Law and Justice in a Globalizing World

Economic and political dimension of Globalization

and Impact on law in India

Department Of Laws,
Panjab University,
Chandigarh.

Submitted to:

Submitted by:
Parth Jain
1228/14
LLM 2nd Sem (1 Year)

Acknowledgement:
I want to thank all powerful, omniscient, omnipresent God who has always showered his
divine love and blessings upon me throughout my life.
My parents and my gurus have also worked very hard to bring me to this stage of my life
on which I stand today. Their continuous support and encouragement still inspires me to
dare and dream about doing the impossible, or near impossible, tasks.
A special vote of thanks to the subject teachers for constantly enlightening us with their
vast knowledge and experience.

Parth Jain

Meaning of Globalization:
Globalization is the process of international integration arising from the interchange
of world views, products, ideas and other aspects of culture.1 It has also been defined as
the worldwide movement towards 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.2
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 and the dissemination of knowledge.3
Roland Robertson, professor of sociology at University of Aberdeen, an early writer in
the field, defined globalization in 1992 as:
...the compression of the world and the intensification of the consciousness of the world
as a whole.4
Sociologists Martin Albrow and Elizabeth King define globalization as:
...all those processes by which the peoples of the world are incorporated into a single
world society5

Al-Rodhan, R.F. Nayef and Grard Stoudmann. (2006). Definitions of Globalization: A Comprehensive
Overview and a Proposed Definition
2
Globalization(Apr 3, 2015, 11:00 AM), http://www.businessdictionary.com/definition/globalization.html
3
International Monetary Fund . (2000). "Globalization: Threats or Opportunity." 12 April 2000: IMF
Publications
4
Robertson, Roland (1992). Globalization : social theory and global culture (Reprint. ed.). London: Sage
5
Albrow, Martin and Elizabeth King (eds.) (1990). Globalization, Knowledge and Society London: Sage.

Dimensions of Globalization:
Globalization has four main dimensions: economic, political, cultural, and ecological6.
1. Economic: Economic globalization is the intensification and stretching of
economic interrelations around the globe. It encompasses such things as the
emergence of a new global economic order, the internationalization of trade and
finance, the changing power of transnational corporations, and the enhanced role
of international economic institutions.
2. Political: Political globalization is the intensification and expansion of political
interrelations around the globe. Aspects of political globalization include the
modern-nation state system and its changing place in todays world, the role
of global governance, and the direction of our global political systems.
3. Cultural: Cultural globalization is the intensification and expansion of cultural
flows across the globe. Culture is a very broad concept and has many facets.
Topics under this heading include discussion about the development of a global
culture, or lack thereof, the role of the media in shaping our identities and desires,
and the globalization of languages.
4. Ecological: Topics of ecological globalization include population growth, access
to food, worldwide reduction in biodiversity, the gap between rich and poor as
well as between the global North and global South, human-induced climate
change, and global environmental degradation.

Steger, Manfred (2009). Globalization: A Very Short Introduction. New York: Oxford University Press

Economic Dimension of Globalisation:

Economic globalization is the increasing economic interdependence of national
economies across the world through a rapid increase in cross-border movement of goods,
service, technology and capital.7
Whereas the globalization of business is centered around the diminution of international
trade regulations as well as tariffs, taxes, and other impediments that suppresses global
trade, economic globalization is the process of increasing economic integration between
countries, leading to the emergence of a global marketplace or a single world market.8
Depending on the paradigm, economic globalization can be viewed as either a positive or
a negative

phenomenon.

Economic

globalization

comprises

the globalization

of production, markets, competition, technology, and corporations and industries. Current

globalization trends can be largely accounted for by developed economies integrating
with less developed economies by means of foreign direct investment, the reduction
of trade barriers as well as other economic reforms and, in many cases, immigration.
In India, business process outsourcing has been described as the "primary engine of the
country's development over the next few decades, contributing broadly to GDP growth,
employment growth, and poverty alleviation"9

Political Dimension of Globalization:

7

Joshi, Rakesh Mohan, (2009) International Business, Oxford University Press, New Delhi and New York
Riley, T: "Year 12 Economics", page 9. Tim Riley Publications, 2005
9
"Outsourcing to Africa: The world economy calls | The Economist", 16 April 2011(Apr 3,2015, 11:30
AM)
8

One of the major impacts of political globalization is that it reduces the importance of
nation states. Many have organized themselves into trade blocs. Emergence of
supranational institutions such as the European Union, the WTO, the G8, and The
International Criminal Court etc replaced or extended the national functions to facilitate
international agreement. This has reduced the sovereignty of nation states in taking
important decisions with respect to their country where we see massive intervention of
these organizations in all fields.
Another major impact of globalization is the increased influence of Non Governmental
Organizations in public policy like humanitarian aid, developmental efforts etc. Many
organizations have come forward with the mission of uplifting the most unprivileged
societies of the world where there is a massive funding of millions of dollars.
Globalization has also lead to the growth of terrorism. Terrorism can be seen as a
response from certain groups of people who were neglected and humiliated for centuries
which lead to the wide spread terrorist networks across world which was accelerated with
the ultra modern technology helping them to strengthen their network and activities.
The rise of global civil society is one of the major contributions of globalization. The
multivariate groups make up civil society which often protests against capitalism. This
shows the existence of a social sphere above and beyond national, regional or local
societies.

Globalization & Its impact on law in India:

Globalization has influenced economy, politics, law and several other factors that
determined the administrative strategy of the country in the modern era, but the Indian
Constitution from the time of its commencement had showed in certain vague traits of the
present globalization features. The Indian Constitution in its quasi federal nature had
adapted several principles from the United States, Australia, Germany and Ireland even
before the coinage of the word Globalization
With the introduction of Liberalization, Privatization and Globalization (commonly
known as the L.P.G.) policies in India as a measure for handling the fiscal deficits during
the year 1991, by the then Prime Minister P.V. Narsimha Rao, India virtually opened
doors for the free flow of men, material, information and technology across its borders.
The underlying aim behind introduction of these policies was simple, to save the nation
from economic crisis, and this could only be done by giving a boost to international trade.
While business sector, including the international business sector, has increased multifold
times since 1991, so have the legal problems. To handle such legal problems and to
ensure smooth running of trade, the legislature has enacted various laws.
As far as law and administrative policies of the Government of India is concerned, a
series of steps are taken to handle the emerging issues of globalization, to promote
international cooperation and to foster growth and innovation in India, such as:
1. Memorandum Of Understanding (MOUs): The Government of India has
entered in different Memorandums of Understanding between itself and other
countries.
Some recently entered MOUs are10:

10

Indo German Joint Declaration for Training of Indian Business Managers

MOU for Cooperation between India and WIPO

Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of
India, http://dipp.nic.in/English/International_cooperation/MOU's/MOU.aspx (Apr 3, 2015, 12:00 PM)

MOU between Ministry of Commerce & Industry of the Republic of India

and Ministry of Economy, Finance and Industry of the Republic of France

MOU between the Ministry of Commerce and Industry of India and the
Federal Department of Economic Affairs of Switzerland on Intellectual
Property

MOU Between MCI and Republic of Netherland

2. Bilateral Investment Promotion and Protection Agreement (BIPA)11: Bilateral

Investment Promotion and Protection Agreement (BIPA) is one such bilateral
treaty which is defined as an agreement between two countries (or States) for the
reciprocal encouragement, promotion and protection of investments in each
other's territories by the companies based in either country (or State). The purpose
of these agreements is to create such conditions which are favourable for fostering
greater investments by the investors of one country in the territory of the other
country. Such agreements are beneficial for both the countries because they
stimulate their business initiatives and thus enhance their prosperity.The
Government of India has, so far, signed BIPAs with 62 countries out of

which

50 BIPAs have already come into force and the remaining agreements are in the
process of being enforced. In addition, agreements have also been finalized and/
or being negotiated with a number of other countries.
3. UNIDO and India12: The United Nations Industrial Development Organization
was setup in 1966 and became a specialized agency of United Nations in 1985,
dealing exclusively with industrial development. It focuses its expertise and
resources to support developing countries and economies in transition to achieve
sustainable industrial development. India is a founder member of UNIDO. It is
both a recipient and contributor to the programmes of UNIDO.

11

http://business.gov.in/legal_aspects/bipa.php (Apr 3, 2015, 12:15 PM)

Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of
India, http://dipp.nic.in/English/International_cooperation/unido.aspx (Apr 3, 2015, 12:30 PM)
12

Apart from these administrative measures, Indian laws and legal profession have also
drastically changed to cater the new developing needs of this globalized era. Some
important legislations enacted post 1991 liberalization include:

The Public Liability Insurance Act, 1991

The Remittances of Foreign Exchange and Investment in Foreign

Exchange Bonds(Immunities and Exemptions) Act, 1991

The Foreign Trade (Development and Regulation) Act, 1992

The Arbitration and Conciliation Act, 1996

The Trade Marks Act, 1999

The Foreign Exchange Management Act, 1999

The Information Technology Act, 2000

The Prevention of Terrorism Act, 2002

The Right to Information Act, 2005

The Limited Liability Partnership Act, 2008

The impact of globalization on legal systems: 13

The functioning of our legal systems is also being continuously re-shaped by the various
socio-economic parameters of globalization. For instance, reliance on foreign precedents
is necessary in certain categories of appellate litigation and adjudication. For instance in
litigation pertaining to cross-border business dealings as well as family-related disputes,
the actual location of the parties in different jurisdictions makes it necessary to cite and
discuss foreign statutes and decisions.
Hence, domestic courts are called on to engage with foreign legal materials in fields such
as Conflict of Laws where they are required to rule on aspects such as proper
jurisdiction and choice of law as well as recognition and enforcement of foreign decrees
and arbitral awards.
Furthermore, domestic courts are also required to look into the text and interpretations of
international instruments (i.e. treaties, conventions, declarations) if their respective
countries are parties to the same.
However, the room for debate arises with respect to the citation of foreign precedents for
deciding cases where they may not be enough guidance or clarity in domestic law. This
trend has provoked some people to express their opposition to the reliance on foreign law,
especially in cases that involve difficult questions of constitutional interpretation.

13

K.G. Balakrishnan ,Justice in the 21st century: The challenge of globalisation, Introductory note for the
plenary session at the Qatar Law Forum, (Doha, Qatar - May 29-31, 2009) available at
http://www.supremecourtofindia.nic.in/speeches/speeches_2009/challenges_of_globalisation_for_justice__qatar_law_forum_may_2009.pdf (Apr 3, 1:00PM)