Globalization is the continuous process of integrating and interacting among the individuals, corporations, and government of various countries. It is driven by the international trade and the investments. In this paper globalization is focused on Sri Lanka. This is a country located on an island in south Asia in southeast of India. It lies in the Indian Ocean adjacent to Palk Strait which separate it from peninsular India. On the globe, is found between latitudes 5°55′ and 9°51′ N and longitudes 79°41′ and 81°53′ E and has a maximum length of 268 miles (432 km) and a maximum width of 139 miles[1]. The approximated area of Sri Lanka is about 65,610 square kilometers and a total coastline of 1700 kilometers[2]. Close to the subcontinent of India has necessitated increased interaction of the culture between India and Sri lank since the time immemorial. During this moment, the maritime routes that linked the Indian Ocean also contributed highly to cultural change. The thesis of this paper focus on the impacts of the globalization on different aspects of Sri lank. They include economic, political, cultural, ecology and the workforce factors. The future effects of globalization would also be viewed.
Economic Dimensions
The gross domestic product of the nation in 2017 was $ 80.5 billion and the national income per capita was $ 3870.4. It is estimated that the rate at which gross domestic product is growing is 4.7. The economic freedom of Sri Lanka’s score is 57.8 becoming the 111th
freest economy on the index of 2018[3]. Its general score rose by 0.4 points with the investment and the business improvements. Sri Lanka is ranked at 25th position among 43 nations in the region of Asia-Pacific. However, this performance is still below the world and regional averages.
The country is experiencing high growth for the recent years. This is indicated by the parity of purchasing power and gross domestic product. The annual growth of economy between the periods of 2003-2012 was about 6.4 percent higher than the neighboring countries[4]. In terms of gross domestic product per capital, it is performing better than some countries in the region of south Asia. The nation also focus on the structural development and long term goals challenges as it fights to transit into middle economy.
The capital city of the country known as Colombo is located on the western side of the coast. The primary sector of the nation is agriculture. Tea, rubber and coconut continue to be leading products in export[5]. However, it also engages in the manufacturing and provision of services. The financial services and tourisms have increased because of nationalization policies being supersede with extensive liberalization. Moreover, the public organizations have been privatized as a result of changes in the policies.
Province
1990/91
1995/96
2002
2006/07
2009/10
2012/13
2016
Sabaragamuwa
508
726
629
467
210
167
133
Western
826
803
595
471
253
116
101
Central
659
842
631
573
256
166
142
Southern
655
743
667
338
247
188
75
Northern
92
114
84
Eastern
100
222
169
118
North western
507
558
616
342
272
140
65
North central
245
237
245
168
71
89
42
Uva
329
518
459
346
183
190
84
Sri Lanka
3729
4427
3841
2805
1806
1339
844
Table 1: Number of poor individuals in Sri Lanka by province. Source: Department of Census and Statistics
Table 1 shows the number of poor people by province. As per the year 2016, the highest number of poor individuals are found in the Central province while the least number are in North central province. The difference between the two provinces is very significant and it clearly indicates that the wealth and the income is unequally distributed. However, there is an improvement in the level of poverty from each province. The numbers of poor individuals are diminishing gradually from the year 1990 to the year 2016. The Western province has the highest economic growth rate as compared to other provinces even though it still records a significant number of poor individuals. In general as show by the country, Sri Lanka is growing at the fastest rate since the poverty level has reduced by around four times since the year 1990.
The image 2 indicate the percentage of poverty level in specific districts of Sri Lanka from the year 1995 to the year 2016. The rate of poverty level has been declining since 1995. Colombo being the capital city has the lowest rate of poor households with 0.6 while Kilinochchi has the highest rate of 15.0. It is also illustrated that some districts have low rates of poor households while others have high rates. Therefore, it symbolizes that the income is unequally distributed at district level. This is brought about by the allocation of economic resources in each district. Some regions are more economic developed than others and their economic growth is expanding rapidly. The overall rate of poor household in the nation has declined significantly from 24.3 in 1995 to 3.1 in 2016. Hence, the country is growing towards the upper middle income class.
District
1995/96
2002
2008/07
2009/10
2012/13
2016
Colombo
8.8
5.0
3.9
2.5
1.1
0.6
Gampaha
11.3
9.2
7.2
3.0
1.5
1.3
Kalutara
24.6
17.7
10.3
4.1
2.5
2.3
Kandy
32.7
20.9
13.9
8.3
4.6
4.2
Matale
36.8
24.5
15.7
9.3
6.0
3.2
Nuwara Eliya
25.9
18.2
27.5
7.1
5.6
4.6
Galle
25.5
21.7
10.7
7.7
7.7
2.0
Matara
29.5
23.2
11.7
8.3
6.2
3.7
Hambantota
26.2
27.8
10.5
5.4
3.8
1.1
Jaffna
12.4
6.6
6.0
Mannar
15.0
0.9
Vavunia
2.0
2.4
1.5
Mullativu
24.7
11.2
Kilinochchi
10.7
15.0
Baticalloa
9.5
17.0
14.3
8.1
Ampara
8.7
10.0
4.1
2.1
Tricomalee
9.0
6.2
6.8
Kurunegala
22.6
21.2
12.9
8.6
5.0
2.3
Puttama
25.8
24.5
10.6
7.5
3.3
1.6
Anuradhabura
21.9
17.2
12.7
4.6
6.3
2.7
Polonnaruwa
17.1
20.1
10.0
4.5
5.6
1.7
Badulla
35.8
31.5
21.0
10.9
10.4
5.9
Moneragala
48.4
32.4
29.2
13.9
18.8
4.4
Ratnapura
40.0
30.1
21.5
8.5
7.5
4.8
Kegalle
31.7
27.5
18.4
9
5.4
5.4
Sri lanka
24.3
19.2
12.6
7.0
5.3
3.1
Table 2: Poor household percentage by district. Source: Department of Census and Statistics.
Figure 1: Amount of foreign direct investment received from other nations. Source: http://blogs.lse.ac.uk/southasia/2017/09/12/china-is-sri-lankas-biggest-source-of-fdi-but-there-is-room-for-more/
Figure 1 indicates inflow of foreign direct investments from other nations. It illustrates that in 2012, the third largest contributor to Sri Lanka’s foreign direct investment donor was china with $ 185 million. Moreover, in 2014 it was the leading foreign direct investment donor in the economy of Sri Lanka with 403. The positon of china is closely followed by the United Kingdom whereas many donors’ nations saw their foreign direct investment reduction during the period in Sri Lanka.
The global competitive index of Sri Lanka is 85th out of 137. The performance reduced mainly because of institutional environment that is deteriorating, lower market efficiency of goods and poor infrastructure. Stability of macro economy requires to be a priority for the country as it continues to regulate high levels of leverage and attempts to restore a macroeconomic that is sound. However, the government was able to manage and reduce the deficit and regulate debt after it signed an agreement with International Monetary Fund in 2016. But still the interest burden is high and it makes a large portion of revenue collected. The increased inflation over the recent years has also pressurized the authorities to revise the monetary policies to attract investors.
Political and Regulatory Dimension
In the first era, the policy of development targeted the achievement of equity and economic growth objectives. The tools employed to attain economic growth involved industrialization of import substitution, both in manufacturing as well as foodstuffs. The main mechanisms used to attain the strategy of growth were imposition of some restrictions on exports and imports and the encouragement of local production[6]. The extensive programs of social welfare like the price subsidies on consumed foods, price control by the government and free education provisions and health care were the tools used to obtain higher equity. The welfare policies achieved important improvements as far as human development is concerned including reduced mortality rates, higher life expectancy and increased literacy rates. Nevertheless, increased welfare expenditure limited the growth of capital and capability to invest, reducing the growth of economy and resulting to increased unemployment and reduced wages.
The second era of economic development took place after 1977 which marked a movement towards the social market economy. The strategic plan aimed at liberalization of the market from excessive government interventions and it selected the private industry as the growth engine. Procedures and policies were developed to increase growth of economy by stimulating investment in private sector via particular incentives and accelerate foreign earnings through improvement of export-oriented economic activities. The policies of liberalization under the monitoring and supervision of World Bank and International Monetary Fund achieved the objectives.
Despite the government allocating portion of land in the east and north for development of economy, the investors have secured interests in different properties in general. The politicization and corruption is a significant issue in the court system, but independence of judicial systems have improved. However, corruption still remains a problem and the function of independent anticorruption body has brought about political controversy.
The market system of Sri Lanka represents a mixed economy in which the public and the private sector engage in the process of manufacturing. The various free zone have been established by the government to encourage the foreign investment activities. The nation’s financial system is highly developed so as both the domestic and foreign banks operate in the economy. The country is focused on market ideology that is free and has a liberal trade regime that is foreign in the world[7]. The performance of the market of Sri Lanka has been effective. Increased growth was experienced as a result of the government to restore the discipline measures in the public accounts. The banking that is market oriented, skilled labor and stability of political aspect led the country to rapid economic growth. Nevertheless, main obstacles involved inadequate infrastructure and public organization that are ineffective and inefficient.
The process of starting up the business has been improved with simple procedures to follow. Once the organization is on operation, the legal framework which is rigid through exercise of the employment Acts makes it challenging for the organizations to lay off its employees[8]. The cost of retrenching workers is very expensive and should be avoided or rather reduced to a minimum level. On one hand the country through the government have systems in place that control prices despite of the markets factors of demand and supply. It therefore fix the highest price to be charged on a specific product in case the organizations are taking the advantage of the situation. On the other hand, the government encourage production of essentials goods and provision of services through subsidies. This attracted investors to engage in businesses that are not lucrative.
Cultural and Communication Dimension
Hofstede classified cultural dimension of the nation into; power distance, uncertainty avoidance, individualism-collectivism, long versus short-term, masculinity versus femininity and indulgence-restraint.
Sri Lanka was colonized by the British. During this colonial period, the organizations were highly centralized due to a lot of supervisors were Britain. In neighboring countries the circumstance was similar. Even though today the senior most individuals in the organization are Sri Lankans still the condition prevail fairly in the institutions. Most of the government institutions have tall pyramids. The wage difference that exist in the market is high. For instance, when a doctor gets Rs.100, 000, a labour gets Rs. 10,000 monthly[9]. The difference is a bit lower compared to that of India since the government implemented actions for the recent months to rise the salaries and wages for government as well as the private sector. Therefore, the suggested index of power distance is 68 which is lower than India and higher than the United States.
The corporations in Asian countries are developed as a family unlike the Western countries. The circumstance is similar in Sri Lanka. For example, in a wedding individuals from a specific organization join together and aid the employee on organizational behalf. Therefore, the organization protects the interests of the employees in a way. It is a habit practiced by Sinhala and Tamil individuals. India has different races and it makes it less effective to defend the interests of employees.
The country is a Buddhist hence the rights offered to the men are equivalent to those given to women. The top positions in the organizations are held with both men and women in regard with qualification. Most women hold more qualified work and the country has once been led with a lady president and prime minister. The chair of telecom of Sri Lanka is a woman. The skills of women in nation have been adequately rewarded.
The country has also little uncertainty avoidance. The rules governing the individuals are not well implemented. Most railway crosses lack gates and pedestrians don’t watch the policies that guide zebra crossing. The nation has a culture with average avoidance of uncertainty, little stress levels and nervousness due to the people’s more perseverance to ambiguities. Sri Lanka has increased long-run orientation. The country is exploring crude oil and developing well interconnected infrastructure
Sri Lanka is inhabited with people of various ethnicity and region. The physical values of the early ethnic classes are distributed widely that occurred as a result of immigration and marriage. However, the groups have the social quality norms which is diffused in the changing culture. The determinants of class of individual is the amount of wealth as well as the educational level whereas the caste, a Buddhism and Hindu part of traditional is determined by birth into status hierarchy which is predetermined. The legitimacy and significant of caste contuse to be neglected by the economic development and political situation of the country. Unlike the caste, the differentiation of the class increases social interaction as well as disparities manifestations.
Ecological Dimension
The government has laid down policies and practices that the individuals in charge should follow to protect the ecological asset. The increased growth of population the provinces have led to expansion in industrial activities which has resulted to increased pollution. Therefore, the government has enacted environmental policy targeting the natural resources like water, air land to be efficiently managed. Additionally, strict standards of environment aid in and development for new market for ecological assets.
The income and pollution have brought higher demand for environmental policies. The forces of demand supply in Sri Lanka have led to reduction of intensity of pollution in economic activities. Nevertheless, policy action required to decouple activity of the economy as well as levels of emissions.
Protection of environmental demand is expanded which came at a cost. The cost-benefit course of action taken is estimated when environmental legislation is enacted. However, the benefits of the act to be implemented in Sri Lanka outweighed the costs of integrating ecological assets
The nation is faced with the various challenges that affect the ecological assets of the economy. First and foremost, the issue of production and consumption in the economy has hit the country for a long period of time. The poor quality and low food diversity that is available has posed for malnutrition which affects a large group of individual than hunger. Moreover, the increase in the level of calories has threaten the health of individuals causing obesity and overweight in the economy. The population of the nation is growing at a high rate leading to depletion of resources[10]. The portion of land for agricultural activities has reduced as many individuals settle. This has greatly affected the amount of goods produced for consumption and commercial purposes. However, the shortage of products have caused the nation to adopt unfavorable agricultural practices to increase the produce. The resultant effects are adverse and they include infertile soils and pollution of water from run-offs.
The change of climate and energy has also influenced ecological assets of Sri Lanka. The current emissions have led to increase in temperature which increases the chances of catastrophic consequences in the country. Even though the government has put the measures in place to regulate the use of the energy and recommend the utilization of the renewable energy, the emissions are still at the harmful level.
Another challenge on ecological assets is development of know-how and information. The country is much left behind in adoption of advanced technology in the process of production. A lot of public sectors are employing obsolete technology in their operations because they want to save in the short run. However, this is very expensive in the long-run since the quality of the products produced by the government is poor. The outdated system is also inefficient in the production which lead to high unit cost of production.
Globalization of financial institutions has further posed challenges to ecological assets. The international monetary fund has liberalized the capital market and improved the inflow of short-term funds. This function has enabled savings across the globe and which is advanced to the country for the purpose of investing in long-term projects.
Lastly, the challenge affecting the ecological assets in Sri Lanka is improver governance. The responsibility of the top management in the organization is to account and safeguard the assets of the organization. This is not the case with some senior most individuals managing both public and private organization. Their interest conflict with the interest of the shareholders and due to lack of enough and tough measures to prevent this scenarios from occurring, the officials engage themselves in corruption.
The Impact of Globalization on Workforce Demographics
Image: 4 Age structure
0-14 years: 24.06% (male 2,750,004/female 2,642,606)
15-24 years: 14.63% (male 1,666,859/female 1,611,379)
25-54 years: 41.58% (male 4,571,200/female 4,747,119)
55-64 years: 10.06% (male 1,043,199/female 1,210,930)
65 years and above: 9.67% (male 917,014/female 1,249,071) (2017 EST.)
Source: https://www.indexmundi.com/sri_lanka
The figure 2 indicates the age structure distribution of population in Sri Lanka. The age structure influences the socioeconomic issues of the country. The country has the leading percentage of youths and the percentage of elderly people. The government therefore is supposed to invest heavily on projects that create employment opportunities.
Figure 2: Population pyramid. Source: CIA World Fact-book
Population pyramid indicates the sex and age structure of the population of the nation and it gives insight about social, political and economic stability. The female and male groups are further classified into 5 age groups according to the maturity level. The pyramid population shape slowly change over time on the basis of mortality, fertility and trends of international migrations.
A large number of Tamils in Sri Lanka went to exile when violence unleashed between the Sri Lankan government and Tamils in the civil war that happened between 1983-2009. The significant group settled in Canada and India. In 1970s, migration for labor opportunities in the Middle East gave rise to Sri Lanka boom economy, involving growth of authorized and unauthorized agents with semi-skilled and unskilled techniques. Even though the policies that guided the migration of labor existed, a significant portion of migrants preferred the informal channels to prepare for their migration.
The immigration of Sri Lankan to Australia has steadily become dominated by skill in the previous years[11]. Introduction of temporary visa by Australian to skilled labor, students and employment during the holiday season highly caused the migration of Sri Lankan to Australia. The foreign country holds a third of students who go overseas. A trend has developed among who take visa for various reasons after which they take permanent settlement when they have achieved the main reason for visa.
Increased globalization due to rapid change of technology has led to rise in cultural diversity in the workforce[12]. The organization in Sri Lanka therefore are required to consider diversity to implement policies and practices for employees. Despite the challenges, it also offers benefit to corporations as it familiarize the management on the values and norms of different culture.
Secondly, the globalization has opened new markets for the companies worldwide. By engaging in these markets, the corporation increase their earnings as well as their market share. However, some companies have failed to penetrate in competitive markets such as Singapore hence increasing the chances of liquidation.
Globalization also provides training and development to workers. This has been facilitated through formulation of policies by management to create a conducive environment to employees[13]. The acquisition of new skills by the workers enables them to perform more effective and efficient in operations.
Sri Lanka has adopted international standards by providing favorable rule and regulation that not only encourage domestic industries but also foreign investment. This has increased the economic development and growth of the country. The poverty level has reduced significantly due to income earned from such foreign investments.
Globalization’s Future Impact
Globalization in Sri Lanka has led to signing of treaties with other countries which allow free movement of goods and services across the border. This step by the government has allowed to produce commodities which it has the comparative advantage hence optimally utilizing the existing resources. This will increase the economic growth in the future and the country continue to enter into multilateral agreements. The quality of health care will also improve as the country has facilitated mobility of labor. It can outsource specialized medical requirements from the laboring countries. The healthy workforce in the future will increase the level of productivity thereby reducing the unit cost of manufacturing. The rate of unemployment will decline in the future due to expanded market for employment. The Sri Lankans are shifting to Australia for further studies after which they decide to settle. Through attending the top universities around the globe, the workforce from the country will be on high demand increasing he gross domestic product per capita income in future. The interaction of different cultures will create harmony and reduce the challenges encountered when a Sri Lankan is offered a job in different nation. This will promote economic stability of the country.
Despite the positive impacts, globalization also result to pollution due to increased levels of industrial activities. The level of gas emission from the factories is increasing with increase in the number of industries. In the future the country might suffer from global effect which will change the climatic condition of the nation. The change of weather will affect the agricultural sector which is the backbone of Sri Lanka economy.
Endnotes
[1] Sri Lanka | Location, Geography, People, Economy, Culture " History. Retrieved from https://www.britannica.com/place/Sri-Lanka
[2] Sri Lanka | Location, Geography, People, Economy, Culture " History. Retrieved from https://www.britannica.com/place/Sri-Lanka
[3] Index of Economic Freedom: Promoting Economic Opportunity and Prosperity by Country. Retrieved from https://www.heritage.org/index/
[4] Economic Statistics of Sri Lanka 2017. (2017). Retrieved from http://www.statistics.gov.lk/EconomicStat/EconomicStat2017.pdf
[5] Enterprise Surveys Indicators Data - World Bank Group. Retrieved from http://www.enterprisesurveys.org/Data
[6] Impact of Globalization on Sri Lanka. Retrieved from https://www.nerdynaut.com/business/impact-globalization-sri-lanka
[7] DHL Global Connectedness Index 2017. (2017). Retrieved from http://www.dhl.com/content/dam/downloads/g0/about_us/logistics_insights/gci_2016/DHL_GCI_2016_full_study.pdf
[8] Info.worldbank.org. Retrieved from http://info.worldbank.org/governance/wgi/#reports
[9] Ibrahim, M. (2016). Cultural Dimensions of Hofstede and Their Impact on Organizational Performance in Sri Lanka. Retrieved from https://www.onlinejournal.in/IJIRV2I10/147.pdf
[10] The Global Competitiveness Report 2017-2018. Retrieved from https://www.weforum.org/reports/the-global-competitiveness-report-2017-2018
[11] Sri Lanka Age structure - Demographics. Retrieved from https://www.indexmundi.com/sri_lanka/age_structure.html
[12] Doing Business - Measuring Business Regulations - World Bank Group. Retrieved from http://www.doingbusiness.org/
[13] The Venture Capital " Private Equity Country Attractiveness Index. Retrieved from http://blog.iese.edu/vcpeindex/profiles/
References
DHL Global Connectedness Index 2017. (2017). Retrieved from http://www.dhl.com/content/dam/downloads/g0/about_us/logistics_insights/gci_2016/DHL_GCI_2016_full_study.pdf
Doing Business - Measuring Business Regulations - World Bank Group. Retrieved from http://www.doingbusiness.org/
Economic Statistics of Sri Lanka 2017. (2017). Retrieved from http://www.statistics.gov.lk/EconomicStat/EconomicStat2017.pdf
Enterprise Surveys Indicators Data - World Bank Group. Retrieved from http://www.enterprisesurveys.org/Data
Ibrahim, M. (2016). Cultural Dimensions of Hofstede and Their Impact on Organizational Performance in Sri Lanka. Retrieved from https://www.onlinejournal.in/IJIRV2I10/147.pdf
Impact of Globalization on Sri Lanka. Retrieved from https://www.nerdynaut.com/business/impact-globalization-sri-lanka
Index of Economic Freedom: Promoting Economic Opportunity and Prosperity by Country. Retrieved from https://www.heritage.org/index/
Info.worldbank.org. Retrieved from http://info.worldbank.org/governance/wgi/#reports
Sri Lanka | Location, Geography, People, Economy, Culture " History. Retrieved from https://www.britannica.com/place/Sri-Lanka
Sri Lanka Age structure - Demographics. Retrieved from https://www.indexmundi.com/sri_lanka/age_structure.html
The Global Competitiveness Report 2017-2018. Retrieved from https://www.weforum.org/reports/the-global-competitiveness-report-2017-2018
The Venture Capital " Private Equity Country Attractiveness Index. Retrieved from http://blog.iese.edu/vcpeindex/profiles/
