Introduction World Trade Organisation (WTO) was established in 1995 as a central body acting as a mediator in nd the trade negotiations

between its member states. As of March 2 2013 WTO has 159 registered members and 24 observers. WTO has enabled a common and level playing field for its members by reducing obstacles to international trade (WTO, 2013a). This has propelled globalisation from steady 20 percent until late 1990s to almost 90 percent today. Globalisation is caused by economic liberalisation. Many equate higher degrees of liberalisation with progress, development and an improved standard of living (Haller, 2012, p. 506). Peter Mandelson, who was European commissioner for Trade between 2004 and 2008, gave the Alcuin lecture Europes openness and the politics of globalisation in which he defined his argument in favour of globalisation. Defending the globalisation Mandelson points out that the WTO has globalised the world economy. Today despite some countries having closed political systems nine out of ten people are affected by a globalised economic system. As the developing world is further integrated into the global economy they are lifted out of poverty. Open markets in the EU have done more to reduce poverty than any other act, such as development aid or debt relief. Globalisation has created hundreds of millions of jobs in the developing world and the EU has benefited from it by becoming more efficient and competitive. Mandelson describes the most beneficial effect of globalisation as thus: The openness boom has been overseen in many cases by states that are far from democratic, but there is a good reason to believe that the aspirational middle classes it is producing will eventually demand the legal security and cultural and political pluralism that turn an open economy into a free society. This premise, that openness drives political liberalisation, has been found wanting by Gawande, IslasCamargo and Narula in 2009. In their research they found that openness did not help move a country toward democracy, rather it moved away from it. This was due to the inequality caused by trade which undermines government stability. If government spending was increased to mitigate inequality there would be a more positive impact from openess on the quality of political regimes. This is also supported by Bussmann and Schneider (2007). Their findings confirmed that countries which are in the process of liberating their economies have a much reduced chance of internal conflict but if they are integrating into a global economy armed conflict becomes more likely. Mandelson confirms that challenges still need to be overcome, such as the interventionist view by many of Europes major trading partners who act out of self interest by distorting competition and conditions of trade. He continues by asserting how EU can use its open trade policy as a bargaining chip to defend itself and demand reciprocity. In doing so it governs the integration of other countries into the global economy, thus creating a growing aggregate demand and capturing a larger share. Mandelson says that the beneficial effects of globalisation come with a number of issues which have to be resolved, the most important of which is environmental costs., Adjustments in Europes labourintensive manufacturing, the amplification of volatility in financial markets and socio-economic challenges due to industrialisation in developing world are also issues but not reasons to move away from globalisation. They are starting points to work through and from which to emerge as more equal and free societies.

Environmental costs As the developing countries compete for their share of global trade, environmental sustainability falls by the way side. Just as the economies of developed countries were fuelled by carbon energy, the same will apply to developing countries until such time that their economies can move forward in an environmentally sustainable way. Until then, the EU will have to lead the way in reduction of greenhouse gases and limiting or negating its negative impact on environment to allow for emerging economies to grow and develop to a point from where they too can actively become proponents of environmental sustainability. Labour-intensive manufacturing As developing and emerging markets become integrated into the global economy there is growing strain on labour markets that can change attitudes towards openness in global trade. The World Trade Report for 2013 indicated that in the past two decades growing globalisation has increased inequality in industrialised countries which stands at twice what it was in the 1970s. The Gini coefficient (a measurement of inequality) places the USA into the same bracket as China and Russian Federation at 40-49 percent. The highest levels are recorded in the South America and Sub-Saharan Africa while Brazil and South Africa are at 50 percent. It is in the EU that the lowest Gini coefficient is found, indicating very low inequality, especially in Germany and Scandinavian countries (WTO, 2013b, p. 222-223). Volatility of financial markets As globalisation moves capital around the globe it can be risky to leave it unchecked. The recent financial crisis may have been averted had globalisation created an institution with a capacity to assess systematic risks, but the system crashed due to imprudent lending, greed and speculation. Socio-economic challenges in developing world As developing countries compete for a share of developed markets they will continue to fuel further openness for a better competitive positioning. Inevitably, this will create new challenges with growing complexity. Governments will have to address the needs of the rural communities while promoting growth of the urban class. Migration of the labour force can have a positive economic impact that can pose difficulties in the integration with the host communities (WTO, 2008, p. 19).

Effects of globalisation in Kenya Kenya became a member of WTO in 1995. With the removal of trade barriers and abolishment of duties of sugar and cereal imports Kenya implemented an industrial development strategy to create better conditions for direct investment and diversification of exports. Since 2000, Kenyan imports have grown at a three times the rate of their exports. Graph 1. Kenya Exports in Millions KES

For small to medium size enterprises (SME), such as luxury tent manufacturer Canvas by DESIGN Ltd (CBDL) it is very difficult to import high quality raw materials that would allow them to remain competitive, because there is a 25 percent duty on imports. At the same time locally produced material remains of substandard quality. This creates problems for SMEs which are competing in the international markets with the best competitive strategy being differentiation and targeting niche markets. One opportunity that opened up for CBDL was installation of permanent tents on behalf of international companies. It was a low-cost outsourcing solution due to labour prices in Kenya. Graph 2. Kenya Imports in Millions KES With the growing trade and increasing GDP Kenya is lowering its external debts and boosting the governments ability to invest into development programs. Kenyas Vision 2030 is governments commitment to reducing inequality with investments into tourism, infrastructure, agriculture, education, environmental sustainability and manufacture among others. These are all positive trends which Kenya has enjoyed since the liberation of economy. This growth has been underwritten by Kenyas external debt doubling since 2008. Graph 3. Kenya GDP in Billions of USD

Graph 4. Kenya Debt to GDP in percentage

Graph 5. Kenya Government Spending in Millions KES Despite growth and development through liberation of trade and a reduction in poverty, Kenyas unemployment rate rose sharply in 2010. The population is rising and industrialisation is increasing inequality between the urban and rural residents leaving almost 40 percent of people unemployed - 70 percent of these are under 30 years of age (UNDP, 2013). Migration from rural areas to the cities has increased by adding to the pressure on the infrastructure. Graph 6. Kenya External Debt in Billions KES It is difficult to negotiate and work around fragile energy infrastructure and businesses such as CBDL, who work in collaboration with international companies, find frequent power outages and internet failures damaging to their business. Disruptions in the manufacturing can seriously hamper any SMEs ability to deliver to tight deadlines. One of the major difficulties SMEs who cater to the high end of the market have is the lack of high quality intermediate product outsourcing. A simple task like zincing can pose insurmountable problems when there is lack of regard for quality. In an economy where everyone is in business and competes with others, low-cost competitive positioning equates to low quality. As the majority of the customers search for low-cost products or services any business dependant on high quality product is left in the cold. CBDL has on numerous occasions been left with defective goods as it is not profitable for a local manufacturer to invest into quality.

Graph 7. Kenya Population

Graph 8. Kenya Unemployment

Graph 9. Kenya Consumer Price Index

Conclusion Globalisation has to be managed properly if it is to create strong economies and free societies. Managing the integration of any developing country into a global economy has to be taken seriously as the consequences for those who are left behind could be a matter of life or death. Even though Kenya has made long strides it still falls short in taking care of their poorest. The Gini coefficient in Kenya is at 47.7 points. Kenyas strategy for equality and development looks promising but it comes at a cost high unemployment and high debt.

References Bussmann, M. & Schneider, G. (2007) 'When Globalization Discontent Turns Violent: Foreign Economic Liberalization and Internal War', International Studies Quarterly, 51 (1), pp. 79-97, Academic Search Complete. Available from: http://ehis.ebscohost.com.ezproxy.liv.ac.uk/eds/pdfviewer/pdfviewer?sid=ade238ab-b7f2-4393-b0ba5da0687dc49f%40sessionmgr15&vid=1&hid=7 (accessed 13 October 2013). Gawande, K. Islas-Camargo, A. and Narula, S. (2009) Openness, Closeness, and Regime Quality: Evidence from the Second and Third Waves [online]. Available from: https://www.wto.org/english/res_e/reser_e/gtdw_e/wkshop09_e/gawande_e.pdf (accessed 13 October 2013). Haller, A. (2012) 'Standard of living improvement - consequence of human development and economic liberalization in the current period', Economics, Management & Financial Markets, 7 (4), pp. 504-516, Business Source Complete. Available from: http://ehis.ebscohost.com.ezproxy.liv.ac.uk/eds/pdfviewer/pdfviewer?vid=12&sid=91eacfec-06fc410e-93fa-f1f5f89a84c0%40sessionmgr114&hid=106 (accessed 13 October 2013). UNDP (2013) Kenyas Youth Employment Challenge [online]. Available from: http://www.undp.org/content/dam/undp/library/Poverty%20Reduction/Inclusive%20development/Keny a_YEC_web(jan13).pdf (accessed 13 October 2013). WTO (2008) World Trade Report 2008 [online]. Available from: http://www.wto.org/english/res_e/booksp_e/anrep_e/wtr08-2b_e.pdf (accessed 13 October 2013). WTO (2013a) Members and Observers [web]. Available from: http://www.wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm (accessed 13 October 2013). WTO (2013b) World Trade Report 2013: D. Trade openness and the broader socio-economic context [online]. Available from: http://www.wto.org/english/res_e/booksp_e/wtr13-2d_e.pdf (accessed 13 October 2013).