Liberalization, Privatization, and Globalization in the rural development of Nepal

Privatization:

In general Privatization, means leaving the economy from government control to market. In the broad sense, privatization implies the policy meant to give the greater role to the market mechanism and lessen the government intervention in the economy. It means the production of goods and services by NGOs or private limited. It covers various ideas and policies and evokes political reactions.

 

In the current scenario, privatization is an international phenomenon, and it is on the progress in every countries of the world. The prime purpose of privatization is to make industries competitive by transforming public sector ownership and control to the private sector. Privatization in fact, envisages the shifting of control or ownership of the means of production from the state to common people, so that these enterprises are not more under the domain of political system. Due to effectiveness and efficiency, the governments rely on private sector for commercial activities.

Political economist have interpreted, defined privatization differently,

World Bank(1988):-is broadly defined as increased private sector participation in the management and ownership of activities and assets controlled and owned by the government.

Mary Shirley:-not only the state of state assets but also privatization the management of state activities through contras and leases and contracting out activities that were previously done by the state.

Kikeri et.al.:-privatization is the transfer of responsibilities  from the state to private sector of economy.

Rondinelli and nellis (1986):-it is the transfer of responsibility for certain government functions to nongovernmental organizations voluntary organizations community associations and private enterprises.  

Types of privatization:-

There are five types of privations

1.      Mega: -advocates the concept of minimalist state and the reduction of stases power in all sectors, dimensions and spheres and activating private sector in this direction.

2.      Macro privatization:-refers to the greater use of market forces and ensures maximum degree of compition reducing the active role of the state or state as regulator, facilator welfare provider and producer.

3.      Micro privatization:-refers to the transfer of ownership of public assets/enterprises to private sector /individuals.

4.      Liberal democratic privatization:-refers to the process of privatization adopted in the liberal democratic system.

5.      Socialistic privation:-refers to the deregulation to enhance the competition among the various economic actors, reducing the role of all powerful or active state and converting it into a minimalistic state or state acting as simply facilitator than acting as initiator of development.

 Importance of privatization in Nepal for rural development:

Our country Nepal has the experience of privatization since the period of Panchayat. The Panchayat government in order to meet the growing challenges of increasing the quality and quantity of basis services, facilities, basic needs of the people, particularly the rural poor, made a number of efforts and undertook several policies to invest public money in a number of governments owned, controlled and regulated enterprises. During the Panchayat period, some attempts were made to encourage the process of privatization. During the sixth five year plan period two public enterprises i.e. “Nepal Cehuri Ghee Plant” and “Chandeshwori Textile Factory” were privatized. In the year 1985, HMG attempted to privatize twelve  PEs, which could not be materialized in practice.

With the formation of the first elected government in 1991 under the prime minister ship of G.P. Koirala in 1991, privatization policy got encouraged in different forms. Immediately after assuming power, the NC government in 1991 issued a policy paper on privatization as the integral part of its economic reform policy and consequently adopted certain policies, programs administrative mechanism and modalities for it. Three PEs i.e. “Bhrikuti Paper Mills”, “Harisiddhi Brick and Tile Factory” and “Bansbari Leather and Shoe Factory” were sold to private individuals from India at cheap rate. The objectives of the phase wise program of privatization were reducing financial and administrative burden of government, improving operational efficiency and involving the participation of general public and the private sector in the management of public enterprises.

As privatization encourages industrialization, it also provides/ generates employment opportunities in private sectors. Privatizations helps the capable and competent persons/ firms to involve in economic activities and thus contributes in most calls, for the just distribution of wealth and income in society but the state has to check the trend of over contraction of capital in the hands of few economic elites and market actors. It may be process of converting black money into white money because it encourages private investment.

Liberalization:

Economic liberalization is taken as the reform processes directed at freeing economic agents and activities from state control. It may be associated with an enhanced role of the private sector as opposed to the state sector. Liberalization is simply to relieve the economy from governmental control and directives and to promote the private sectors. Liberalization is analyzed in terms of internal economic reform which can be discussed in terms of reforms in the fiscal and the financial sectors.

            Liberalization according to John Black is a program of changes in the direction of moving towards a free market economy. This normally includes the reduction of direct controls on both internal and international transactions and a shift towards relying on the price mechanism to co ordinate economic activities. In such a program, less use is made of licenses, permits and price controls, and there is more reliance on prices to clear markets. It also involves a shift away form exchange controls and multiple exchange rated\s towards the convertible currency. The extent to which an economy is controlled can vary greatly, liberalization is a matter of degree and does not imply a shift to total laissez faire. Liberalization is an act of freeing somebody from political or moral restrictions. According to “World Development Report 1996”, liberalization means ‘freeing prices trade and entry of markets form state controls while establishing the economy’.

Importance of liberalization in Nepal for rural development:

            The need and importance of liberalization in Nepal in post 1990 period was felt due to various reasons. The supporters of economic liberalization advocated that the existing government investment in most cases had proved unproductive and unfruitful to the people and the nation, consequently creating deficit budget every year. As the economic policies including market prices, production, consumption and distribution were government controlled, the private sector, and individual investors remained passive in economic activities often directly encouraging their capital to invest in foreign banks or invest outside the country in different forms. The supporters of liberalization advocate that it can reduce the growing government deficit every year.

            The liberalized economic reform measures in post 1990 periods have played very significant roles in the economic life of Nepal. Its role in Nepal’s particular context can be outlined as:

1.      Since the economic liberalization measures in post 1990, Nepal have contributed to the all round development and rapid economic growth inside the country, though economic development in Nepal in post days remained negatively affected by the political factor.

2.      Like in other liberalized economics, liberalization in Nepal has also benefited people in different ways and has reduced the role of command economy. 

3.      Liberalization contributed much for the development of Nepal in different ways including improving the quality of Nepalese people and their living standard by generating income in different ways.

4.      As liberalized economic reforms have encouraged the establishment of new industries or enterprises of new industries or enterprises, it would encourage the increase the volume of export items and contents, contributing to earn foreign currency and making economy self sustaining.

5.      Liberalization process has also contributed much to the utilization of country’s existing resources and the development of raw materials based industries, new enterprises and business/ commercial activities.

6.      The liberalization in Nepal has contributed to generate employment opportunities to Nepalese in new established enterprises, firms, industries and business houses.

7.      The state owned enterprises, after liberalization process was encouraged and have also made several attempts to improve their working styles in course of competing with the private sector banks.

8.      A number of financial institutions, aid services, film industries, media houses, insurance companies and joint venture companies in different sectors, travel agencies and man power companies were established which have brought positive impacts in Nepalese economy in different form including the increment in revenues and taxes.

9.      It has promoted private sector, prices have been freed from government control and economy has been more or less stabilized.

  

Globalization:

            Globalization is a worldwide phenomenon and has become quite a fashionable term among political economist, planners, development practitioners, media persons, which generally means the free flow of ideas, information, goods and services. It is generally referred as the international flow of trade and capital, growing integration of economics and societies around the world through free movements of goods, services, people, and information across boundaries. It has both descriptive and prescriptive interpretation. It refers to widening and deepening of international flow of trade capital and technology, ideology, culture and information within a single and integrated market and also involves the liberalization of national and global markets in the belief that free flow of trade, capital and technology, and information would produce box outcome of growth and human welfare.

            Globalization is the process by which an activity becomes worldwide in scope. It is a process of integration of the world as one market. The free movements of the elements like information, economy, technology and ideas are well knitted production network help to create bigger market which in turn is expected to generate opportunities for product specialization. Globalization according to Todaro is the increasing integration of national economics into global markets.

            Speaking from political point of view, globalization refers to the integration of national economy with the powerful global economy through a number of processes and measures including privatization, liberalization, marketization and liberal economic reforms, removing existing trade barriers consequently leading the world towards “one huge market” and increasing the process of “interdependence” among sovereign nation states on the ground of mutual interest and benefit. Globalization in most cases leads to an integrated global economy. The process of globalization ultimately converts the huge globe into a small global village. Structurally speaking, structural globalization refers to the activation of global economic actors including Britton woods institution, multinational corporations and enterprises virtually establishing their organization networks though out the world powerfully controlling the economy in the independent nation states.

 Importance of globalization Nepal for rural development:

            Increasing globalization has direct/ indirect impact and consequences on individual, business groups, nation economy, political system, socio cultural and other sectors which may be both negative and positive. The major effects of globalization are on liberalized international trade, import penetration, foreign direct investment, multinational companies and competitive environment. In this connection, it would be appropriate to study the regional reaction to the increasing globalization. Late his majesty king Birendra addressing in the inaugural session of form for Asia in the capacity of chief guest, stated that this phenomenon of opportunities for economic and social development yet are facing a number of challenges on the same occasion. Chinese president Jiang Zemin viewed that the forum reflected the aspirations of the Asian countries for common development through enhanced dialogue and co operation against the backdrop of economic globalization.

            Malaysian Prime minister Mohammad Mahathir stated when the weak countries are forced to open their borders to globalization; giant banks and corporation would come in and destroy the small local counterparts. In such a terrible situation can the states ignore the growing wave of globalization and the answer would be strictly not because in today’s globalize world, these nation states which are mostly the members of international community and have to depend on them on a number of sectors cannot get international support and thus cannot remain in complete isolation. Moreover, these states cannot explore and exploit the opportunities for economic growth and efficiency to the maximum possible extent provided by the increasing wave of globalization. They also need to protect their national interest, adjust with the changing world, redefine their foreign policy, goals, objectives, strategies, interests, re-orient their diplomatic practices in the light or context of globalization.

            The only thing the small countries like Nepal in this context can do is that it can make attempts to minimize the negative impacts of globalization, increase its capability to cope with the changing regional and international environment. The factors responsible for global economic boom during the 1990’s include growing economic interdependence, technological revolution and low transport costs, globalization, increasing gross national product, changing structure of world economy, increasing global trade, increasing foreign direct investment, foreign aid, increasing subsidies and current transfers.

 Globalization has impacts on Nepalese economy in a number of areas both positive and negative ones. It attempts to widen or broaden individual attitudes, encourages tough competition and consumer satisfaction encourages access to global markets, increase in investment and improvement in quality of products influence on performances. However globalization in today’s world is relevant to the Nepali context and has contributed much positive impact on rural development of Nepal. The Nepalese rural areas have taken better advantage of the process of globalization in a number of ways. Rural population have become conscious about their human rights including their right to development and right to protect their own clean and beautiful environment and protect rural natural resources.

Conclusion:             

From the above discussion, it can be concluded that the process of liberalization, privatization, and globalization has done a lot and can do a lot for the development of the rural area of Nepal. For the development of the country, we should go from the rural area and should apply the weapon of liberalization, privatization and globalization properly. As most of the places of our country are rural, the development step should be started from the rural place and the media of liberalization, privatization and globalization can play a very important role in this step.