Globalization of rural economy by local governance, a debate on pros and cons

1. GLOBALIZATION OF RURAL ECONOMY BY
LOCAL GOVERNANCE
Ankita Bakshi
Arun C Babu
Ipsita Shee
Puja Kumari
Mani Dhingra

2. GLOBALIZATION Definitions
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.”

3. 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

4. IS THIS GLOBALIZATION ??

5. IS THIS
GLOBALIZATION ?
BAD
OR THESE ??
GOOD
OR THIS ??
GOOD/ BAD ?

6. 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
•
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"
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

7. 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 developmentimprovement of quality of life - health, education, income,
HDI , equality etc.

8. LOCAL GOVERANCE Definition
•
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.
ROLE & RESPONSIBILITIES OF LOCAL GOVT.
•POWERS & CONTROL OF LOCAL GOVT.
•RELATION BETWEEN LOCAL GOVERNMENT AND “THE PEOPLE”
3 tier of local government
Form of public administration generally existing as the lowest tier of administration within a given state
STRUCTURE OF RURAL LOCAL GOVERNMENT
•

9. Globalization and Rural Economy
For Globalization
Against Globalization
Arun
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?
PART 02
Local Governance and Rural Economy
For Local Governance
Against Local Governance
Questions
01.
02.
Puja
Ankita
Main aim: Developing rural economy
PART 01

10. “INDIA LIVES IN VILLAGES AND ITS TRUE
SPIRITS LIVES IN RURAL AREA”
– MAHATAMA GANDHI
WHY RURAL ECONOMY IS IMPORTANT?

11. Rural Consumer Market
• 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 200405 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.

12. Indian Economy Growth Trend

13. WHAT ARE THE COMPONENTS OF
RURAL ECONOMY?
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

14. 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?

15. ?
01.
IS RURAL ECONOMY GROWTH POSSIBLE VIA INDUSTRIALIZATION OF
AGRICULTURE???

16. FOR
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.

17. LIMITATIONS OF PRESENT SETUP
1.LACK OF PROPER INFRASTRUCTURE
2.DOMINANCE OF INTERMEDIARIES IN THE VALUE CHAIN
3.IMPROPER PUBLIC DISTRIBUTION SYSTEM
CURRENT AGRICULTURAL MARKETING SCENARIO IN INDIA
PROFIT
MARGIN
PADDY
WHEAT
POTATO
OIL
SEDDS
VEGETABL
ES
0–5%
28
14
40
44
82
5 – 10 %
46
42
52
41
14
10 – 15%
26
44
08
15
04
Source: Author’s field study(2009-10)
Retail sector US
Thailand
China
India
Organized
85
40
20
03
Un organized 15
60
80
97
Source: P.Shivakumar and S Senthilkumar, 2011[6])

18. AGAINST
SOURCE: Directorate of Economics and Statistics

19. SOURCE: Report on agriculture by Governement

20. 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.

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

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

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

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

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

26. LABOUR FORCE GROWTH AND EMPLOYMENT REQUIREMENTS

27. QUALITY OF EMPLOYMENT

28. ROLE OF INTERNATIONAL COMPANIES IN COUNTRY'S
SOCIO ECONOMIC CONDITION:
03.
DOES FDI REALLY FAVORS OUR FARMERS AND RURAL
COMMUNITIES???

29. FOR
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.

32. •
The percentage of FDI in
agricultural sector is only
4.8% and concentrated in
the organized sector, in
few states.

33. 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.

34. 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.

35. AGAINST

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

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

40. Main aim: Developing village economy
Development
Local
Governance
2 Opposing But Equal Forces
Rural
Economy
Globalization

41. Main aim: Developing village economy
Development
Local
Governance
Collapse
Rural
Economy
Globalization

42. Main aim: Developing village economy
Development
Local
Governance
Rural
Economy
Globalization
Collapse

43. Main aim: Developing village economy
Development
Local
Governance
2 Opposing But Equal Forces
•
•
Rural
Economy
Globalization
We need both of them in equal measure for overall holistic development of the village economy.
Government needs to work in tandem with the

44. GLOCALIZATION Globalization
“Globally Local “
Localization
“Glocalization”
Genesis: The term first appeared in the late 1980s in articles by Japanese economists
in the Harvard Business Review.
Global
Local
“Globalocal”
Genesis: Michael Grant blogged about GlobaLocal as an exercise in thinking out loud.
“Think Global, Act Local”
•
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

45. 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