Analysis of Effects of Globalization - Coursework Example

Globalization Student Name: Student Number: Course Code: Instructor: 12th March, 2013. Globalization is the coming together of different systems that cultivate a better environment for enhancement of trade, cultures, political influence and other factors that arise from the interaction of the aforementioned factors. At the onset of globalization in the mid nineteenth century, most countries were either searching for resources to use in the manufacture of products, or were busy searching for markets where they could trade their products. Despite the then simmering tensions between many economies that seemed to be growing fast, one factor was common among them – the need for a continuous process of production coupled with a market for their goods. The availability of labour also created a constant movement of people across continents. While the West raided Africa and Asia for slaves, it moved more and more expatriates to continents like the Americas. In doing this, it intended to capture more territory upon which it would derive resources in all forms be it raw material, labour or markets. The main drivers of the formative stages of the first age globalization were transport and communication. The basis of trade was goods, services and labour. Therefore, it was common to have massive ships set sail for continents yonder. Dominance in trade could signal that a country was more influential than its peers. As such, hostilities were not an alien thing as happened when World War I and II halted the process of Globalization (Ferguson, 2005). Governance in the first age globalization era also consisted of bigger economies taking colonies and running them as their own territories. The biggest beneficiaries of this kind of governance were the West, especially the UK, France and smaller countries like Portugal, Belgium and Netherlands. Germany may have been a big player in such conquests, but it was not in the habit of keeping colonies and protectorates. On the other hand, smaller countries only gained what was then called civilization. In civilization, newer, and cultures often thought to be better than those of the natives, were inculcated among them. Western cultures seemed more appropriate than most of the others. The new era globalization is more sophisticated. The methods employed in trying to achieve certain basic goals are more tactful and better strategies are used in implementing them. Globalization as envisaged in the new age is more inclined towards trade and cultural values than ever before. The formative stage of trying to reach into new territories is over and done with. Currently, more countries are basically trying to create conducive environments for trading the products they consider their best commodities. Most economies basically depend on the service industry as not all countries are blessed with resources like minerals. The rentier states are states whose GDPs are basically earned from one product, usually a mineral. For instance, most Middle Eastern countries like Iran and Saudi Arabia have GDPs whose main source is their oil. When such countries position their product well in the market, they may avoid fluctuations that arise due to effects of globalization. Such are the characteristics of the current globalization. A product faces challenges due to machinations put into play by the activities from other equally endowed economies. As such, the perspective of the current globalization lies in developing rules that sort of level the playing field for the stakeholders. Finally, the current system of globalization includes the setting up of multinationals in different countries. Companies like Starbucks, McDonalds, Toyota and many other organizations come with defined rules of engagement. For instance, most countries enact policies that are bound to define parameters within which such multinationals may be allowed to operate. Not only are such rules meant to limit the dominance of multinationals, but they are also made to protect indigenous ones from the effects of competitors. It may be good to allow foreign companies rights to operate from within a country’s boundaries, but it is healthy to declare the extent to which the trade is allowed so as not to deny the domestic companies benefits accruing from their own market at home. The first age of globalization and the current globalization have a lot in common. They both share the factor of trade. In both instances, we see economies struggling to find markets for their products in far-flung areas. This in itself spells out the main factor that drives globalization. Therefore, it is prudent to look at the way trade was carried out during the first age viz-a-viz the current manner in which it is done. In the formative stages of the first age globalization, trade was done through basic means. A country was allowed to export goods without many limitations as compared to the current case. Currently, there are limitations to how much a country can export to another through quotas. The first age of globalization was characterised with a lot of tariffs and trade barriers. This, in essence, was modelled so as to avoid unfair trade practises. However, currently, the modus operandi is defined by rules that set standards rather than limit the trade. Standards are set on the quality of goods to be exported from regions. This way, substandard goods don’t find their way into markets. It is also good to note that in the older stage of globalization, free movement of labour was not controlled; only goods were. However, at the current stage of globalization, each country tries to limit the number of foreign expatriates allowed into its boundaries so that jobs meant for natives can be maintained. The formative stage of globalization was characterised with attempts at introducing new religions through missionaries alongside civilization. Not only did the Western world succeed in introducing new religions, but they also, for a bigger part, managed to kill most of the native religions in continents like Africa and the Southern Americas. This was a leeway for the introduction of western cultures. However, the current globalization process involves transmission of cultures via mass media communication. More people ape cultures as envisaged by cable television channels. It is not foreign to see teenagers aping what they see on MTV. Both the stages of globalization contributed to the dilution of prevalent cultures among citizens of different countries. The advantages of globalization in its current state are diverse. For a start, we should note the amount of trade that is going on between economies. As a result, the huge amount of goods being traded between countries improves the standards of living among their respective citizens. Trade also serves to improve multilateral relations to include political influence. Political influence may arise from joining specific trading blocs so as to increase the bargaining power for better policies when dealing with rival trading blocs. The setting of standards in production of goods is great as it ensures that only goods made to specific qualities are exported. We can also satisfactorily say that cheaper and higher volumes of goods are the result of setting of standards (Levitt, 1983). Technological advances ensure a more efficient service delivery aside from better quality production. For instance, in the advent of innovation in communication technology, better delivery of messages is witnessed. The internet is the exemplification of the world as a village. The click of a mouse ensures that a message is instantly received thousands of miles away. Apart from the advances in communications, the field of biological sciences has also been a beneficiary of innovation. Terminal illnesses like cancer can now be detected in their formative stages and nipped in the bud. Other discoveries in the field of medicine have also led to introduction of more efficient medicine to deal with ailments. Diseases that could wipe out whole villages like the plague, and others that were rampant have been put under considerable control. Finally, the field of travel has been made easier. Transport of goods and labourers is way easier. Huge amounts of goods may be transferred at a faster rate from a point to the other with more ease than before. Railroad, sea travel and air travel have experienced major shifts from the use of slower machines which were environmentally hazardous to bigger and faster machines which are environment-friendlier. Reduction of other factors that limit all the three experiences has also been immense. The disadvantages of the current globalization are less than those of the former. However, when looked at keenly, they pose a lot of questions to the persons concerned. For instance, with the increase of trade between countries, more and more of those involved have to introduce policies that may not exactly create harmony among trading partners. As an example, a look at the flow of foreign direct investment into under-developed economies begs a lot of questions. For the most part, FDI always comes attached with conditions. A look into some of them reveals conditions suggesting the tampering with of the sovereignty of some countries. The Bretton Woods institutions only deal with countries that are viewed to be allies of the western world. These institutions also mainly engage countries which meet certain preset conditions. Caribbean countries suffered for a long time due to the Washington Consensus, which was set in 1989. It only favoured the financing of projects in countries with a certain minimum number in population (Goldin, 2012). Trading blocs may be in a position to drive a good bargain for the members states but at times, they seem to go overboard in influencing market prices for certain important commodities. A good example lies in the trading blocs that control oil markets. More often than not, instances where politics dominate the agenda in setting prices have not ended well for non-oil producing countries. This cartel-like behaviour has created a very volatile nature in the oil market. A simple war in Middle East could well influence the production of oil at the shortest of notices. Some countries like China and North Korea are yet to embrace globalization fully due to the perception that western cultures could influence their populace and foster rebellion. As such, companies like Google face tighter controls on their content. The establishment of foreign companies in both countries is also very hard as most indigenous companies are state-owned and enjoy immense protectionism crafted through government policies. These serve to favour them over foreign organizations (Ervin & Alden, 2008). In conclusion, the first age of globalization is slightly different with the current one as both are driven by the same ideology, which is to open the world to trade and run it as an open market. However, the current stage of globalization is so advanced as to engage better rules that enable a better running of trade. Standardization of rules to guard against malpractice has enabled more partners to trade with little friction or exploitation. However, there are still instances when cases of substandard good are reported to have been exported to trading partners. Such cases raise concerns on how effective these agreements are. When trade agreements are broken, embargoes may result. Economies with financial might may be able to play at a certain level that may not be practical for the developing nations. For instance, most of the time, these economies set standards for countries so much so that they only allow selected ones to access financial services from the Bretton Woods institutions. Countries that are viewed as less democratic are frequent victims of such embargoes. On the other hand, infiltration of cultures from Western countries through mass media is seen as a means through which more people are empowered just by virtue of the facts that they learn of their rights. Trading blocs are notorious for acting in a manner that creates lots of volatility in the world market. Oil producing countries are known to coalesce around trading blocs that frequently manipulate prices due to various reasons. Russia, a major producer of natural gas, is always accused of controlling its supply of the same to the larger Europe for political reasons. As a major supplier of gas, Russia has a lot of say in the natural gas market. Other goods which may be vulnerable to the cartel-like behaviour from their producers include wheat, sugar, rice and coffee. The manipulation of foreign companies to adhere to regulations in certain countries like China make the cause that is globalization seem ignoble, while the truth states otherwise. Reference Ferguson, N. (2005). Sinking Globalization. Foreign Affairs Vol. 84 No. 2. University of Oxford. Levitt, T. 1983. Globalization of Markets. Harvard Business Review. Retrieved from Goldin, I. 2012. Globalization: The Good, the Bad, and the Uncertain. Oxford Martin School, University of Oxford. Retrieved from Ervin, J. & Alden, Z. (2008). 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