The Development of Globalization - Essay Example

Lecturer: presented: Introduction The development of globalization has proved to be significant in developing links anda mixture of cultures around the globe, making regimes to form alliances in order to participate in trade and social activities such as provision of human services. In the practice, it has caused the re-location of industries and the setting up of worldwide corporations as investors seeks new markets to expand their industries. “Less developed countries have been a major target for foreign investors since they have a high potential for investments” (Barry 2008 p. 9). The admission of the overseas traders in to the less developed economies is an advantage, though it presents a number of troubles. The two main drivers towards this recent increase in globalization have been opinionated as well as industrial aspects. They have led to the flourishing of trade between countries globally. “Beginning from 1950s, globalization of industries increased at a high rate” (Griffiths and Wall, 2007 p. 37). This essay gives a critical analysis of two of the main drivers of this wave, which are political forces and technological aspects. The driving force towards adopting the various forms of globalization and the consequences of these options as well as the benefits and disadvantages of globalization have been discussed. Several examples of globalization have been highlighted. Political Aspects In the early 1950s, leaders especially from the developed economies needed to build up scheme of making certain that a war of such intensity could never recur. This had to be realized through removal of the barriers that formed impediments to trade in order to boost success and increase interdependence amongst nations globally. Mainly the powerful were involved in developing frameworks for international trade and investment through agreements. They established key global institutions. According to (Barry 2008 p. 91), “These political powers promoted international treaties that were aimed at upholding international trade through tariff reductions and encouragement of free trade amongst its members. Barry (2008 p. 91) further states that, “By 1994, its membership included more than 100 member states”. Through it, there was a major reduction in the restrictions that hampered trade before it was established. Such restrictions included a minimum quantity of what was to be traded. Held and Mcgrew, (2000 p.18) observe that “GATT membership kept on rising, and in 1995, it was transformed in to World Trade Organization”. This was transformation was a step taken by members to further reduce barriers to international trade especially for the new entrants, mainly from the developing countries. The barriers that existed in regard to political boundaries were reduced to a great extent thereby making it possible for nations to participate in international operations. They played a major role in the assimilation of developing countries in to the multilateral trade. Their trade diversified through the flexible rules created under the treaties. Raymond (1999 p. 171) indicate that “the decreased tariffs that were a major barrier to trade resulted in the formation of the European Union and North American Free Trade Area”. Raymond (1999 p. 171) further attributes the recent wave of globalization to policies that arose from the emergent treaties. They motivated members to adopt open economic policies that have contributed to a great extent, the expansion of trade world wide. Investors can easily cross borders to invest and market their products in foreign countries. “Free trade policies have been adopted by many economies” (Barry, 2008 p. 51). This has led to a rise in the number of worldwide collaborations between companies and their foreign affiliates. The policies have enhanced the reduction in governments’ influence in the investment market, creating and enabling environment for foreign direct investment. Investors usually focus on the economies where policies on tax regulation are encouraging. They tend to make investments in the economies where tax charges are minimal. Heng and McDonagh (2009 p. 91) observe that, “The emergence of the concept of global governance has led to decision making that goes beyond political boundaries”. This has led to the adherence by member countries to regulations that have been set outside their political jurisdiction. It means that many countries especially in third world do not make independent decisions in regard to external operations. This has created a great inter dependence amongst states. For example, Held and Mcgrew (2000 p. 67) observe that, “Many countries worldwide are obligated to adhere to the regulations of intergovernmental organizations such as the UN, WTO, and the EU”. Each of them outlines policies that affect many states globally. Politics have been used by some world political powers to suggest a global government that has the capability of regulating the inter-relationship that between nation states. For example James (2005) observes that, “the United States is politically powerful than other developed countries, which is attributed to its economy”. This is one political aspect that has led to the adoption of many of its policies in most of the less developed economies. The political drivers towards globalization have led to the formulation of international law, which according to Geoffrey (2004 p. 98), refers to agreements amongst the world economies that bind them together, each adhering to certain standards that they have set. It led to the establishment of the international community, which has to follow the rules and principles that have been agreed upon. He further states that “the International Court of Justice arose as a result of globalization” p. 99. The law has enabled companies to establish in foreign countries, leading to the rapid increase in the number of multinational companies. These companies mainly arise in the quest for new market exploration, reduction of production costs, and exploration of potential areas for expansion of the production base as well as to utilize various opportunities arising in foreign countries. They usually have unlimited boundaries internationally (Held and Mcgrew, 2000 pp. 78-81). The companies are developed through a complex arrangement of all its affiliates worldwide. Information and deftness are collectively transmitted to all the links with each of them learning from all the global operations. They are globally incorporated having a decision making system involving two or more nations. These nations are allied in the sense of ownership and exert some influence over the rest of the members. Sloman and Sutcliffe (2004 p. 171) state that, “the companies usually possess at least 25 percent and above of their production outside one country”. They harmonize invention, intentions, and product promotion and administration services on a number of continents. To achieve this, they make their investment in the opportunities prevailing in other nations, e. g purchasing or constructing industrial units in a foreign country for operations. They take advantage of the labor market available worldwide as they engage in foreign ventures. The United States has the largest number of multinational companies in many developing countries. Held and Mcgrew (2000 p. 56) for example observe that it is for the basis of a favorable environment created by many of the regimes’ political and economic reforms. Held and Mcgrew (2000) further observe that “South Africa government restored the United States foreign tariff credit on investment” p. 57. Political reforms in many developing countries have encouraged foreign direct ventures by multinationals from developed countries. The surfacing of cosmopolitan firms that are attributed to political factors which contribute to globalization through continuous formation of alliances that are aimed at making it possible for them to offer better services in an efficient manner. Griffiths and Wall, (2007, p.78) observe that “the main forms of alliances are evident in the international communication service providers”. These have contributed greatly to re-organization of the global characteristics of trade. Alliances can be either equity oriented or non-equity associations. They might, in addition take the form of outsourcing alliances whereby the main corporation subcontracts small scale investors operating in the domestic market. The communication companies have established several alliances that operate world wide. For example, (Fang 2005 p. 60) cites “the Concert communication services alliance between MCI and British Telecommunications” which was formed with a goal of offering services in communication internationally. They have a central point of operation. The two corporations enjoy the autonomy while each set prices for the products offered. “Global One alliance” was formed with an objective of ensuring the best services for telecommunications are provided globally. “It is an alliance between three corporations; Telekom from Deutsche, Sprint, and Telecom from France” (Held and Mcgrew, 2000, p.72). The objective of the alliance was provision of all the services as may be deemed appropriate by the “Global Venture Board”. Other agreements in the telecommunication industry that have been formed in the global context include; “world partners, the federation of cable and wire communications as well as Uniworld, which targeting the multinationals within Europe” (Sloman and Sutcliffe, 2004 p. 72). Technological Progress Technological advancement is the second main driver towards globalization. All forms of technology have in one way or the other traversed state boundaries. Dealing in communication is one of the fiscal segments that have responded positively to advancement in information technology. This advancement in communication has facilitated outsourcing from foreign labor markets especially through the use of the internet (Howard, 1969 p. 68). Nevertheless, the transfer expertise has led to a reduction in transport costs globally. This has made the movement of people and merchandise cheap, thereby contributing to globalization. More over, it has raised the speed for service delivery to customers across geographical boundaries. More over, bulky and large quantities of merchandise can easily be distributed to various destinations globally with ease. Transaction costs have to a great extent been decreased in the course of technical progression. For example Howard (1969 p.97) states that, “the cost of calling from London to New Yolk has significantly reduced from 1990 to the present”. The cost of traveling has also reduced. These have enhanced productivity and hence the search for foreign markets by the industrialized economies. This enabled them to produce for export purposes. They usually market their produce in the developed economies (Sloman and Sutcliffe, 2004 pp. 45-47). Technology has also led to improvements in research and development, which allows researchers to collect data globally with ease. This is usually enhanced by communication technology. Nevertheless, technology has also enabled merchants to deal with perishable commodities beyond due to advancement in preservation techniques. Goods can be transported shipped for many days to far destinations. Technology has also made education global. It has also made media global through advanced news transmission methods whereby information can be acquired from long distances, “such as the British Broad Casting News that are transmitted globally” (Duffield 2001 p.67). Production through stages has also been facilitated by advancement in technology, resulting in a simplified process. In turn, the supply chain becomes more divergent where companies subcontract some of these stages. “Knowledge transfer has been facilitated through technological advancement” (Raymond, 1999 pp. 65-67). Developing countries are the main recipients of this knowledge. Private investors engage in technological research and development within these economies. Logistics have been made easier especially through communication technology. Quality control in the production is better, and therefore goods are produced according to acceptable principles and as a result they are satisfactory to the user. “Production of quality products creates demand for the goods to foreign consumers which has largely supplemented globalization” (Fang, 2005 pp.32-33). For example, there is a rising demand for Benefits of Globalization The political drivers to globalization are exhibited when governments make international set of laws and organizations to oversee issues regarding trade, protection of human rights, and the environmental conservation. Institutions resulting from the opinionated standpoint comprise; “the World Trade Organization (WTO), the North American Free Trade Agreement (NAFTA) and the Euro currency amongst others” (Mark 1999 p. 30). The rules set by these organizations are significant in protection of the states participating in international trade. More over, the political aspects have led to the globalization of human rights activism. The non-governmental organizations are significant in spear heading the protection of human rights, which has helped in curtailing governments and other powerful forces from exploiting humans through acts of violence, crimes against humanity, slavery, child abuse, and gender based violence amongst others. Such organizations include, “the Human Watch Rights Trust and Global Alliance for Workers and Communities, Amnesty International” (Duffield 2001 p. 78) amongst others. They have a set of laws that help in overseeing protection of human rights globally. Some undertake the responsibility of challenging economic interests of powerful states that undermine the lesser powerful nations’ capability of providing security to their citizens (Rajan 2005). When local financial institutions support reforms, “they benefit in terms of tax subsidies, credit facilities and profit resulting in strengthened property rights” (Kaufmann 1995 p.68). The “Word Bank” is one fiscal establishment that was formed to provide loans to developing countries in a bid to lessen poverty through growth programs (Geoffrey, 2004 p. 47). Technological drivers towards globalization have largely contributed to innovative changes in technology, especially in transportation and communications, which has enhanced business across the globe. Movement from one state to another as well as communication has been made cheap and faster, which has contributed to the phenomenon of the world as a “global village”. Technological transfer has also increased the scope of socialization and interactions of world communities. Technology has also enhanced foreign exchange through electronic money transfer. This has enhanced trade in the fiscal market. Disadvantages of Globalization Globalization has led to the spread of organized crime beyond political boundaries. It allowed the movement of these organizations disguised as merchants. With time, they have been able to establish in many countries globally especially those whose security structures have been weakened by war. The criminals are usually able to evade the security personnel within the countries of operation. The activities may be carried out on a regional or global level (Mark 1999 pp. 16-18). The organizations usually have interconnections across boundaries. Some times it may be overwhelming to the level of challenging national and international authorities. Political drivers may cause crises in cases where there exist limitations in global fiscal markets. This can cause financial failures, illogical behavior, attacks based on speculation, and collapse, among other things (Raymond, 1999 p.91). For example the countries that have an association in terms of trade may suffer losses if sanctions are imposed on one of them. Technological drivers of globalization are disadvantageous in the sense that illegal trade has been enhanced. Smuggling of goods and people across boundaries has become rampant. Drug trafficking is one of the problems facing nation states world wide. Technology has facilitated illegal trade through production of illegal certificates leading to unfair competition in the market for the legitimate goods. Counterfeiting and fraud are consequences of technological transfer. The fake certificates are difficult to identify unless if they are scrutinized by an expert. Consumers therefore may suffer due to consumption of substandard goods. The less developed countries that initially were not capable of polluting the environment have begun releasing substantial amounts pollutants (Howard, 1969 pp. 40-43). Conclusion The political and technological factors that have largely contributed to globalization have been useful in the promotion of development endeavors. Multinational companies resulting from their participation in foreign operations have played a significant role in employment creation and establishment of industries locally. This has enabled them to increase their pace towards industrialization. The quality of manufactured goods has improved due to globalization of technology. Politically, economies have become integrated through the common laws and regulations, facilitating the existence of harmonious relations amongst the world economies. However, the political and technological drivers towards globalization have not been without disadvantages. Bibliography 1. Barry G. 2008. Globalization and the Global Politics of Justice, Reiters Scientific Books. 2. Duffield M. 2001. Global Governance and the New Wars: The Merging of Development and Security, Zed Books. 3. 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