GLOBAL ISSUES

Globalisation

- Globalisation is the process by which the world is becoming increasingly interconnected

as a result of massively increased trade and cultural exchange.
- Globalisation also means making worldwide and extending to all parts of the world
- Globalisation, global economy, global village and global issues have gained a popular
usage in the study of economics and social sciences.

Global economy

- This refers to interconnected worldwide economic activities that take place between
multiple countries.

Global village

- Due to rapid development in mass communication, transport system and other areas of
technology, the world has become small and said to be global village
- Global village means the world is considered to be a single community linked by
telecommunication

Global Issues

- Refers to all those developments and problems which affect the welfare of people in all
nations.
- Global issues include human rights and good governance, war and peace, world refugee
crisis, world debt crisis, the world energy crisis, international trade, global warming, HIV
and AIDS, the bird flu outbreak, terrorism and global credit crunch, corona virus.

Global Interdependence

- Global Interdependence means that each nation’s welfare may depend on the decisions
and policies of other nations. Global interdependence also means that each nation’s
welfare on goods and services offered by other countries.
- Both developed and developing countries depend on each other for their nations welfare.

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Positive effects or advantages of Globalisation

- Sharing of basic knowledge

- Spread of technology
- Sharing of investments
- Sharing of resources and ethnic values
- Sharing of cultures

Negative effects or disadvantages of Globalization

- The rapid spread of diseases

- Rapid spread of illicit drugs, crime and terrorism
- Uncontrolled migration
- Loss of culture for many African countries

Foreign Aid

- This refers to the international transfer of funds, goods and services in form of loans and
grants from one country to another.

Types of foreign Aid

There are two types of foreign aid and these are;

 Bilateral aid: This is assistance from one country to another. For example Zambia
receives aid from other countries through agencies such as Irish Aid, Swedish
International Development Agency (SIDA) , Japan International Co-operation (JICA),
Finish International Development Agency (FINNIDA), and United States Agency for
International Development (USAID).
 Multilateral aid: This assistance from international agencies formed by several
countries. These lending institutions don’t not belong to one country. Examples of these
institutions include African Development Bank ( ADB), the Arab Bank for Economic
Development (ABEDA), The International Monetary Fund (IMF) and the World Bank

Forms of Bilateral and Multilateral AID

- Bilateral and multilateral aid mainly come from grants and loans

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 - These grants and loans may come in form of financial assistance, capital goods (e.g
machinery) , relief food or technical expertise ( skilled labour)
- Grants are gifts from international agencies or from one government to another which are
not paid back.
- Loans are transfers of funds , goods and services from one financial entity to another
which must be paid, usually with interest.
- There are two types of loans and these are ; hard loan and soft loan.
- A hard loan is a loan given with conditions attacked and at a high rate of interest
- A soft loan is a loan given at a low rate of interest or which must be paid without any
interest at all.
- Tied aid refers to loans and grants which have strings or stipulated conditions of use.

The Role of the World Bank and IMF

 World Bank
- The World Bank is a multilateral financial institution and has its headquarters in
Washington DC, United States of America.
- The World Bank mainly operates with funds from member states. World Bank offers two
types of loans and these are;
 Loans for developing countries with higher income. These are loans repaid for a
period of 15 to 20 years with a grace period of 3 to 5 years before the repayment of
the principle begins. A principle is the actual money one had borrowed which
doesn’t include the interest.
 Loans for poor countries. These are loans given to countries which are not credit
worthy in the international financial markets and cannot afford to pay market interests
rates on loans. Such loans are provided with a 10 years’ grace period and they are
repayable in 35 to 40 years.

Affiliate Institutions to World Bank

The World Bank consists of four affiliate institutions and these are ;

 The International Development Association (IDA)

 The International Finance Corporation (IFC)

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  The Multilateral Investment Guarantee Agency
 The International Centre for Settlement of Investment Disputes
 The International Monetary Fund(IMF)
- The IMF is a specialized agency of the United Nations and its main purpose is to regulate
the international monetary system.

Functions of International Fund

- Controls fluctuations in the exchange rates of World currencies and lends to countries
facing balance of payment deficit
- Offers advice and policy recommendations to over financial problems
- Offers financial assistance to support economic reform programmes.

Foreign Aid and the Development Debate

There has been an international debate to whether foreign aid hinders or promotes economic
development in the third world recipient countries. Some of these arguments are;

Arguments for Foreign Aid

- Provides foreign capital needed to the recipient country to supplement its locally
available investment resources.
- Provides more foreign exchange.
- The recipient government earns more revenue by tax enterprises established with the help
of foreign aid and by participating financially in operations of these enterprises.
- Food aid alleviates poverty in case of natural disasters. It also provides free or cheaper
food to countries facing chronic food problems.
- Promote international cooperation between the donor and the recipient countries

Arguments against Foreign Aid

- Loans and grant ‘tied to donor’ have to be spent on buying goods and services from the
donor country
- Loans and grants ‘tied to projects’ can only be spent by the recipient country on projects
agreed upon by the donor country
- Loan must be paid with interest. The larger the loan, the larger the debt service burden.

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 - Food-aid may worsen food shortages as it tends to reduce food prices, hence killing the
food market for farmers in the recipient country which may in return cause a reduction in
domestic food production
- Food-aid is also given as a tied aid.
- assistance given by donors is not always appropriate or beneficial to the needs of the
recipient country, and may require the importation of expensive machinery and spare
parts from donor nations. Technical assistance actually benefits the donor countries more
in that;
 Earns more money in form of interest on loan repayment
 Creates a market for its machinery and spare parts in the recipient country
 Creates oversees employment for its citizens
 Gains political and economic influence in the recipient country

International Trade

- Trade is the selling and buying of goods. There are two types of trade and these are
internal and external trade.
- Internal trade also known as home or domestic trade is the trade done within the country
- External trade or known as foreign trade or international trade done between or more
countries

Importance of International Trade

- Resources are not evenly distributed in the world, as a result nations depend upon each
other.
- Countries have different climatic conditions which may not favour the production of
certain crops which they may need to import in other countries
- Specialisation: No country can produce all the goods and services it requires. Each
country specializes in a given line of industries where it is most efficient. It may also be
worthwhile for two countries to have a comparative cost advantage. A comparative
cost advantage is a definite clear cut advantage in the production of a particular
commodity.

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- Technological differences Some countries do not possess the technological capacity to
produce certain products
- Supplement Domestic Production: A country with vast demand or inadquate local
supplies of certain products may import certain goods to supplements local production.
- Earn foreign exchange: Trade is one way of increasing one's own wealth through profit-
taking .

-Promote International co-operation: Trade promotes international peace, co-operation

and political friendship.

Terminologies commonly used at International market

 Terms of Trade
- This means the rate at which a country’s exports are exchanged for imports from another.
- This depends on the prices of commodities at the international market
- Favourable terms of trade means the prices for your country’s exports are relatively
higher than for it’s imports
- Unfavourable terms of trade means the prices for your country’s exports are relatively
lower that the prices of it’s imports
 Balance of Trade
- This is the difference between the value of visible imports and exports over a particular
period of time .
- Favourable balance of trade is when the value of your country’s visible exports exceeds
the value of its visible imports. This is known as trade surplus.
- Unfavourable balance of trade is when the value of goods imported exceeds the value of
goods exported. This is referred to as trade deficit
 Balance of payment
- This means the difference in a country’s spending and earnings from imports and exports.
It includes payments and earns from visible and invisible imports and exports .
- Invisible imports and exports are services such as insurance, transport , tourism and
expatriate labour..

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 - Favourable balance of payment is when a country receives more foreign currency from
exports but spends less foreign currency of on imports. This is called balance of payment
surplus.
- Unfavourable balance of payment is when a country receives less foreign currency from
it’s exports ,but pays more foreign currency on it’s imports. This is called balance of
trade deficit

Note: that international trade is conducted in foreign currency and currencies mostly used in
international trader are US Dollar, British Pound, Euro and the Japanese Yen.

World Trade Organisation (WTO)

The World Trade Organisation is an organisation that regulates trade between countries. It is
an international body dealing with global rules of trade between nations

Aims of World Trade Organisation

 Administer technical barriers to trade (TBT)

 Foster sanitary and phyto-sanitary (SPS) agreements

Origins of the WTO

- The World Trade Organisation was established in 1995 to replace the General Agreement
on Tariffs and Trade (GAT) which was established in 1947.
- WTO has cooperation arrangements and works closely with the United Nations.
- The headquarters for WTO are in Geneva, Switzerland.

Reasons for replacing General Agreements on Tariffs and Trade(GAFF) with World
Trade Organisation (WTO)

 GATT rules applied to trade only in merchandise goods leaving out trade in services and
trade related aspect of intellectual property
 GATT had selective agreements
 WTO Dispute settlement system is faster and more automatic than old GATT system

Objectives of World Trade Organisation

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 - The overriding objective of WTO is to help trade flow smoothly , freely , fairly and
predictably. This object is achieved through its functions

Functions of WTO

- Helps trade flow freely by reducing or eliminating tariff and other barriers impose by
various Nations
- Sets out rules for regulating international trade
- Organises trade negotiations among it’s members
- Interprets trade agreements and impartially settles trade disputes between Nations.
- Assisting developing countries in trade policy issues through technical assistance and
training programmes
- Cooperating with other international organisations
- Review national trade policies.

Specific functions of WTO

- Progressive opening and regulations of markets.

WTO regularly opens markets while ensuring that rules are respected
- Acting as conductor
WTO is governed by rules developed by WTO members . Countries must apply these rules
when trading with one another.WTO ensures that these rule are respected.
- Tribunal
The main role of WTO is to settle disputes between its members. There are three stages to
a dispute settlement and these are
 Disputing countries try to settle their differences
 If that fails the case is decided by a panel of three experts
 If that fails too, disputing countries are liable for sanctions
- Monitor
WTO regularly reviews the trade policies of its members. These reviews assess whether
WTO members are abiding by WTO rules and measure the impact of their domestic
policies on international trade.
- Trainer

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 Provides training programmes for government officials from developing countries .

Principles of WTO

 Non-discrimination: A country should not discriminate between its trading partner.

Trading partners are all granted the most favoured nation (MFN) status. They are all
given national treatment
 Free trade: There should be free trade and all trade barriers should be reduced through
negotiations
 Predictability: Governments and other foreign companies should be confident that
Tariffs and other trade barriers will not be raised arbitrary. Tariffs and other market-
opening commitments are bound in the WTO member state
 Competition: There should be more free competition in the international trade. Unfair
practices such as export subsidies(benefit given in form of cash payment or tax reduction)
and damping products at below cost to gain market’s share are discouraged.
 Special privileges for the less developed countries: The trading system should be more
beneficial to less developed countries .This is done by giving them more time to adjust to
international rules of trade.

Structure of WTO

- The WTO has 164 member countries.

- WTO has the following organs:
 Ministerial conference
- This is the highest decision-making body which meets at least once every two years.
 General council
- Is made up of ambassadors And the heads of delegations in Geneva, but sometimes
officials are sent from member capitals. It meets several times a year in Geneva. It also
meets as the Trade Policy Review Body and the Dispute settlement Body.
 The Goods council, Services Council and Intellectual Property (TRIPS)

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 - This organ reports to the General council .These organs are responsible for trade
activities.
 Secretariat
- The WTO Secretariat is based in Geneva and has around 640 staff. It is headed by the
director -general.
- It’s functions are to supply technical support for various council’s and committees and
ministerial conferences. It also provides assistance in the Dispute settlement process and
advises governments wishing to become members of WTO.
Zambia’s role to WTO
- It membership plays an important role
- Because of its diverse national , it has different views and concerns

Benefits of Zambia from WTO

- More time is given to hert to fulfill her commitment in many of the WTO agreements
- Has more trading opportunities
- Zambia’s interests are safeguarded when adopting some domestic or international
measures.
- Zambia benefits by provisions for various means of helping developing countries to deal
with commitments on animal and plant health standards , technical standards, and in
strengthening their domestic telecommunications sector.
- Zambia has access to legal services provided by WTO

Weaknesses of World

- The WTO is often referred to as a club for the rich by it’s critics.
- Decisions made by WTO are largely influenced and guided by the interests of
developed countries.
- Less developed countries are often not given an equal platform to negotiate and defend
their trade interests.

Debt Crisis

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 - Debt crisis is an increase in indebtedness to a level where a debtor is unable to repay
the debt without defaulting

Factors contributing to Debt crisis in third world countries.

 Unfair international trade :

- Most of the goods exported to third world countries are undervalued. Third world
countries are also forced to sell their raw materials are cheaper prices .This has resulted
into balance of payment deficit and increase in debt burden.
- Third world countries can raise money to repay their debts, as a result their loans are
often rescheduled with higher interest rate.
- Debt rescheduling is the lengthening of the time of debt repayment or restructuring the
loan or forgiving part of the loan.
- Partial dent cancellation is when ones debt is partly forgiven.
 Debt servicing:
- There are two aspects to a loan. These aspects are that the loan has to be paid and must be
paid with interest .
- The process of paying the interest on the outstanding loans is known as debt servicing.
Debt servicing has worsened debt burden in third world countries.
 Spending loans on consumption.
- Some third world countries have a tendency of spending the money borrowed on pure
consumer products hence fail to pay the money borrowed.
 Falling copper prices and liberation wars
- Zambia’s debt crisis was worsened in the 1970s as a result of the fall in copper prices
and in the 1980s as a result of southern African liberation wars.

Debt Relief and Highly Indebted Poor Countries (HIPC) Initiative

- The HIPC Initiative was a World Bank and IMF programme aimed at reducing the debt
burden of the world's poorest countries that were unable to service their debts.
- The following were the objectives of HIPC:
 Reducing the huge debt burden of the world's Highly Indebted poor Countries to
sustainable levels

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  Provide funds for poverty reduction in form of debt relief. Debt relief is the partial or
total forgiveness of debt or simply the reduction in debt payment.

HIPC Qualification and Structural Adjustment Programmes (SAPs)

 For a country to qualify for HIPC Initiative , it was required to implement monetary
reforms and Structural Adjustment Programmes .Some of the SAPs that Zambia needed
to implement were:
 Privatise state -owned enterprise
 Lift restrictions on foreign investment so that profits exteternalised

Reduce its tariff barriers to encourage imports

 Float its exchange rates so that they are freely determined by the market
 Impose restrictive fiscal and monetary policies
 Remove controls on prices and withdraw subsidies even on essential commodities
 Relax labour laws protecting workers and employers

Note that, Zambia qualified to HIPC Initiative in December 2000 and was awarded a total
debt relief package of 3.8 billion US Dollars. Her debts were going to be written of by her
creditors after reaching HIPC Completion point

HIPC Completion point Benchmarks

- The following were some of the conditions or benchmarks that Zambia needed to
implement in order to qualify for HIPC Completion point;
 Poverty Reduction
- Adopt the Poverty Reduction Strategy Paper
- Present the first PRSP Progress Report
- Improve Poverty Database
 Education sector
- Implement Education Sector Reform
- Increase share of education in the budget to 23%

-Restructure the pay and benefits of teachers to encourage them to work in rural areas

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- Reform the Basic Education Curriculum to improve literacy, numeracy and communication
skills

 Health sector
- Adopt a strategic framework for HIV and AIDS
- Implement the Strategic Framework for HIV and AIDS
- Implement Health Sector Reform
 Macro -economic
- Finalise the privatisation of the Zambia Electricity Supply Corporation ZESCO and the
Zambia National Commercial Bank and other State enterprises.
 Water Sub-sector
- Rehabilitate urban water supply systems

Zambia qualifies for HIPC Initiative

- Zambia struggled from 2000 to 2005 to reach the HIPC Completion Point.
- In December , 2003 Zambia could not reach the Completion point because the
government had over spent
- This forced the government to freeze wages and appeal to the ordinary civil servants to
sacrifice in order for the country to reach HIPC Completion Point.
- Zambia reached HIPC Completion Point in April 2005.

HIPC countries were 19 and other countries that had reached HIPC Completion point besides
Zambia were; Benin, Bolivia ,Burkina Faso , Ethiopia Ghana ,Guyana , Honduras, Madagascar,
Mali ,Niger, Rwanda , Senegal, Tanzania and Uganda.

Benefits of the HIPC Initiative

The following were benefits of the HIPC Initiative to Zambia ;

- Debt Relief Funds

- The total package of debt relief to Zambia was 3.8 billion US Dollars.
- Zambia started getting debt relief in January 2001.
- The debt between the Decision point which is the time when the country qualified to HIPC
in December,2000 and the completion point are known as interim relief.

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 - This money was mainly spent on poverty reduction.
- Reduced External Debt Payment Levels
- Reduction in the Total Debt Stock. After reaching the HIPC Completion point it was
expected that the total debt stock will be gradually finished. Total debt stock is the amount
of money a debtor owns the creditor.

Disadvantages or concerns about the HIPC Initiative

- Reduction in debt stock may not occur

- Possible misuse of Debt Relief Resources
- Loss of National sovereignty

Millennium Development Goals

Development goals are objectives set to enhance professional skills , knowledge and abilities.

- MGGs are eight international developed goals that were agreed upon by World leaders at
the United Nations Millennium Summit in September , 2000 and these goals were to be
achieved by 2015.
- The United Nations membership at the time MDGs were established was 189. UN
membership is currently at 193.
- The following are the Eight MDGs;
 Goal 1; Eradicate Extreme Poverty and Hunger
- Reduce half a number of those living on less than one US Dollar a day and those who suffer
from hunger
 Goal 2; Achieve Universal Primary Education
- All boys and girls should complete primary education
 Goal 3; Promote Gender Equality and Empower women
- Eliminate gender gap in primary and secondary enrollment preferably by 2005 and at all
levels by 2015
 Goal 4; Reduce Child Mortality
- Reduce the Mortality rate among children under five by two thirds
 Goal 5; Improve Maternal Health
- Reduce by three quarters the ratio of women dying in Childbirth by 2015

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  Goal 6; Combat HIV and AIDs, Malaria and other Diseases
- By 2015 stop and reverse the spread of HIV and AIDS and the incident of Malaria and
other major diseases
 Goal 7; Ensure Environmental sustainability
- Integrate the principles of sustainable development into countries policies and Programmes
and reverse the loss of environmental resources by 2015
- Reduce half a number of people without access to safe drinking water by 2015 and by 2020
achieve much improvement in the lives of at least 100million slum dwellers world-wide.
 Goal 8; Develop a Global partnership for Development .
- By 2015 develop further an open trading and financial system that will include a
commitment to good governance, development and poverty reduction nationally and
internationally.

Implementation of MDGs in Zambia

The following were measures taken by the Zambian government to implement MDG

 Poverty Reduction
- Introduction of poverty Reduction Strategy Paper
- Creation of citizens Empowerment Commission
- Provision of subsidised fertilizer to subsistence farmers
- Creation of economic zones
- Attraction of foreign investments and re-opening of mines
 Education Sector
- Introduction of free basic education from Grade one to seven
- Introduction of school Re-entry Policy
- Construction of more schools and expansion of school enrollment
- Training and development of more teachers in basic schools
 Gender Equality and women Empowerment
- Introduction of the Ministry of Gender
- Implementation of Affirmative Action Policy in the selection of students in colleges and
universities.
 Child Mortality

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 - Universal vaccination of children under five years ( kick- out polio and Child Health Week
Programmes
- Implementation of Roll Back Malaria and Child spacing Programmes
 Maternal Health
- Implementation of compulsory Ante-natal and Post-natal (Under -Five clinics) health
programmes
- Implementation of family planning and Child Spacing Programmes
 Combat HIV and AIDS, Malaria and other Diseases
- Encouragement and implementation of free Voluntary Counseling and Testing. (VCT)
- Introduction of HIV and AIDS programmes at places of work
- Free Indoor residual(house) spraying to control Malaria
- Provision of free mosquito nets to pregnant and nursing mothers
 Environmental Sustainability
- Strengthening the capacity and operation of Environmental Council of Zambia currently
known as ZEMA
- Implementation of Annual Tree Planting Programmes
- Enforcement of Annual Fish Bans
 Global Partnership For Development
- Implementation of Anti-Corruption policies
- Strengthening of the Human Rights Commission
- Strengthening of partnership with Regional and International organisations.

Zambia’s efforts towards the attainment of the Millennium Development Goals

- During the period 2006 to 2010 , Zambia made a significant progress towards the
achievement of the MDGs particularly goal number 2 and 4. Though these goals could not
be achieved completely at least the country made some progress in all the 8 MDGS

Sustainable Development Goals (SDGs)

- Sustainable development is the development that meets the needs of the present without
compromising the ability of the future generation to meet their own needs
- SDGs are a set of 17 global development goals agreed upon by United Nations member
countries at the Untied Nations Sustainable Goals summit of 25 September 2015

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- These SDGs were set up in order to fight poverty inequality and Injustice, and tackle
climate change at all levels.
- SDGs go further in addressing the root causes of poverty and the universal need for
development that works for all people
- SDGs also known as Global goals are a build up of MDGs .SDGs are for a period from
2015 to 2030.
- The following are the SDGs.
 Goal 1; End poverty in all it’s forms everywhere by 2030
 Goal 2;End hunger: End hunger , achieve food security and improved nutrition and
promote sustainable agriculture
 Goal 3; Good health and well-being: Ensure healthy lives and promote well-being for
all
 Goal 4; Quality education: Ensure inclusive and equitable quality education and
promote life long learning opportunities for all
 Goal 5; Gender Equality : Achieve gender equality and empower all women and girls
 Goal 6; Clean water and sanitation: Ensure access to water and sanitation for all
 Goal 7;Affordable and clean energy: Ensure access to affordable , reliable ,
sustainable and modern energy for all
 Goal 8; Decent work and economic growth
 Goal 9; Industry, Innovation, infrastructure: Build resilient infrastructure, promote
sustainable industrialisation
 Goal 10; Reduced inequalities: Reduce inequality within and among countries
 Goal 11;Sustainable cities and communities: Make cities inclusive , safe , resilient
and sustainable
 Goal 12; Responsible consumption: Ensure sustainable consumption and production
patterns
 Goal 13; Climate change: Take urgent action to combat climate change and its impacts
 Goal 14; Life below water: Conserve and sustainably use the oceans , seas and marine
resources
 Goal 15; Life on land: sustainably manage forests, combat desertification, halt and
reverse land degradation , halt biodiversity loss

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 Goal 16; Peace, Justice and strong Institutions: Promote just, peaceful and inclusive
societies
 Goal 17; Partnership for the goals: Revitalize the global partnership for sustainable
development

Prepared by Didi N Namfukwe

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