Defining Globalisation and Globalisation in the Late 19th Century - Essay Example

Globalisation Globalisation Introduction: Defining globalisation The term globalisation is used both as a as well as a prescription. In descriptive way, it is used to mean the ‘process of integration into the world economy’ and in its prescriptive way, it is used to mean ‘strategy of development based on rapid integration with the world economy’ (Nayyar, 2006). Hence we are faced with either a process or a strategy, and they are not the same. Trade, investment, finance and labour are the important elements of world economy. Globalisation is the expansion of these economic activities across national boundaries. This would require that the nations concerned should open their markets for international trade, international investment, international finance and labour movements – a process which would result in interdependency and lead to integration of the economies of the concerned countries with attendant benefits to all. From an individual country or a business point of view, globalisation is also a matter of strategy in the overall process described above. This strategy is best defined as the attempt to reap the highest benefits from out of the natural endowments of a country / business – be it in terms of raw materials, technology, skilled manpower etc. and reach the world markets with greater competitiveness. Viewed from this perspective, the term globalisation defines both a threat and an opportunity; a threat if a dominant economy or a business house commands the world markets, and an opportunity when even a small player can look at the entire world as his potential market to exploit. Thus, defining globalisation brings out both the positive and negative aspects of Globalisation 2 the term. Deepak Nayyar puts it best in his words: “It is, in part, an integration of markets (for goods, services, technology, financial assets and even money) on the demand side, and, in part, an integration of production (horizontal and vertical) on the supply side (Nayyar, 2006). Globalisation in the late 19th century International trade had been taking place for nearly a thousand years both on the land and sea routes. The items of exchange were mainly spices, silks and precious stones; in other words, only a limited number of highly valued exotic items. This trade was being conducted by individual traders. Great Britain was the dominant political and economic power that virtually ruled the world, when the industrial revolution took place during the 19th century. Due to the industrial revolution, there was a dramatic increase in the production capability of a very wide variety of manufactured goods. This required supply of raw materials on one hand, and markets for the finished products on the other. Great Britain thus started sourcing its requirement of raw materials like jute, cotton, cane, minerals, etc. from the colonies and exporting its finished items like textiles, sugar, metal products etc. back to the colonies. To this extent, the late 19th century globalisation heralded a new trend in international trade - exchanging finished manufactured goods for raw materials, although Great Britain as the supreme imperial power, controlled the raw materials prices from its colonies as well as the prices of finished goods sold in its colonies. Further, to supplement its work force, it deployed substantial number of indentured labourers from the Indian subcontinent to places like the South and East Africa, Australia and South East Globalisation 3 Asia. Thus, labour was also being moved across the nations during globalisation in this period. Economic benefits of globalisation We have defined globalisation both as a process and a strategy. Strategically, firms expand their businesses internationally for reasons such as better profitability of the expanded operations (overseas markets may be more profitable), or to exploit new opportunities (particularly if the local markets are already saturated), or for establishing raw material linkages, and of late for reasons of cheap but skilled manpower. In this process money, materials and manpower move freely across national borders, resulting in ever increasing global economic activity. Trade and industry flourishes; incomes rise; employment opportunities increase, and in general the standards of life style and prosperity are set to rise. Developed countries reap the benefits of cheap labour and access to markets apart from the significant insights into how business processes can be performed better and more economically as a result of cross fertilisation of ideas. Developing countries gain access to newer technologies and markets, and witness strong GDP growth rates. Naomi Klein’s views on globalisation Naomi Klein is an activist against all the neo-colonial and predatory acts of the giant corporations in the name of globalisation. She is the author of the widely read books like, “No Logo: Taking Aim at the Brand Bullies”, “The Shock Doctrine: The Rise of Disaster Capitalism” and her collection of articles, “Fences and Windows: Dispatches from the Front Lines of the Globalization Debate” (Faces of resistance, 2004). Globalisation 4 Her movement against global corporations, the World Trade Organization, International Monetary Fund and the role played by the governments of major economic powers like the USA, contributed to focus attention on the inequity of the globalisation, the rising power of corporations to the detriment of local governments, and the exploitative nature of globalisation. Privatisation of industries, as a philosophy actively promoted by the World Bank and strongly backed by the USA, is a key feature of globalisation. The objective of this policy is to secure more and more business for the US companies. If in the process, it becomes necessary for the USA to destroy another country at war and rebuild that economy using US companies, it would do so, according to Naomi Klein and she calls it ‘disaster capitalism’. Globalisation benefits only a limited section of the society (apart from the big corporations) – the section that is already well endowed with education, training or capital – leaving the larger mass of the poor and illiterate population in greater poverty. Income disparities rise, leading to social unrest. Naomi Klein contributed to the realisation of the limitations of globalisation, and helped to build public opinion against rampant and reckless privatisation. Conclusion Globalisation as a process and a strategy has been gaining ground. Unlike the late 19th century phenomenon, in the current phase, movement of labour is a significant part. Benefits of globalisation are in the increased economic activity all over the world; drawbacks are in the inequity and rising income disparities, as brought home by Naomi Klein. Globalisation 5 References Nayyar, D. (2006), ‘Globalisation, History and development: A tale of two centuries’, Cambridge Journal of Economics, 2006, 30, pp.137-159, Oxford University Press. Unknown, (2004), “Faces of Resistance: Confronting Corporate Globalization”. Available at: http://www.cpinternet.com/mbayly/facesofresistance2e.htm [Retrieved on 2 Dec 2007]. Read More