Globalization is a Result of Neoliberal Polices - Essay Example

? Globalization is a Result of Neoliberal Polices Globalization is a Result of Neoliberal Polices Economic globalization has been a question of concern for most of the business analysts. It is for this reason that a number of studies have been conducted for the evaluation of factors that have led to economic globalization. Most of the business analysts have claimed that globalization has become reality because of neo-liberalist institutions and its policies. However, a contested view of globalization being a result of neo-liberalism policies has been observed. The purpose of this paper is to analyze globalization as a result of neoliberal policies or International financial institutions (IFIs) which have been developed on the basis of neo-liberalism model. This paper will also discuss the contested view of globalization and neo-liberalism. Before understanding the conviction of neo-liberalism as resulting in globalization, it is imperative to understand both the concepts with proper definitions. On the surface, globalization has been understood as a process of compression of time and space which has enables business enterprises to concentrate more on production and achieving localization benefit. But it should be noted that the definition of globalization is broader and aggregated in terms of socio-economic levels (Gillan 2012). Globalization is basically an economic change which has taken place in every part of the world with a wider reach to heterogeneous audiences. The spread of globalization is mainly a spread of capitalism which has been in active since late 19th century. The spectrum of globalization has been understood as a very helpful concern because it helped enterprises to save a great deal of time and capital in order to transport products and services (Gillan 2012). This also saved the cost to communicate with better and effective transference than before. The view of globalization has been taken and welcomed in the international business including all major business institutions. It was merely because the dream of reaching to the areas which were once considered as remote. There is no part of the world which has not been reached in terms of economic activity. The credit for this massive increase of business activates al around the world goes to the phenomenon of globalization (Thomas 2000`). The aim of business enterprises is to make profit by making sure that the member of societies (consumers) is able to get all the comforts for sustaining a better lifestyle. This is due to the faster and diverse means of trading and financial transactions. Seemingly, the political control over the activities of business being undertaken cross-border is just another aspect that has declined now. In other words, it could be said that the control of political institution on business enterprises to go cross-border seems to be less influential than before (Baldwin 2012). It should also be noted that the quicker and diverse impact of globalization could not be possible on its own. There are some of the factors that have influenced globalization to take place all around the world. These factors are rationalism, capitalism, technological innovation and regulation. Taking these four elements into account, it becomes easy to understand as to why globalization has taken such a diverse reach in the business world. The technological innovation such as easy transport of products and services through air routes and sea routes was has become faster because of the easy and diverse communication networks. The financial institutions which were limited to the domestic business are now complying with international financial systems allowing better visibility of shares for foreign markets for investment purpose (Pambazuka News 2010). The phenomenon of globalization is somewhat similar to that of neo-liberalism. It is due to the nature of neo-liberalism which is defendant of free trade and a liberal view of economy to promote equal and diverse platform of markets. Neo-liberalism can also be termed as a defendant movement of privatization (Gillan 2012). This gives society a structure of modern society enabling hegemonic view of economy. International financial institutions (IFIs) are basically developed on the model of neo-liberalism (Haque 2004). Neo-liberalism has been illustrated as a model or set of beliefs which have stressed on the fact that economic growth is undertaken. This is similar to globalization as it tends to provide a brief account internationalization of business enterprises (Gillan 2012). Neo-liberalism bestows the concept of investment being done by business enterprises in competitive market models which will undergo profit maximization. Similar is evident in the case of globalization as foreign direct investment is a business concept which became more active and illustrative in the contemporary globalized world. Thus, it becomes easy to understand that neo-liberalism polices and agendas have resulted in globalization (McGovern 2006). The drawbacks of the Neo-Liberal policy can be seen in relation to the economic downturns experienced by the nations in Latin America and Southern parts of Asia in the 90s. These nations had no other option than to embrace the Neo-Liberal policies of “privatization” and “deregulation”, and the primary reasons for doing so were significant issues related to the economy of those countries and the increasing pressure from the International Monetary Fund (Gillan 2012). Since then, few Latin American nations, which included Venezuela, Cuba, Argentina and Bolivia, declined to have corporate controlling assistances from outsiders and the suggestions given by International Monetary Fund and the World Bank. Apart from this, they opted for redistributing their wealth in the economy and nationalize the industry and also to focus more on providing health and education facilities to the general public. In addition to that, those Latin American countries also started to share their resources and other expertise with each other and also with other countries around the globe (Makwana 2011). As per analysis, there is a massive divergence between the quantifiable product of economic globalization and its projected profits. It should be noted that neoliberal policies have incontrovertibly made colossal wealth for several people, but most critically, they have not been capable to give profit to those who are living in intense poverty and are mainly in need of financial support. Seemingly, annual economic escalation in developing countries between late in 19th century was 3.2% which was considered as a better figure for economic activity within a year. This crashed radically between 1980 and 2000 to a plain 0.7% that has pushed economic activity to the ground level. This second phase is when neo-liberalism was mainly common in global economic course of action (Makwana 2011). Furthermore, it was commonly seen that neo-liberalism has not been capable to deal with rising levels of global imbalance. Above the last 25 years, the income disparities have improved radically, in cooperation within and among the countries. Majorly, during late 19th century, the earnings of richest 10% as share of pitiable poorest 10% turned out to be 19% extra uneven. This was in the name of globalization that marked its present in terms of deflecting statistics. The earnings of richest 1% as share of pitiable poorest 1% turned out to be 77% extra uneven (Makwana 2011). The neo-liberal polices seem to have a very profit based view at the expense of poor. These policies are emergent elements for spread of globalization. The dominant nations have basically made use of neo-liberalism policies in order to give rise to their own profit. Imperialism in the past has allowed colonists to speculate markets and undergo saturation of their products. Similarly, the contemporary business world, economically powerful countries have made use of globalization as a manner to speculate markets and undergo saturation in broader markets. This view has been marked by neo-liberalism and injected in the phenomenon of globalization. In other words, it can be said that policies of neo-liberalism has been designed in order to benefit the powerful countries which have enough capital to save themselves even during major recessions. The concept of globalization or macdonalization was spread because developed countries needed to make use of the developing markets to use in their own benefits. It is for this reason that neo-liberalist institutions were developed based on strict policies (Baldwin 2012). The primary objective of the Neo-Liberal globalized approach is the extinguishing of all the constraints in the way of global trade and to open of the economies of the world by way of privatizing the resources and institutions. In such a situation, however, the economies will be at stake, considering the expected fast changing market conditions and also due to the fact that the resulting benefits by following the said approach will not be availed by the general public at large (Gillan 2012). The major drawbacks of this approach are now in limelight to a great extent and it is due to this particular reason that a number of Latin American countries are openly ridiculing and disregarding the imposed corporate control upon them by the financial institutions (Gillan 2012). As a result of these developments, the ideologies on which the economic systems of the said countries are founded are slowly being reinstated by the regional cooperation policies involving sharing of resources and cooperation in the region. On the other hand, challenging and modifying the foundations of the deep-rooted political and economic systems is undoubtedly a troublesome endeavor, but the fact that the stress being placed on the judicial systems by general public is predictive of success. There is undoubtedly a dire need felt across the global economies for bringing in a change so as to ensure that human rights are in access of people everywhere (McGovern 2006). Also, it should be noted that the policies of neo-liberalism has been absorbed by the institutions such as World trade organization (WTO), International monetary fund (IMF) and World Bank. These institutions are also called as international financial institutions (IFIs) which have ultimately given countries a chance to barter the markets. These institutions have rather allowed the countries to make use of ministers who would actually be undertaking decision-making process by using veto power. This means that these ministers have the right to put stakes of their market in order to give a platform to others to saturate their product in the market (Thomas 2000`). There are two opposing views about IFIs. There are some of the defendants who claim that the multilateral trading system have allowed people of different countries to live a better and standardized lifestyle. However, the opposing view of the anti-IFIs believes that these institutions have given chances to their ministers to become pressurized with increased debts. This has infected their economies and the living standards of members of the respective societies. The economical crisis in most of the developing countries has been noted due to the financial loans being given by these initiations with a strict pay back policies. The results of increased debts in counties due to IFIs include unemployment, social disruptions and migration (Baldwin 2012). All these international financial institutions have been initiated in order to take the accumulation of global reach to a broader array of business activities. In simpler words, it could be said that these IFIs were developed in order to provide loans to the developing countries or those business enterprises which were not able to expand their business and economic activities due to lack of avid amount of capital. It was for this reason that these institutions projected capitalist view in the business world. For most of the developed countries, these institutions did not have anti effects as these countries had a great capital support but these institutions have been problematic for the developing countries for issues which have been discussed above (Haque 2004). More recently, a number of developed economics of the world have rejected the ideal policies of neo-liberalism that are leading to economic globalization all around the world. The purpose behind such a contested view of globalization by influential countries such as Latin Americas etc. is due to the fact that it has affected world in terms of cultural disruption and democratic back-slash. It will not be incorrect to state that the rise of globalization has been possible as a number of institutions have been involved in making it a worldwide phenomenon. There are a number of neo-liberalist institutions that have saturated the phenomenon of globalization around the world (Pambazuka News 2010). Neo-liberalist institutions which are synonymous to IFIs have been contested as the process of globalization. It is because countries have planned campaigns against these IFIs. The major reason which has resulted in such protests is the fact that IMF and World Bank have given strict and harsh conditions after the provision of loans to developing countries. In this regard, the case of Sri Lanka can be considered as a biggest anti-IFIs campaign. According to the news reports, it was noted that Sri Lankans have posed protests in the name of Green Movement in 2007 (Weerasinghe 2007). The ultimate agenda of the movement was to put all the projects in action in Sri Lanka with the collaboration of IFI. These projects included water privatization and water shed management. It was quiet a bigger stance against the international financial institutions. But the campaign was undertaken because there were strict conditions which were posed by IFIs (Thomas 2000`). Another example of such protest against the neo-liberalist institutions is the battle of Seattle which was observed in 1999. This protest was against the World trade organization (WTO). There were a large number of Protestants who were against the harsh conditions which were being posed in terms of European Union Confederation of farmers. This was a biggest hit for the IFIs which were unable to mark their place. Seemingly, it was noted that all this went against own agenda and objectives. The Protestants also believed that there are many advantages of globalization but the negative features of globalization cannot be overlooked in this regard. Most people believe that it was globalization which has created different economic problems as it was rooted by neo-liberalism (Baldwin 2012). For business enterprises, it was quiet interesting to gather loans and start up a new business ventures. As a result, even small enterprises which did not have any capital backup became a part of the globalization race (Gillan 2012). The globalization as a result of neo-liberalism projected a farther reach for these companies in different markets. But the loans were needed to be paid and there was a lot of risk associated with FDI in which these companies were involved. As a result, these companies went bankrupt. Neo-liberalism has aided globalization with institutions and strict policies as noted above which initially helped companies to get out of the limited business spectrum (Haque 2004). Through the above in-depth analysis, it could be said that neo-liberalism policies are emergent in every aspect of globalization. This means that globalization has been spread among different parts of the world with a great influence of neo-liberalism. The idea of globalization has become common and usual for countries because neo-liberalist institutions have marked their presence in terms of loans. However, the objective of the neo-liberalist institution seemed to be helpful for social living standards of people but the issue has arose when it spread under the name of globalization. Harsh policies to get back the amount of loan from different countries did not seem to achieve the main objective. It was for this reason that a number of countries observed protest movement against WTO and IMF. The protests were illustrative to the social issues that were projected by these IFIs. Most notably, these were unemployment, bankruptcy, social disintegration, migration, low self-esteem etc. In short, neo-liberalism rooted itself in different parts of the world under the name tag of globalization. List of References Baldwin, R., 2012. Failure of the WTO Ministerial Conference at Cancun: Reasons and Remedies. Madison: University of Wisconsin-Madison. Gillan, K., 2012. Lecture 3: Globalisation and the New Capitalism. Manchester: University of Manchester. Haque, I., 2004. Globalization, Neoliberalism and Labor. New York: UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT. Makwana, R., 2011. Globalization. [Online] Available at: [Accessed 19 March 2012]. McGovern, L., 2006. Neo-liberalism Gobalization in the Philipines. Bloomington: Indiana University. Pambazuka News, 2010. Global Week of Action against Debt and the IFIs. Pambazuka News, 17 October. Thomas, J., 2000`. The Battle in Seattle: The Story Behind and Beyond the WTO Demonstrations. New York: Fulcrum Publishing; First Edition edition. Weerasinghe, C., 2007. Protest campaigns against IFIs. Daily News, 17 October. p.Online. Read More