Economic globalisation is the increasing economic mutuality of national economic systems across the word by a rapid in cross-border trade in service, engineering, goods and capital. ( Joshi, Rakesh Mohan. 200:1 ) . This can be viewed as either a positive or a negative phenomenon.
In footings of economic growing during the early 1990s, Ghana was an African success narrative and led the manner for other African states ( World Bank 2008 ) . Ghana had a important GDP growing of 4.5 % per annum during the mid-1990s ( figure 1 ) ; this growing rate was 2 % higher than the mean growing rate of other African states during the same period. This high and pronounced growing in GDP resulted in a diminution of poorness in Ghana ; the per centum of the hapless in Ghana was reduced from 52 % to fewer than 40 % during this period. ( Dordunoo, C.K. A.Donkor 1998:76 ) .
At the beginning of twenty-first century, policies and plans were guided by a scheme named Vision 2020: the purpose of this scheme was to develop Ghana ‘s economic system and accomplish a mid-income state by the twelvemonth 2020. The agricultural sector was highlighted an of import country for economic reforms because most of the hapless Ghanaians were found in rural country, and another purpose of Vision 2020 was to cut down poorness. ( Dordunoo, C.K. A.Donkor 1998:76 ) .
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Figure1 Growth rate of GDP in Ghana from 1994 to 2001
Beginning: World Bank and IMF
Today, globalisation plays a positive fiscal impact on economic system. First, economic growing benefits of economic globalisation, in malice of many people prognosiss that inequality spread will increase between developing and developed states, there is no grounds to propose their prognosis. On the contrary, both of them are benefit of globalisation. Second, economic globalisation helps to cut down poorness around universe, as the essay mentioned before, the per centum of the hapless in Ghana was reduced from 52 % to fewer than 40 % during1990s ( Dordunoo, C.K. A.Donkor 1998:77 ) . The last concluding positive consequence to economic globalisation is it contracting spread between the rich and the hapless, for illustration, China and India, both of them are the hapless states 30 old ages ago, but now they are progressively contracting the spread with developed states. These effects on economic system by globalisation indicate that how of import economic globalisation it is. This subdivision will explicate how globalisation has affected the planetary economic system in item and associate it to Ghana, and policy reforms implemented by the Ghana authorities to increase economic system. ( Dordunoo, C.K. A.Donkor 1998:77 )
Global Production Networks
Economic globalisation is non merely the economic exchange of a finished merchandise in the universe, but it is besides the development of planetary production webs through the integrating of more and more intra-firm trade ( S Javed Maswood 2008:4~5 ) . A good illustration of planetary production webs to exemplify this: the US car company Ford manufactures its Escort auto theoretical account in the UK, but the natural stuffs and constituents used are sourced from eleven other states. Further illustrations include Chinese companies who have set up their subordinate companies in the UK, or the Ghana Railway Corporation who uses London based accounting services.
“ The betterment in communications and information engineering boosted globalisation of production. However, its causing can be traced to a combination chiefly of, trade liberalisation in the post-war period, neo-protectionism in a logical extension of the procedure of liberalisation and mutuality after the Second World War, it has besides bee deeply shaped by the intolerant forces of neo-protectionism and by exchange rate accommodations in the 1980s ” ( S Javed Maswood 2008: 3 ) . The latter two instigated Nipponese fabrication investing in many developed states, Neo-protectionism encouraged Nipponese makers to export merchandises in markets to retain market portion. This explains the rapid rush in investing in the United States, for illustration, in the car industry, Nipponese auto makers merely had relied on exports to serve consumer demand in the United States before the limitations on Nipponese car industry and the limitations on Nipponese car exports in 1981 ( S.J.Anjaria, Z.Iqbal, N.Kirmani, and L.L.Perez. 2008:31~32 ) .
Global economic development
International trade is the exchange of goods and services across international boundary lines. Today it plays a important function in understanding economic globalisation and the complete trade free through progressive trade liberalisation.
There are two sort of trade to explicate why states trade, the first 1 is the having state unable to bring forth the goods or supply the services domestically, or it does non hold adequate goods and services. For illustration, the UK imports a batch of chocolate every twelvemonth signifier Ghana to run into the demand of consumer. The 2nd 1 is the having state has the ability to supply the services or bring forth the goods, nevertheless, it still imports from other states. For case, the UK imports coal, fish, vesture and other merchandises from Ghana, it seems a waste of resource to import because the UK has the capableness of bring forthing the goods, the ground are the imported goods possibly cheaper or more quality and design than those produced domestically. ( Jonathan Reuvid. , Jim Sherlock 2011. Pp3 )
The international trade system promoted by GATT ( General Agreement on Tariffs and Trade ) and its replacement, the WTO ( World Trade Organization ) have been aimed at get the better ofing protectionist governments and alternatively to advance planetary trade. In 2008 many states signed regional trade understandings: this resulted in approximately 73 % of the European Union ‘s trade being amongst its ain member provinces, and the sign language of NAFTA ( North American Free Trade Agreement ) by Mexico, Canada and the United States meant that about 50 % of North American trade was entirely through these three states ( Jonathan Reuvid. , Jim Sherlock 2011. Pp7 ) The WTO purposes to ease trade ( such as the understandings above ) between states and guarantee that it is a just and legal procedure.
Globalization implies trade liberalisation, so the hard currency flow additions, it causes more liquidness in capital. To cut down the fiscal hazard, many fiscal organisations disperse the hazard extensively in the clip of economic globalisation. Because of globalisation, more and more activities of concern are making across the Earth, the invertors can put economic capital in the development states, therefore, an increasing figure of employees in developing states to run into the demand of those transnational companies. ( Jonathan Reuvid. , Jim Sherlock 2011. Pp19 ) For illustration, Global Caledonian Limited invest in Ghana to better their economic systems and engage a batch of employees in Ghana, increased income for the indigens.
Economic Development in Ghana
In order to cut down authorities engagement in the economic system, in 1983 Ghana implemented a series of economic reform and structural accommodation to pull financess from the IMF ( International Monetary Fund ) and foreign assistance ; at the same clip exports and foreignA investings were increased to hike the economic system. Many jobs existed before these economic policies were implemented, such as high rising prices, limitations on imports, distributions and monetary values. ( Cletus k. Dordunoo, Goodwin Y. Dogbey )
In the early phases of implementing the structural accommodations, the focal point was to work out the job of monolithic financial and external instability. In order to cut down budget shortage and encouragement profitableness, exchange rate reforms by increasing import-duty aggregations were implemented ; in add-on assorted administrative reforms were carried out to raise the effectivity of the revenue enhancement disposal. For the intent of funding, although it was capable to unfavorable judgment from international administrations, the authorities sold the portions of state-owned Bankss including Social Security Bank to accomplish denationalization ; this increased the sum of foreign investing in the state. ( Cletus k. Dordunoo, Goodwin Y. Dogbey )
In the 2nd half of the 1990s, the economic reforms in Ghana focused on easing trade liberalisation. In order to follow with the WTO regulations and ordinance, the Ghanese authorities bit by bit eliminated the inducement system and removed many limitations and domestic monetary value controls to better the fight of local manufacturers. In 2001, the duty was reduced to less than 20 % , and most of import and monetary value controls were relaxed. Nevertheless, many local baby industries were damaged from these reforms, they were non able to against foreign competition ( Hussain and Faruquee 1994:108 ) . However, as a important constituent of the trade liberalisation program, the agricultural merchandises mostly benefited from the decrease of export responsibilities.
Agricultural development in globalisation and its effects in Ghana
After the dialogues from the Uruguay Round, agricultural merchandises constituted merely 13 % in the universe merchandises trade ( S Javed Maswood. , 2008 page 38 ) . Nevertheless, agricultural trade was expected to hold a rapid growing after carry oning trade within the model of the GATT. In order to promote husbandmans to bring forth to run into demand and maintain high domestic monetary values, policy turned to merchandise protectionism and provided subsidies by the EU under CAP ( Common Agricultural Policy ) . With the aid of export subsidies, 3rd state markets were disposed by excess production. As the subsidy war became progressively dearly-won between America and the European Union, the Cairns Group ( supported by America ) began to run for broad trade without subsidy in agribusiness. ( S Javed Maswood. , 2008 ) .
Agricultural trade in globalisation has been characterized by a diminution in the costs of planetary trade in agricultural merchandises by the technological alterations in the procedure of production and structural alterations in planetary agricultural markets ( Kym Anderson 2010 ) . Ghana, as a big agricultural state, an indispensable method to increase their economic system is by spread outing agricultural production and exports ; frequently the chief export merchandises are chocolate, fish and lumber, and the bulk of these are exported to states in the EU ( British Broadcasting Corporation 2008 ) . After the reforms in the most of import agribusiness merchandises such as hard currency harvest and chocolate implemented by the authorities, Ghana has reduced poorness and hungriness in the past 25 old ages through this successful agricultural development. As the one of the universe ‘s top performing artists in agricultural growing, the volumes of its agricultural merchandises increased about 5 % per twelvemonth during the past 25 old ages. ( Bill and Melinda Gates Foundation. 2010 )
And agricultural trade in globalisation besides has bad effects on Ghana. Cocoa is the primary hard currency harvest exported by Ghana and is the chief beginning of income for the authorities and husbandmans. Therefore, it is necessary to hold effectual and timely reform in this sector at the early phase of the scheme in order to change by reversal the lessening in gross revenues of export merchandises. In an consequence to make so, the authorities has raised manufacturer monetary values and has allowed the Cocoa Marketing Board to treble the existent manufacturer monetary values in 5 old ages. But the rapid lessening of the chocolate monetary value in the universe market makes it hard to keep the existent manufacturer monetary value. This is the ground why the export in 1990s less than that in 1980s in Ghana. ( Ghana Cocoa Board 2008 )
Globalization and the fiscal crisis
Fiscal crisis refer to a state of affairs that the assets or fiscal establishments lose their value quickly. Many fiscal crises were associated with banking terrors ( Franklin Allen, . Douglas Gale, . 2007:2 ) . The East Asiatic Financial Crisis which happened in 1997 is a good illustration to bespeak how fiscal crisis influence the planetary economic system. The East Asiatic Financial Crisis was started in Thailand in July 1997, the Central Bank of Thailand was forced to drift the Thai tical, and afterwards, it led to 20 % devaluation of Thai tical in that month and even made Thailand dissolution before the fiscal prostration of the tical. ( Steven C. Radelet, A Jeffrey D. Sachs. 1998:72 )
As the crisis rapidly spread, other states in Southeast Asian and Japan were suffered from this fiscal crisis, their currencies were dropped quickly and stock markets were devalued at the clip. There were three states affected most by this fiscal crisis, South Korea, Thailand and Indonesia. The ratios between foreign debt and GDP increased from 12 % to surprising 40 % in South Korea. ( Steven C. Radelet, A Jeffrey D. Sachs. 1998:73 ) The crisis besides spread to Hong Kong, in October 1997, the equity market in Hong Kong was plunged, it caused the planetary rippling consequence, so the equity monetary values bead in globalisation, included Europe and the US. The authorities of South Korea asked for international deliverance In November 1997, and IMF intervened to assist South Korea to stabilise its currencies. ( Steven C. Radelet, A Jeffrey D. Sachs. 1998:73 )
Another planetary fiscal crisis started from America in September 2008 and spread rapidly most of states of the universe. The impact on Ghana was noticeable. In the 2nd half of 2008, Ghana suffered the fiscal crisis, the international monetary value of gold and chocolate which are primary export merchandises declined quickly and raised in the monetary value of crude oil which is one of Ghana ‘s chief imports. This daze resulted in a rise in rising prices and a depreciation of the exchange, every bit good as high crude oil monetary values which led to high conveyance and other costs in Ghana ; the authorities raised the monetary value in the domestic market to cut down the operation losingss in the province refinery. Due to the bead in monetary value of agricultural merchandises, many famers hence merely produced for self-consumption. Mineral production was besides affected by the bead in the international monetary value of gold. However, the reforms of denationalization and exchange rate helped to retrieve the mineral and agricultural sector. At the terminal of 2009, the monetary value of gold and chocolate rebounded rapidly, the export volumes of both chocolate and gold increased in 2009 and reached a comparatively high degree in the clip. ( Ackah, C. G. et Al. 2009 )