Case studies on globalization
& local development
Stefania Scuderi - Italy
Roney Parente - Brazil
Ke Yu - China
Index

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
work 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
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 opportunities
– Enhancing trade
– Attracting capital
– Getting the most from migration
Enhancing 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 capital

Attracting long-term capital flows
 Managing the volatility of short term capital
Getting 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
vulnerabilities

Coping with changing labour market
How 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 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 growth
Creating effective alliances of
national actors
Formulating strategies for emerging
new issues
Brazil-Norway
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Economic main characteristics
Market characteristics
Special growth sectors
Prospects for Norwegian export industry in
Brazil
Norway-Brazil Trade
Main economic 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%
Main economic 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
Main economic characteristics
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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
Market 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 sectors


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 sectors


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
industry in Brazil
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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-Brazil

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Brasil is Norway’s most important partner in SouthAmerica
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-Brazil
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-Brazil
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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 longterm in the Brazilian market
 The size of the market
 Stable democratic governing
 Wish for more foreign “actors” in the market
Mauritius
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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 Society

impact of ethnic,religious, linguistic
fragmentation
– Majority - Indian: Hindu, Muslim,Christians
– Franco-Martitians
– Chinese: Christians and Buddhists
– Africans
Background of Economy

dependent on sugar
– 99% of export
– 70% employment
– 1/3 of GDP
– cane field - 90% arable land
History of economic development
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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
Factors of foreign investor’s concern

Negative:
– Inconveniences by location
– Lack of natural resources
– Small domestic market
– Uncertain sociopolitical future
Factors 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
Factors 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
Factors of local investor’s concern
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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
investors
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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
Challenges


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
Reference
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http://www.nhh.no/geo/302/reading/Chapter4.pdf
http://www.exportnet.ntc.no/
http://www.eagerproject.com/FLIresearch.pdf
Thank you!