Relationship between Globalization and Sustainable Development: Poverty Alleviation - Essay Example

? Relationship Between Globalization and Sustainable Development: Poverty Alleviation and Environmental Protection Table of Contents Table of Contents 1 Executive summary 2 Introduction 3 Definitions 4 Poverty Alleviation 5 Environmental Protection 7 Conclusion 9 References 11 Executive summary The given report presents a research and analysis of the relationship between globalization and sustainable development. The role of globalization as that of the driver of economic growth and wealth generation is analyzed through the perspective of such sustainable development principles as poverty alleviation and environmental protection. The research and analysis have shown that though globalization has a positive impact on sustainable development of the nations, it is also harmful since causes overexploitation of the nation’s environmental resource. The environment, as a result, is influenced in a negative way. On the other hand, globalization has a positive impact on poverty reduction and wealth generation of the nations, thus proving them with a wider range of opportunities for sustainable development. Introduction Globalization, as a process of unification of global markets, has been much discussed in the recent years. There exist different opinions on the issue – some view globalization as a positive thing, while others – as a negative. However, a general common opinion is that globalization is one of the principal vehicles for economic growth and wealth generation. Therefore, the goal of this paper is to research and analyze the role of globalization in the modern world as that of the driver of economic growth and wealth generation. In addition, the relationship between globalization and sustainable development will be assessed and analyzed in order to determine compatibility of the two concepts. The analysis will be based on current examples in areas such as poverty alleviation and environmental protection. The impact of global brands on these areas of social development will be assessed with the purpose of finding out whether globalization has a positive impact on the development of local nations. Finally, the findings of the research will help businesses and public organizations to understand how globalization is related to sustainable development and how the two principles can be used on practice with the goal of achieving a sustainable competitive advantage in the global marketplace. In order to achieve the set goals the meaning of both concepts – globalization and sustainable development – should be defined in the first place. Definitions Knight (2000, 12) defines globalization as a “growing interdependence of national economies - involving consumers, producers, suppliers, and governments in different countries.” As a result, boundaries between foreign and domestic markets are loosing their significance and businesses have more freedom to operate in foreign countries. Among the results of the process of globalization is, as Dunning (1993, 43) outlines, intensification of competition. As an economic term, globalization refers to the increasing integration of global economy caused by “incessant flows of goods and services, capital, technology and information across national borders” (Lucas 2004, 1). At the same time, globalization stimulates international communication and intercultural exchange. So, in a broad sense globalization can be called a continuous process of internationalization that increases interdependence of world countries in such aspects as economy, politics and culture, among others. As for sustainable development, it can be defined as a system’s desire or tendency to continuously improve and achieve certain social objectives, such as social wealth and health, improved education, increased volume of resources or increased number of social freedoms (Pearce, Barbier, and Markandya 1990, 2). Though such an improvement within the system does not have any time limits, the term implies that the changes taking place always lead to improvement and benefits the system itself, as well as its direct external environment. Therefore, in business context sustainable development is a response to the negative results of industrial activities, such as environment pollution, human exploitation, or biodiversity loss, among others (Faucheux, O'Connor, and van der Straaten 1997, 2). The goal of sustainable development, thus, is business operations that cause minimum harm to the company’s external environments, whether natural or social, or economic, and contribute to the improvement and positive development of such environments. For commercial organizations in particular sustainable development is a tool for creating a sustainable competitive advantage in the international market (Day 1990, 3). Poverty Alleviation Poverty reduction has recently become one of the major goals of global society. Being powerful members of the global society large international companies, therefore, have been given the responsibility of supporting the communities they work within. Consequently, globalization has made possible for local communities to experience the advantage of large corporations’ operations. For companies, as Rumelt, Schendel, and Teece (1991, 6) such practices create a positional advantage in the marketplace and, consequently, strengthen their competitive positions since modern society has moved from pure consumerism to more environmentally responsible buying behavior. So, unlike in the era of rapid industrialization, current market conditions force companies to operate in an environmentally and socially responsible manner. This demand of the global society has already showed some positive results. World Bank (2008, 45) reports that in the time period of 1993-2002 the number of poor people in rural areas of the developing countries decreased from 1 billion to 0.9 billion. Though 0.1 billion does not look as a huge number in comparison to 0.9 billion, the Bank contributes this poverty reduction to the sustainable development and corporate social responsibility strategies of the companies operating in the third world markets. A recent report made by the Coca-Cola Company reports that private companies are the major facilitators and executors of poverty reduction initiatives all over the world. In particular, Coca-Cola, in association with SAB Miller, and Oxfam America (American poverty and environment activists) point out that even though separate initiatives can make slight contributions to poverty reduction, only a sustainable economic growth of the country can help to minimize poverty (The Coca-Cola Company, 2011, 13). The reports evaluates the impact of the company’s operations in Zambia and El Salvado and concludes that thousands of jobs created in both countries have, actually, contributed to the wealth generation of the citizens and have contributed to reduction of poverty levels in the countries. Another perspective on the problem is taken by Pearce, Barbier, and Markandya (1990, 71), who write that poverty reduction is achieved with the help of social initiatives aimed at sustainable agricultural development of local communities, among other objectives. Such sustainable agricultural development, in its turn, is closely related to environmental protection. In particular, such strategies as land preservation initiatives, purification and protection of industrial water supplies, and introduction of technological innovations have shown to produce visible positive results on practice. At the same time, globalization brings negative consequences as well. Pearce, Barbier, and Markandya (1990, 82) present the experience of Java as an example. The caused by globalization openness of the economy lead to better terms of trade for the farmers. Profitability of farming, thus, increased and caused intensification of farmers’ activities. This, in its turn, causes heavier soil exploitation, faster soil erosion and, consequently, prevents soil conservation practices. So, while globalization does contribute to poverty reduction through creating new jobs for people and companies’ implementing targeted poverty reduction initiatives, it has negative implications as well. Globalization, in many cases, gives people an opportunity to earn more via exploiting their resources more radically. This, in its turn, has a negative influence on the environment and natural resources in particular. Therefore, it can be concluded that poverty reduction is interrelated with environmental issues, so while globalization helps to reduce poverty, it damages the environment at the same time. Environmental Protection As it was outlined above, globalization, in some situations, leads to overexploitation of natural resources of the nation. Poverty, therefore, is the cause of greater problems. The most crucial of them is related to the planet’s environment. Hollander (2003, 235) even calls poverty the major reason for environmental problems. So, it is not a surprise that a great number of international organizations are working toward fighting poverty. It is not an easy task and the outcomes of poverty need much attention too. Environmental problems are direct threats to people and to the planet. “Global warming, ozone depletion, overfertilization of water, dispersal of heavy metals and Persistent Organic Pollutants (POPs) - exist as a direct result of insufficiently regulated capital reproduction in the globe’s most affluent nations and the North–South relationships so engendered,” comment on this matter Schwartzman and Schwartzman (2006, 439). The authors continue stating that actually globalization expressed in the widespread of large corporations has lead to such negative consequences to the environment. Businesses, according to Schwartzman and Schwartzman (2006, 439), are the main cause of environmental problems because companies are the ones who produce “toxic chemicals, radioactive fallout and conspicuous consumption.” Nevertheless, it can be easily noticed that a web-site of any global corporation is filled with information on how the company helps protect the environment. Such corporate environmentalism can be classified into environmentalism orientation (that is understanding the need to protect the environment) and focused on environmental protection strategies, as Banerjee, Iyer, and Kashyap (2003, 106) suggest. Pure environmental orientation, however, is a pointless thing, according to the authors, since it does not imply that a company actually does anything in order to support its environment-oriented vision. Nevertheless, since public concern about environmentalism has recently become an external political force that influences companies, it has brought some positive changes. In 1991, for instance newly introduced to the market ‘green’ products made more than 13% of all the new products (Ottman 1993, 12). In addition, with the development of globalization, transfer of western technologies to the developing countries, as well as capacity building does, according to Baker (2006, 182) help the third world countries in reaching their objectives of healthier environment and sustainable development. In this context it can be said that globalization is giving developing countries more opportunities for sustainable development since technologies and resources (both material and intellectual) brought to them from abroad help to form a more solid and stable basis for future improvements in all the aspects. Of their development. So, it can be concluded that on one hand globalization impacts the state of the environment negatively. Large company’s entry in the market or diffusion of trade barriers leads to overexploitation of local environmental resources. On the other hand, however, these same factors have a positive side: new jobs are created, people get new opportunities to earn and governments get additional tax income. This, in its turn, helps the nation to generate wealth and, as a result, reduce poverty which is claimed to be the real cause of environmental problems. Therefore, the impact of globalization on the nation’s economy and lifestyle has both direct and indirect influence on environmental protection. Conclusion The presented above information leads to a conclusion that interrelation between globalization, as a process of growing interdependence of national economies, and sustainable development, as a trend for improvement, is rather controversial. Surely, globalization, through increased competition, makes businesses take more measures for remaining competitive. This leads to the companies’ being more socially responsive and responsible, and investing into sustainable development initiatives related to poverty reduction and environmental protection, among others. Undoubtedly, new jobs created by multinational corporations contribute to the economic development of the country. Then this development leads to poverty reduction and wealth generation. And since poverty is claimed to be the major reason for environmental problems, such as overexploitation of natural resources, its reduction is to reduce the number of environmental problems. However, it should not be forgotten that many environmental problems are caused by the companies directly. Industrial production makes the world suffer from global warming, ozone depletion, overfertilization of water, dispersal of heavy metals and so on. Therefore, while globalization helps nations in some aspects, it damages their environments in others. The problem could be solved if large corporations were able to invest into the design, development and implementation of environmentally-friendly technologies. The existing situation, unfortunately, looks as a closed disk – businesses harm the environment, and then fight for protecting the nature continuing damaging it at the same time. Therefore, governments, communities and businesses should work in cooperation with the purpose of developing and implementing more environment-friendly technologies for the good of the global society. Global exchange of knowledge, experience and technologies should be encouraged in order to facilitate and support poorer nation’s economical growth. References Baker, Susan. 2006. Sustainable development. Routledge. Banerjee, Subhabrata B., Easwar S. Iyer, and Rajiv K. Kashyap. 2003. “Corporate Environmentalism: Antecedents and Influence of Industry Type.” Journal of Marketing 67 (April 2003): 106–122. Day, George S. 1990. Market-Driven Strategy: Processes for Creating Value. New York: The Free Press. Dunning, John H. 1993. The Globalization of Business. London: Routledge. Faucheux, Sylvie, Martin O'Connor, and Jan van der Straaten. 1997. Sustainable development: concepts, rationalities, and strategies. Springer. Hollander, Jack M. 2003. The Real Environmental Crisis: Why Poverty, Not Affluence, Is the Environment’s Number One Enemy. Berkeley, California: University of California Press. Knight, Gary. 2000. “Entrepreneurship and Marketing Strategy: The SME Under Globalization.” Journal of International Marketing 8 (2): 12–32. Lucas, Manuela. 2004. “How can we make globalization work for sustainable development?” Afrique PALOP : Developpement et mondialisation. Seminaire - Universite Libre de Bruxelles - 1-2 mars 2004. www.amigos-de-mocambique.org/sem/PALOP-Lucas.pdf Ottman, Jacqueline A. 1993. Green Marketing: Challenges and Opportunities for the New Marketing Age. Lincolnwood, IL: NTC Business Books. Pearce, David W., Edward Barbier, and Anil Markandya. 1990. Sustainable development: economics and environment in the Third World. Earthscan. Rumelt, Richard P., Dan Schendel, and David Teece. 1991. “Strategic Management and Economics.” Strategic Management Journal, 12 (Winter): 5–30. Schwartzman, Peter and David Schwartzman. 2006. “The Real Environmental Crisis: Why Poverty, Not Affluence, Is the Environment's Number One Enemy.” Science & Society 70 (3): 437 – 440. The Coca-Cola Company. 2011. “Exploring the links between international business and poverty reduction — The Coca-Cola/SABMiller value chain impacts in Zambia and El Salvador.” www.thecoca-colacompany.com/citizenship/pdf/poverty_footprint_report.pdf World Bank. 2008. World development report 2008: Agriculture for development. Washington, DC: World Bank. Read More