Globalization - Benefits, and Drawbacks - Coursework Example

Globalization: Benefits and Drawbacks s Globalization: Benefits and Drawbacks Globalization has been an intensely controversial topic over the last few years. The term refers to the integration and interdependence of firms, people and Governments belonging to different countries. It also urges constant innovation and adaptability for companies, nations and people involved in order to gain competitive edge in international market. Through international trade and foreign investment, world-wide societies prosper with major effects on their respective cultures, environment, political and social systems and most of all economic growth. Globalization has received its fair share of critique and admiration simultaneously. Arguments in favor of globalization state many reasons, which include reduction of worldwide poverty, easy access to information and technology among emerging nations, promotion of world peace and economic growth. Critics argue reimbursements of international trade and wealth benefits being inclined more towards multinational companies while local enterprises get affected. Cultural and social side-effects also raise resistance to globalization. This paper will provide a comparative assessment of globalization with regards to its positive and negative aspects supported through different scholarly sources. Globalization: History and overview Since the dawn of 21st century, globalization has been used as a mean to increase worldwide connectivity and interaction with respect to social, economic, political, cultural, ecological and technological impacts. According to Friedman, this concept has been revolutionized throughout the 21st century and has operated as an international system replacing cold war system (Friedman, 2007). It is evident from the constant change in the economic concepts and continuous emergence of new skills and abilities in every field Friedman sees the world being turned into a “flat playing field”, which he calls as “Globalization 3”(Friedman, 2007). According to him, technological reforms are beneficial for humanity. These changes are no doubt useful but their negative impacts cannot be ignored (Friedman, 2007). In other words, globalization has provided countries throughout the world a flat field to play and gather benefits after gaining a competitive advantage. After the decline of communism and emergence of Windows and Netscape, global communication widened. Software protocols supported work to flow easily throughout the world. Further reforms in globalization were evident through adopted techniques of outsourcing, in-sourcing, off-shoring and supply-chaining. Such technological reforms further broadened the international playing field. It is because of these developments that countries like China and India are seen reaping success of globalization by not only adjusting their political structures but also via becoming an important part of international supply chain for different products and services (Friedman, 2007). However, there still exists a certain level of anxiety, which has upset the global economy since 2001. This was further intensified after numerous excursions in the financial markets worldwide. Industrialized countries as well as emerging ones have been deeply affected by competition and modernization. It has caused bankruptcy of firms, death of whole industries and broke down communities. Benefits of globalization The trend of globalization has reduced the distances and converted the whole world into a global village. There are many advantages of globalization which include the following. 1. Free trade Globalization has provided endless opportunities for emerging markets and developed countries as well as facilitated trade, easy flow of technology, capital, workmanship and labor. This has been particularly evident in the prosperity of Chile, Vietnam and Malaysia. These countries have achieved efficient economic growth through globalization by increasing their productivity and skills (Lehmann, 2014). Global free agreements from GATT, NAFTA and FTAA allow countries to invest, do business and be protected against overruling(Parenti, 2014). 2. Creation of jobs Multinational companies via expansion in emerging countries provide investment opportunities in the local organizational structures, generate jobs, and create profitable prospects for local businesses in the field of distribution, supply-chain management, consultation and services. Vietnam is a good example of how globalization benefits a large segment by providing skill-related jobs (Lehmann, 2014). 3. Poverty reduction and improved quality of life Countries that have opted for globalization have shown increased GDP growth rates and thus, evolved into wealthier states. The last decade of twentieth century show that developed countries have experienced 5% annual growth rate after switching to globalization (Boundless, 2014). These countries benefitted from economic development and international trade (Boundless, 2014). Easy access to globally recognized products, services and ideas positively affects the lifestyles of the public. These include widespread access to attractive standards of living like home loans and car loans, etc. It also provides ample opportunities for traveling abroad and affordability of luxurious items. Liberty of cross-border immigration allows for better work opportunities. A large segment of the world enjoys music, fashion, sports, cultures and different forms of entertainment without any restriction. People from diverse backgrounds and cultures, consume globally renowned branded consumer goods from sectors of clothing, food, sports and technology. All these facilities lead to an improved quality of life for nations supporting globalization (Boundless, 2014). 4. Economic gains for developing countries: Globalization has made possible an increased interdependence of various emerging nations via amplified cross-border exchange of products, technology, capital and different services. Under World Trade Organization structured framework of Tariffs, countries have been compelled to break down trade barriers and adopt an opening-up policy. Developed nations and developing countries have been interconnected through direct foreign investment as well as cross border migration. Improved transport of labor and goods has increased global accessibility. Technological innovations have made new market based trade entry very cost-effective for merchants. The financial gains achieved by nations from economic globalization were evident through accelerated per capita GDP growth (Roberts, 2008). It is observed that governments with strong domestic infrastructures and flexible trade regulations enjoy huge gains from globalization. China, as explained by Dr. Albert Keidal, is a perfect example of a country obtaining constructive economic development and benefitting from globalization through increased production capacities, huge labor pool and extensive technological reforms (Keidal (a), 2004). China over the last few decades lifted its public out of intense poverty by raising its economic growth. It is now focusing on purchasing global assets and is predicted to raise its economic size by 2035 (Keidal (b), 2014). China has benefitted from globalization largely by aggressive inclusion of direct foreign investment and enhancing efficiency at home via dealing with global foreign competition (Keidal (a), 2004). China has also managed to reduce poverty on a national level. It is estimated that approximately 1.3 billion people have been lifted out of poverty by China. This became possible through commercialization of globalization, focusing on reforming markets, exploring scarce commodities, developing substitutes and taking care of environmental effects of globalization. (Keidal (a), 2004) 4. Tourism and travel Tourism-based businesses operate efficiently on an international level in the presence of globalization. This process has resulted in creating a whole new market for tourism with endless opportunities for development and interactive functioning. Regardless of businesses being giant, mid-sized or small, each enterprise opts for a competitive strategy for achieving internalization. This includes global tourism management, excessive competition for holiday resorts and packages and foreign investment in restaurants and tourists attraction spots. In 2002, 715 million people have travelled globally and this figure is anticipated to be enhanced by 1.6 billion by year 2020 (Peric, 2014). Tourism turnover has been accounted to be US$ 3500 billion, an approximately 10% of the international trade (Peric, 2014). Drawbacks of globalization The fresh arrival of globalization seized the world’s attention at first but has now turned sour into everyone’s mouth due to various reasons, which P. J. Lehman believe requires utmost attention so as to benefit all nations, whether developed or not (2014). The harsh implications of globalization range from reduction of labor standards at home, disregard of human and civil rights, environmental and ecological pollution and creating culture confusions. 1. Promotion of protectionism, mercantilism and nationalism in globalization WTO is responsible for providing the necessary administrative, legal and political structure for countries to operate in a global market. However, its failure to prevent developed nations from reforming tariffs has led to constant rivalry among emerging economies. One such example was the former agreement of a proposed agenda whereby the low-income countries were to be allotted agriculture as a playing field and this sector was to be kept off-reach for richer countries. However, entrepreneurs focused on changing policies to their own advantage. This led to blockade of market access from South to North. Moreover, as seen in Uruguay Round, developed nations included agriculture in their agenda causing difficulties for poor nations. As it is evident, globalization has been sabotaged by leading nations and causing destruction of the global market field with protectionism and nationalism (Lehmann, 2014). The absence of major global corporations in policy making has also led to other groups molding the whole public policy system to their own advantage. The companies battling in today’s weakened global environment will be able to review the future much more clearly when profits, capital and returns on investments will be reduced (Lehmann,2014). 2. Multinationals sweeping away larger profit margins Multinational corporations are seen creating monopoly in not only the global market but also within the host country. By hiring workers at cheaper rates than that in international markets, these firms enjoy a free hand at manipulation of labor standards. Natural resources are also easily depleted. It also influences the political structure and creates cultural and social impacts on the host country in order to survive. Profits are repatriated back to the home nation of the multinational company thereby lowering the profit margin of the deployed country. Safety and health regulations are not considered to be a prime objective for functioning. In other words, multinationals extensively cover the global market and pressurize policy structures to chunk away bigger portions of profits (Lehmann, 2014). 3. Unfair global practices in the name of free trade: World Trade Organization (WTO) is supposed to be responsible for keeping a close eye on the unethical business practices worldwide. However, its trade specialists have failed to achieve this objective causing havoc for various nations. WTO has turned to bureaucracy causing no regulations against private companies, similar treatment of foreign companies as local ones and honoring of all corporate claims. Thus, unfair practices such as increase pesticide residues in Japanese imported food, and deceptive media propagation of baby food in Guatemala raise health concerns on a global basis. Lifting of sanctions on asbestos and emission limits in transportation is also easily introduced. Moreover, rulings against endangered marine species and related products have also been ignored (Parenti, 2014). 4. Dilution of traditional cultural norms and local customs: Globalization has created another hurdle on an international level which was reflected strongly in global societies since 1990s. The invasive distribution of famous U.S franchises and goods in diverse societies such as McDonalds, Nike, Coca Cola, Sony, and Microsoft has not only targeted their traditional culinary preferences but homogenized cultural patterns. Friedman refers to this aspect as “McDonaldization” and “Americanization,” which has caused autonomy in Western and Non-western societies (Friedman, 2007). This elongates the difference between richer and poorer class thus, making it far more difficult to sustain an equitable global environment. Cultural hybridist is a very prominent side-effect which cultivates as the dominance of Western culture all over other cultural settings worldwide gains momentum. This spreads as a traditional schizophrenia and puts even culturally strong countries such as Arab Emirates, Turkey and India in a hostile takeover situation. The one-sided alluring perception of western culture, art, fashion and entertainment provokes a brand-culture which increases fascination-based sale margins but causes native cultures to vanish from communities on a global level. Cultures are influenced at striking speeds after media globalization without any time given for justifying the harmful effects. Music, entertainment, news and even pornography now reach throughout the world easily via technologically advanced gadgets and screens. Thus, globalization has given rise to tensions between system of globalization and ancient cultural coordination of the once tradition-oriented communities (Friedman, 2007). 5. Super-capitalism Globalization systems are fueled by neo-liberal policies (Vogler, 2014). These are aimed at causing radical transformation of local economic systems and welfare structures. A certain wave of super- capitalism is imposed that benefits investors, banks, trans-national firms, shareholders and hedge funds (Vogler, 2014). Fundamental reforms in the processes of distribution and production have imposed major risks on the world economy. This in turn causes financial loss to the locals of the nations where these policies and regulations have been conducted. Iraq and South Africa are also examples of pressurized imposition from neo-liberal entities to establish competitive markets. In the way of liberalization and privatization of local markets of these nations, ever-rising inequality and increased rate of poverty was visualized. As Dr. Albert Keidal suggested in his article “China’s economic rise-fact and fiction,” USA is losing the credibility of being an upholder of democracy and liberty in this era of globalization (Keidal (b), 2014). 6. Impact on environmental and ecological systems: Globalization has led to many environmental side effects. The world experienced the hottest temperature in 2000–2003, especially in the Northern hemisphere. Global warming has caused frequent natural disasters such as hurricanes, acid rains, floods and storms, water, noise and air pollution, shortage of scarce resources and extinction of endangered species are all related to higher consumption needs, industry expansions and free trade liberalization (Vogler, 2014). Increase in Carbon di Oxide (CO2) emissions has caused havoc on the ecological system and the global environment. Increased transportations, deforestations and mismanagement of toxic industrial waste cause drastic climate changes. Currently USA, as one of the developed countries, accounts for approximately 20% of international CO2emissions (Oecd-ilibrary.org, 2014). In, 2007, China also became the largest polluter of CO2 by utilizing increased number of power plants fired via coal, increased transportation fleets and causing disastrous impacts of urbanization (Oecd-ilibrary.org, 2014). Deforestation due to globalization has also led to birth of agricultural fields, which in turn also increases levels of CO2 emissions. Developing nations such as Brazil increased its agriculture-based exports to China from 15,000 to 6 million tons from 1996 to 2003 (Oecd-ilibrary.org, 2014). 7. Increasing rate of mental illnesses Bio-psychiatry has also been globalized in recent years. This new trend of globalization has caused confusion and disturbed the human mind to the extent of mental illness or as Watters suggested “Americanization of mental illnesses”(Raikhel, 2010). Greatly influenced by different religions and societal persuasions has made it difficult for the common man to differentiate between one form of norms to another. According to Ethan Watters, symptoms, diagnosis, forms of treatment and distress tackling techniques have also been revolutionized (cited in Raikhel, 2010). These steps were necessary to take place due to the heavy influence of Western culture on most of the global societies. This western culture encompasses not just ideas or images but also induces western practices, norms, customs and strong beliefs, which have to be cultivated and practiced in everyday life. Therefore, in order to control and create comfortable survival among society, a great investment in treatment and research of mental illnesses is necessary. Some serious progressive mental illnesses such as multiple personality disorders, fugue and schizophrenia require urgent globalization of psychiatric knowledge and associated technological medical advancements (Raikhel, 2010). Conclusion: Globalization and its processes have been experienced by every government, region and country. These changes have been significantly seen from 1990s to 2000 onwards. Globalization has empowered developing countries as well as huge international corporations. Opening up to foreign investment, spreading technology, increasing skilled workforce, gaining competitive edge in international trade creates means for raising standards of living, holding global power and increased wealth for developing and developed nations. But it has also expanded the gap between rich and poor countries due to the negative impacts of globalization. Local cultures are overshadowed by Westernization and environmental and ecological systems are disturbed in the essence of high consumption of scarce resources. Frequent needs of materials and capital cause de-nationalization of local markets. Uncertainty prevails in the form of investment strikes, fund flights, offshore producing plants and outsourcing. In short, for globalization to prosper in the form of industrial and societal modernization, it has to be taken seriously by analysts to avoid the direct and indirect negative effects. Recommendations: Globalization needs to be undemocratic. This requires sustaining economic development through sound infrastructures, increase in employment rates and creation of stable political and social set-ups. Thus, it is evident that direct foreign investments should be attracted for economic growth but this roadmap also requires stable national capital. Unfair practices of trade and unethical trading advantages often lead up to side-effects like global warming, ozone depletion, water pollution and increase in atmospheric temperature. WTO imposed trade sanctions should be made effective against all nations causing carbon emissions like those against Rhodesia and South Africa. Economic growth can be boosted through sharing of innovative knowledge and rejecting the system of patent rights. Education should be more focused on policy making, appropriate policy changes, mechanisms of trade-offs and analysis of political structures. Growing inequality between corporate class and middle class should be reduced so as to sustain quality of living and avoid technology replacing workers or a decrease in wages. References Boundless. (2014). Benefits of Globalization - Boundless Open Textbook. [online] Retrieved from: https://www.boundless.com/business/international-business/globalization-in-business/benefits-of-globalization/ [Accessed: 28 Mar 2014]. Friedman, T. L. (2007). The world is flat. New York: Picador/Farrar, Straus And Giroux. (a)Keidel, A. (2004). Chinas Growing Pains Shouldnt Hurt Us. [online] Retrieved from: http://carnegieeurope.eu/publications/?fa=17259&reloadFlag=1 [Accessed: 28 Mar 2014]. (b)Keidel, A. (2014). China’s Economic Rise—Fact and Fiction. [online] Retrieved from: http://carnegieendowment.org/2008/07/08/china-s-economic-rise-fact-and-fiction/2t9 [Accessed: 28 Mar 2014]. Lehmann, P. J. (2014). GLOBALIZATION - WHATS SO BAD ABOUT PEACE AND PROSPERITY?. [online] Retrieved from: http://www.imd.org/research/challenges/TC050-07.cfm [Accessed: 28 Mar 2014]. Oecd-ilibrary.org. (2014).OECD iLibrary: Organisation for Economic Co-operation and Development. [online] Retrieved from: http://www.oecd-ilibrary.org/docserver/download/0111111ec008.pdf?expires=1395993180&id=id&accname=guest&checksum=B84DF88C9A6AFDB73B05054E5F00D068 [Accessed: 28 Mar 2014]. Parenti, M. (2014). Globalization and Democracy: Some Basics. Common Dreams, Friday, May 25, 2007. Peric, V. (2014).TOURISM AND GLOBALIZATION. [report] Turistica,Slovenia: University of Primorska. Raikhel, E. (2010). The globalization of biopsychiatry | Somatosphere. [online] Retrieved from: http://somatosphere.net/2010/01/globalization-of-biopsychiatry-in-nyt.html [Accessed: 28 Mar 2014]. Roberts, G. (2008). Tug of War: Opposing views on the processes of globalization. International Journal Of Social Inquiry, 1 (2), pp. 69--88. Vogler, J. (2014). Democratisingglobalisation: Joseph Stiglitz interviewed | openDemocracy. [online] Retrieved from: http://www.opendemocracy.net/globalization-vision_reflections/stiglitz_3931.jsp [Accessed: 28 Mar 2014]. Read More