Legal and Regulatory Development of Nuclear Energy in Bangladesh

Abstract
The adequacy of legal and regulatory framework relating to nuclear energy in Bangladesh has sparked many questions since the government took the formal decision to establish a nuclear power plant (NPP) at Rooppur. Consequently, the government has taken some measures to make a comprehensive and robust framework to ensure safe and secure nuclear energy production in the country. Even though these initiatives are highly appreciable, there remain certain regulatory concerns which this paper has attempted to reflect. Therefore, the objective of this paper is to showcase the recent legal and regulatory development of Bangladesh in relation to nuclear energy and to recommend further developments. The study was based on secondary sources where a doctrinal research was carried out to solve particular research questions. The safety and security of the Rooppur Nuclear Power Plant will frankly rely on how the government of Bangladesh plans and learns to implement, design, safeguard, exchange and further develop nuclear energy related knowledge and talent around the country
Introduction
The considerable levels of risks posed by nuclear energy to the health, safety, and well-being of the people involved in its processes and surrounding environments means that these risks warrant careful management [1]. Although the risks are substantial and widely acknowledged, this technology promises benefits to many fields, including medical science, electricity production, agriculture, etc. [2]. Legal philosophers have long argued that any human action that generates only risks and yields no positive gains merits a legal regime of prohibition. Regulation alone does not suffice. Therefore, a distinguishing idiosyncrasy of nuclear energy legislation comprises a dual concentration on its risks and advantages.
Furthermore, national legal hierarchy is necessary to recognize that legal norms for the regulation of nuclear energy fall under the ambit of the State’s broad legal infrastructure [3]. Thus, laws pertaining to nuclear energy and technology should carve out its place within this hierarchy as applicable in most States. Scholars have so far identified several levels within this hierarchy.
The legal structure and regulatory system regarding a nuclear power plant (NPP) in Bangladesh has raised many questions from the very beginning since the government took the decision to go for the nuclear energy production. However, the government has taken some measures to make a comprehensive and robust framework to ensure safe and secure nuclear energy production in the country. Even though these initiatives are highly appreciable, there remain certain regulatory concerns which this paper has attempted to reflect.
The objective of this paper is to showcase the recent legal and regulatory development in relation to nuclear energy in Bangladesh. This paper first discusses nuclear energy development in Bangladesh and then evaluates the nuclear energy regulations of the country. It is recommended that the government should take initiatives to adopt a comprehensive energy law with more noteworthy emphasis on sustainability. Bangladesh also needs such a comprehensive atomic energy law to strengthen nuclear safety and liability related provisions. Nuclear energy production cannot bring development if the government of Bangladesh cannot possess solid State inclusion in managing monetary advancement, centralization of national energy planning, efforts to connect innovative advance to a national rejuvenation, impact of technocratic philosophy on approach choices, subordination of difficulties to political hegemony, and the paltry scale of civic activism in the country [4]. In sum, it is high time for Bangladesh to take all necessary steps that may assure a safe, sustainable and efficient nuclear energy production.
Energy in Bangladesh
Nuclear energy has emerged as an issue of global and local importance, propelled in large part by increased costs of fossil fuels, rising energy needs, concerns over inefficiencies in the energy mix, security of energy supply, climate change, its cleanness as less carbon polluting than fossil fuels, raw material availability, technicians and scientists’ interests, etc. [5]. Nuclear power supplies a large amount of the world’s electricity needs [6]. The efficiency of nuclear power is well-documented. For example, 1 kg of U-235 has been shown to be able to produce more than 24 million kWh worth of electricity [7]. By comparison, a wholly combustive or fission-based process yields 8 kWh worth of heat via conversion from 1 kg of coal. The same amount of mineral oil conversion results in 12 kWh [8].
At the start of 2011, before Fukushima, there were 441 NPPs in operation in 30 countries [9]. In 2016, 13 countries generated more than 30% of their total electricity from nuclear: France generated 77.7% of its electricity from nuclear power; Slovakia, 54%; Belgium, 54%; Ukraine, 47.2%; Hungary, 43.3%; Slovenia, 41.7%; Switzerland, 40.9%; Sweden, 39.6%; South Korea, 34.6%; Armenia, 33.2%; Czech Republic, 33.0%; Bulgaria, 32.6%; and Finland, 31.6% [10,11].
Figure 1, Figure 2 and Figure 3 demonstrate an overview of worldwide energy production capacity, nuclear capacity, and distribution of energy sources respectively. In particular, in Figure 1, bigger bubble sizes indicate more nuclear reactors available, while darker colors indicate higher proportion of energy being generated through nuclear sources; Figure 2 indicates domestic share of nuclear power generation for nuclear reactor rich countries; Figure 3 explains the worldwide energy source distribution which displays the contribution of fission technology in the modern world.
In light of the discussed challenges, various resource-rich heavyweight countries have realigned their existing plans pertaining to expansion of atomic power plants [13]. Examples of such countries include India, Kingdom of Saudi Arabia (KSA), the United Arab Emirates (UAE), South Africa, China, Vietnam, the United Kingdom (UK), and the United States of America (USA) [10]. Bangladesh is no exception. The steady upward trend in global prices in fossil fuels, crude oil, and coal [14], and overall dearth of natural gas reserves indicate that, for the foreseeable future, Bangladesh will face pressures in meeting its energy demands, and this pressure will sustain. The environmental impact [15] of this phenomenon should not be discounted either. Under these circumstances, nuclear energy is an attractive strategic option for the Bangladeshi government. This is reflected in the government’s decision to construct NPPs to stimulate the ongoing economic growth and meet consumer and industry demands. Thus, Bangladesh has undertaken serious initiatives to commence NPPs to mitigate the ever-surging power demands in one of the sprinting economies in the world.
While Bangladesh has been known worldwide as an agriculture-based economy that frequently combats natural disasters, Bangladesh has undergone significant industrialization in the past two decades. The proportion of heavy industries’ contribution to the gross domestic product (GDP) bears the testimony in this regard. Thus, it is hardly surprising that Bangladesh’s policy makers have connected the increase of power generation to the rise of gross domestic product (GDP) growth [16]. The greatest rational behind the nuclear power production is the prospect of minuscule input producing a great deal of power. The first batch of these projects, Rooppur (located in Pabna district) [17], is a joint collaborative effort with Russia’s State based Nuclear Energy Corporation (ROSATOM).
In May 2010, an intergovernmental understanding was marked with Russia, giving a lawful premise to atomic participation in territories, for example, siting, outline, development and operation of energy and research in atomic reactors, water desalination plants, and basic molecule enrichment agents [17]. Thus, the journey to produce the nuclear power energy has already begun. However, despite enthusiasm at the State’s administrative level, some oppositions exist in implementation of NPPs, especially in the form of negative perception and attitude held by certain quarters of the population and intellectual stakeholder community. Therefore, it is the right time for the government of Bangladesh to take initiatives to deal with the challenges for the safe and secured production of nuclear energy. It is imperative that without a strong nuclear safety regulatory framework, it would not be possible for Bangladesh to ensure safe nuclear energy production.
As with most ventures, Bangladesh’s foray into the nuclear energy realm is a double-edged sword [18]. Although Bangladesh has a lot to gain from this pursuit, the challenges need equally careful considerations, particularly given the high stakes for a developing and high-density country such as Bangladesh. Nuclear energy surely can be a prospective medium of energy source to meet the massive energy demand in Bangladesh, however, for that, the government of Bangladesh must equip themselves with all the necessary tools before going to harness the benefit of such technology.
Nuclear energy is considered to be the most dangerous process in the production of energy [19] and that how a developing and densely populated country such as Bangladesh takes the initiatives to address the challenges regarding the NPP should be revealed. The most important question is whether Bangladesh can survive any NPP disaster such as the Chernobyl disaster (occurred in the former Soviet Union, now in Ukraine) and the very recent Fukushima (Japan) disaster, when Bangladesh is already vulnerable to natural calamities.
Japan took immediate action after the occurrence of the Fukushima disaster, thus the human losses from the Fukushima nuclear accident itself could have been practically avoided. However, the economic consequences and socio-political impact of the disaster seriously affected the public attitude towards nuclear power and are expected to pertain for quite some time in the future [19].
One of the basic purposes of present fervor for Bangladesh will be the planning and availability of qualified staff to meet the staggering necessities of the procedure and broadening program. Regardless, the path chosen to develop qualified human resources and personnel needs to consolidate each of the issues that impact human resource training; for instance, activity, organization structures, working society, atomic data organization, and individual perspectives [14]. In particular, for Bangladesh, it is rudimentary that a productive nuclear power program requires an extensive system. Hence, this paper completely breaks down the atomic foundations, offices, research affiliations, authoritative offices, and government divisions in Bangladesh and assesses whether such bodies have nuclear aptitudes and informational capacity to ensure that nuclear projects are ready in a safe and secure manner. There is no denying that constructing a solid backbone and enhancing a nuclear regulatory system is imperative to avert any NPP disaster [20]. Instead of operating a single, comparatively miniature NPP to achieve the know-how and expertise, concurrently Bangladesh is moving toward two high output (1200 MWe and 3000 MWth) plants, and, according to experts, the government aims to spend enormous costs on them [21].
Regarding the economic and safety viability of the recommended NPP at Rooppur, not only academics, engineers, doctors, surgeons, scientists and other experts from Bangladesh but also many foreign nationals and dignitaries, are anxious about the setup.
In Bangladesh, where the conventionally placed coal-based or gas power plants are tumbling down frequently, mostly due to incorrect installation and lack of decent maintenance, the question certainly arises: How secure would a sophisticated NPP be? Gas disasters, naturally, pale in comparison with nuclear disaster in terms of damage and risk to public safety. There exist serious concerns and, therefore, a study about the introduction of nuclear energy in Bangladesh from a legal point of view should be conducted.
A disaster such as Fukushima provides a chance to reconsider [22], venture back, factor in, and evaluate all the more extensively where, as a group and as a general public, we stand [23]. Industrialized nations such as Japan and the USA could react promptly after the nuclear debacle [24]. Is there any guarantee that a developing nation such as Bangladesh with scant resources can replicate their success of recovery? There is no reason to believe Bangladesh can achieve that, given its present scenario and infrastructure. It is important to understand that we welcome any new technologies that come forward; however, such technology must be equipped with proper tools for safe and secure generation and production.
The commitment of Bangladeshi government toward ensuring the concerns related to safety of atomic power plant and power generation as a whole cannot be doubted [16]. Other than the liability issues, the government of Bangladesh has been trying to come up with a solid legal structure. There remain certain loopholes in that structure. However, the government’s genuine intention to provide the best regulatory structure must be appreciated.
Energy Regulation in Bangladesh
The first step in regulating nuclear energy in any State includes assessing the present and future anticipated programs and plans concerning atomic techniques and materials [25]. This is regardless of whether the country is adopting a brand new framework for a legislation, revising an existing one, or simply updating one or more aspects of its legislation [26].
Scholars have identified several levels within the hierarchy of a nation which is going to build new nuclear power plants. The first, ordinarily held as the constitutional level, sets the primary legal and institutional framework to govern all relationships in the State [27]. The statutory level is directly underneath the constitutional level, at which particular laws are passed by a parliament to place other imminent bodies and to foster the rules connecting to the wide range of activities concerning national interests [2].
The third level includes very comprehensive regulations that are usually quite technical to regulate or control activities stipulated by the legal instruments [2]. By reason of their distinctive character, the expert bodies (comprising bodies nominated as regulatory authorizations) usually state these rules. In addition, these bodies are authorized to look after specific domains subjected to national interest and promulgated through the national legal framework.
A fourth level comes with non-mandatory guidance instruments containing instructions meant to serve organizations and persons to meet the legal specifications [25]. Based on which kind of nuclear ventures a nation chooses to sanction, the optimal use of the nuclear technology may require the employment of a wide array of laws initially associating with other subjects (for instance, industrial safety, environmental protection, mining, transport, administrative procedure, land use planning, electricity rate regulation and government ethics).
Usually, the discrepancies from the general structure of national legislation ought to be accepted only where the distinctive characteristic of an activity justifies the special treatment. Consequently, up to the degree that an activity deals with nuclear is modestly incorporated in other laws, it should not be necessary to issue new laws. Nevertheless, from the initial stage of its advancement, to make sure the proper management, nuclear energy has always been acknowledged to use special legal design. Bangladesh, thus far, has followed these levels to incorporate new regulatory structure particularly for fission technology. However, there are still some gaps, which need to be addressed soon to make a comprehensive nuclear regulatory regime. This paper attempts to find such gaps and recommend the Government of Bangladesh to take necessary regulatory steps to ensure the safe and secure nuclear energy production.
In the case of Bangladesh, the agency appointed to deal with assessment of safety and security of nuclear energy is Bangladesh Atomic Energy Commission (BAEC) [28]. This is a scientific research organization. Established in 1973, two years after the liberation war, its primary goal is promotion of using nuclear energy for peaceful purposes and to maximize citizens’ export.
BAEC, subjected to the presidential order of 1973, enjoys the role of sole beneficiary owner of the NPP and thus is entrusted with our atomic regulation related aspects. Meanwhile, Bangladesh Nuclear Power Action Plan (BANPAP) (2000) and Bangladesh Atomic Energy Regulatory Authority (BAERA) operate under the auspices of existing Nuclear Safety and Radiation Control (NSRC) Acts (1993 and 1997), and Bangladesh Atomic Energy Authority (BAEA) Act (2012) [29].
The International Atomic Energy Authority (IAEA) safety standards, established under the prevailing domestic legislation frameworks, requires the organizations interested with operation of NPPs to liaise with an independent regulatory body [24]. This law empowers the BAERA with the ability to a apprise safety and security related to atomic plants, protecting the personnel from radiation, authorization, transporting and managing waste materials, assessing and shielding raw material and liabilities for transportation, and overall operation of nuclear facilities throughout the country.
Regardless of which regulatory agency is vested with carrying out assessment criteria, be it from the government, a committee from the legislation body, or an independent expert panel, the actions of that regulatory agency should not constrict itself to the confines of present and expected programs in the immediate future [30]. Instead, they should be versatile enough to contemplate and design programs which could surface and a somewhat more distant future keeping in mind the fluid and swiftly changing patterns of the global economy. As such, we argue that designing advance legislative guidance pertaining to operational parameters of atomic energy related actions and its concomitant regulations is a superior proactive strategy compared to the present patterns of reactive policies, even if that means that the present guidance is hastily drafted and requires revisions in the future. This is far better than abandoning guidance and leaving operations without any regulatory oversight. Previous precedents from nuclear disasters have shown that nuclear activities, even if carried out in good faith, run the risk of environmental, safety, health, security, and economic pitfalls.
Along these lines, the Bangladeshi government has viably figured out how to develop the definitive structure to erect a sustainable and responsible framework for NPP in general and to create, commission and work the country’s first nuclear power plant: the Rooppur Nuclear Power Plant. In line with this commitment, the BAER Act has quite recently been maintained with robust commitment from national specialists, IAEA and furthermore a well-reputed vendor country to set up an independent managerial body, the BAERA, to execute administrative obligations without undue obstacle from the bodies responsible for making, progressing or operational assignments of nuclear foundations [30].

3.1. Assessment of Laws and the Regulatory Framework

Generally speaking, new atomic legislation should incorporate a complete appraisal of the status of all things considered and administrative courses of action significant to atomic energy [2]. This undertaking may not be a direct one. In most national legislation frameworks, numerous arrangements not particularly coordinated towards atomic related activities can have a considerable effect on how such activities are directed. Notwithstanding broad environment laws, enactment concerning financial issues (e.g. tax collection, liabilities, administrative charges, financial punishments and the setting of energy and utilities rates), workers’ wellbeing and security, criminal enforcement, planning of land uses, worldwide customs and trade, scientific research, and many other related disciplines, may encroach on endeavors pertaining to atomic related activities [31].
Bangladesh has repeatedly demonstrated her commitment and responsibility to anchor and advance human rights. Common and political rights are seen in the constitution as real rights. Article 11 of the Bangladesh Constitution communicates that the Republic will be a prominent government in which significant human rights and openings and respect for the pride and worth of the human individual will be ensured [32]. Indeed, even money related, social and social rights are recognized and regarded by the Constitution of Bangladesh. The constitution arranges that it will be a key obligation of the State to achieve, through arranged financial development, a steady addition in helpful forces and an unwavering change in the material and social lifestyle of the overall public with a view to anchoring to its nationals the arrangements of the key necessities to life, including sustenance, protection, shelter, clothing needs, education and instruction, and human services [33].
Along these lines, energy is inseparably associated with other basic human rights and in most of the cases a precondition to fulfill substitute rights. Reports such as the American Convention on Human Rights, the African Charter of Human and People’s Rights, the Johannesburg Declaration on Sustainable Development, the UN Declaration on the Right to Development, the Stockholm Declaration on the Human Environment and others give state change and affirmation of various human rights through comprehensive access to energy.
Bangladesh is a nation host to countless conventions and in this manner is bound to fulfill each of the responsibilities constrained by them. Both the Fundamental Principles of State Policy and the Fundamental Rights’ parts of the Constitution of Bangladesh contain courses of action, which are overwhelmingly dependent on comprehensive and feasible access to energy. Article 15 of the constitution includes different rights major for the affirmation of the benefit to an adequate lifestyle, including access to agreeable sustenance, clothing, survival, and to the persistent change in living conditions. These rights are interrelated with the basic access to energy. That very article similarly empowers commitment on the State to ensure respectable work condition, which is unavoidable with genuine access to energy. In addition, Article 16 is based on common and country progression, while ceaseless access to energy is considered the best and most critical instrument to get positive changes in this domain.
The provision in Constitution of Bangladesh additionally ensures work with reasonable wage, right to standardized savings, and personal satisfaction. The established arrangements are made to ensure, advance and regard financial improvement as a constituent of human rights in Bangladesh. Be that as it may, the current context is prejudicial as half of rural populace has no access to power. Despite what might be expected, as indicated by the United Nation’s Least Developed Countries (LDC) Report 2017, 84% urban citizens get power but the rate is as yet unsuitable contrasted with the world average [34].
In any case, the next few articles of Bangladesh Constitution again stress citizen’s rights to education, well-being and environmental security and conservation, which are not in the slightest degree achievable by the State if access to energy facilities is not ensured. Moreover, Article 31 ascribes the right to life as a major right, which doubtlessly incorporates right to employment. Nonetheless, right to life revered in Bangladesh Constitution fails to translate as right to breathe and live as a mere animal. Instead, it imputes great importance on life incorporating right to live with dignity, respect, and comfort, as attested by the Judiciary in Ain O Salish Kendra vs Bangladesh, 1999 BLD 488 case [35].
In this manner, the privilege to have access to power can be translated as a sacred commitment of the State and enforceable by the court. Moreover, it is a protected commitment for the government of Bangladesh not exclusively to give sufficient quantity of energy to its citizens, but also to ensure the safe and secure production of the energy.
Along these lines, there is no extent of circumventing this duty by claiming falsely that there is no particular law on citizens’ rights to gain access to energy. Instead, if the full notion of the Bangladesh Constitution is considered, it becomes clear that the goal of the constitution is to slowly improve the standard of livelihood for the peoples of this Republic. To reiterate, the State component should look into the matter of all-inclusive access to current energy from a human right point of view to make it more comprehensive.
Moreover, it is additionally required to proceed with the issue with cautious and sincere insight for the improvement of the country and its long-term sustainable growth. From an economic point of view, considering the scarcity of resources, we should make present day energy authorities accessible in view of equality and non-segregation to the entire populace including those who are left behind by the society; the most underprivileged.
To understand the legal procedure relating to any aspect of a nation, it is very important to look into the country’s regulatory structure and hierarchy. Therefore, Figure 4 shows the structure and hierarchy of the laws in Bangladesh to construct a comprehensive regulatory idea about the nuclear energy for the country.
Conclusion
In the context of Bangladesh, an exigent issue in need of swift remedy is the preparation and accessibility of qualified personnel to stay on par with the overwhelming demands of the proceeding and extending program. At any rate, human resource development models should factor in all issues relevant to human execution, for instance, administration frameworks, initiative, planning, working society, administration of nuclear information, and individual states of mind. The Bangladeshi case is more interesting because for the citizens here it is immediately necessary that a productive nuclear power program to generate a comprehensive framework. Therefore, this paper engages in in-depth analysis of nuclear facilities and their establishment, and examines their associations, interrelationships, governmental hierarchies, etc. Moreover, the paper appraises if the vested authorities possess the requisite nuclear-related skill-set and instructional capacity to operate suitable nuclear preparation programs.

Citation
MDPI and ACS Style

Karim, R.; Muhammad-Sukki, F.; Karim, M.E.; Munir, A.B.; Sifat, I.M.; Abu-Bakar, S.H.; Bani, N.A.; Muhtazaruddin, M.N. Legal and Regulatory Development of Nuclear Energy in Bangladesh. Energies 2018, 11, 2847.

AMA Style

Karim R, Muhammad-Sukki F, Karim ME, Munir AB, Sifat IM, Abu-Bakar SH, Bani NA, Muhtazaruddin MN. Legal and Regulatory Development of Nuclear Energy in Bangladesh. Energies. 2018; 11(10):2847.

Chicago/Turabian Style

Karim, Ridoan; Muhammad-Sukki, Firdaus; Karim, Mohammad E.; Munir, Abu B.; Sifat, Imtiaz M.; Abu-Bakar, Siti H.; Bani, Nurul A.; Muhtazaruddin, Mohd N. 2018. “Legal and Regulatory Development of Nuclear Energy in Bangladesh.” Energies 11, no. 10: 2847.

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Some thoughts on Globalization

Preamble

The concept of globalization is deceptively simple. Like most academic concepts, there is no monolithic definition of globalization. Concisely put, globalization is the extension of a simple, country-bound market. Broadly speaking, it can be considered the expansion of linkages across geo-political boundaries, leading to a re-organization of social and economic life in an unprecedented scale, and by extension global consciousness. Despite the broadness of this definition, its parsimony in capturing the true scope of the term is confessed. While generally globalization is construed in positive light due to the perceived benefits of increased communication, free trade, economic growth, greater trans-national exchange of people, ideas, culture, and technology, empirical claims suggest its pros may have been overstated (Kiser and Laing, 2001). Strictly from an economic perspective, the widening wealth gap, the contagious nature of inter-dependent financial markets brought about by globalized economic integration, over-dependence on debt to sustain the economic pyramid, irrational expansion of markets have not only garnered the attention of economists but also pundits from all disciplines; so much so that many socialists consider the term globalization a pejorative (Gupta, 2006), with some believing it a pre-cursor to revolution (Tally, 2013). In the course of this paper, the economic pros, cons and dichotomies of this phenomenon will be addressed, and potential areas for future research will be adumbrated.

 What does globalization entail?

Admitting upfront the ambit of this paper is on the economic aspects of globalization, it would be remiss to overlook the multi-disciplinary tentacles of globalization. As such, the definitions propounded by experts are rich in the diversity of their disciplinary spectrum. For example, McMichael (2000), from his Economics vantage point, considers globalization integration on the basis of a project that pursues market rule on a global scale. T L Friedman offered an influential view, calling it the inexorable integration of markets, nation-states, and technologies that enable reaching the world farther, faster, deeper, and cheaper (Satyavrata, 2004). The most eloquent and holistic definition, in the survey of this writer, lies in Mittelman’s (2000) understanding of globalization:

“As experienced from below, the dominant form of globalization means a historical transformation: in the economy, of livelihoods and modes of existence; in politics, a loss in the degree of control exercised locally . . . . and in culture, a devaluation of a collectivity’s achievements . . . . Globalization is emerging as a political response to the expansion of market power . . . . [It] is a domain of knowledge.”

In light of the definitions presented above, the practical scope of globalization is fairly clear.

Debate on Globalization

The controversy surrounding globalization is not new. The question of whether its pros outweigh its cons has been debated by many experts from many disciplines. While many economists are concerned with the empirical challenges of quantifying the performance of globalization, experts in other fields offer alternate viewpoints of apprising globalization. For example, Cooper (2001) analyzes globalization from a historical perspective, given Africa’s colonial and slavery-ridden past. A study sanctioned by WHO investigates the question of how globalization impacts the healthcare of global citizens (Dollar, 2001). From a risk and management angle, Schwartz and Gibbs (1999) conduct a unique study chronicling risky and irresponsible behavior of trans-national corporations impelled by the age of globalization. Without digging deeper, it’s safe to say the debate surrounding the efficacies and justification of globalization has is old, extensive, and far from settled. In the proceeding paragraphs some backdrop will be provided for this debate as a prelude for the writer’s subsequent economic analyses.

Globalization generally positively impacts a nation specializing in a particular good or service, provided that country is able to find a consenting partner for exchange; i.e., generate trade. The torrent of regional and global economic integration, coupled with free trade campaigns have resulted in an unstoppable push for economic globalization. While many experts laud the trend (Irwin, 2015; Behren and Murata, 2012), citing the abundance brought forth by modernization, growing wealth, and living standards, a sizeable number of nations haven’t forgotten the ills of globalization. The evidences range from colossal inequality and underdevelopment of previous colonial countries of Africa and Asia to present day American imperialism (Kwame-Sundaram, 2014), modern financial aggression (Borio, 2014), proliferating culture of profit-maximization (Young and Akhija, 2014; Gandolfo, 2014; Dolgui, Kovalev, Pesch, 2015), etc.

Longitudinal and cross-sectional studies have shown ameliorated living conditions based on broad indicators of well-being across the decades contemporaneous with globalization (Zhang and Herring, 2012; Shaikh, 2007; Yusuf, Everett, and Wu, 2001). While this rings true for most countries, the highest beneficiaries have been advanced economies; in fact, most developing economies significantly lag behind (Askari, Iqbal, and Mirakhor, 2010).

So far, the main spur behind globalization is international trade. The exponential rise in trade is linked with higher economic activity, and thereby growth. This is not universal, however. For instance, at a time when yearly growth rates in ASEAN countries ranged between 6% to 8%, most African countries scored below 0.5% (Urata, 2002). This growth is also touted to have created more jobs and thus reducing unemployment. A closer look, however, shows us that despite creating more overall new jobs, the effect hasn’t been across the board. Indeed, many economies witnessed massive laying-off of workers to cut costs to remain competitive due to higher international competition, boost efficiency, and simply improve profit (Margalit, 2011; Tripathi, 2014). Case in point: China in recent years has been grappling with urban unemployment, which is beginning to affect rural economic clusters too (Zhang and Rasiah, 2015).

Thus, it is understandable why the debate rages on regarding the acceptability of globalization’s virtues. In the following sections, the good, bad, and the objective dichotomy of economic well-being of nations brought on by globalization will be presented.

Globalization: The Good

The positive economic impacts of globalization can be distilled into several distinct aspects. First, despite what detractors of globalization claim, the economic growth and development of most nations in 20th century was astounding (Crafts and O’Rourke, 2013). This accelerated ascension to economic well-being is exemplified by the Asian Tiger economies of the 1990s, who leap-frogged the West’s 200 years of economic growth in just over 200 years (Rodrik, 2012). Secondly, technology has further catalyzed this phenomenon. Case in point: Norwegian telecom giant Telenor, while justifying their foray into South Asian market, noted the accelerated effect of globalization in helping poor nations like Bangladesh and Pakistan bypass a proper land-line telephonic network and to embrace 2G GSM/WCDMA network right away. Furthermore, the dissemination of knowledge brought about by globalization led to increased awareness, transfer of technology, and ideas, all of which in turn accelerated both globalization and its capacity to generate wealth (McMillan and Rodrik, 2011). So in a way globalization has achieved a self-perpetuating growth phenomenon.

One of the most vaunted products of globalization has been the explosion of free trade. In theory, it reduces barriers like import tariffs, VAT, government subsidies and other non-tariff barriers (Costinot and Rodriguez-Clare, 2013). Enhanced global trade leads to economic growth of participant economies and creation of jobs. It also makes businesses more competitive and offers more variety and options for consumers, who also benefit from lower prices. In addition, countries reliant on semi-skilled and menial labor, who typically are also economically laggards (Jensen and Lindstadt, 2013), benefit from influx of direct foreign investment, transfer of technology and stand to gain from economic and technical development, higher standard of living, lower unemployment—all of which that are linked to fostering a democracy-friendly environment; this is supposed to make a country socially and politically more stable.

Since most businesses now have a global market to tap, the potential to grow is theoretically unlimited. Cultural intermingling facilitated by technology means two economies which have historically nothing in common and/or are geographically apart can now benefit from mutual trade and exchange of information, ideas, etc. (Narula, 2014). This has also led to higher level of tolerance and mutual understanding heterogeneous peoples. Labor and capital also have the option of finding the most rewarding destinations. The proliferation of multinational companies enabled installation of plants, highways and infrastructure facilities in poorer countries that resulted in employment and basic benefits for their citizens—helping alleviate poverty (Rodrik, 2012). And lastly, as the recent TPPA is a reminder, globalization has led to forging of many regional alliances and economic integration (Kaplinsky, 2013).

Globalization: The Bad

The greatest bane of globalization has been creation of wealth disparity. Simply put, the rich got richer, and the non-rich poorer. During the most prolific period of international trade (1960 to 2000), inequality of income grew heavily between nations, as well as within. UNDP reports suggest that 86% of the world’s resources are hogged by the richest 20%, and the remainder 14% is accessible to poorest 80% (von Braun, 2012, Van de Vliert, and Postmes, 2014).

Despite theoretical slogans of free trade with no barriers, in practice nearly 170 countries still impose VAT on imports (Leviner, 2014). In many European countries, taxes of nearly 25% are imposed (De-Hu, 2012). For the rich countries, loss of jobs is a big economic as well as social concern. As capital and labor seek the most optimal, economically proficient destination (usually poor economies), jobs are lost in the developed nations (Margalit, 2012; Geishecker, Riedl, and Frijters, 2012). China’s emergence as the export superpower has contributed to de-industrialization and manufacturing job loss of many millions in the USA and Europe. It also resulted in widening trade deficit.

The loss of jobs in developed nations is aggravated by the derivative trend of demanding pay cuts from their employees, who would otherwise lose their jobs for non-compliance (Margalit, 2012). This fosters a culture of fear for many blue collar and white collar workers.

Lack of uniformity in tax laws enables transnational enterprises to exploit tax havens (Leviner, 2014) like Cayman Islands, Bermuda, etc. Spurred by an obsessive motive of profit, these companies also carry the blame of imposing unjust and unfair working conditions, indentured slavery, exploitation of poor workers and economic migrants, child labor, unsafe working conditions, environmental mismanagement, and causing permanent ecological damage to many natural resources (von Braun, 2012). Although not strictly economic effects per se, when translated to monetary units, these losses grow staggering.

The instability witnessed in financial markets worldwide comes with massive socio-economic costs and human resource costs (Asongu, 2012, Bekaert, Ehrmann, and Fratzscher, 2014). There’s also a mismatch between the economic and financial system, as well as historic institutions that were originally designed to govern the economic and financial system (Chai, Liu, Zhang, and Xu, 2013). The propensity of funds to flee one market at the earliest sign of discomfort has had a cascade effect on capital flight (Briere, Chapelle, and Szafarz, 2012), increasing volatility of equity and derivatives market. The currency crises of 1997 and fall of Euro in the 2010s have been precipitated by the inter-connectedness brought about by globalized economic integration (Beck, Claessens, and Schmukler, 2013).

Globalization: The Dichotomy

As globalization envelops the world, the economic well-being and social welfare of economies are inextricably intertwined. Such interdependence has evolved over the past 20th century, culminating in today’s impasse where the richer nations are now rich but with the caveat that their richness is dependent on the performance of poorer countries. The proportion of world population today living in indigence is an alarming figure, and it’s growing. The irony is this growth of poverty is concomitant with unprecedented human capacity to generate wealth. As cited by Frenk and Moon (2013), the Commission on Global Governance succinctly prophesied in 1996, “a sophisticated, globalized, increasingly affluent world currently co-exists with a marginalized global underclass.” Lower travel and transportation cost has spurred a slew of economic migrants seeking better fortune for themselves and their families, leading to a migrant crisis in many countries. The result has been unsatisfactory for all—a lose-lose situation as global governance has failed to cope with newly rising challenges of migratory crises.

Another interesting aspect of globalization is, as Roine and Waldenstrom (2008) find out, the rich countries are now beginning to get poorer together. An image generated from their study is attached in the next page to demonstrate the trend.

The cultural aspect of globalization has economic implications as well. More communication induced by globalization allows for higher exchange of ideas and a broader vision. The interchange of ideas and culture allows one nation to shape its products and services to fill the void in another and thusly benefitting both nations. Obviously, the poorer economies, having poorer technological infrastructure, are surely lagging in this regard.

Globalization: A Tale of Two Hemispheres

Most topical in recent years, especially around the landmark TPPA signing has been the disproportionate distribution of income. While some studies find that the rising volume of trading between Northern nations and Southern nations can be linked to reduction in income disparity amidst skilled workers (Sheppard, 2012), the intra-North income inequality rose in the

Northern countries. Since manufactured exports of Southern origins increased the wages and demand for low-skill jobs in the South, in the North the service sector usually offers the highest paid jobs. As such, workers of semi-skilled or menial persuasion faced lay-off (Glen, 2012).

Topics Ripe for Globalization Research 

From an economic research perspective, the jury is still out on whether the world itself is fully better off due to globalization, or at least most parts. The disagreement among scholars ensues from disputing interpretations of various economic impacts of globalization, irregularity of empirical evidence, uneven nature of economic costs and gains for various countries with very few conspicuous trends emerging, difficulty in quantifying trans-generational effects, politicized nature of a nation’s capacity to maneuver economic levers, geo-political vulnerability, etc. All the factors mentioned are notoriously difficult to quantify in a monetary unit. In spite of such challenges, extensive studies have looked at settling the question of whether globalization has paid off or not.

Most literature suggests that the extent and scope of wealth inequality has deteriorated in multiple dimensions since the 80s in both rich and non-rich economies. This phenomenon has been pitted against parameters of globalization and global trade in many empirical studies. Most findings report an affirmative link of higher international trade and globalization indices with income inequality—some within economies, some among economies. Atkinson, Pietty, and Saez (2011) categorize such changes by tabulating a database where they examine it through economic factors (capital gains, incomes, labor wages, taxation systems, financial crises, macro-economic variables), political changes, and global-social themes.

Recent works have recognized considerable heterogeneity in various performance measures across firms within narrowly defined industries in richer and non-rich economies (Tybout, 2003). This carries significant consequence on participatory trends of firms in global markets. When the cost of exports become fixed, firms choose to export more and expand beyond their traditional and local markets. Naturally, less proficient firms shrink their business operations (Mayer, Melitz, and Ottaviano, 2011). The former phenomenon also adds to upgradation of product line and quality through technological research and innovation as the productive firm actively seeks out newer export frontiers (Kugler and Verhoogen, 2008; Bustos, 2011).

The pervasive trade of merchandises between rich and poor countries has led to studies investigating skill premiums, which create disparity of wages and job loss in certain countries. Some studied examined this to verify existence of  Stolper-Samuelson Effect and found that most exploited countries demonstrated elements of the workhorse sub-model of trade, part of the Hecksher-Ohlin framework (Goldberg and Pavcnik, 2007; Hanson, 2007; Harrison, 2006). Interestingly, majority of such studies stem from American and European narrative. It is hardly a secret that the majority that bear the brunt of globalization’s ills stem from the Eastern nations—particularly Africa and Asia. Thus a huge opportunity exists in investigating where Stolper-Samuelson Effect applies in intra-Asian or intra-African or trans-AfroAsian trades.

Some areas still not heavily explored include factors that have a considerable bearing on the quantification of costs and benefits, including scopes of gain from trading, free mobility of capital, income disparity, unemployment patterns, etc. In particular, interpersonal and inter-generational comparisons of economic pros and cons are worthy of scrutiny, especially considering the implications for eradicating dynastic poverty in many marginalized communities of poorest countries. Other interesting areas of research surrounding globalization include the premonition of Madison (1998), who believes globalization has run its course and is now in a transitional stage; as such, the economic system is evolving into a new form of capitalism—one that is distinct from 19th century laissez-faire capitalism, and 20th century ‘managed’ capitalism.

Final Words

The reality of globalization is undeniable. Despite its drawbacks, arguments for reversing it are as inane as putting toothpaste back in the tube, or arguing for reverting to typewriter because computers have drawbacks. In the economic history of mankind, it was an inevitable period. However, as many studies cited in this paper have shown, the spate of globalization in its current form is simply untenable. Its economic defects and the resultant widespread income inequality, financial contagion, exploitation of resources, etc. render it unsustainable due to a lack of self-correcting disciplinary mechanism. The proliferation of technology, transportation, communication, and cultural amalgamation has only magnified its effects—good or bad. The rising income inequality among high income and low income economies is a cause for great concern. Additionally, the sheer number of people living below poverty line worldwide is on the rise, despite a reduction percentage-wise. This divergence is worrisome too. Besides, the failure of many developing economies in benefitting from the fruits of globalization isn’t entirely their fault either. The challenges of integration for a low-income economy are substantial, and it isn’t merely because of their chosen policies. A lot of factors are beyond these countries’ control. Although some experts believe despite the current fervor for globalization, the phenomenon itself is not irreversible; it’s safe to assume globalization is here to stay—at least for a few more decades. Accepting this reality, the international community ought to aid the poorest economies by strengthening the global financial system via trade, aid, and inclusive approach. The end result will be stimulated growth and hopefully eradicated poverty. Thus the benefits of globalization can be actualized truly globally.

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Review Remarks on an Empirical Paper Investigating Budget Forecast using AR-MIDAS

Mixed Data Sampling based econometric techniques have grown in popularity in recent times due to their superior performance in extracting informational content out of data sampled at heterogeneous frequencies. Thus, it comes as no surprise that regulatory bodies are showing greater interest in using MIDAS to forecast instead of the orthodox approach where all time series must be aggregated into lowest common frequency. Therefore, I commend Damane’s (2018) ongoing endeavor in testing predictive superiority of MIDAS to forecast Lesotho’s budget. To improve the manuscript further, I proffer the following remarks.

Capitalization
All currency names (Loti/Rand/Dollar) and Brent should be capitalized.

 

This approach will not only assist to give an early warning signal of risks to budgetary executions but it will also help refine fiscal surveillance and planning by narrowing forecasting errors during the government budget process and also decrease uncertainty around government revenue and expenditure.

 

This statement in Page 3 can be buttressed by the broad empirical findings of the aforestated  papers that intra-annual data, as it becomes available in real-time, improves overall current year forecasts compared to traditional approach.

Figure 1
This is purely a cosmetic issue, but I feel the image (Page 4) should be reworked differently than that of Eptisa (2018). It is unclear if the image depicts a time-series of events. Also, the significance of the arrows is hard to comprehend. Besides, streamlining the fonts and graphics to suit the Working Paper’s official layout will make it more attractive and credible.

 

 In order to appreciate the importance of the relationship between forecasting and the government budgetary process, it is necessary to divide the budget period into three distinct periods. 

 

This is a momentous assertion in Page 8, based on Williams and Calabrese’s (2016) preferences. I feel their paper should be cited here rather than the paragraph’s end. On a related side-note, I feel the author cites this paper too generously. It may be better to reduce some of Williams and Calabrese’s (2016) citations lest the reader gets an erroneous perception that the current paper piggybacks on their work.

Midyear forecasts are therefore ideal for purposes of cash management or the choice among investing, holding, cashing out, and borrowing to pay for current expenditure.   

 

Could it be possible to provide examples of Central Banks who are exponents of Midyear forecasts?

  • Footnote 11 has a slight grammatical error.

For example, conservative revenue forecasting or revenue underestimation (pessimism) may be sort for its advantage of providing a rational hedge against future revenue uncertainty.

 

I do not quite understand this sentence.

Contrary to this, the popularity maximization assumption dictates that political actors can be tempted to overestimate revenue forecasts (optimism) especially during election cycles in order to use non-binding financial planning as a marketing tool to depict a bright fiscal future and in turn generate votes.

 

This is an astute observation and an intuitively correct statement. I do feel, however, that the author may want to cite the following papers in its support.

  1. Jeffrey Frankel; Over-optimism in forecasts by official budget agencies and its implications, Oxford Review of Economic Policy, Volume 27, Issue 4, 1 December 2011, Pages 536–562, https://doi.org/10.1093/oxrep/grr025
  2. Brück, T. and Stephan, A. (2006), Do Eurozone Countries Cheat with their Budget Deficit Forecasts?. Kyklos, 59: 3-15. doi:10.1111/j.1467-6435.2006.00317.x
  • Sabaj and Kahveci’s (2018) MIDAS actually outperformed the official forecasts. This is a major selling point of their paper and yours. It is worth highlighting.
  • Can a table be designed summarizing the major findings of these papers?
  • While the empirical approaches are well-chronicled and their findings adequately described, any kind of critique is noticeably absent. As such, to avoid making the review look like a laundry list of papers, I suggest adopting a theme-based approach, either geographically, chronologically, performance-based, or any other criterion deemed suitable.

STL is able to work on any frequency of data. It can also be calculated on time series with irregular patterns and missing values (EViews, 2015).

 

The claim in footnote 26 that STL is able to tackle missing values and irregular patterns is attributed to Eviews. Can we have an academic/professional reference here?

Tense
There are some minor inconsistencies in the overall tense of the paper. It is particularly noticeable in the sections where the author describes adopting Sabaj and Kahveci’s (2018) measures of forecasting quality/accuracy, and Rufino’s (2018) preference of RMSE.