Globalisation - Economic Internationalisation through Trans-National Corporations - Essay Example

Running Head: GLOBALISATION PROCESS Globalisation Process [The Writer’s Name] [The Name of the Institution] Globalisation Process Introduction The concept of 'Globalisation' has achieved varying support from different groups in regard to its ability to aid the struggle of underdeveloped countries to reduce economic inequality. Secondly, viewed in economic terms, globalisation is usually taken to mean the recent massive increase in global trade and internationalisation of production and distribution strategies along with the unprecedented mobility of global finance capital pushed forward by the dazzling advances in information technology. This paper would analyse and evaluate which driving factor is the most crucial in developing and promoting the globalisation process in the world. Part1 Patterns/Problems Due To Political and Social Ideas The beginning of the globalisation process can be traced back to the collapse of the Soviet Union. Since then, the first great expansion of European capitalism took place up until the 16th century. This bought an immense expansion in world trade and investment up to the late 19th century. (Olson, 1960) At this point the First World War contributed to the "Great Depression" in 1930, which halted the globalisation process until it gathers pace again in the 19th century. After the Second World War, there was another expansion of capitalism. With the introduction of multinational companies, who produced and sold products and services to domestic markets worldwide. The final factor was the elimination of the Soviet Empire. (Holmes, Leslie 1997) This allowed capitalism to thrive, and with the development of air travel, international companies and more recently the internet, has made possible the organisation of conducting business on a global scale. The political system is often 'Westernised', and a democratic system implicitly imposed. Social freedom of choice is also manipulated as the candidates will often be those who champion the policies of the West or who are deemed to suit Western objectives. Secondly, indigenous industries of developing countries suffer due to high inflows of FDI from foreign TNC's. This has several knock on effects, firstly the host governments fail to gain revenues through taxes and rent and secondly the skill and expertise of indigenous business fails to flourish. (Goldberg and Pavcnik, 2007) If the level of and need for skill is low then institutions such as universities and Schools will not develop, thus restricting the earning potential and quality of life at a social level. One major problem with the globalisation of the developing world is that decisions made by major world organisations are also taken from a Western viewpoint and fail to recognise the direct needs and requirements of non-Western cultures. Stiglitz has emerged as one of globalization’s most prominent critics. His book “Globalization and Its Discontents” included sharp criticisms of international economic institutions. His new book “Making Globalization Work” extends the discussion of “Globalization and Its Discontents” but largely avoids the polemical tone. He is even weaker in his policy proposals. His book “Globalization and Its Discontents” writes about international economic problems, along with much less convincing proposals for reform. His second about globalisation “Making Globalization Work” offers the hope that global society has the will or the ability to address global problems and that international economic integration will ultimately prove a force for good. He argues throughout that powerful special interests have distorted the world economic order and the international institutions that run it. His preferred solutions are large-scale reforms in existing international institutions and the creation of new institutions like a global reserve system to make trade fairer, to allocate reserves more equitably and to discourage despotism and corruption. Part II Globalisation Process Driven due to Economic Factors and Financial Forces Economic globalisation refers to economic integration and market deregulation. Economic integration is the lowering of national barriers to trade and investment, where goods, services and money move freely throughout the world. Just as important to economic globalisation is market deregulation (economic liberalisation), which involves reducing the role of the government in regulating economic activity. The perception economists hold on 'Globalisation' and its effect on developed and underdeveloped countries is one that continues to spark debate all over the world. Extensive scale ideological altercations have been substituted in recent years by many smaller ethnic differences in various regions of the sphere. Some small-scale battles intensified transnational prearranged crime by escalating the supply of drugs and by feeding the trade in ammunitions and arms. Developing countries enjoying meagre economies which are reliant upon farming and rural commodities are, with declining agricultural prices, frequently engrossed to drug cultivation as a way of acquiring cash. (Hignett 2004) This wealth can then be utilised to procure arms for use in low rated rifts. Arms and ammunitions for such objectives are constantly bought on the unlawful arms market, which is afforded by transnational gangster crime clusters. (Mark Galeotti, 2004) In the 1980s, the notorious Colombian drug traffickers extended their drug market range to encircle Europe, and they improved links to the Italian mafia and such international criminal organizations as the Chinese Triads and the Nigerian mafia. Just shortly, connections have been established with post-Soviet organized crime groups and Eastern European. (Claire Sterling, 1994) Globalisation leads to growth, and growth reduces poverty. It is often alleged that free trade exploits developing countries. However, many economists believe that trade and investment are the best poverty 'alleviators' around. Therefore hindering free trade and investment hinders the development prospects for a country. Liberalisation of markets promotes perfection in economic organisation and management which, in turn, pushes forward growth and human welfare. Even though economists vary on the timing and qualities of capital account unchecked flow, they are inclined to be operative optimists in that they see prospects for trade developments as providing joint gains to the participants. This fundamental impending inspires economists' public policy sustenance for globalization and an open international trading system as an impending energizer for producing and flourishing opulence across all nations. (Ronald Findlay & Kevin H. O'Rourke, 2001) The effect of economic institutions such as GATT, the WTO and the IMF on non-Western societies has been varied in their effect. GATT originally only regulated the trade between countries, failing to protect the interest of the smaller economies. The World Bank and IMF finally addressed the investment needs and fiscal issues arising in developing countries from international trade and balance of payments deficits. Rather than solve, these organisations have acted more as managers of debt within developing economies and its allocation. Many countries in seeking to close the void between themselves and the West have taken on huge debts, increasing the dependence economically between themselves and the West and creating greater economic instability and social unrest. (Bouloukos, Farrel and Laycock.2003) This economic dependency has had significant impacts both socially and politically within non-Western economies. Firstly, governments of poorer economies lose much of their autonomy and control over political, investment and fiscal decision-making. By distinction, corruption in the prevailing public sector engages the, misuse of powers within dubious state institutions. In calculation, the favouritism toward public sector corruption in the available theoretical literature fairly reproduces an ideological concept that the private sector is the area of fundamentally unimpeded individual authorization, while the state symbolizes its reverse and must be subject to meticulous inquiry, imprisonment and self-possession. (Bardhan, Pranab, 2006) Conclusion With the rise of globalisation across the modern period, economic internationalisation through Trans-national corporations, showed sovereign power now viewed against the rise of economic, political and social internationalisation. With states losing economic, political and social independence, sovereignty of independent states has not been lost but has merely secured and adapted in light of a changing political environment. While the ancient civilisations of Rome and China enjoyed isolated independence, in the twenty first century, the growth of Trans-national companies, concerns over uniform global, environmental problems, and humanitarian concerns has seen the integration of independent nation states. Economic transactions, international companies have continually transgressed national boundaries. Globalisation is rapidly taking place while the state remains a key actor in the mediation of national and international levels of activity. Sovereignty has been maintained simply because of the way in which it can be viewed differently in different concepts, historically and spatially, internally and externally. The effect trans-national corporations have had on the globalisation process has been the most significant. These companies have collectively used all the technology, resources, political and economic power, and regulations to their advantages in order to gain the most for such countries and their people. They are the very "real" reason why globalisation has become so "global." With so many trans-national and multinational corporations it is very difficult for even the sceptics to say that globalisation is a myth, when such companies are the living proof that globalisation is taking place, and will continue to do so for a very long time into the future. Economists have no excuse for corruption. One potential cause for their prejudiced anxiety with public segment corruption is the prevalent pressure of individualistic and liberal philosophy. A crucial mark in this ideology is the misuse of command by politicians. The mistreatment of authority by directors of great corporations does not elevate the same height of apprehension among chief idiosyncratic and broadminded theorists such as Friedrich Hayek and Milton Friedman. As per this flow of thought, most deliberate contracts between yielding adults are ethical and rightful, as long as they do not hurt others. Ignoring the depressing externalities of sleaze, it has been additionally convinced from a libertarian standpoint that subornment and other designs of corruption in the classified globe have probable profits, and are expressions of consumerist commotion. References Bardhan, Pranab, (2006). "The Economist's Approach To The Problem Of Corruption," World Development, Elsevier, vol. 34(2), pages 341-348 Bouloukos, Farrel and Laycock.(2003) Globalization Produces Criminal Opportunities. Goldberg and Pavcnik (2007) “Distributional Effects of Globalization in Developing Countries,” Journal of Economic Literature. Hignett K: (2004) Organised Crime In East Central Europe. Holmes, Leslie (1997) Post-Communism: An Introduction: Duke University Press. Mark Galeotti: (2004) Introduction: Global Crime Today” in Global Crime, Vol. 6, No. 1, February 2004, pp. 1-8. John McFarlane. Olson (ed.) (1960) Theory and Practise of International Relations, (8th ed. Prentice Hall press) Ronald Findlay & Kevin H. O'Rourke, (2001). "Commodity Market Integration, 1500-2000," NBER Working Papers 8579, National Bureau of Economic Research, Inc. Stiglitz, J. (2002) “Globalization and Its Discontents”, W.W. Norton. Stiglitz, J. (2006) “Making Globalization Work”, W.W. Norton. Read More