The Pros and cons of The Globalization Process - Essay Example

Does Globalization always make economic sense? Table of Contents Executive Summary With the ill effects of globalization acutely felt in some areas of the world, it might be questioned as to why any organization, nation or individual would consider encouraging its spread. Introduction With the advent of the internet and massive computing systems that are nevertheless small in physical scale, the world is becoming an ever-shrinking globe. National boundaries are becoming blurred as people in India begin working for companies in the United States and cultural groups are beginning to lose their sense of uniqueness as the world’s civilizations become more and more Westernized with the onset of full-scale capitalism. This globalization, or inter-nationalization, process has been a hotly debated topic in the media, political and social circles for the past several years. The Globalization Process The concept of a “shrinking world,” a world wherein travel, trade and communications between countries is becoming easily accessible by all, is luring more and more companies into the worldwide market thanks to significant advances in transportation, communication and a recognition of the success of libertarian marketing systems. “The globalization of markets has certainly accelerated through almost universal acceptance of the democratic free enterprise model and new communication technologies, including satellites and the Internet” (Cateora 2005). The International Monetary Fund defines globalization as “a historical process” involving “the increasing integration of economies around the world, particularly through trade and financial flows” (International Monetary Staff 2002). It is typically viewed as a necessary and unavoidable key to future world economic development. Others have denounced the process as it seems to increase the current inequalities that exist within and between nations, threatens the employment and living standards of individuals in all countries as talent is pulled from each and low-paying jobs are farmed out to others and prevents the natural social progress with which each of these countries have been involved. Changes in the way in which organizations conduct business have been rapid and wide-spread as the globalization concept has been introduced. It is the inherent nature of the marketplace to increase efficiency within the workplace by constantly striving to produce the most products with the least expenditure of resources. It is this concept that has driven many corporations to join in the globalization process, frequently outsourcing many of their activities and production processes to less developed countries in which this process is less expensive and requires fewer restrictions, licensing, and/or controls. “Global markets offer greater opportunity for people to tap into more and larger markets around the world. It means that they can have access to more capital flows, technology, cheaper imports and larger export markets” (International Monetary Fund Staff 2002). Expansion of Free Market Policies Although the idea of globalization sounds like an ideal situation for the increased flow of goods and currencies throughout the world, as well as a possible solution for the redistribution of wealth into some of the world’s most destitute countries, “in practice, this has meant that the governments of the advanced capitalist countries, along with the I.M.F., the World Bank, and the W.T.O., have increasingly sought to force other nations to adopt market economies, privatize public companies and resources, abandon labor and environmental regulations, reduce social services, and embrace ‘free trade’ and the free movement of transnational capital” (Smith 2002). It is noted that much of the globalization effort is being organized and encouraged by the Western capitalist countries and the big businesses that have ever-increasing power in the political circles, forcing their own ideals, agendas and policies upon developing nations desperate for some help. The policies of a free market system in a globalized economy is envied, emulated and remains the ‘gold standard’ of national economic policy accepted by economists, businessmen, politicians and academics worldwide (Brace, 2001). The reduction of trade restrictions along with the opening of monetary incentives to foreign investments over the last two decades has combined to stimulate economic development. The expansion of free market policies is the economic tool, one already in place and expanding, which is affecting technological advancements and wealth (Burns, 2006). Big Fish Eat Small Fish Because of the increased ability for these larger corporations to move into smaller markets, bringing in their greater resources, greater capital and greater ability to undercut their competitors, smaller businesses are finding it more and more difficult to survive the globalize marketplace. Rather than leading to an increased diversification in the market, as well as the associated opportunities for employment and competitive salaries, globalization is beginning to decrease the ability of local citizenry to find adequate support outside of the multi-national corporation and opportunities for entrepreneurship dwindle. “As we all search for the best deal for our consumer dollars, regional superstores and on-line shopping drives our Mom and Pop shops, local manufacturing and local service companies out of business. As local businesses close their doors, the number and diversity of local jobs decrease” (Salmons & Babitsky 2002 p. 4). The World Economy Despite the apparent threat to local businesses, developing nations are eager to accept the influx of big business as the international corporation operating in the right third world country can substantially increase the GNP. This interaction among nations leading to the overall economic growth of those countries has been historically demonstrated. Globalization offers extensive opportunities for truly worldwide development. Because companies expand into new markets based on how well that market can meet their own needs, this process sees some countries becoming integrated into the worldwide economy much faster than others. Economically deprived countries, not surprisingly, have larger proportions of poor than industrialised nations. These countries, Cuba for example, cannot afford protectionist practices such as building barriers to free trade if they wish to bring their respective populations out of impoverished conditions (Dollar, Lindert & Williamson, 2001). “On average, those developing countries that lowered tariffs sharply in the 1980s grew more quickly in the 1990s than those that did not” (Dollar, 2001). Global Brands In moving into other countries and other environments, companies need to take into consideration not only their own products and services, but the resources of materials and workers available in a local market as well as the individual tastes and desires of the consumers in that area that have been formed by a combination of cultural background, national identity and personal preference. In “Why global brands are not always cost-effective,” Lindsay Williams quotes Laurie Young, global head of marketing at PricewaterhouseCoopers as saying “Local culture is a powerful barrier to the success of a global brand. It really is time that we recognised the power of cultural differences and their effect on global enterprise” (Williams 2004). Of course, all this change filters down to ultimately affect the individual citizens in a very real way. No longer sure of their livelihood thanks to increased competition for less jobs available, the globalized economy has made it difficult, if not impossible, for the poor to dig their way out of their poverty while increasingly helping the wealthy add to their fortunes. In addition, the jobs that do become available are not always jobs that would be open to local residents as they might require skills or knowledge that were not previously necessary. Global Competition Downsizing by companies moves the bulk of workers into contract and temporary employment” (Salmons & Babitsky 2002). This increased competition for jobs has led to a Westernized way of living that places emphasis on fast lifestyles and a constant pressure to keep up with the latest advancements and social opportunities in order to have a chance at the best jobs. “In this world of intense competition, social networking is everything. Who you know and how they can help you is the coin of the realm. The result is that we increasingly isolate ourselves into gated communities and exclusive membership organizations” (Salmons & Babitsky 2002). Conclusion It could be argued that globalization has been in existence ever since the first two countries established communication with each other. The only difference now is that the advances in technology and communication have enabled business to be conducted over longer distances in less time, enabling this kind of interaction to occur regardless of geographic location. There are benefits to be gained through globalization as countries such as Asia see dramatic improvement in their GNP, which is further transferred down into the general populace. Although there is still poverty in these nations, it can be argued that the poor are living better quality lives as a result of the influx of capital and resources. The question, then, is not how to stop globalization, but rather how to make globalization work in such a way that it does not break down the cultural ideals, family structures or provide corporations with unchecked controls over developing nations even while it works to benefit the world economy. Works Cited Brace, Amanda. “Free Trade History, Theory and Ideology.” Friends of the Earth International. (January 24, 2001). November 19, 2007 Burns, Alice. “Free Market Environmentalism.” Digital Freedom Network. (August 8, 2006). November 19, 2007 Cateora, Phillip R. and John Graham. International Marketing. Columbus: McGraw-Hill, 2005. Dollar, David. “Globalization, Inequality and Poverty since 1980.” World Bank, 2001. Dollar, David; Lindert, Peter & Williamson, Jeffrey. “Does Globalization Make the World More Unequal?” NBER Working Paper N. 8228, 2001. International Monetary Fund Staff. “Globalization: Threat or Opportunity.” International Monetary Fund. (January 2002). November 19, 2007 Salmons, Jim & Babitsky, Timlynn. “Shamrocks and Nanocorps: Business Model and Technology Innovation to Bridge the Digital Divide.” 2002 Northern Montana Technology Exposition [keynote presentation]. (March 23, 2003). November 19, 2007 < http://sohodojo.com/mt-tech-expo-scripted.pdf> Smith, David Michael. “The Growing Revolt Against Globalization.” Impact Press. (August / September 2002). November 19, 2007 Williams, Lindsay, “Why global brands are not always cost-effective,” The Business. November 19, 2007 World Bank. “Globalization, Growth and Poverty: Facts, Fears and an Agenda for Action. Read More