Anti-globalisation Arguments Undervalue Benefits of Globalisation - Research Paper Example

Anti-globalisation arguments undervalue benefits of globalisation Introduction The world economy has undergone several layers of positive changes since the inception of globalisation, yet impact of globalisation is a subject of strong argument and debate among renowned academicians. Globalisation has brought about large scale development in underdeveloped and emerging nations by means of financial liberalisation and global capital flow while advanced economies witnessed unrestricted and free flow of resources and economic integration. Despite accelerated economic development as a result of globalisation, the phenomenon has been strongly criticised for initiating global financial crisis and economic meltdown (Sassen, 1998; Das, 2010). In this paper, role of anti-globalisation arguments in undervaluing benefits of globalisation has been critically assessed to determine its validity. Globalisation and its benefits According to different scholars, no specific definition of globalisation exists and consequently the debates initiates at this very point. However, in common language, globalisation can be defined as integration of several national markets into one common global forum where national boundaries are largely diminished (Das, 2010). It is an intensification of interconnectivity and movement of trade, finance, human and non-human resources, culture and investment (Robertson, 1992). According to studies, economic globalisation can be considered as the most influential force that has shaped the globe since the wars (Das, 2010; Huwart and Verdier, 2013). Over the time, globalisation became one of the drivers of structural changes with respect to global, regional and national economies. It is also referred to as a powerful transformative force on the face of world economy (Amin, 2004; Das, 2010). It was observed that globalisation has resulted in significant rise in value as well as volume of international trade in goods and services along with expansion in long and short periodic flow of capital (Amin, 2004; Huwart and Verdier, 2013). It was also gathered that liberalisation as a part of globalisation movement cause trade and financial integration and raised economic growth rate and earning rate. As the worldwide economic integration progressed and intensified, it caused increase in efficiency of various tangible and intangible resources and utilisation of inputs (Das, 2010). According to studies in 2007, the volume of goods and services in global multilateral trade was equivalent to $16.9 trillion and it was about 34 percent of total global gross domestic product (Huwart and Verdier, 2013). In the same year, private capital was observed to flow from industrial economies to developing economies of net worth $1 trillion (Amin, 2004; Das, 2010; Huwart and Verdier, 2013). Theory of comparative advantage The theory of comparative advantage was pioneered by David Ricardo, who explained that due to globalisation different nations enjoy comparative advantage and mutual benefits from global trade (cited in Mendoza and Quadrini, 2010). The author argued that international trade is relatively advanced from domestic trade because in domestic trade scope of exhaustion is relatively high with respect to economic exchange. The author further posited that countries or persons differ in terms of their capability to produce goods and services while globalisation helps them to achieve the niche where they can trade anything that is best suited to them (Knight, 1998; Buchanan and Yoon, 1994; Buchanan, 2004; Mendoza and Quadrini, 2010). Drawing on the theory of comparative advantage, it was observed that globalisation resulted in significant economic development in Asian and African nations. Globalisation not only brought about development in the developing Asian nations but its impact was observed in Sub-Saharan African countries as well (Mendoza and Quadrini, 2010). Global economic integration resulted in improved macroeconomic management, increase in capital flow and debt relief and rise in GDP in more than 48 countries thereof. Most importantly, raw material producing countries witnessed steady rise in commodity price and demand of bulk purchasers. Africa also witnessed steady flow of capital from India, China and Middle East. Globalisation made it possible for Sub-Saharan countries to have access to capital that has been employed for economic and social development and consequently, it can be suggested that comparative advantage theory holds true with respect to globalisation (Knight, 1998). Theory of network society The theory of network society presents technologistic approach towards globalisation where the author, Manuel Castells, closely associated the concept of globalisation with age of information (cited in Robertson, 1992). The author emphasised on capitalism with respect to technological development. He posited that rise of network society is a result of groundbreaking innovation in the information technology sector and growing connectivity across the globe. According to this theory, the post-globalisation new economy is knowledge and information oriented and global in nature. Every process and activity has been explained by the author in term of global existence and exposure. Castells viewed that globalisation will result in development of an economy that is largely networked from the perspective of knowledge, culture and technology (Robertson, 1992). The network society theory can be well-supported with various evidences that explain that globalisation has resulted in development of variety of technologies and growth of communication across communities and societies. Networking has resulted in diminishing of traditional organisational barriers and their movement from home country to various host countries. In addition to that tall structures are increasingly being converted to organic structure so that cultural variation can be accommodated. Networking plays an important role in this regard and information technology has been considered to bring about revolutionary changes thereof (Pieterse, 2009; Sassen, 1998). Negative aspects of globalisation A large number of authors have pointed that globalisation has contributed largely towards broadening of income inequality and a result of which, poor countries are becoming poorer while the rich countries are becoming richer. Other arguments suggest that world trade is being increasingly dominated by transnational organisations that seek to earn maximum profit without considering need of local populace and individual nations. Studies suggest competition for having maximum access to foreign investment has caused nations to degrade their environmental standards. One of the greatest anti-globalisation arguments is the financial crisis of 2007-2008 (Das, 2010). Financial crisis was regarded by many as one of the very few negative outcomes, albeit a mammoth outcome, yielded by the rapid rate of globalisation. The greater degree of interconnectivity indicated by globalisation provided managers of financial institutions all over the world with the opportunity to invest in various complex financial instruments whose movement dependent upon the performance of the underlying asset that was handled in another country (Mendoza and Quadrini, 2010). Such was the degree of interconnectivity that companies based in country started bidding on products manufactured by organizations based in another country without even knowing the underlying intricacies associated with the products (Roberts, 2008). This was one of the primary reasons people all over the world started doubting the opportunities created by globalisation. However, one must not forget that it is this globalisation that has proven to be instrumental in increasing the employment rate in various underdeveloped and developing companies. People have found new sources of income through globalisation which in turn has contributed to the growth of the overall economy (Eschle, 2004). The financial crisis that shook the entire world economy cannot be entirely regarded as a negative by product of globalisation. Its onset was triggered by mismanagement of a handful of few powerful institutional managers who were driven by the urge to increase profit thereby compromising on the quality of products that were being offered to the customers (Thomas, 2007). The opaque businesses conducted by managers accompanied by modification of accounting figures can never be attributed as a by product of globalisation. Globalisation does not teach somebody to manipulate accounting figures. Therefore, simply highlighting financial crisis as an outcome of globalisation, which is often found in several anti-globalisation arguments, is equivalent to undervaluing the positive benefits that globalisation has provided over decades to people all over the world. Critical discussion on anti-globalisation arguments undervaluing benefits of globalisation Globalisation is a phenomenon of distinctive characteristics which has influenced every aspect of external business environment and individual’s lifestyle differently. It has brought about walloping benefits to developing nations in Asian and African continents. Globalisation has helped these economies to open up to untapped prospective investment opportunities (Mendoza and Quadrini, 2010). Studies reveal that China is one of few nations that embraced globalisation immediately and its outcomes are very evident in terms of rapid economic development undertaking in the country (Das, 2010). The unfolding of crisis of 2008 caused globalisation to become the main excuse for every involved party to cover their respective mistakes. However, it is noteworthy that globalisation was only one of the reasons that too an indirect one. Globalisation introduced financial liberalisation but it nowhere mentioned of uncontrolled lending and credit policy which most banks adopted and eventually became insolvent (Huwart and Verdier, 2013; Das, 2010). Globalisation is considered as a prominent culprit that induced economic downturn as per anti-globalisation arguments but it is nowhere mentioned that globalisation has caused rise of a series of phenomena such as global culture, global political environment, multidimensional movement of resources and transnational migration and integration of identities and communities, which have drawn researcher’s attention on mass scale. Globalisation is an effort towards uniting the world economy so that various national issues are treated at international level. Globalisation has been held responsible for rise in poverty in various countries but it is noteworthy that globalisation has benefited several poverty-countries in Sub-Saharan and Gulf regions. There are several resources such as agricultural products, oil and others, which are accessible to the world only because of globalisation (Buchanan and Yoon, 1994; Pieterse, 1997; Das, 2010). Globalisation led to cultural melange that introduced new materialist and immaterialist changes in lifestyle of individuals and presented them greater scope of learning and development (Pieterse, 2009). However, none of these benefits are highlighted during anti-globalisation discussions. Economic inequality, recession, cultural loss and financial weaknesses are predominantly highlighted to cover advantages such as development and growth in under-developing countries, strengthening of weak currency, comparative advantage to economically challenged societies by means of financial aid and worldwide support from international bodies such as UN and its associate organisations (Wade, 2004; Roberts, 2008; Das, 2010). Globalisation is a relatively new concept and requires certain structural adjustments and eliminations for developing a better and interconnected world economy. Consistent support from economies will help the phenomenon achieve its main objectives while capitalising on its loopholes will only benefit a few and create global issues such as economic depression. Conclusion Studies and assessment suggests that for some, the financial and economic globalisation will remain as an iniquitous phenomenon and this notion has been further strengthened by the unfolding financial crisis and recession during 2008. The paper discusses positive as well as negative aspects of globalisation and it was gathered that the impact of financial crisis was too large and this is why all benefits of globalisation such as opening of national boundary for capital, global liquidity and inflation control has been overshadowed. However, it should be noted that globalisation in itself is neither good nor harmful. Instead, the phenomenon aims at achieving efficiency in the long and short run by means of structural changes. These structural changes involve certain cultural and social adjustments which are highlighted in the form of consequences. Noted authors argued that there is no common solution to this situation and every nation has to meet these challenges in its own way. Reference list Amin, A., 2004. Regulating economic globalization. Transactions of the Institute of British Geographers, 29(2), pp. 217-233. Buchanan, J. M. and Yoon, Y. J. (Eds.)., 1994. The return to increasing returns. Michigan: University of Michigan Press. Buchanan, J. M., 2004. Anti-Globalization, Democracy, and the Logic of Trade. [pdf] Germany. Available at: [accessed 12 March 2015] Das, D. K., 2010. Another perspective on globalization. Journal of International Trade Law and Policy, 9(1), pp. 46-63. Eschle, C., 2004. Constructing the Anti-Globalisation Movement. International Journal of Peace Studies, pp. 61-84. Huwart, J. and Verdier, L., 2013. The 2008 financial crisis – A crisis of globalisation? France: OECD Publishing. 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