The liberalisation wave is attracting the local, national and international attention. The reasons are: the failure of incompetent and inward-looking orthodox economic policies, the success of globalisers and the IT revolution. The most successful aspect of globalisation is the economic integration in the global market that encourages globalisers to introduce a wide range of domestic reforms on trade, investment, governance and institutions.

The economic integration process has produced ‘winners’ and ‘losers’, both at the national and international levels. A realistic assessment reveals that countries integrated with the global market have benefited more than the less globalised ones in attaining higher growth and reduced poverty. Openness has compelled the players to enhance productivity, efficiency and competitiveness for their growth and survival. But small entrepreneurs, wage earners and low-income groups that could not adapt to outward orientation or failed to exploit greater competitiveness and efficiency lost out.

Unresolved issues of governance, conflict and marginalisation have complicated economic integration. Similarly, geographical disadvantages, high cost of infrastructure and institutional deficiencies need to be addressed.

Culture, environment and public welfare call for policy intervention to minimise the negative effects of globalisation. Critical factors hampering economic integration are higher labour turnover and poor social protection system. High off-farm employment and higher wages resulting from the Foreign Direct Investment (FDI) flow in urban centres encourage internal migration, which leads to greater rural-urban disparity.

In future informal sector and rural areas will benefit less than the formal sector and urban centres resulting in income disparity between farm and off-farm workers, and rural and urban population.

The ‘losers’ need social and economic protection through social insurance schemes or social security provided by the state. In the long run, unemployment and social protection problem can be addressed through additional capital investment and a social safety net mechanism.

Nepal began economic integration two decades ago, adopting liberal policies and entering into regional and multilateral arrangements including World Trade Organisation (WTO) and South Asian Free Trade Area (SAFTA). This resulted in positive developments in economic growh, employment, investment and poverty reduction during the mid 1990s.

Unrealistic expectations from globalisation should be tempered by realistic policies aimed at eliminating trade and service barriers, adopting flexible migration rule, increasing aid volume and providing debt relief.

WTO and other forums can help implement the multilateral integration initiatives for better results. Developing countries should restore stability, execute sound macroeconomic policies and create good climate for investment.

Similarly, elimination of political ‘bias’ against liberalisation, maintenance of ethnic and cultural homogeneity, greater involvement of the marginalised groups and establishment of social protection system could help transform the rhetoric of globalisation into reality.