IMPACT OF GLOBALISATION

The Asymmetric Impact of Globalisation on Agriculture in Developing Countries

The Asymmetric Impact of Globalisation on Agriculture in Developing Countries

Introduction

Globalisation is killing cotton farmers in India. Analysing the disturbing fact of suicides by farmers in the region of Vidarbha, the "cotton bowl" of India (in the north-east of the state of Maharashtra), had reached the victims. The rapid analysis highlighted how the suicides were attributed to a number of reasons. Certainly, some recent contributions highlight how the effects of globalisation on various countries are asymmetric in the sense that they are systematically unfavourable to poor countries and, within them, for layers of poor population. In this paper, we would like to discuss the main arguments on this, explaining why there are asymmetries in the globalisation and what the consequences for agriculture in developing countries are.

The causes of asymmetric effects in globalisation, generally averse to developing countries, are attributable to differences in institutional and infrastructural change in the composition of international trade and the liberalisation of capital markets in the presence of strong and weak currencies.

The asymmetries in the infrastructural and institutional

Globalisation means above all extension and deepening of markets. It is, therefore, obvious that in order to seize the opportunities offered by these markets, you need to have physical infrastructure (roads, railways, ports), assets (telecommunication networks, education systems and vocational education) and economic institutions (markets, credit and of insurance companies, stock and commodity markets, etc.). Unfortunately, developing countries are already behind in global competition, since they generally lack the infrastructure and institutions which is directly proportional to the level of poverty.

The trade in goods and services

One of the most striking structural changes in the years of globalisation is the growth of trade volume and the change of its composition. For example, the weight of services in international trade has quadrupled in absolute terms in the two decades from the mid '80s to today, from 16 percent to 20 percent of the value of exports. Even more interesting is the fact that not only the share of services has increased, but is also rapidly increasing trade of the whole collection of quality differentiated goods, which can be assigned a different (higher) reputation and from which, ultimately, comes the possibility of exploiting economic rents due to market segmentation and protection of intellectual property rights worldwide (Dehn 2000, 90).

The transition from an international business based primarily on undifferentiated goods (commodities) involves passing a trade based on comparative advantage, to one based on the reputation of the goods traded. In this framework, while continuing to operate determinants (cost of production and quality of goods), the competition moves increasingly towards competition based on quality (real and / or perceived) rather than the cost of producing the goods. It is evident how the developing countries are disadvantaged in that type of competition.

The reputation of the different currencies and currency substitution

All currencies are used for transactional purposes, i.e. to carry out trade in the market. Only some, however, are required as a precautionary ...