal to or higher

than the Norwegian average National production directed to domestic market Emphasize the importance of increasing the export Mercosul – FTAA (ALCA) Complicated rules for import and duties, taxes and

customs restrictions

Special growth Special growth ssectorsectors

The oil and gas related industry– Growing quickly on the Brazilian market– Petrobras does no longer have the monopoly– Norwegian Statoil received concession in 2001

Telecommunication market– Large boom in the IKT sector is now over– Internet and mobile users have exploded the last 2

years– Demand in computer based solutions

Special growth Special growth ssectorsectors

Electricity sector– Will grow fast in the near future– New power station, improvement and expansions– Increase in the demand of energy saving solutions

and efficient equipment Other sectors

– Shipbuilding industry– Agriculture– Extraction and refinement of minerals– Textile industry

Prospects for Norwegian export Prospects for Norwegian export industry in Brazilindustry in Brazil

Norwegian export to Brazil representes 1% of Norway’s total export

Fish export will continue dominating Norwegian export to Brazil Suppliers of equipment and services within the oil and gas

industry Brazil chose the European GSM-model rather than the

American one, Norwegian exporters have an advantage Environmentally friendly solutions market Equipment and parts for use in hydro-electric power stations

and transmission lines

Trade Norway-Trade Norway-BrazilBrazil

Brasil is Norway’s most important partner in South-America

Brazilian market represents only 0,7% of Norway’s total export in 2001

in 2000 the export of dried codfish represented 61% of Norway’s total export to Brazil

Machines and telecommunications equipment came in on 2nd and 3rd place, each with less than 10% of the total export

Trade Norway-Trade Norway-BrazilBrazil

2000 2001 %

Import from Brazil

2332,7 million crowns

2291,6 million crowns

-1,8

Export to Brazil

1488,3 million crowns

1564,6 million crowns

5,1

Trade Norway-Trade Norway-BrazilBrazil

Brazil entered the 21st century with the world’s 9th largest economy

Facts that suggest that more Norwegian companies should be able to participate actively and in the long-term in the Brazilian market The size of the market Stable democratic governing Wish for more foreign “actors” in the market

MauritiusMauritius

Background of Society Background of Economy History of Economic development Factors of foreign investor’s concern Factors of local investor’s concern Linkage between foreign and local investors Challenges

Background of SocietyBackground of Society

impact of ethnic,religious, linguistic fragmentation– Majority - Indian: Hindu, Muslim,Christians– Franco-Martitians – Chinese: Christians and Buddhists– Africans

Background of EconomyBackground of Economy

dependent on sugar– 99% of export – 70% employment– 1/3 of GDP– cane field - 90% arable land

History of History of eeconomic developmentconomic development

Independence 1968, introduced initial import subsitution industrialization policy

1970 export promotion zone legislation passed, but few investor in 1970s

1979-1981 crisis, down of sugar prices, escalation of oil price, political tensions, cyclone destroyed sugar crop and other infrastructure - fall off in new investment;

1982 with change in government, adopted outward-oriented strategy to export-led growth – “export or die”

Early 80’s, foreign investment took off as a consequence

FFactors of foreign investor’s concernactors of foreign investor’s concern

Negative:– Inconveniences by location– Lack of natural resources – Small domestic market – Uncertain sociopolitical future

FFactors of foreign investor’s concernactors of foreign investor’s concern

Positive (pull):– Political stability and policy consistency– Sound institutions– Cheap, trainable labor force– Good economic management– Infrastructure– Preferential market access to other market– Multi-ethnic/lingual provide friendly environment

FFactors of foreign investor’s concernactors of foreign investor’s concern

Positive (push) - quick response to external global events– Sino-British agreement over Hong Kong– Multifiber agreement– High labor cost in Hong Kong

FFactors of local investor’s concernactors of local investor’s concern

How to deal with lack of land? Take advantage of tax-free assets offered

by EPZ and government Take advantage of local bank’s attractive

loan rates Take advantage of local population linkage

with Europe, India, and China Potential in tourism

Linkage between foreign and local Linkage between foreign and local investorsinvestors

Foreign cater for haven for capital, quota-free access to markets, but they also bring technical manufacturing knowledge, factory management know-how, international standards, knowledge of customers tastes and orders, training

Local bring land, management capability and capital Global sourcing Synergies between industries, local commerce,

services and tourism - rapid GDP growth; spread from sugar industry to other economic activity

ChallengesChallenges

Problem facing today - more expensive labor New approaches:

– Increase productivity with new tech, management– Branch out to neighboring as for basic production

while keeping marketing, design and financial management;

– New niches-high tech, off-shore business and Freeport services

ReferenceReference

http://www.nhh.no/geo/302/reading/Chapter4.pdf http://www.exportnet.ntc.no/ http://www.eagerproject.com/FLIresearch.pdf

Thank you!Thank you!