This paper has attempted to provide an integrated and global perspective on adjustment and globalization. These two processes are seen as interdependent and mutually reinforcing. The dynamics of global integration in the post-war period interacted with the economic crisis in the post-1973 period to strengthen the forces and pressures for adjustment policies. The latter, reflected in liberalization, deregulation and privatization, in turn reinforced the thrust of global economic integration in the 1980s. Structural adjustment policies originated in the industrial countries and then spread to other regions of the world. In the former, they represent both elements of continuity and break with the economic and social policies pursued in the post-war period. In the developing countries, they constitute a sharp break with the earlier policies of state-directed modernization and growing reliance on administrative methods for resource allocation. The pace and pattern of liberalization show considerable country and regional variation in the Third World reflecting socio-economic structures, the severity of the crisis, the intensity of foreign pressure and the interplay of contending social groups.

The 1980s witnessed a marked acceleration of the globalization process which extended beyond economics to embrace science, technology, culture and lifestyles. In the economic domain, it was reflected in rapid growth of trade in goods and services, of foreign investment, technology transfers, foreign exchange transactions and telecommunications. With some notable exceptions, the role of the developing countries in the global exchanges has tended to shrink in recent years. This is due in part to discrimination in the pattern of liberalization. In an era of extensive deregulation, the protection accorded to agriculture was enhanced, non-tariff barriers multiplied on some manufactured goods of export interest to developing countries and controls on immigration of unskilled persons were tightened. Nevertheless, the world moved strongly in the direction of an integrated market for goods, capital, technology and skills. The process was fueled by technological progress and mediated by transnational enterprises that increasingly became the vehicle for trade and investment and access to technology, skills and markets.

The processes of adjustment and globalization have been associated with wide-ranging social and political changes. They contributed to intensification of inequalities nationally and internationally and an increase in the incidence of poverty in most countries. The slowdown in economic growth in the post-1973 period played a major role in this. However, changes in relative product and factor prices and in patterns of taxation and expenditure exacerbated poverty and inequalities. The groups which suffered most include the unemployed, new entrants to the labour force, urban workers and sections of the middle class. The chief beneficiaries include those deriving their income from capital, especially those engaged in financial, manufacturing and commercial enterprises in the export business. The intensification of poverty and inequalities has severely strained social fabrics and accentuated social conflicts world-wide.

These changes reflect important shifts in power at the national and international levels. Internationally the balance of power has shifted further away from developing countries in favour of foreign creditors and investors, international financial organizations and industrialized countries. Everywhere the power and the reach of the state have declined. Internally, there has been a shift of power in favour of capital, especially that linked with the international economy, and away from the organized working class and to some extent the middle class.

These developments have undermined the social alliance and national consensus on economic and social goals and policies established in the post-war period in both the industrialized and developing countries. Together with intensification of poverty, they have generated a wide array of social problems. They pose serious threats to political stability and sustainable growth. Social problems need to be addressed not only in the interest of national cohesion and solidarity but also as a necessary investment for future growth. Unfortunately, nation states are increasingly both unwilling and unable to cope with the social crisis. At the same time, the economic power wielded by the new dominant forces nationally and internationally has not been matched by a corresponding shift in their political and social responsibilities for global welfare or in their accountability to the peoples of the world. It is a task of the highest importance to explore the political, social and economic configurations of new arrangements to articulate and implement an agenda of reform addressing the major social problems of the era.