Real World Example of Globalization - Literature review Example

Geography and Globalisation Name Course Name and Code Instructor’s Name Date 1. Introduction 1.1 What is globalization? Globalisation is an important word that has recently become common in the contemporary world. Globalisation can be defined as bringing together different economies around the world into one economic composition that allows for effective trade and financial flows. According to Held and McGrew (2002), numerous views and perspectives exist on whether globalisation is an important concept or not. Thus, the aim of this paper is to elaborate on how globalisation has increased poverty and how it has restructured inequalities. Globalisation has immensely contributed to restructuring of inequality. According to Kremer and Maskin (2002), they state that globalisation has played an important role in shaping and providing for prosperity because of removal of trade barriers, integration of economies, and removal of other barriers that prevents effective business operations. Moreover, globalisation has changed the way things are done, how other people should be treated, and how nations should operate: for example, globalisation has championed democracy and enhanced peace. Nevertheless, other scholars such as Dirk and Perri (2002) have argued that globalisation has increased unrest and stability of different nations across the world. The common conflicts between nations may be attributed to self-interest, disregard of developing countries by the industrialised world, and this is usually championed by the corporate and power held by these bodies. In addition, globalisation has contributed to discontentment in various interest groups around the globe. This discontentment may be attributed to factors such as advancement of technology and expansion of multinational companies that has resulted in easing marketing and production process through globalisation at the expense of the available labour. Held and McGrew (2002) states that these components has resulted in joblessness in the developing economies, while also those employed are paid peanut salary that is not enough to gather for their families. 1.2 Real world example of globalization Held and McGrew (2002) states that numerous studies carry information claiming globalisation has contributed immensely to increase in poverty levels in the developing economies. The studies argues that the industrialised countries benefits more because the policies formulated and implemented favours them leaving those economies that are not industrialised disadvantaged and thus wallow in poverty. According to Baulch and John (2000), a high percentage of poverty in the developing countries is attributed to improved international trade. Moreover, Dirk and Perri (2002) states that the removal of custom duties has increased inequalities in the distribution of revenues in that the developed economies benefit more compared to the developing nations. In addition, globalisation has weakened employment structures. For example, the available jobs in the developing nations pay less compared to the pay in the industrialised world even though the jobs are similar. Moreover, globalisation has contributed to removal of restrictions and has made many multinational companies to shift there facilities to the developing contributes, controlling large pools of capital in favour of their mother countries. These multinational companies have the capacity to influence policies made into their favour in these developing countries resulting in increase in poverty in the developing countries. 2. Discussion 2.1 Economic and cultural effects of globalization Improvement of the international trade is an important component of globalisation. Baulch and John (2000) states that international trade plays a crucial role in the contemporary society in that it allows for goods and services to move between countries and around the world. This is based on the definition of international trade: movement of services and goods from one country to another. The unification of trade and international trade has increased available market for goods and services, and hence, improves on wellness of economies. Baulch and John (2000) associates these large markets with the abolishment of protective barriers and custom duties that translates to free trade between and within states. This increases gains experienced and opportunities that may be used to generate more income that will be re-invested into other programs such as health and education and hence ensures continuous economic growth. Moreover, through international transfers, countries and economies are able to gain access for their exports and technology. Improvement of gross domestic production has been attributed to growth of exports and imports, and this is directly associated with globalisation. Furthermore, rationalisation of production activities from the developed to under-developed countries creates opportunities to expand trade. This approach is not only restricted to goods but also to services that forms the main component for global trade according to Baulch and John (2000). In addition, globalisation has enhanced populace migration and effective communication result in eroding of national identities. 2.2 Pros and cons of globalization Pros Globalisation has numerous positive benefits towards improvement of economies and human life. Globalisation allows for unification of finance systems, technology, communication, and commerce, laws that bypasses traditional social, national, cultural and ethnic boundaries. Pettinger (2009) says that this approach has contributed towards higher standards of wealth, greater specialisation, improved living, eradication of poverty, and efficiency of division of labour. Improvements in both transportation networks and technology have contributed in reduction of business costs. In addition and according to Pettinger (2009), information technology ensures that information is exchanged effectively at minim costs. Consequently, reduction of the costs associated with transport and communication has significant impact on the production approach, flow of information, and the market that the business relies on. Moreover, reduction in these important overheads stimulates localisation of businesses and intensification of competition resulting in determining appropriate marketing strategies and the way the goods are manufactured. Pettinger (2009) also states that globalisation plays an important role in determining finance and capital flows. In addition, globalisation has provided a base in shaping utilisation of finance in terms of pricing, repackaging, unbundling and in redistribution of financial risks. Moreover, national markets integration has expanded markets of services resulting in globally oriented banks and other international financial institutions that ensures businesses operates optimally. Globalisation also brings into consideration unique features in the society. Culture and environmental diversity are examples of unique issues that globalisation has championed, providing extensive information, and enabling different stakeholders to utilise factors associated with culture and environmental diversity. When it comes to culture and environmental diversity, tourism comes into play. Many people through tourism are able to attend and participate in cultural activities, to sample it unique features such as the wine and food festivals in Australia. Moreover, when it comes to environmental diversity, people visit Africa to view the big five animals and through globalisation many of the tourists obtain information on locations of these animals and other environmental features such as cliffs and mountains. Cons The policies and procedures that guide global businesses such as trade agreements and international laws are always formulated and controlled by developed economies. In this case, the rules and policies usually favours these economies because of elimination of capital controls, abolishment of tariffs, privatisation of public businesses, and implementation of intellectual property rights. Moreover, these regulations affect labour, health, and environment. These factors are usually championed by the wealthy and powerful economies that are found in the developing world that sets the terms, conditions that shape the way in which the economic and social parameters operate in the contemporary world. Improvement of international trade attributed to abolishment of custom duties as resulted in increase in inequalities between the developing and developed countries. Pettinger (2009) states, huge inequality are associated with income distribution of these countries and hence poor economic growth. In addition, globalisation as resulted in attraction of investors into certain regions: relocation of investors has its consequences. For example, the region in which these investors’ originates is left with large unemployment, and thus adversely affects such regions. In addition, these investors have a huge influence on transnational and national governments e.g. through European Union and World Bank when it comes to policy formulation and distribution of basic facilities. The investors influences such organisations into championing the needs of the corporate leaving the rest of populace suffering. 2.3 Is Globalization beneficial or harmful? According to Smith (2009) states that many people believe that globalisation is beneficial. This is attributed to the fact that many people initially were not able to access markets but with the introduction of globalisation has resulted in a scenario where people can easily export and import both goods and services. Such scenarios has contributed to generation of more incomes through taxes resulting in improvement of other important sectors such as education and health. 2.4 Example Smith (2009) states that presence of open and free trade has increased opportunities especially in United States of America through helping foreign economies to becoming stronger. When USA helps and supports other states, it increases the demand of goods and services. Since the developing countries are not able to produce these goods and services, it provides an opportunity for USA to produce such goods and services translating in creation of employment opportunities. All these benefits are beneficial to USA because of lack or minimal trade barriers but a disadvantage to the developing economies. Moreover, according to Smith (2009), such trades also champions finance and capital flows to United States of America. 3. Summary 3.1 As is evident from the discussion above that globalization has brought with it various positive and negative impacts, which can be explained in terms of their political, socio-cultural and economic effects. This paper has focused on ascertaining that globalization has had beneficial effects across especially from the unification of trade, which has resulted to huge gains to many nations and increased opportunities for economic growth. The effects of globalization discussed here include promotion of international trade, influence of financial markets and movement of labour, market unification and spread of technology. However it is believed that that more appropriate and fiscal policies should be put in place to ensure that aggregate demand keeps the economy on footing (Smith, 2009). These policies should aim at protecting the workers as well as help them during the difficult times to become more flexible and adapt when such changes occur. These policies should include all the workers who have lost their jobs as a result of foreign competition or outsourcing. Studies have revealed that, in order to encourage further globalization, countries should work together and formulate common laws that are favourable to all countries. 3.2 Apparently some scholars do not agree that globalization is beneficial and they term it as American Economic Imperialism. They argue that globalization has only contributed to the rising levels of unrest and conflict among various nations. This is because those with power and the corporate especially those in the industrialized world are filled with self-interest and they constantly disregard the people living in the developing countries (Held and McGrew, 2002). In addition, they argue that globalization has only resulted to discontentment in various groups from across the world. This is because most of the opportunities as a result of globalization such as technological advancements and multinational companies have eased the production and marketing process at the expense of the available manpower. However they should be informed that a number of institutions including The World Bank, International Monetary Fund (IMF), The World Trade Organization (WTO), among other agencies, trade unions, businesses and Non-Governmental Organizations (NGO’S), are in the forefront to guiding the procedure to formulate international laws and policies to guiding this effect (Held and McGrew, 2002). 4. Results 4.1 It is apparent that due to globalization the world has become increasingly interconnected as well as interdependent in cultural, social, economic and the environmental matters. Seemingly the world is quickly becoming a single community and a global village. Human beings are able to purchase products from all over the world from your country of residence. Additionally, by surfing the internets from ones computer, people are able arse able to keep up to date with the current world news on anything seven days a week and all year round. 4.2 Impact of globalization in the future Until recently, the most notable effects of globalization to be in the unskilled labour market and the policy makers regarded training as the answer to this. Skilled labour especially in the computer software can be outsourced. However the powerful nations are enormously worried by the prospect that they could be overtaken by harder working nations. The result will not only be a political backlash, but also an extreme populist concern in the rich industrial countries with corporate governance, corporate abuses, and the excesses of executive pay (Held and McGrew, 2002). References Baulch, B., & John, H. (2000). Economic mobility and poverty dynamics in developing countries. Journal of Development Studies, 36(6), 1–24 Dirk, K., & Perri, F. (2002). Does Income Inequality Lead to Consumption Inequality? Evidence and Theory. National Bureau of Economic Research, Working Paper 9202. Cambridge, Massachusetts. Held, D., & McGrew, A. (2002).The Great Globalization Debate. Cambridge: Polity Press http://ronald-smith.suite101.com/globalization-and-the-us-economy-a104014 Kremer, M and Maskin E., (2002).Globalization and Inequality.Working Paper. Brookings Institution Group on Globalization and Inequality. Pettinger, T. (2009). Costs and Benefits of Globalisation. Accessed on June 30, 2012, http://www.economicshelp.org/blog/81/trade/costs-and-benefits-of-globalisation/ Smith, R. (2009). Globalization and the U.S. Economy. Accessed on June 30, 2012, Read More