IT is clear that "globalisation" has become a buzz word--quite often use but seldom in the same context.  It is, in fact, one of those far-reaching concepts which are being used by different people to explain facts which are completely different in nature.  Even when qualified as "economic", globalisation can still be associated with a variety of phenomena.

One aspect that can be related to economic globalisation is the ever-increasing expansion of transborder financial flows as well as its impact on the monetary and exchange policies of national economies.  We have seen this happening since July 1997 when the so-called "tomyam domino effect" began in Thailand, affecting a number of Asian countries, including Malaysia.

We have also witnessed the currency crisis that hit Russia and Brazil.  Nevertheless, the effects of the financial dimension of globalisation are somewhat disputed.  On the one hand, the mobility of capital flows across borders can be regarded as an efficient way to allocate resources globally and to channel them to developing countries.

On the other hand, this mobility creates volatility and provides an opportunity for speculative attacks against currencies that threatens the economic stability of countries.  In other words, globalisation that creates this free movement of huge capital flows creates both opportunities and risks.

The second aspect of economic globalisation is "globalisation of production".

In the past, most, if not all, stages of production of goods were conducted in one country. The goods was either for local consumption or to be exported.  However, this is no longer the case. The domestic contents of most goods have diminished, and what we see now are intermediate production stages taking place in different countries.

This is the result of the interplay of several new trends such as the reduction in the costs of the mobility of production factors and the economies of scale required by increasingly sophisticated production processes.  International trade of intermediate goods is conducted primarily among industrial units of the same company.

Corporations usually structure their activities to fit marketing and production strategies designed to enhance their global competitiveness.   Countries are selected for investment by companies on the basis of the overall advantages that they present.

This has led to increased competition for foreign investments among countries, in particular developing ones.  If we look back to the 1960s and 1970s, the scenario now is completely different.   Then, controls and restrictions were necessary to discipline the operations of transnationals in their markets.

Today, developing countries have been reformulating their trade and economic policies, primarily to offer an attractive domestic environment for foreign investment.  The third aspect of economic globalisation will definitely have to be the increasing uniformity in the institutional and regulatory framework in all countries.

For the globalisation of production to be possible, rules in different countries have to be similar so that no artificial advantages exist in any one of them.  Examples of these rules are best epitomised by the international standards for intellectual property rights and trade related aspects of investment measures as prescribed by the World Trade Organisation.

Matters which were once considered to fall primarily within the jurisdiction of the State are now subject to multilateral disciplines.  Undoubtedly, there are limitations to such uniformity as a natural result of national differences.  As such, the delicate interplay of global trends between uniformity and national identities is very complex.

The forth aspect of economic globalisation is linked to a revolution in production patterns leading to a significant shift in the comparative advantages of nations.

The competitive position of a country relative to others is determined more and more by the quality of its human resources, knowledge, science and technology that are applied to production methods.  Abundant labour and raw materials are becoming less advantageous.

This irreversible trend makes it unlikely for developing countries, in particular the South as well as Muslim countries, to succeed solely on cheap labour and natural resources.  With economic globalisation, comes a change in the role of the State.  As a result of globalisation, external variables have an increased bearing on domestic agendas.

Fiscal balance, to take an example, has become a dogma.

The requirements for external competitiveness have led to greater homogeneity of the institutional and regulatory frameworks of States.  These requirements have left less room for widely-differentiated national strategies vis-a-vis labour, macroenomic policy.  The introduction of the Euro early this year sets limits within the budget of the Maastricht Treaty signatories which needs to be maintained.

Both international public opinion and market behaviour have also come to play a role in defining the range of possible actions of the States.  In this day and age, information travels with but a blink of an eye and a click of a mouse button.  Countries, their leaders ad their policies come under close scrutiny of the global public opinion.

Any misdeed or step judged by these immaterial entities to be in the wrong direction will incur penalities. The opposite is also true.   If developments in a particular country is considered to be positive, then the country would be rewarded.

Economic globalisation is not just a result of market forces. The framework within which the market operated is politically defined.  The power game among nations is ever-present. So is the possibility of economic co-operation among States.  Foreign trade negotiations are still conducted through dialogues among States.

Economic clout is a key factor in these negotiations as well as the settlement of bilateral trade disputes.

In some cases, economic powers invoke their influence to circumvent the very multilateral disciplines that they themselves have proposed. Subsidies in agriculture is a case in point.  On the other hand, the recent movements towards the creation of schemes of regional integration, which is characteristic of the 1990s, are also initiatives with which governments have tried to influence the direction of economic globalisation.

We must be careful not to transform the market into a form of ideology, where everything that falls into line with market forces is good and positive whereas every political decision is viewed as negative.  It is in recognising the fact that there are limits to the market that allows developing countries to act politically in defence of national interests.

The move introduced by Malaysia to curb currency speculation is a good example. However the forms of such action vary from one country to another.  The new millennium is just a little over 100 days to go. Today we see the complex structure of international relations.

The world today is no longer divided into East-West and North-South as was the case during the Cold War.  Now the world is divided into regions and countries which participate in and benefit from globalisation and those which do not.  The former are generally associated with the idea of progress, development, improvement and wealth.  The latter with marginalisation, exclusion, poverty and misery.

Sadly we note the latter seems to consist of mainly Muslim countries.

It's true that globalisation has opened up a window of opportunity for countries to jump into the mainstream of the global economy.  But for some countries, the integration process into the global economy is being pursued at the cost of greater domestic adjustment at a time of fierce international competition.

Will these countries, particularly Muslim countries, ever be able to cope with the tremendous challenges of globalisation. Are their peoples condemned to live in poverty?  Are they destined to rely on foreign aid in a world less willing and ill-prepared to provide it?

These are some of the questions that we should try to address.

The reality is, even in developed countries, globalisation has a noticeable impact.  Globalisation means competition founded on higher levels of productivity, meaning more output per unit of labour.  Globalisation has created exclusion of poor countries which have not so far shared the benefits of globalisation.

It has also created wealth, unleashing productive forces at an unprecedented scale.   Should we renounce the positive elements of globalisation, to the possibilities of wealth and eradicating poverty? The answer is a resounding no.

The question now is: How can the negative elements of globalisation be handled and reduced?  To tackle globalisation is not simple. Neither is it impossible.

In view of the challenges of globalisation, it is imperative that we try to re-instil ethics and values within State dealings and through them the whole society.  Governments and world leaders cannot do everything.  However, because of the role they play and the examples that they can give, they can act as catalysts for change by re-introducing ethical values at a time when globalisation has blurred the meaning of ethics and values.

Globalisation has brought about the need for Islam as a complete way of life to respond. Without this response, Muslims as an ummah and a nation would be left behind.  What is worse, it is feared that Muslims would suffer the consequences brought forth by the drastic changes of globalisation.

Muslims must be proactive as opposed to merely being reactive when it comes to tackling globalisation issues.  The changes that globalisation brings are rapid and drastic. It would be suicidal for Muslims not to be proactive in coming up with the necessary responses.